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): June 24, 2013

 

SAEXPLORATION HOLDINGS, INC.

(Exact Name of Registrant as Specified in Charter)

 

Delaware 001-35471 27-4867100
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)

 

3333 8 th Street SE, 3 rd Floor, Calgary Alberta, T2G 3A4

(Address of Principal Executive Offices) (Zip Code)

 

(403) 776-1950

(Registrant’s Telephone Number, Including Area Code)

 

Trio Merger Corp., 777 Third Avenue, 37th Floor, New York, New York 10017

(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 ( see General Instruction A.2. below):

 

  ¨ 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))

 

 
 

 

THIS REPORT AND THE EXHIBITS HERETO INCLUDE “FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE SAFE HARBOR PROVISIONS OF THE U.S. PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. ACTUAL RESULTS MAY DIFFER FROM EXPECTATIONS, ESTIMATES AND PROJECTIONS AND, CONSEQUENTLY, YOU SHOULD NOT RELY ON THESE FORWARD LOOKING STATEMENTS AS PREDICTIONS OF FUTURE EVENTS. WORDS SUCH AS “EXPECT,” “ESTIMATE,” “PROJECT,” “BUDGET,” “FORECAST,” “ANTICIPATE,” “INTEND,” “PLAN,” “MAY,” “WILL,” “COULD,” “SHOULD,” “BELIEVES,” “PREDICTS,” “POTENTIAL,” “CONTINUE,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION, THE REGISTRANT’S EXPECTATIONS WITH RESPECT TO FUTURE PERFORMANCE, ANTICIPATED FINANCIAL IMPACTS OF THE MERGER AND RELATED TRANSACTION.

 

THESE FORWARD-LOOKING STATEMENTS INVOLVE SIGNIFICANT RISKS AND UNCERTAINTIES THAT COULD CAUSE THE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE EXPECTED RESULTS. MOST OF THESE FACTORS ARE OUTSIDE THE PARTIES’ CONTROL AND DIFFICULT TO PREDICT. FACTORS THAT MAY CAUSE SUCH DIFFERENCES INCLUDE CHANGES IN ECONOMIC, BUSINESS, COMPETITIVE AND/OR REGULATORY FACTORS, AND OTHER RISKS AND UNCERTAINTIES AFFECTING THE OPERATION OF SAE’S BUSINESS. THESE RISKS, UNCERTAINTIES AND CONTINGENCIES INCLUDE: FLUCTUATIONS IN THE LEVELS OF EXPLORATION AND DEVELOPMENT ACTIVITY IN THE OIL AND GAS INDUSTRY; BUSINESS CONDITIONS; WEATHER AND NATURAL DISASTERS; CHANGING INTERPRETATIONS OF GAAP; OUTCOMES OF GOVERNMENT REVIEWS; INQUIRIES AND INVESTIGATIONS AND RELATED LITIGATION; CONTINUED COMPLIANCE WITH GOVERNMENT REGULATIONS; LEGISLATION OR REGULATORY ENVIRONMENTS; REQUIREMENTS OR CHANGES ADVERSELY AFFECTING THE BUSINESS IN WHICH SAE IS ENGAGED; FLUCTUATIONS IN CUSTOMER DEMAND; MANAGEMENT OF RAPID GROWTH; INTENSITY OF COMPETITION FROM OTHER PROVIDERS OF SEISMIC ACQUISITION SERVICES; GENERAL ECONOMIC CONDITIONS; GEOPOLITICAL EVENTS AND REGULATORY CHANGES; AND OTHER FACTORS SET FORTH IN THE REGISTRANT’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

THE FOREGOING LIST OF FACTORS IS NOT EXCLUSIVE. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS CONCERNING THE REGISTRANT, THE MERGER, THE RELATED TRANSACTIONS OR OTHER MATTERS AND ATTRIBUTABLE TO THE REGISTRANT OR ANY PERSON ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS ABOVE. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON ANY FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE MADE. THE REGISTRANT DOES NOT UNDERTAKE OR ACCEPT ANY OBLIGATION OR UNDERTAKING TO RELEASE PUBLICLY ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENT TO REFLECT ANY CHANGE IN ITS EXPECTATIONS OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED.

 

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Item 1.01. Entry into a Material Definitive Agreement

 

As disclosed under the sections entitled “ The Merger Proposal ” and “ The Merger Agreement ” beginning at pages 60 and 83, respectively, of the definitive Proxy Statement/Information Statement filed with the Securities and Exchange Commission (the “ Commission ”) on May 31, 2013 (the “ Proxy Statement/Information Statement ”) by Trio Merger Corp., now known as SAExploration Holdings, Inc. (the “ Registrant ”), the Registrant entered into an Agreement and Plan of Reorganization (the “ Merger Agreement ”), dated as of December 10, 2012, as amended by a First Amendment to Agreement and Plan of Reorganization dated as of May 23, 2013, with Trio Merger Sub, Inc. (“ Merger Sub ”), the entity formerly known as SAExploration Holdings, Inc. (“ Former SAE ”) and CLCH, LLC (“ CLCH ”), which contemplated Former SAE merging with and into Merger Sub with Merger Sub surviving as a wholly-owned subsidiary of the Registrant (the “ Merger ”). The Merger Agreement and the First Amendment thereto are included as Exhibits 2.1 and 2.2 to this Current Report on Form 8-K (this “ Report ”).

 

Item 2.01 of this Report discusses the consummation of the Merger and various other transactions and events contemplated by the Merger Agreement and is incorporated herein by reference. As used herein, “ SAE ” refers to Former SAE, as to disclosure relating to periods prior to the Merger, and Merger Sub, now known as SAExploration Sub, Inc., as the surviving entity in the Merger, as to disclosure relating to all periods from and after the effective time of the Merger.

 

As described in Item 2.01 of this Report, at the closing of Merger on June 24, 2013 (the “ Closing ”), the Registrant entered into two escrow agreements providing for the escrow of certain shares of the Registrant’s common stock issued in connection with the Merger, a registration rights agreement with CLCH and an amendment to the warrant agreement governing its outstanding warrants. Also in connection with the Closing, the Registrant entered into certain executive employment agreements and adopted a 2013 Long-Term Incentive Plan, as further described in Item 5.02 of this Report, which is incorporated herein by reference.

 

In addition, in connection with the Closing, the Registrant executed a Joinder to Credit Agreement (the “ Joinder ”), pursuant to which it joined, in the same capacity as SAE, the Credit Agreement dated as of November 28, 2012, among SAE, as parent, its subsidiaries, SAExploration, Inc., SAExploration Seismic Services (US), LLC and NES, LLC, as borrowers (the “ Borrowers ”), the lenders party thereto, and CP Admin Co LLC, as Administrative Agent (the “ Credit Agreement ”), as amended by an Amendment No. 1 to Credit Agreement dated as of December 5, 2012 (“ Amendment No. 1 ”), and by an Amendment No. 2 and Consent to Credit Agreement dated as of June 24, 2013 (“ Amendment No. 2 ”). The Credit Agreement, as amended by Amendment No. 1, is described in the Proxy Statement/Information Statement in the section entitled “ SAE’s Management’s Discussion and Analysis of Financial Condition and Results of Operations – 2012 Liquidity and Capital Resources – Debt Financing ” beginning on page 158. Amendment No. 2 amends the Credit Agreement to:

 

· replace CP Admin Co LLC with MC Admin Co LLC as Administrative Agent, a distinct legal entity in no way affiliated with or related to CP Admin Co LLC;

 

· change the definition of “Change of Control” thereunder to lower the economic ownership and voting control percentages that were required to be achieved in connection with the Merger, and that must be maintained upon any disposition of the Registrant’s, by certain of the SAE insiders, including Jeff Hastings, Brian Beatty and Brent Whiteley;

 

· change the required Total Leverage Ratio, which is consolidated indebtedness (all outstanding debt, capital lease obligations, unused letters of credit and contingent obligations) divided by consolidated EBITDA, for the fiscal quarter ending June 30, 2013, from 2:50:1:00 to 2:65:1:00;

 

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· provide for the relaxation of certain other financial covenants if Borrowers borrow the $20 million of additional loans pursuant to the commitment described below; and

 

· make certain other clarifying changes to certain provisions of the Credit Agreement.

 

At the time it entered into Amendment No. 2, SAE and the Borrowers received a commitment from MC Credit Fund I LP to fund, at SAE’s election and subject to the satisfaction of customary closing conditions, the full $20 million of the additional loans available to the borrowers under the Credit Agreement. The commitment expires October 5, 2013.

 

Copies of the Credit Agreement, Amendment No. 1, Amendment No. 2 and the Joinder are attached hereto as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, to this Report.

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

On June 21, 2013, the Registrant held its special meeting in lieu of annual meeting of stockholders (the “ Special Meeting ”), at which the stockholders considered and adopted, among other matters, the Merger Agreement. On June 24, 2013, the parties consummated the Merger.

 

Pursuant to the Merger Agreement, the SAE common stockholders, on a fully-diluted basis, as consideration for all shares of SAE common stock they held or had the right to acquire prior to the Merger, received: (i) an aggregate of 6,448,443 shares (which includes 30 shares issued in lieu of fractional shares) of the Registrant’s common stock at the Closing; (ii) an aggregate of $7,500,000 in cash at the Closing; (iii) an aggregate of $17,500,000 represented by a promissory note issued by the Registrant at the Closing; and (iv) the right to receive up to 992,108 additional shares (which includes 44 shares that may be issued in lien of fractional shares) of the Registrant’s common stock after the Closing based on the achievement of specified earnings targets by the combined company for the 2013 and/or the 2014 fiscal years. Additionally, the Registrant paid to CLCH, the holder of all of the outstanding shares of SAE preferred stock, an aggregate of $5,000,000 in cash for all of such shares. Reference is made to the disclosure contained in Item 2.03 of this Current Report with respect to the promissory note issued at the Closing to CLCH, as the representative of the SAE stockholders under the Merger Agreement, which is incorporated herein by reference.

 

Certain of the shares of the Registrant’s common stock and cash payable as merger consideration were placed in escrow at the Closing. Of the shares of the Registrant’s common stock issued to the SAE stockholders at Closing, an aggregate of 545,635 shares were deposited in escrow pursuant to an escrow agreement among the Registrant, CLCH, as representative of the SAE stockholders, and Continental Stock Transfer & Trust Company, as escrow agent (the “ Indemnity Escrow Agreement ”), to secure the indemnification obligations owed to the Registrant under the Merger Agreement. The material terms of the Indemnity Escrow Agreement are described in the section of the Proxy Statement/Information Statement entitled “ The Merger Proposal – Indemnification of Trio ” beginning on page 62 and are incorporated herein by reference. A portion of the merger consideration allocable to holders of certain derivative securities of SAE that were not converted or exchanged prior to the Merger is being held in escrow pursuant to the terms of another escrow agreement (the “ Merger Consideration Escrow Agreement ”). The Merger Consideration Escrow Agreement provides that CLCH as nominee of the Registrant, will have voting control over all shares of the Registrant’s common stock held in escrow under this agreement. The Indemnity Escrow Agreement and the Merger Consideration Escrow Agreement are attached as Exhibits 10.5 and 10.6, respectively, to this Report.

 

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At the Closing, the Registrant entered into a registration rights agreement (“ Registration Rights Agreement ”) with CLCH, which became an “affiliate” of the Registrant under Rule 144 of the Securities Act of 1933, as amended (the “ Securities Act ”), as a result of the issuance of shares of the Registrant’s common stock in the Merger. The material terms of the Registration Rights Agreement are described in the section of the Proxy Statement/Information Statement entitled “ The Merger Proposal – Sale Restriction; Resale Registration ” beginning on page 63 and are hereby incorporated by reference. The Registration Rights Agreement is attached as Exhibit 10.7 to this Report.

 

At the Special Meeting, holders of 987,634 shares of the Registrant’s outstanding common stock issued in its initial public offering (“ public shares ”) exercised their rights to convert those shares to cash at a conversion price of approximately $10.08 per share, or an aggregate of approximately $9.96 million. After giving effect to the issuance of the shares of the Registrant’s common stock to SAE stockholders at the Closing (excluding the additional shares that may be issued to the SAE stockholders based on the achievement of the earnings targets), the issuance of 100,000 shares of the Registrant’s Common Stock in exchange for the UPOs (as defined below) and the conversion of 987,634 of the Registrant’s public shares, there were 13,402,664 shares of the Registrant’s common stock outstanding as of June 24, 2013.

 

The conversion price for holders of public shares electing conversion was paid out of the Registrant’s trust account, which had a balance immediately prior to the Closing of $61,680,970. The remaining trust account funds were used to pay transaction expenses of approximately $4.0 million and the cash portion of the merger consideration payable to the SAE preferred and common stockholders, totaling $12.5 million, and the balance of approximately $35.2 million was released to the Registrant.

 

Additionally, immediately prior to the Closing, SAE paid cash dividends to its stockholders of $5 million on shares of its preferred stock and $10 million on shares of its common stock outstanding immediately prior to the merger, for an aggregate dividend amount of $15 million.

 

At the Special Meeting, the Registrant’s stockholders also voted to approve an amendment to the Registrant’s amended and restated certificate of incorporation to change the Registrant’s name to SAExploration Holdings, Inc. Accordingly, effective upon the Closing, the Registrant changed its name to SAExploration Holdings, Inc. and Merger Sub, the surviving entity in the Merger, changed its name to SAExploration Sub, Inc. Thus, the Registrant is now a holding company called SAExploration Holdings, Inc., operating through its wholly-owned subsidiary, SAExploration Sub, Inc., and its subsidiaries.

 

At the Closing, the Registrant also entered into an amendment to the warrant agreement (“ Warrant Amendment ”) with Continental Stock Transfer & Trust Company, as warrant agent, which amends the Registrant’s warrants to (i) increase the exercise price of the warrants from $7.50 to $12.00 per share of the Registrant’s common stock and (ii) increase the redemption price of the warrants from $12.50 to $15.00 per share of the Registrant’s common stock. On December 10, 2012, the Registrant obtained written consents from the holders of a majority of the then outstanding warrants approving the Warrant Amendment. Reference is made to the disclosure in the Proxy Statement/Information Statement in the section entitled “ The Warrant Amendments ” on page 127, which is incorporated herein by reference, for further information related to the Warrant Amendment.

 

Pursuant to the Merger Agreement, the Registrant agreed to offer the holders of Registrant’s warrants the right to exchange their warrants for shares of Registrant common stock, at a ratio of ten warrants for one share of Registrant common stock. The parties will seek to consummate the warrant exchange as soon as practicable. Certain of the warrant holders, including those who consented to the Warrant Amendment, each of whom is an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act, also agreed to participate in the warrant exchange with respect to the warrants held or to be held by them. Any warrants remaining outstanding after the consummation of the warrant exchange will continue to have the same terms as currently set forth in such warrants, as modified by the Warrant Amendment described above. In addition, as part of the reorganization contemplated by the Merger Agreement, EarlyBirdCapital, Inc., the representative of the underwriters of Registrant’s initial public offering, on behalf of itself and its designees, exchanged, at the Closing of the merger, the options (the “ UPOs ”) to purchase up to a total of 600,000 shares of common stock and 600,000 warrants held by it and its designees for 100,000 shares of Registrant common stock. Re ference is made to the disclosure in the Proxy Statement/Information Statement in the section entitled “ The Warrant Amendments — Warrant Exchange Offer ” on page 127, which is incorporated herein by reference.

 

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FORM 10 INFORMATION

 

Item 2.01(f) of Form 8-K states that if the registrant was a shell company as the Registrant was immediately before the Merger, then the Registrant must disclose the information that would be required if the Registrant were filing a general form for registration of securities on Form 10. Accordingly, the Registrant is providing below the information that would be included in a Form 10 if it were to file a Form 10. Please note that the information provided below relates to the combined company after the Registrant’s acquisition of SAE by consummation of the Merger, unless otherwise specifically indicated or the context otherwise requires.

 

Business

 

The business of the Registrant is described in the Proxy Statement/Information Statement in the section entitled “ Business of SAE ” beginning on page 138, and that information is incorporated herein by reference.

 

Risk Factors

 

The risks associated with the Registrant’s business are described in the Proxy Statement/Information Statement in the section entitled “ Risk Factors – Risks Relating to Trio’s Business and Operations Following the Merger with SAE ” beginning on page 35 and are incorporated herein by reference.

 

Financial Information

 

Reference is made to the disclosure set forth in Item 9.01 of this Report concerning the financial information of the Registrant, which is incorporated herein by reference. Reference is further made to the disclosure contained in the Proxy Statement/Information Statement in the sections entitled “ Selected Historical Financial Information ” and “ SAE’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ”, including the subsection thereof entitled “ – Quantitative and Qualitative Disclosures about Market Risk, ” beginning on pages 30, 148 and 168, respectively, which is incorporated herein by reference.

 

Properties

 

The facilities of the Registrant are described in the Proxy Statement/Information Statement in the section entitled “ Business of SAE – Properties ” on page 146, which is incorporated herein by reference.

 

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Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth information as of the Closing regarding the beneficial ownership of the Registrant’s common stock by:

 

· Each person known to be the beneficial owner of more than 5% of the Registrant’s outstanding shares of common stock;

 

· Each director and each of the Registrant’s principal executive officer, principal financial officer and three other most highly compensated executive officers (“ named executive officers ”); and

 

· All current executive officers and directors as a group.

 

Unless otherwise indicated, the Registrant believes that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.

 

Name and Address of Beneficial Owner (1)   Amount and Nature of Beneficial Ownership (2)     Approximate Percentage of Beneficial Ownership (2)  
Directors and Executive Officers            
Jeff Hastings     6,772,064 (3)     50.5 %
Brian Beatty     6,772,064 (4)     50.5 %
Brent Whiteley     6,772,064 (5)     50.5 %
Eric S. Rosenfeld (6)     4,107,286 (7)     25.2 %
David D. Sgro (6)     578,056 (8)     4.2 %
Gary Dalton     ––       ––  
Arnold Wong     ––       ––  
Gregory R. Monahan (6)     100,433 (9)     *  
Mike Scott     44,455 (10)     *  
Darin Silvernagle     32,486 (11)     *  
All directors and executive officers as a group
(11 persons) 		    10,232,589 (12)     61.0 %
Five Percent Holders:                
HighVista Strategies LLC (13)     690,000 (14)     5.1 %
Polar Securities, Inc. (15)     714,700 (16)     5.3 %

_______________________

 

* Less than 1%.

 

(1) Unless otherwise indicated, the business address of each of the individuals is 3333 8th Street SE, 3rd Floor, Calgary Alberta, T2G 3A4.

 

(2) The percentage of beneficial ownership upon consummation of the Merger is calculated based on 13,402,664 shares of common stock deemed outstanding as of June 26, 2013, including shares of common stock in the process of being issued to former SAE stockholders in connection with the Merger. Such amounts do not take into account the shares that would be issued to SAE stockholders upon achievement of the EBITDA targets, shares underlying the Registrant’s outstanding warrants, shares underlying the warrants that may be issued upon conversion of certain outstanding convertible promissory notes or shares that may be issued under the Registrant’s 2013 Long Term Incentive Plan.

 

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(3) Includes 3,269,954 shares held directly by CLCH, and includes and excludes, as applicable, the shares included and excluded by Seismic Management Holdings Inc. and Brent Whiteley, as set forth in notes (4) and (5) below, as members of a “group” (as defined in Section 13(d)-3 of the Securities Exchange Act of 1934, as amended) with CLCH. Includes (i) 390,859 shares that may be issued to the holders of SAE derivative securities upon their conversion or exercise over which CLCH has voting control as nominee of the Registrant, and (ii) 1,629,441 shares over which CLCH was granted voting control pursuant to voting proxy agreements entered into upon Closing. This amount excludes up to 503,070 shares of common stock that may be issued to CLCH under the Merger Agreement after the Closing based on the achievement of specified earnings targets by the combined company for the 2013 and/or the 2014 fiscal years. CLCH is controlled by Jeff Hastings, who became the executive chairman and a director of the Registrant upon consummation of the Merger. The business address for CLCH is 4721 Golden Spring Circle, Anchorage, Alaska 99507.

 

(4) Includes 1,196,846 shares held directly by Seismic Management Holdings Inc., and includes and excludes, as applicable, the shares included and excluded by CLCH and Brent Whiteley, as set forth in note (3) above and note (5) below, as members of a group with Seismic Management Holdings Inc. Excludes up to 184,131 shares of common stock that may be issued to Seismic Management Holdings Inc. under the Merger Agreement after the Closing based on the achievement of specified earnings targets by the combined company for the 2013 and/or the 2014 fiscal years. Seismic Management Holdings Inc. is controlled by Brian Beatty, who became the chief executive officer and a director of the Registrant upon consummation of the Merger, and his wife, Sheri L. Beatty. The business address for Seismic Management is 59 Westpoint Court SW, Calgary, AB, T3H 4M7.

 

(5) Includes 284,964 shares held directly by Mr. Whiteley, and includes and excludes, as applicable, the shares included and excluded by CLCH and Seismic Management Holdings Inc. as set forth in notes (3) and (4) above, as members of a group with Mr. Whiteley. Excludes up to 43,841 shares of common stock that may be issued to Mr. Whiteley, under the Merger Agreement based on the achievement of specified earnings targets by the combined company for the 2013 and/or the 2014 fiscal years. Mr. Whiteley became the chief financial officer, general counsel and secretary and a director of the Registrant upon consummation of the Merger.

 

(6) The business address of this individual is 777 Third Avenue, 37th Floor, New York, New York 10017.

 

(7) Includes (i) 2,314,912 shares of common stock issuable upon the exercise of insider warrants held by Mr. Rosenfeld that became exercisable upon consummation of the Merger and (ii) 600,000 shares of common stock underlying 600,000 warrants that may be issued upon conversion of $300,000 in promissory notes held by Mr. Rosenfeld, which became convertible, subject to the effectiveness of stockholder approval of such conversion, upon consummation of the Merger. Mr. Rosenfeld has entered into a voting proxy agreement with CLCH, an affiliate of Jeff Hastings.

 

(8) Includes (i) 22,806 shares of common stock issuable upon the exercise of insider warrants held by Mr. Sgro that became exercisable upon consummation of the Merger and (ii) 400,000 shares of common stock underlying 400,000 warrants that may be issued upon conversion of $200,000 in promissory notes held by Mr. Sgro, which became convertible, subject to the effectiveness of stockholder approval of such conversion, upon consummation of the Merger. Mr. Sgro has entered into a voting proxy agreement with CLCH, an affiliate of Jeff Hastings.

 

(9) Includes 22,807 shares of common stock issuable upon the exercise of insider warrants held by Mr. Monahan that became exercisable upon consummation of the Merger. Mr. Monahan has entered into a voting proxy agreement with CLCH, an affiliate of Jeff Hastings.

 

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(10) Excludes up to 6,840 shares of common stock that may be issued to Mr. Scott under the Merger Agreement after the Closing based on the achievement of specified earnings targets by the combined company for the 2013 and/or the 2014 fiscal years. Mr. Scott has granted a revocable voting proxy to CLCH, an affiliate of Jeff Hastings, giving CLCH the power to vote all shares of the Registrant’s common stock owned by him. Mr. Scott became the executive vice president – operations of the Registrant upon consummation of the Merger.

 

(11) Excludes up to 4,998 shares of common stock that may be issued to Mr. Silvernagle under the Merger Agreement after the Closing based on the achievement of specified earnings targets by the combined company for the 2013 and/or the 2014 fiscal years. Mr. Silvernagle has granted a revocable voting proxy to CLCH, an affiliate of Jeff Hastings, giving CLCH the power to vote all shares of the Registrant’s common stock owned by him. Mr. Silvernagle became the executive vice president – technology of the Registrant upon consummation of the Merger.

 

(12) Includes (i) 2,360,525 shares of common stock issuable upon the exercise of insider warrants held by Messrs. Rosenfeld, Sgro and Monahan that became exercisable upon consummation of the Merger, (ii) 1,000,000 shares of common stock underlying 1,000,000 warrants that may be issued upon conversion of $500,000 in promissory notes held by Messrs. Rosenfeld and Sgro, which became convertible, subject to the effectiveness of stockholder approval of such conversion, upon consummation of the Merger, (iii) 87,793 shares of common stock issuable to executive officers of the Registrant upon the conversion of SAE derivative securities held by them, (iv) 303,066 of the shares that may be issued to the holders of SAE derivative securities upon their conversion or exercise that CLCH has voting control over as nominee of the Registrant (which excludes the 87,793 shares issuable to executive officers of the Registrant upon the conversion SAE derivative securities held by them), and (v) 227,250 of the shares over which CLCH was granted voting control pursuant to voting proxy agreements entered into upon Closing (which excludes the 1,402,191 shares over which CLCH was granted voting control that are held by the Registrant’s directors and executive officers). This amount excludes (i) up to 742,880 shares of common stock that may be issued to CLCH, Seismic Management Holdings Inc., Mr. Whiteley and certain other executive officers of the Registrant under the Merger Agreement after the Closing based on the achievement of specified earnings targets by the combined company for the 2013 and/or the 2014 fiscal years and (ii) up to an additional 13,507 shares of common stock that may be issued to executive officers of the Registrant after the Closing upon the achievement of such earnings targets and upon the conversion of SAE derivative securities held by them.

 

(13) The reporting persons also include HighVista GP, LLC, HighVista GP Limited Partnership, HighVista I Limited Partnership, HighVista II Limited Partnership, HighVista III, Ltd., HighVista V Limited Partnership, XL Re Ltd, Brian H. Chu and Andre F. Perold. The business address of HighVista Strategies LLC, HighVista GP, LLC, HighVista GP Limited Partnership, HighVista I Limited Partnership, HighVista II Limited Partnership and HighVista V Limited Partnership is John Hancock Tower, 50th Floor, 200 Clarendon Street, Boston, MA 02116. The business address of HighVista III, Ltd. is Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681 GT, George Town, Grand Cayman, British West Indies. The business address for XL Re Ltd is Brian O’Hara House, One Bermudiana Road, Hamilton HM08, Bermuda. The foregoing information and the information in note (14) below was derived from a Schedule 13G filed on February 14, 2013.

 

(14) HighVista Strategies LLC, HighVista GP, LLC, HighVista GP Limited Partnership, Brian Chu and Andre F. Perold each have sole voting and dispositive power with respect to all such shares. HighVista I Limited Partnership has sole voting and dispositive power with respect to 279,781 of such shares. HighVista II Limited Partnership has sole voting and dispositive power with respect to 230,916 of such shares. HighVista III, Ltd. has sole voting and dispositive power with respect to 107,167 of such shares. HighVista V Limited Partnership has sole voting and dispositive power with respect to 21,156 of such shares. XL Re Ltd has sole voting and dispositive power with respect to 50,980 of such shares.

 

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(15) The reporting persons also include North Pole Capital Master Fund. The business address of the reporting persons is 401 Bay Street, Suite 1900, P.O. Box 19, Toronto, Ontario M5H 2Y4. The foregoing information and the information in note (16) below was derived from a Schedule 13G filed on February 14, 2013.

 

(16) Polar Securities, Inc. and North Pole Capital Master Fund each have shared voting and dispositive power with respect to all such shares.

 

Directors and Executive Officers

 

At the Special Meeting, the Registrant’s stockholders elected the eight director nominees presented in the Proxy Statement/Information Statement to the Registrant’s board of directors as follows:

 

· in the class to stand for reelection in 2014: Jeff Hastings, Brent Whiteley and Gary Dalton;

 

· in the class to stand for reelection in 2015: Brian Beatty and Arnold Wong; and

 

· in the class to stand for reelection in 2016: Eric S. Rosenfeld, David D. Sgro and Gregory R. Monahan.

 

Immediately after the Closing, the Registrant’s board of directors established a standing executive committee, consisting of Messrs. Hastings, Beatty, Whiteley and Rosenfeld. The executive committee is empowered with authority to act on behalf of the Registrant in instances where full board authorization is not required. The Registrant also has a standing audit committee, consisting of Messrs. Sgro, Monahan and Dalton, and a standing compensation committee, consisting of Messrs. Hastings, Rosenfeld and Dalton.

 

The executive officers of the Registrant following the Closing are as follows:

 

HTTP:||WWW.SEC.GOV|ARCHIVES|EDGAR|DATA|1514732|000114420413032653|SPACER.GIF   HTTP:||WWW.SEC.GOV|ARCHIVES|EDGAR|DATA|1514732|000114420413032653|SPACER.GIF   HTTP:||WWW.SEC.GOV|ARCHIVES|EDGAR|DATA|1514732|000114420413032653|SPACER.GIF
Name   Age   Position
Jeff Hastings   55   Executive Chairman of the Board
Brian Beatty   50   Chief Executive Officer, President
Brent Whiteley   47   Chief Financial Officer, General Counsel, Secretary
Mike Scott   55   Executive Vice President – Operations
Darin Silvernagle   47   Executive Vice President – Technology
David Siegfried   51   Executive Vice President – Business Development 1

______________

 

1 Mr. Siegfried is an executive officer of certain subsidiaries of the Registrant but is not an appointed officer of Registrant.

 

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Information regarding the Registrant’s directors, and its executive officers who are also directors, and the criteria for their selection as nominees for director, is included in the Proxy Statement/Information Statement in the sections entitled “ The Director Election Proposal- Information About Executive Officers, Directors and Nominees ” and “ The Director Election Proposal- Nominating Committee Information – Guidelines for Selecting Director Nominees ” beginning on pages 110 and 117, respectively, and that information is incorporated herein by reference. Information regarding Messrs. Scott, Silvernagle and Siegfried is set forth below.

 

Mike Scott is the Registrant’s Executive Vice President – Operations. Prior to the Merger, he was Executive Vice President of Operations of SAE, a position he held since joining SAE in September 2011. Mr. Scott spent the 20 years prior to joining SAE with Veritas (CGGVeritas), ultimately serving in the role of VP North American Operations, with responsibilities for Veritas’ growth through market expansion, strategic positioning and implementation of a comprehensive quality, health, safety and environmental management system.

 

Darin Silvernagle is the Registrant’s Executive Vice President – Technology. Prior to the Merger, Mr. Silvernagle served as Executive Vice President of Technology of SAE since joining SAE in September 2011. Mr. Silvernagle has over 30 years of experience in the geophysical services industry. Prior to joining SAE, Mr. Silvernagle worked for 17 years with Veritas, Veritas DGC Land and finally CGGVeritas. Mr. Silvernagle held a variety of roles with those companies including Technical Manager of North America, Technical Manager of North and South America and, ultimately, VP of Resources for the Global Land Division. In these roles, Mr. Silvernagle managed all aspects of technical operations in both field and office locations. His assignments included the diverse operating environments of Canada, the Canadian Arctic, the North Slope of Alaska, the US Lower 48, the Middle East and South America. Mr. Silvernagle spent 10 years in the field in supporting roles for all aspects of crew operations.

 

David Siegfried is the Executive Vice President of Business Development of SAExploration (Canada) Ltd., a wholly-owned subsidiary of SAE. Mr. Siegfried has been with SAE since August 2011, when SAE acquired Datum Exploration Ltd. There Mr. Siegfried was a senior partner and served as President, CEO and Chairman of the Board of Directors from October 2003 until its acquisition by SAE. Prior to that date, Mr. Siegfried held senior management positions at Trace Energy Services and Western Geophysical. Mr. Siegfried has 39 years of experience in the geophysical industry, and he holds a Bachelor of Science from the University of Alberta and an MBA from the University of Houston.

 

Executive and Director Compensation

 

Summary Compensation Table

 

The following table provides summary information concerning compensation for each named executive officer as of December 31, 2012, December 31, 2011, and December 31, 2010:

  

Name and Principal Position   Year     Salary
($) 		    Stock Awards
($) 		    All Other
Compensation
($) 		    Total
($) 		 
Jeff Hastings     2012     $ 387,929       —     $ 31,653 (1)   $ 419,582  
   Executive Chairman     2011     $ 101,999       —     $ 28,838 (2)   $ 128,837  
      2010     $ 606,100       —       —     $ 606,100  
Brian Beatty     2012     $ 406,499       —     $ 14,381 (3)   $ 420,880  
   President and CEO     2011     $ 302,999       —     $ 504 (2)   $ 303,503  
      2010     $ 249,100       —       —     $ 249,100  
Brent Whiteley     2012     $ 300,346       509,000 (4)   $ 28,653 (5)   $ 837,999  
   CFO, General Counsel and
   Secretary 		    2011     $ 240,000       —     $ 3,900 (2)   $ 243,900  
Mike Scott     2012     $ 253,750       79,404 (6)   $ 27,086 (7)   $ 360,240  
Executive Vice President –
Operations 		    2011     $ 74,038       —     $ 4,802 (8)   $ 78,840  
Darin Silvernagle     2012     $ 262,750       58,026 (9)     $ 20,587 (10)   $ 341,363  
Executive Vice President –
Technology 		    2011     $ 56,384       —     $ 79,443 (11)   $ 135,827  

 

 

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______

 

* Messrs. Hastings and Beatty were the only executive officers of SAE during 2010. Messrs. Whiteley, Scott and Silvernagle joined SAE in 2011, and were employed for only a part of the year.

 

(1) Represents Mr. Hastings’ $2,750/month automobile allowance and the payment of the premiums on his health and life insurance policies by SAE.

 

(2) Represents the payment of premiums on the executive’s health and life insurance policies by SAE.

 

(3) Represents Mr. Beatty’s $2,750/month automobile allowance and the payment of the premiums on his health and life insurance policies by SAE.

 

(4) On November 26, 2012, Mr. Whiteley received 50,000 shares of restricted stock with a grant date fair value of $10.18 per share. All 50,000 shares were scheduled to vest on the fifth anniversary of the date of grant. The SAE board of directors elected to vest all such shares in full immediately prior to the Merger.

 

(5) Represents Mr. Whiteley’s $1,750/month automobile allowance and the payment of the premiums on his health and life insurance policies by SAE.

 

(6) On November 26, 2012, Mr. Scott received 7,800 shares of restricted stock with a grant date fair value of $10.18 per share. All 7,800 shares were scheduled to vest on the fifth anniversary of the date of grant. The SAE board of directors elected to vest all such shares in full immediately prior to the Merger.

 

(7) Represents Mr. Scott’s $1,000/month automobile allowance, company contribution to the SAE retirement registered savings plan of $992.50 per month and payment of premiums on his health and life insurance policies by SAE.

 

(8) Represents Mr. Scott’s $1,000/month automobile allowance and the payment of the premiums on his health and life insurance policies by SAE.

 

(9) On November 26, 2012, Mr. Silvernagle received 5,700 shares of restricted stock with a grant date fair value of $10.18 per share. All 5,700 shares were scheduled to vest on the fifth anniversary of the date of grant. The SAE board of directors elected to vest all such shares in full immediately prior to the Merger.

 

(10) Represents Mr. Silvernagle’s $700/month automobile allowance, company contribution to the SAE retirement registered savings plan of $990.63 per month and payment of premiums on his health and life insurance policies by SAE.

 

(11) Represents Mr. Silvernagle’s $700/month automobile allowance and the payment of premiums on his health and life insurance policies by SAE and a signing bonus of $75,000.

 

Additional information regarding the executive compensation of the Registrant’s named executive officers and directors is described in the Proxy Statement/Information Statement in the section entitled “ The Director Election Proposal – Trio Executive Officer and Director Compensation ” beginning on page 118, and that information is incorporated herein by reference.

 

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Restricted Stock

 

Prior to the Merger, Messrs. Whiteley, Scott and Silvernagle owned 50,000, 7,800 and 5,700, respectively, shares of restricted stock that were issued pursuant to SAE’s 2012 Stock Compensation Plan on November 26, 2012. As issued, the restricted shares were scheduled to vest on the fifth anniversary of the date of issuance. The holder of the shares had the right to dividends and to vote the shares of restricted stock before they vested. The SAE board of directors, in its discretion, elected to accelerate vesting of all restricted shares immediately prior to the Merger, including those of Messrs. Whiteley, Scott and Silvernagle, and, upon the Merger, such shares were converted into the right to receive the merger consideration payable to holders of SAE common stock under the Merger Agreement.

 

Employment Agreements

 

Descriptions of the employment agreements between SAE and Jeff Hastings, executive chairman, Brian Beatty, president and chief executive officer, and Brent Whiteley, chief financial officer, general counsel, and secretary, that were in effect prior to the Merger, and the new employment agreements entered into with each of them in connection with the Merger are described in the Proxy Statement/Information Statement in the sections entitled “ The Director Election Proposal — SAE Executive Officer and Director Compensation — Current Employment Agreements ” and “ The Director Election Proposal — Trio Executive Officer and Director Compensation — New Employment Agreements ” beginning on pages 122 and 120, respectively, and such descriptions are incorporated herein by reference.

 

Mike Scott, executive vice president – operations, and Darin Silvernagle, executive vice president – technology, entered into employment agreements with SAExploration, Inc., a wholly-owned subsidiary of SAE formerly known as South American Exploration LLC (“ SAExploration ”), on July 1, 2011 and July 15, 2011, respectively (collectively, the “ Employment Agreements ”). The Registrant is in the process of negotiating new employment agreements with Messrs. Scott and Silvernagle.

 

The Employment Agreements provide for base salaries as follows: Mike Scott ($250,000) and Darin Silvernagle ($237,750). The Employment Agreements provide for variable pay of up to 40% of such executive’s base salary for such calendar year, with such amount being based on the attainment of the following goals, as agreed to from time to time between SAExploration and the executive: (i) the executive’s individual goals (20%); corporate quality, health, safety and environmental goals (30%); and overall corporate fiscal performance (50%). In addition, the executives each receive a monthly automobile allowance. The Employment Agreements also provide for participation in SAExploration’s preferred profit sharing plan, under which the executives were each entitled to receive a distribution of “phantom” shares. Pursuant to agreements between the executives and SAExploration, however, those awards were not issued, and awards of SAE restricted stock under SAE’s 2012 Stock Compensation Plan were made in lieu thereof. The Employment Agreements provide for a signing bonus to the executives of $75,000 each. Mr. Scott elected to defer his signing bonus, and in lieu thereof, he received additional shares of SAE restricted stock under SAE’s 2012 Stock Compensation Plan.

 

Each Employment Agreement continues in effect until terminated by either SAExploration or the executive, either with or without cause, as provided in the agreement. The Employment Agreements provide that, in the event of a termination of an executive’s employment by SAExploration without cause or by the executive upon a change of control (both as defined in the Employment Agreements), SAExploration will pay him, within five days of the date of termination, the following: (i) a payment equal to 6 months of base salary, and (v) a payment equal to one month’s base salary for each month of service after the first year, up to a maximum of 18 months, and (iii) a payment of the variable pay amount prorated for the partial year prior to termination.

 

13
 

 

The Employment Agreements restrict the executives from disclosing confidential information SAExploration uses to compete in the marketplace for any purpose other than to promote SAExploration’s products and services.

 

SAE’s executives participate in its other benefit plans on the same terms as its other employees. These plans include medical, dental, life insurance, and a retirement registered savings plan for which SAE matches up to 10% of the employee’s base salary or until the Canada Revenue Agency annual limit is reached.

 

Outstanding Equity Awards at Fiscal Year-End

 

The following table provides information concerning restricted stock held by each named executive officer that had not vested as of December 31, 2012:

 

Outstanding Equity Awards at Fiscal Year-End  
  Stock Awards  
Name   Number of
Shares or Units of
Stock That Have
Not Vested
(#) 		    Market Value of
Shares or Units of
Stock That Have
Not Vested
($) 		    Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#) 		    Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or Other Rights That Have Not Vested
($) 		 
Jeff Hastings     —       —       —       —  
Brian Beatty     —       —       —       —  
Brent Whiteley     —       —       50,000     $ 509,000  
Mike Scott     —       —       7,800     $ 79,404  
Darin Silvernagle     —       —       5,700     $ 58,026  

 

 

SAE’s board of directors elected to accelerate the vesting of all shares of SAE’s restricted stock, including the shares listed above, effective immediately prior to the Merger.

 

On June 24, 2013, immediately after the Closing, the Registrant’s board of directors set the compensation for its non-employee directors. Each non-employee director will receive $25,000 in cash for each year of board service, payable quarterly in advance. In addition, each independent director serving on a committee will receive $50,000 in cash for each year of committee service, payable quarterly in advance, and an aggregate of $50,000 in shares of restricted stock annually, payable in 2013, upon the Registrant’s adoption of an equity compensation plan for its directors, and thereafter, on July 1 of each year.

 

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Compensation Committee Interlocks and Insider Participation

 

The Registrant did not have a compensation committee prior to the Merger. During 2012, the Registrant’s board of directors included Eric S. Rosenfeld, who served as chairman of the board and chief executive officer of the Registrant, and David D. Sgro, who served as the chief financial officer of the Registrant. Neither Mr. Rosenfeld nor Mr. Sgro are or were employees of the Registrant or any of its subsidiaries. Reference is made to the disclosure contained in the paragraph below entitled “ Certain Relationships and Related Transactions, and Director Independence, ” which is incorporated herein by reference. During 2012, none of the Registrant’s executive officers served as (i) a member of the compensation committee of another entity, one of whose executive officers served on the Registrant’s board of directors, or (ii) a director or member of the compensation committee of another entity, one of whose executive officers served on the Registrant’s board of directors.

 

Certain Relationships and Related Transactions, and Director Independence

 

Certain relationships and related party transactions of the Registrant are described in the Proxy Statement/Information Statement in the section entitled “ Certain Relationships and Related Person Transactions ” beginning on page 178, which is incorporated herein by reference. The independence of the Registrant’s directors is described in the Proxy Statement/Information Statement in the section entitled “ The Director Election Proposal – Independence of Directors ” beginning on page 113, and that information is incorporated herein by reference. The disclosure contained in Item 2.03 of this Report is also incorporated herein by reference.

 

Legal Proceedings

 

Reference is made to the disclosure regarding legal proceedings in the section of the Proxy Statement/Information Statement entitled “ Business of SAE – Legal Proceedings ” beginning on page 146, which is incorporated herein by reference.

 

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

 

The market price of and dividends on the Registrant’s common stock and related stockholder matters are described in the Proxy Statement/Information Statement in the section entitled “ Price Range of Trio Securities and Dividends ” on page 186, and such information is incorporated herein by reference.

 

Subsequent to the Closing, the Registrant’s common stock began trading on the Nasdaq Capital Market (“ Nasdaq ”) under the symbol “SAEX” and its warrants began quotation on the OTC Bulletin Board under the symbol “SAEXW.”

 

As of June 26, 2013, assuming the exchange of all of the outstanding shares of common stock of SAE in connection with the Closing, there were 40 holders of record of the Registrant’s common stock and 14 holders of record of the Registrant’s warrants. The Registrant believes that there are greater than 300 beneficial holders of its common stock.

 

Recent Sales of Unregistered Securities

 

Reference is made to the disclosure set forth under Item 3.02 of this Report concerning the issuance of shares of the Registrant’s common stock to the SAE stockholders upon the Merger and to the holders of the UPOs, which is incorporated herein by reference.

 

Description of Securities

 

The securities of the Registrant are described in the Proxy Statement/Information Statement in the section entitled “ Description of Trio Common Stock and Other Securities ” beginning on page 182, which is incorporated herein by reference.

 

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Indemnification of Directors and Officers

 

The Registrant’s amended and restated certificate of incorporation contains provisions eliminating the personal liability of directors to the Registrant and its stockholders for monetary damages for breaches of their fiduciary duties as directors to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware or any other applicable law as it exists on the date of the Registrant’s amended and restated certificate of incorporation or as it may be amended. The General Corporation Law of the State of Delaware prohibits such elimination of personal liability of a director for:

 

· any breach of the director’s duty of loyalty to the Registrant or its stockholders;

 

· acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law;

 

· the payment of dividends, stock repurchases or redemptions that are unlawful under Delaware law; and

 

· any transaction in which the director receives an improper personal benefit.

 

These provisions only apply to breaches of duty by directors as directors and not in any other corporate capacity, such as officers. In addition, these provisions limit liability only for breaches of fiduciary duties under the General Corporation Law of the State of Delaware and not for violations of other laws such as the U.S. federal securities laws and U.S. federal and state environmental laws. As a result of these provisions in the Registrant’s amended and restated certificate of incorporation, the Registrant’s stockholders may be unable to recover monetary damages against directors for actions taken by them that constitute negligence or gross negligence or that are in violation of their fiduciary duties. However, the Registrant’s stockholders may obtain injunctive or other equitable relief for these actions. These provisions also reduce the likelihood of derivative litigation against directors that might benefit the Registrant.

 

In addition, the Registrant’s amended and restated certificate of incorporation and bylaws provide that the Registrant will indemnify and advance expenses to, and hold harmless, each of the Registrant’s directors and officers (each, an “ indemnitee ”), to the fullest extent permitted by applicable law, who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he, or a person for whom he is the legal representative, is or was a director or officer of the Registrant or, while a director or officer of the Registrant, is or was serving at the Registrant’s request as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such indemnitee. Notwithstanding the preceding sentence, except as otherwise provided in the Registrant’s amended and restated certificate of incorporation and bylaws, the Registrant will be required under the Registrant’s amended and restated certificate of incorporation and bylaws to indemnify, or advance expenses to, an indemnitee in connection with a proceeding (or part thereof) commenced by such indemnitee only if the commencement of such proceeding (or part thereof) by the indemnitee was authorized by the Registrant’s board of directors.

 

16
 

 

At the Closing, the Registrant entered into indemnification agreements with each of its directors and certain of its officers (each, a “ Contractual Indemnitee ”). Pursuant to the indemnification agreements, the Registrant will be obligated to indemnify the applicable Contractual Indemnitee to the fullest extent permitted by applicable law in the event that such Contractual Indemnitee, by reason of such Contractual Indemnitee’s relationship with the Registrant, was, is or is threatened to be made a party to or participant in any threatened, pending or completed action or proceeding, other than an action or proceeding by or in the Registrant’s right against all expenses, judgments, penalties, fines (including any excise taxes assessed on the Contractual Indemnitee with respect to an employee benefit plan) and amounts paid in settlement actually and reasonably incurred by such Contractual Indemnitee in connection with such action or proceeding, provided that such Contractual Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the Registrant’s best interests, and, with respect to any criminal action or proceeding, provided that he or she also had no reasonable cause to believe his or her conduct was unlawful. The Registrant will also be obligated to indemnify such Contractual Indemnitee to the fullest extent permitted by applicable law in the event that such Contractual Indemnitee, by reason of such Contractual Indemnitee’s relationship with the Registrant, was, is or is threatened to be made a party to or participant in any threatened, pending or completed action or proceeding brought by or in the Registrant’s right to procure a judgment in the Registrant’s favor, against all expenses actually and reasonably incurred by such Contractual Indemnitee in connection with such action or proceeding, provided that such Contractual Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the Registrant’s best interests. Notwithstanding the foregoing sentence, no indemnification against expenses incurred by such Contractual Indemnitee in connection with such an action or proceeding brought by or in the Registrant’s right will be made in respect of any claim, issue or matter as to which such Contractual Indemnitee is adjudged to be liable to the Registrant or if applicable law prohibits such indemnification being made; provided, however, that, in such event, if applicable law so permits, indemnification against such expenses will nevertheless be made by the Registrant if and to the extent that the court in which such action or proceeding has been brought or is pending determines that, despite the adjudication of liability but in view of all the circumstances of the case, the Contractual Indemnitee is fairly and reasonably entitled to indemnity for such expenses.

 

The indemnification agreements also provide for the advancement of all reasonable expenses incurred by such Contractual Indemnitee in connection with any action or proceeding covered by the indemnification agreement. The Contractual Indemnitee will be required to repay any amounts so advanced if, and to the extent that, it is ultimately determined that he or she is not entitled to be indemnified by the Registrant against such expenses. The Contractual Indemnitee will further be required to return any such advance to the Registrant which remains unspent at the conclusion of the action or proceeding to which the advance related.

 

In addition, the indemnification agreements provide that the Registrant will use all commercially reasonable efforts to obtain and maintain in effect during the entire period for which the Registrant is obligated to indemnify a Contractual Indemnitee under his or her indemnification agreement, one or more insurance policies providing the Registrant’s directors and officers coverage for losses from wrongful acts and omissions and to ensure the Registrant’s performance of the Registrant’s indemnification obligations under each indemnification agreement. The form of the indemnification agreements is attached as Exhibit 10.8 to this Report.

 

Financial Statements and Supplementary Data

 

Reference is made to the disclosure set forth under Item 9.01 of this Report concerning the financial statements and supplementary data of the Registrant, which is incorporated herein by reference.

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

Reference is made to the disclosure contained in the Proxy Statement/Information Statement in the section entitled “ Business of SAE — Change in Auditor ” on page 147, which is incorporated herein by reference. The disclosure contained in Item 4.01 of this Report is also incorporated herein by reference.

 

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Financial Statements and Exhibits

 

Reference is made to the disclosure set forth under Item 9.01 of this Report concerning the financial information of the Registrant, which is incorporated herein by reference.

 

Item 2.02. Results of Operations and Financial Condition.

 

Certain annual and quarterly financial information regarding SAE was included in the Proxy Statement/Information Statement filed on May 31, 2013, in the section entitled “ SAE’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ” beginning on page 148, which is incorporated herein by reference. The disclosure contained in Item 2.01 of this Report is also 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.

 

Pursuant to the Merger Agreement, at the Closing, the Registrant issued to the SAE common stockholders, on a fully-diluted basis, a promissory note in the aggregate amount of $17,500,000. The promissory note will bear interest at a rate of 10% per annum and will mature on the tenth anniversary of the Closing. It may be prepaid in whole or in part at any time and is subject to certain customary events of default. The promissory note is unsecured and is subordinated to the credit facility provided pursuant to the Credit Agreement. The promissory note is attached as Exhibit 10.9 to this Report.

 

At the Closing, the Registrant joined the Credit Agreement, as amended by Amendment No. 2, which was executed immediately prior to the Closing. The disclosure regarding the Credit Agreement, the Joinder and Amendment No. 2 contained in Item 1.01 of this Report is incorporated herein by reference.

 

As previously reported, on each of April 25, 2012, September 26, 2012 and November 21, 2012, Eric S. Rosenfeld, a member of the Registrant’s board of directors and the Registrant’s former chairman and chief executive officer, loaned the Registrant $100,000, and on each of March 7, 2013 and June 4, 2013, Crescendo Advisors II, LLC, an affiliate of Mr. Rosenfeld, loaned the Registrant an additional $100,000, for an aggregate of $500,000 in loans. Each loan was evidenced by a convertible promissory note (each, a “ Note ,” and collectively, the “ Notes ”) that was payable upon consummation of the Merger. The principal balance of each Note could be converted, at the holder’s option, to warrants at a price of $0.50 per warrant. Notwithstanding the foregoing, the Notes could not be converted unless stockholder approval of the conversion had become effective, if required by the rules of Nasdaq. Immediately prior to the Closing, Crescendo Advisors II, LLC assigned both of its Notes to David Sgro, a member of the Registrant’s board of directors and the Registrant’s former chief financial officer and secretary, and the Notes were amended and restated solely to (i) extend the maturity date of the Notes to the 60 th day after the Closing, and (ii) allow the Notes to be converted at any time after the Closing until the repayment in full of the Notes. Conversion of the Notes remained subject to the effectiveness of stockholder approval. On June 24, 2013, the Registrant obtained written consent to the conversion from the holders of a majority of the Registrant’s outstanding shares of common stock, which consent will become effective 20 days after mailing an information statement on Schedule 14C to the Registrant’s stockholders.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

Pursuant to the Merger Agreement, the SAE common stockholders, on a fully-diluted basis, as consideration for all shares of SAE common stock they held or had the right to acquire, received an aggregate of 6,448,443 shares of the Registrant’s common stock at the Closing. The Registrant issued the shares of common stock pursuant to Regulation D and Regulation S promulgated under the Securities Act, as a transaction not requiring registration under Section 5 of the Securities Act.

 

18
 

 

The issuance of the Registrant’s common stock to SAE stockholders residing in the United States was made in reliance on Rule 506 of Regulation D, as fewer than 35 of such stockholders are non-accredited investors. The issuance of the Registrant’s common stock to SAE stockholders residing outside of the United States was made in reliance on Regulation S under the Securities Act, as an offshore transaction in which no directed selling efforts were made in the United States and appropriate offering restrictions were implemented. The SAE stockholders represented their intentions to acquire the shares for investment only and not with a view to or for sale in connection with any distribution, and appropriate restrictive legends were affixed to the certificates representing the shares. The SAE stockholders also had adequate access, through business or other relationships, to information about the Registrant.

 

Reference is made to the Proxy Statement/Information Statement in the section entitled “ The Warrant Amendments—Warrant Exchange ” on page 127, which is incorporated herein by reference, for information related to the exchange of the UPOs for 100,000 shares of the Registrant’s common stock. Further reference is made to the information contained in Item 2.01 to this Form 8-K.

 

The issuance of the Registrant’s common stock to the representative of the underwriters of the Registrant’s initial public offering and its designees was made in reliance on Section 3(a)(9) of the Securities Act, as the Registrant’s common stock was issued in exchange for the Registrant’s UPOs and no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange.

 

Item 3.03. Material Modification to Rights of Security Holders.

 

Reference is made to the Proxy Statement/Information Statement in the section entitled “ The Warrant Amendments ” on page 127, which is incorporated herein by reference, for information related to the Warrant Amendment. Further reference is made to the information contained in Item 2.01 to this Form 8-K.

 

Reference is also made to the disclosure in the Proxy Statement/Information Statement in the sections entitled “ The Name Change Proposal ” on page 100 and “ The Charter Amendments Proposal ” on page 101, which is incorporated herein by reference. Further reference is made to the information contained in Item 2.01 to this Form 8-K.

 

At the Closing, pursuant to the Joinder, the Registrant joined the Credit Agreement, as amended by Amendment No. 2, which was entered into immediately prior to the Closing. The disclosure regarding the Credit Agreement, the Joinder and Amendment No. 2 contained in Item 1.01 of this Report is incorporated herein by reference. Reference is made to the disclosure regarding the provisions of the Credit Agreement pertaining to the Registrant’s working capital and its ability to pay dividends to its stockholders in the Proxy Statement/Information Statement in the section entitled “ SAE’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources ” beginning on page 157, which is incorporated herein by reference.

 

Item 4.01. Changes in Registrant’s Certifying Accountant.

 

Marcum, LLP (“ Marcum ”) served as the Registrant’s independent registered public accounting firm from February 2, 2011 (inception) through the Closing. In connection with the Closing, Marcum was dismissed and Grant Thornton LLP (“ Grant Thornton ”), SAE’s independent registered public accounting firm, became the Registrant’s independent registered public accounting firm. The decision to change independent registered accounting firms was made by the audit committee of the Registrant’s board of directors effective as of June 24, 2013, because the historical financial statements of SAE became the historical financial statements of the Registrant after the Closing.

 

19
 

 

Marcum’s reports on the Registrant’s financial statements for the year ended December 31, 2012 and the period from February 2, 2011 (inception) through December 31, 2011, did contain an explanatory paragraph relating to substantial doubt about the ability of the Registrant and its subsidiary to continue as a going concern; as described in Note 1 to the Registrant’s consolidated financial statements included in its Annual Report on Form 10-K filed on March 4, 2013 and April 12, 2012. That disclosed, Marcum’s reports on the Registrant’s financial statements for the year ended December 31, 2012 and the period from February 2, 2011 (inception) through December 31, 2011 did not contain an adverse opinion or disclaimer of opinion, nor were such reports otherwise qualified or modified as to audit scope or accounting principles. During the period from February 2, 2011 (inception) through December 31, 2012 and the subsequent interim period preceding Marcum’s dismissal, there were no disagreements with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to the satisfaction of Marcum, would have caused it to make a reference to the subject matter of the disagreement(s) in connection with its reports covering such periods. In addition, no “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K, occurred within the period from February 2, 2011 (inception) through December 31, 2012 and the subsequent interim period preceding Marcum’s dismissal.

 

During the period from February 2, 2011 (the Registrant’s inception) through December 31, 2012 and the subsequent interim period preceding the engagement of Grant Thornton, the Registrant did not consult Grant Thornton regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Registrant’s financial statements, and either a written report was provided to the Registrant or oral advice was provided that Grant Thornton concluded was an important factor considered by the Registrant in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a disagreement or a “reportable event” (as described in paragraph 304(a)(1)(v) of Regulation S-K).

 

The Registrant provided Marcum with a copy of the disclosures made pursuant to this Item 4.01 prior to the filing of this Form 8-K. The Company requested that Marcum furnish a letter addressed to the Commission, which is attached hereto as Exhibit 16.1, stating whether it agrees with such disclosures, and, if not, stating the respects in which it does not agree.

 

Item 5.01. Changes in Control of Registrant.

 

A change of control of the Registrant occurred on June 24, 2013, as a result of the Merger. Jeff Hastings, Brian Beatty and Brent Whiteley the former controlling stockholders of SAE, together beneficially own approximately 38.4% of the outstanding shares of the Registrant’s common stock, and with the voting proxies granted to CLCH in connection with the Merger, Mr. Hastings and Mr. Beatty have the power to vote approximately 50.5% of the outstanding shares of the Registrant’s common stock. In addition, because Messrs. Hastings, Beatty and Whiteley control more than 50% of the voting power of the Registrant’s common stock, the Registrant will be considered a “controlled company” for purposes of the Nasdaq listing requirements.

 

Reference is made to the disclosure in the Proxy Statement/Information Statement in the section entitled “ The Merger Proposal ” beginning on page 60 and “ The Merger Agreement ” beginning on page 83, which is incorporated herein by reference. Further reference is made to the information contained in Item 2.01 to this Report, which is incorporated herein by reference.

 

20
 

 

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

 

Upon the Closing, Eric S. Rosenfeld and David D. Sgro resigned as officers of the Company. Jeff Hastings was appointed as the Registrant’s executive chairman, Brian Beatty was appointed as the Registrant’s chief executive officer and Brent Whiteley was appointed as the Registrant’s chief financial officer, general counsel and secretary. Biographical information regarding those individuals is included in the Proxy Statement/Information Statement in the section entitled “ The Director Election Proposal ” beginning on page 110 for further information, which is incorporated herein by reference.

 

At the Closing, the Registrant entered into employment agreements with each of Messrs. Hastings, Whiteley and Beatty. A description of the employment agreements is included in the Proxy Statement/Information Statement in the section entitled “ The Director Election Proposal — Trio Executive Officer and Director Compensation — New Employment Agreements ” beginning on page 120, which is incorporated herein by reference. The employment agreements are attached as Exhibits 10.10, 10.11 and 10.12 to this Report and are incorporated herein by reference.

 

In connection with the Closing, the SAE stockholders, including Messrs. Hastings, Beatty and Whiteley, entered into lock-up agreements with the Registrant, which restrict the stockholders from selling any of the shares of the Registrant’s common stock that they received as a result of the Merger during the twelve month period after the Closing, subject to certain exceptions. The form of the lock up agreement, the terms of which are identical for all of the former SAE stockholders, is attached as Exhibit 10.13 to this Report.

 

In addition, at the Special Meeting, the Registrant’s stockholders approved the Registrant’s 2013 Long-Term Incentive Plan. A description of the plan is included in the Proxy Statement/Information Statement in the section entitled “ The Incentive Compensation Plan Proposal ” beginning on page 103, which is incorporated herein by reference.

 

Immediately after the Closing, each of the Registrant’s directors, including its executive chairman, its president and chief executive officer and its chief financial officer, general counsel and secretary, entered into an indemnification agreements with the Registrant. Reference is made to the disclosure in Item 2.01 of this Report, which is incorporated herein by reference.

 

Reference is made to the Proxy Statement/Information Statement section entitled “ Certain Relationships and Related Person Transactions ” beginning on page 178 for a description of certain transactions between the Registrant and certain of its affiliates, which is incorporated herein by reference. The disclosure contained in Item 2.03 of this Report is also incorporated herein by reference.

 

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

In connection with the Merger, at the Closing, the Registrant filed an amended and restated certificate of incorporation to (a) change the name of the company from “Trio Merger Corp.” to “SAExploration Holdings, Inc.” and (b) remove various provisions that applied only prior to the consummation of the Merger and fix the classification of its board of directors. Reference is made to the disclosure in the Proxy Statement/Information Statement in the sections entitled “ The Name Change Proposal ” on page 100 and “ The Charter Amendments Proposals ” on page 101, which are incorporated herein by reference.

 

In addition, in connection with the Merger, at the Closing, the board of directors of the Registrant adopted amended and restated bylaws to reflect the change of the Registrant’s name, provide that indemnification of employees and agents of the Registrant is permissive, rather than mandatory, and clarify the provision regarding the ability of the board of directors to amend the bylaws.

 

Copies of the Registrant’s amended and restated certificate of incorporation and amended and restated bylaws are attached as Exhibits 3.1 and 3.2 to this Report.

 

21
 

 

Item 5.06. Change in Shell Company Status.

 

As a result of the Merger, the Registrant ceased being a shell company. Reference is made to the disclosure in the Proxy Statement/Information Statement in the sections entitled “ The Merger Proposal ” beginning on page 60 and “ The Merger Agreement ” beginning on page 83, which is incorporated herein by reference. Further reference is made to the information contained in Item 2.01 to this Form 8-K.

 

Item 7.01 Regulation FD Disclosure.

 

On June 24, 2013, the Registrant issued two press releases announcing the completion of the Merger and the change of the trading symbol for the Registrant’s common stock, as well as SAE’s entry into certain new contracts. The June 24, 2013 press releases are included as Exhibits 99.1 and 99.2 hereto.

 

On June 25, 2013, the Registrant issued two press releases announcing the change of the trading symbols for the Registrant’s common stock and warrants. The June 25, 2013 press releases are included as Exhibits 99.3 and 99.4 hereto.

 

The information in Item 7.01 of this Current Report, including the exhibits relating thereto, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in Item 7.01 of this Current Report, including the exhibit relating thereto, shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933.

 

Item 9.01. Financial Statement and Exhibits.

 

(a)-(b) Financial Statements.

 

The financial statements and selected financial information of SAE included in the Proxy Statement/Information Statement in the sections entitled “ Selected Historical Financial Statements ,” “ Selected Unaudited Pro Forma Condensed Financial Statements, ” “ Comparative Per Share Data ” and “ Unaudited Pro Forma Condensed Combined Financial Statements ” beginning on pages 30, 32, 34 and 92, respectively, are incorporated herein by reference.

 

The following financial statements of SAE and its subsidiaries are included or incorporated by reference in this report:

 

Quarterly and Annual Financial Statements
    HTTP:||WWW.SEC.GOV|ARCHIVES|EDGAR|DATA|1514732|000114420413032653|SPACER.GIF  
Consolidated Balance Sheets as of March 31, 2013 (Unaudited) and December 31, 2012     FS-34 (*)    
Unaudited Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2013 and 2012     FS-35 (*)    
Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2013 and 2012     FS-36 (*)    
Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012     FS-37 (*)    
Notes to Unaudited Consolidated Financial Statements     FS-38 – FS-44 (*)    
Report of Independent Registered Public Accounting Firm     FS-45 (*)    
Consolidated Balance Sheets as of December 31, 2012 and 2011     FS-46 (*)    
Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2012, 2011 and 2010     FS-47 (*)    
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2012, 2011 and 2010     FS-48 (*)    
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010     FS-49 (*)    
Notes to Consolidated Financial Statements     FS-50 – FS-74 (*)    

 

(*)

 

Incorporated by reference to the corresponding page of the Proxy Statement/Information Statement.

             

 

22
 

 

(d)           Exhibits

 

Exhibit No.   Description   Included   Form   Filing Date
                 
1.1   Form of Underwriting Agreement.   By Reference   S-1/A   April 28, 2011
                 
2.1   Agreement and Plan of Reorganization dated as of December 10, 2012, by and among the Registrant., Trio Merger Sub, Inc., SAExploration Holdings, Inc. and CLCH, LLC.   By Reference   8-K   December 11, 2012
                 
2.2   First Amendment to Agreement and Plan of Reorganization dated as of May 23, 2013, by and among the Registrant., Trio Merger Sub, Inc., SAExploration Holdings, Inc. and CLCH, LLC.   By Reference   8-K   May 28, 2013
                 
3.1   Amended and Restated Certificate of Incorporation.   Herewith        
                 
3.2   Amended and Restated Bylaws.   Herewith        
                 
4.1   Specimen Common Stock Certificate.   Herewith        
                 
4.2   Specimen Warrant Certificate.   Herewith        
                 
4.3   Form of Warrant Agreement by and between Continental Stock Transfer & Trust Company and the Registrant.   By Reference   S-1/A   April 28, 2011
                 
4.4   Amendment to Warrant Agreement dated June 24, 2013, by and between Continental Stock Transfer & Trust Company and the Registrant.   Herewith        

  

23
 

 

4.5   Form of Amended and Restated Convertible Promissory Notes issued to Eric S. Rosenfeld and David D. Sgro.   Herewith
         
10.1   Credit Agreement dated as of November 28, 2012, by and among SAExploration Holdings, Inc., as parent, SAExploration, Inc., SAExploration Seismic Services (US), LLC and NES, LLC, as borrowers, the lenders party thereto, and CP Admin Co LLC, as Administrative Agent.   Herewith(*)
         
10.2   Amendment No. 1 to Credit Agreement dated as of December 5, 2012, by and among SAExploration Holdings, Inc., SAExploration, Inc., SAExploration Seismic Services (US), LLC, NES, LLC, the lenders party thereto, and CP Admin Co LLC, as Administrative Agent.   Herewith(*)
         
10.3   Amendment No. 2 and Consent to Credit Agreement dated as of June 24, 2013, by and among SAExploration Holdings, Inc., SAExploration, Inc., SAExploration Seismic Services (US), LLC, NES, LLC, the lenders party thereto, and MC Admin Co LLC, as Administrative Agent.   Herewith(*)
         
10.4   Joinder to Credit Agreement dated as of June 24, 2013, between the Registrant and MC Admin Co LLC.   Herewith
         
10.5   Indemnity Escrow Agreement dated as of June 24, 2013, by and among SAExploration Holdings, Inc., CLCH, LLC, and Continental Stock Transfer & Trust Company.   Herewith
         
10.6   Merger Consideration Escrow Agreement dated as of June 24, 2013, by and among SAExploration Holdings, Inc., CLCH, LLC, and Continental Stock Transfer & Trust Company.   Herewith
         
10.7   Registration Rights Agreement dated June 24, 2013 by and between SAExploration Holdings, Inc. and CLCH, LLC.   Herewith
         
10.8   Form of Indemnification Agreement.   Herewith
         
10.9   Unsecured Promissory Note in the amount of $17,500,000 by SAExploration Holdings, Inc. for the benefit of CLCH, LLC, as representative.   Herewith

  

24
 

 

10.10   Employment Agreement dated June 24, 2013, by and between SAExploration Holdings, Inc. and Jeff Hastings.   Herewith (**)        
                 
10.11   Employment Agreement dated June 24, 2013, by and between SAExploration Holdings, Inc. and Brian Beatty.   Herewith(**)        
                 
10.12   Employment Agreement dated June 24, 2013, by and between SAExploration Holdings, Inc. and Brent Whiteley.   Herewith (**)        
                 
10.13   Form of Non-Disclosure Agreement between the Registrant and Jeff Hastings, Brian Beatty and Brent Whiteley.   Herewith        
                 
10.14   Form of Lock-Up Agreement between the Registrant and each of the former stockholders of SAExploration Holdings, Inc.   Herewith        
                 
10.15   Employment Agreement dated July 1, 2011, by and between SAExploration, Inc. (f/k/a South American Exploration LLC) and Mike Scott.   Herewith(**)        
                 
10.16   Employment Agreement dated July 15, 2011, by and between SAExploration, Inc. (f/k/a South American Exploration LLC) and Darin Silvernagle.   Herewith(**)        
                 
10.17  

SAExploration Holdings, Inc. 2013 Long-Term Incentive Plan.

  Herewith(**)        
                 
10.18   Form of Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and each of the Registrant’s Officers, Directors and Initial Stockholders.   By Reference   S-1/A   April 28, 2011
                 
10.19   Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant.   By Reference   S-1/A   May 23, 2011
                 
10.20   Form of Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Stockholders.   By Reference   S-1/A   April 28, 2011
                 
10.21   Form of Registration Rights Agreement among the Registrant and the Initial Stockholders and EarlyBirdCapital, Inc.   By Reference   S-1/A   April 28, 2011
                 
10.22   Form of Subscription Agreements among the Registrant, Graubard Miller and the Purchasers of Insider Warrants and EBC Warrants.   By Reference   S-1/A   April 28, 2011
                 
10.23   Form of Warrant Consent/Exchange Agreements.   By Reference   8-K   December 11, 2012

 

25
 

 

14.1   Code of Ethics.   By Reference   S-1/A   April 28, 2011
                 
16.1   Letter dated June 28, 2013, from Marcum, LLP to the Registrant.   Herewith        
                 
21.1   List of subsidiaries.   Herewith        
                 
99.1   Press release dated June 24, 2013.   Herewith        
                 
99.2   Press release dated June 24, 2013.   Herewith        
                 
99.3   Press release dated June 25, 2013.   Herewith        
                 
99.4   Press release dated June 25, 2013.   Herewith        
                 
99.5   Form of Audit Committee Charter.   By Reference   S-1/A   April 28, 2011
                 
99.6   Form of Compensation Committee Charter.   Herewith        

  ________________________
(*) Portions of this exhibit have been omitted and filed separately with the Commission as part of an application for confidential treatment pursuant to the Securities Exchange Act of 1934, as amended.

(**) Denotes compensation arrangements.


26
 


 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: June 28, 2013    
  SAEXPLORATION HOLDINGS, INC.
     
     
     
  By:  /s/ Brent Whiteley
    Brent Whiteley
    Chief Financial Officer, General Counsel and
Secretary

 

 
 


EXHIBIT INDEX

 

Exhibit No.   Description   Included   Form   Filing Date
                 
1.1   Form of Underwriting Agreement.   By Reference   S-1/A   April 28, 2011
                 
2.1   Agreement and Plan of Reorganization dated as of December 10, 2012, by and among the Registrant., Trio Merger Sub, Inc., SAExploration Holdings, Inc. and CLCH, LLC.   By Reference   8-K   December 11, 2012
                 
2.2   First Amendment to Agreement and Plan of Reorganization dated as of May 23, 2013, by and among the Registrant., Trio Merger Sub, Inc., SAExploration Holdings, Inc. and CLCH, LLC.   By Reference   8-K   May 28, 2013
                 
3.1   Amended and Restated Certificate of Incorporation.   Herewith        
                 
3.2   Amended and Restated Bylaws.   Herewith        
                 
4.1   Specimen Common Stock Certificate.   Herewith        
                 
4.2   Specimen Warrant Certificate.   Herewith        
                 
4.3   Form of Warrant Agreement by and between Continental Stock Transfer & Trust Company and the Registrant.   By Reference   S-1/A   April 28, 2011
                 
4.4   Amendment to Warrant Agreement dated June 24, 2013, by and between Continental Stock Transfer & Trust Company and the Registrant.   Herewith        
                 
4.5   Form of Amended and Restated Convertible Promissory Notes issued to Eric S. Rosenfeld and David D. Sgro.   Herewith        
                 
10.1   Credit Agreement dated as of November 28, 2012, by and among SAExploration Holdings, Inc., as parent, SAExploration, Inc., SAExploration Seismic Services (US), LLC and NES, LLC, as borrowers, the lenders party thereto, and CP Admin Co LLC, as Administrative Agent.   Herewith(*)        
                 
10.2   Amendment No. 1 to Credit Agreement dated as of December 5, 2012, by and among SAExploration Holdings, Inc., SAExploration, Inc., SAExploration Seismic Services (US), LLC, NES, LLC, the lenders party thereto, and CP Admin Co LLC, as Administrative Agent.   Herewith(*)        
                 
10.3   Amendment No. 2 and Consent to Credit Agreement dated as of June 24, 2013, by and among SAExploration Holdings, Inc., SAExploration, Inc., SAExploration Seismic Services (US), LLC, NES, LLC, the lenders party thereto, and MC Admin Co LLC, as Administrative Agent.   Herewith(*)        

 

 
 

 

10.4   Joinder to Credit Agreement dated as of June 24, 2013, between the Registrant and MC Admin Co LLC.   Herewith  
           
10.5   Indemnity Escrow Agreement dated as of June 24, 2013, by and among SAExploration Holdings, Inc., CLCH, LLC, and Continental Stock Transfer & Trust Company.   Herewith  
           
10.6   Merger Consideration Escrow Agreement dated as of June 24, 2013, by and among SAExploration Holdings, Inc., CLCH, LLC, and Continental Stock Transfer & Trust Company.   Herewith  
           
10.7   Registration Rights Agreement dated June 24, 2013 by and between SAExploration Holdings, Inc. and CLCH, LLC.   Herewith    
             
10.8   Form of Indemnification Agreement.   Herewith    
             
10.9   Unsecured Promissory Note in the amount of $17,500,000 by SAExploration Holdings, Inc. for the benefit of CLCH, LLC, as representative.   Herewith    
             
10.10   Employment Agreement dated June 24, 2013, by and between SAExploration Holdings, Inc. and Jeff Hastings.   Herewith(**)    
             
10.11   Employment Agreement dated June 24, 2013, by and between SAExploration Holdings, Inc. and Brian Beatty.   Herewith(**)    
             
10.12   Employment Agreement dated June 24, 2013, by and between SAExploration Holdings, Inc. and Brent Whiteley.   Herewith(**)    
             
10.13   Form of Non-Disclosure Agreement between the Registrant and Jeff Hastings, Brian Beatty and Brent Whiteley.   Herewith    
             
10.14   Form of Lock-Up Agreement between the Registrant and each of the former stockholders of SAExploration Holdings, Inc.   Herewith    
             
10.15   Employment Agreement dated July 1, 2011, by and between SAExploration, Inc. (f/k/a South American Exploration LLC) and Mike Scott.   Herewith(**)    

  

 
 

 

10.16   Employment Agreement dated July 15, 2011, by and between SAExploration, Inc. (f/k/a South American Exploration LLC) and Darin Silvernagle.   Herewith (**)        
                 
10.17  

SAExploration Holdings, Inc. 2013 Long-Term Incentive Plan. 

  Herewith (**)        
                 
10.18   Form of Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and each of the Registrant’s Officers, Directors and Initial Stockholders.   By Reference   S-1/A   April 28, 2011
                 
10.19   Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant.   By Reference   S-1/A   May 23, 2011
                 
10.20   Form of Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Stockholders.   By Reference   S-1/A   April 28, 2011
                 
10.21   Form of Registration Rights Agreement among the Registrant and the Initial Stockholders and EarlyBirdCapital, Inc.   By Reference   S-1/A   April 28, 2011
                 
10.22   Form of Subscription Agreements among the Registrant, Graubard Miller and the Purchasers of Insider Warrants and EBC Warrants.   By Reference   S-1/A   April 28, 2011
                 
10.23   Form of Warrant Consent/Exchange Agreements.   By Reference   8-K   December 11, 2012
                 
14.1   Code of Ethics.   By Reference   S-1/A   April 28, 2011
                 
16.1   Letter dated June 28, 2013, from Marcum, LLP to the Registrant.   Herewith        
                 
21.1   List of subsidiaries.   Herewith        
                 
99.1   Press release dated June 24, 2013.   Herewith        
                 
99.2   Press release dated June 24, 2013.   Herewith        
                 
99.3   Press release dated June 25, 2013.   Herewith        
                 
99.4   Press release dated June 25, 2013.   Herewith        
                 
99.5   Form of Audit Committee Charter.   By Reference   S-1/A   April 28, 2011
                 
99.6   Form of Compensation Committee Charter.   Herewith        
                   

  ________________________
(*) Portions of this exhibit have been omitted and filed separately with the Commission as part of an application for confidential treatment pursuant to the Securities Exchange Act of 1934, as amended. 

(**) Denotes compensation arrangements.

 

 

Exhibit 3.1

 

SECOND AMENDED AND RESTATED

 

CERTIFICATE OF INCORPORATION

 

OF

 

TRIO MERGER CORP.

 

 

 

Pursuant to Section 245 of the

Delaware General Corporation Law

 

 

 

TRIO MERGER CORP., a corporation existing under the laws of the State of Delaware (the “Corporation”), by its Chief Executive Officer, hereby certifies as follows:

 

1. The name of the Corporation is “Trio Merger Corp.”

 

2. The Corporation’s Certificate of Incorporation was filed in the office of the Secretary of State of the State of Delaware on February 2, 2011. The First Amended and Restated Certificate of Incorporation was filed in the office of the Secretary of State of the State of Delaware on June 20, 2011.

 

3. This Second Amended Restated Certificate of Incorporation restates, integrates and amends the Certificate of Incorporation of the Corporation.

 

4. This Second Amended and Restated Certificate of Incorporation was duly adopted by the board of directors of the Corporation and the vote of the holders of a majority of the outstanding shares of common stock of the Corporation in accordance with Section 242, Section 245 and other applicable provisions of the General Corporation Law of the State of Delaware (“GCL”).

 

5. The text of the Certificate of Incorporation of the Corporation is hereby amended and restated to read in full as follows:

FIRST: The name of the corporation is SAExploration Holdings, Inc. (hereinafter sometimes referred to as the “Corporation”).

 

SECOND: The registered office of the Corporation is to be located at 615 S. DuPont Hwy., Kent County, Dover, Delaware. The name of its registered agent at that address is National Corporate Research, Ltd.

 

 
 

 

THIRD: The purpose of the Corporation shall be to engage in any lawful act or activity for which corporations may be organized under the GCL.

 

FOURTH: The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 56,000,000 of which 55,000,000 shares shall be Common Stock of the par value of $.0001 per share and 1,000,000 shares shall be Preferred Stock of the par value of $.0001 per share.

 

A. Preferred Stock . The Board of Directors is expressly granted authority to issue shares of the Preferred Stock, in one or more series, and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series (a “Preferred Stock Designation”) and as may be permitted by the GCL. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to any Preferred Stock Designation.

 

B. Common Stock . Except as otherwise required by law or as otherwise provided in any Preferred Stock Designation, the holders of the Common Stock shall exclusively possess all voting power and each share of Common Stock shall have one vote.

 

FIFTH: The name and mailing address of the sole incorporator of the Corporation are as follows:

 

  Name     Address  
         
  Jeffrey M. Gallant   Graubard Miller  
      The Chrysler Building  
      405 Lexington Avenue  
      New York, New York 10174  

 

SIXTH: The Board of Directors shall be divided into three classes: Class A, Class B and Class C. The number of directors in each class shall be as nearly equal as possible. The directors in Class A shall be elected for a term expiring at the first Annual Meeting of Stockholders after the filing of this Second Amended and Restated Certificate of Incorporation, the directors in Class B shall be elected for a term expiring at the second Annual Meeting of Stockholders after such filing and the directors in Class C shall be elected for a term expiring at the third Annual Meeting of Stockholders after such filing. Commencing at the first Annual Meeting of Stockholders after such filing, and at each annual meeting thereafter, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election. Except as the GCL may otherwise require, in the interim between annual meetings of stockholders or special meetings of stockholders called for the election of directors and/or the removal of one or more directors and the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum (as defined in the Corporation’s Bylaws), or by the sole remaining director. All directors shall hold office until the expiration of their respective terms of office and until their successors shall have been elected and qualified. A director elected to fill a vacancy resulting from the death, resignation or removal of a director shall serve for the remainder of the full term of the director whose death, resignation or removal shall have created such vacancy and until his successor shall have been elected and qualified.

 

 
 

 

SEVENTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

 

A. Election of directors need not be by ballot unless the by-laws of the Corporation so provide.

 

B. The Board of Directors shall have the power, without the assent or vote of the stockholders, to make, alter, amend, change, add to or repeal the by-laws of the Corporation as provided in the by-laws of the Corporation.

 

C. The directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the stock of the Corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and binding upon the Corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the Corporation, whether or not the contract or act would otherwise be open to legal attack because of directors’ interests, or for any other reason.

 

D. In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this Second Amended and Restated Certificate of Incorporation, and to any by-laws from time to time made by the stockholders; provided, however, that no by-law so made shall invalidate any prior act of the directors which would have been valid if such by-law had not been made.

 

EIGHTH: A. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the GCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the GCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended. Any repeal or modification of this paragraph A by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation with respect to events occurring prior to the time of such repeal or modification.

 

 
 

 

B. The Corporation, to the full extent permitted by Section 145 of the GCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized hereby.

 

NINTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.

 

 
 

 

IN WITNESS WHEREOF, the Corporation has caused this Second Amended and Restated Certificate of Incorporation to be signed by Brian Beatty, its Chief Executive Officer, as of the 24 th day of June, 2013.

 

 

 

  /s/ Brian Beatty
  Name: Brian Beatty
  Title: Chief Executive Officer

 

 

 

Exhibit 3.2

 

Adopted as of June 24, 2013

 

AMENDED AND RESTATED BY LAWS

 

OF

 

SAEXPLORATION HOLDINGS, INC.

 

ARTICLE I
OFFICES

 

1.1            Registered Office . The registered office of SAExploration Holdings, Inc. (the “Corporation”) in the State of Delaware shall be established and maintained at 615 S. DuPont Highway, Kent County, Dover, Delaware and National Corporate Research, Ltd. shall be the registered agent of the corporation in charge thereof.

 

1.2            Other Offices . The Corporation may also have offices at such other places both within and without the State of Delaware as the board of directors of the Corporation (the “Board of Directors”) may from time to time determine or the business of the Corporation may require.

 

ARTICLE II
MEETINGS OF STOCKHOLDERS

 

2.1            Place of Meetings . All meetings of the stockholders shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof.

 

2.2            Annual Meetings . The annual meeting of stockholders shall be held on such date and at such time as may be fixed by the Board of Directors and stated in the notice of the meeting, for the purpose of electing directors and for the transaction of only such other business as is properly brought before the meeting in accordance with these Bylaws (the “Bylaws”).

 

Written notice of an annual meeting stating the place, date and hour of the meeting, shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the annual meeting.

 

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To be properly brought before the annual meeting, business must be either (i) specified in the notice of annual meeting (or any supplement or amendment thereto) given by or at the direction of the Board of Directors, (ii) otherwise brought before the annual meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the annual meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy (70) days notice or prior public disclosure of the date of the annual meeting is given or made to stockholders, notice by a stockholder, to be timely, must be received no later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made, whichever first occurs. A stockholder’s notice to the Secretary shall set forth (a) as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, and (ii) any material interest of the stockholder in such business, and (b) as to the stockholder giving the notice (i) the name and record address of the stockholder and (ii) the class, series and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Article II, Section 2. The officer of the Corporation presiding at an annual meeting shall, if the facts warrant, determine and declare to the annual meeting that business was not properly brought before the annual meeting in accordance with the provisions of this Article II, Section 2, and if such officer should so determine, such officer shall so declare to the annual meeting and any such business not properly brought before the meeting shall not be transacted.

 

2.3            Special Meetings . Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), may only be called by a majority of the entire Board of Directors, or the President or the Chairman, and shall be called by the Secretary at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.

 

Unless otherwise provided by law, written notice of a special meeting of stockholders, stating the time, place and purpose or purposes thereof, shall be given to each stockholder entitled to vote at such meeting, not less than ten (10) or more than sixty (60) days before the date fixed for the meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

 

2.4            Quorum . The holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the holders of a majority of the votes entitled to be cast by the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting.

 

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2.5            Organization . The Chairman of the Board of Directors shall act as chairman of meetings of the stockholders. The Board of Directors may designate any other officer or director of the Corporation to act as chairman of any meeting in the absence of the Chairman of the Board of Directors, and the Board of Directors may further provide for determining who shall act as chairman of any stockholders meeting in the absence of the Chairman of the Board of Directors and such designee.

 

The Secretary of the Corporation shall act as secretary of all meetings of the stockholders, but in the absence of the Secretary the presiding officer may appoint any other person to act as secretary of any meeting.

 

2.6            Voting . Unless otherwise required by law, the Certificate of Incorporation or these Bylaws, any question (other than the election of directors) brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. At all meetings of stockholders for the election of directors, a plurality of the votes cast shall be sufficient to elect. Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder, unless otherwise provided by the Certificate of Incorporation. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize any person or persons to act for him by proxy. All proxies shall be executed in writing and shall be filed with the Secretary of the Corporation not later than the day on which exercised. No proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot.

 

2.7            Action of Shareholders Without Meeting . Unless otherwise provided by the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

 

2.8            Voting List . The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the election, either at a place within the city, town or village where the election is to be held, which place shall be specified in the notice of the meeting, or, if not specified, at the place where said meeting is to be held. The list shall be produced and kept at the time and place of election during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present.

 

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2.9            Stock Ledger . The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 8 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

 

2.10          Adjournment . Any meeting of the stockholders, including one at which directors are to be elected, may be adjourned for such periods as the presiding officer of the meeting or the stockholders present in person or by proxy and entitled to vote shall direct.

 

2.11          Ratification . Any transaction questioned in any stockholders’ derivative suit, or any other suit to enforce alleged rights of the Corporation or any of its stockholders, on the ground of lack of authority, defective or irregular execution, adverse interest of any director, officer or stockholder, nondisclosure, miscomputation or the application of improper principles or practices of accounting may be approved, ratified and confirmed before or after judgment by the Board of Directors or by the holders of Common Stock and, if so approved, ratified or confirmed, shall have the same force and effect as if the questioned transaction had been originally duly authorized, and said approval, ratification or confirmation shall be binding upon the Corporation and all of its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction.

 

2.12          Inspectors . The election of directors and any other vote by ballot at any meeting of the stockholders shall be supervised by at least one inspector. Such inspectors shall be appointed by the Board of Directors in advance of the meeting. If the inspector so appointed shall refuse to serve or shall not be present, such appointment shall be made by the officer presiding at the meeting.

 

ARTICLE III
DIRECTORS

 

3.1            Powers; Number; Qualifications . The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by law or in the Certificate of Incorporation. The number of directors which shall constitute the Board of Directors shall be not less than one (1) nor more than nine (9). The exact number of directors shall be fixed from time to time, within the limits specified in this Article III Section 1 or in the Certificate of Incorporation, by the Board of Directors. Directors need not be stockholders of the Corporation. The Board may be divided into Classes as more fully described in the Certificate of Incorporation.

 

3.2            Election; Term of Office; Resignation; Removal; Vacancies . Each director shall hold office until the next annual meeting of stockholders at which his Class stands for election or until such director’s earlier resignation, removal from office, death or incapacity. Unless otherwise provided in the Certificate of Incorporation, vacancies and newly created directorships resulting from any increase in the authorized number of directors or from any other cause may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director and each director so chosen shall hold office until the next annual meeting and until such director’s successor shall be duly elected and shall qualify, or until such director’s earlier resignation, removal from office, death or incapacity.

 

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3.3            Nominations . Nominations of persons for election to the Board of Directors of the Corporation at a meeting of stockholders of the Corporation may be made at such meeting by or at the direction of the Board of Directors, by any committee or persons appointed by the Board of Directors or by any stockholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Article III, Section 3. Such nominations by any stockholder shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided however, that in the event that less than seventy (70) days notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder, to be timely, must be received no later than the close of business on the tenth (10th) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. Such stockholder’s notice to the Secretary shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director, (a) the name, age, business address and residence address of the person, (b) the principal occupation or employment of the person, (c) the class and number of shares of capital stock of the Corporation which are beneficially owned by the person, and (d) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to the Rules and Regulations of the Securities and Exchange Commission under Section 14 of the Securities Exchange Act of 1934, as amended, and (ii) as to the stockholder giving the notice (a) the name and record address of the stockholder and (b) the class and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth herein. The officer of the Corporation presiding at an annual meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.

 

3.4            Meetings . The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. The first meeting of each newly elected Board of Directors shall be held immediately after and at the same place as the meeting of the stockholders at which it is elected and no notice of such meeting shall be necessary to the newly elected directors in order to legally constitute the meeting, provided a quorum shall be present. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the President or a majority of the entire Board of Directors. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, facsimile, telegram or e-mail on twenty-four (24) hours notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.

 

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3.5            Quorum . Except as may be otherwise specifically provided by law, the Certificate of Incorporation or these Bylaws, at all meetings of the Board of Directors or any committee thereof, a majority of the entire Board of Directors or such committee, as the case may be, shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors or of any committee thereof, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

 

3.6            Organization of Meetings . The Board of Directors shall elect one of its members to be Chairman of the Board of Directors. The Chairman of the Board of Directors shall lead the Board of Directors in fulfilling its responsibilities as set forth in these By-Laws, including its responsibility to oversee the performance of the Corporation, and shall determine the agenda and perform all other duties and exercise all other powers which are or from time to time may be delegated to him or her by the Board of Directors.

 

Meetings of the Board of Directors shall be presided over by the Chairman of the Board of Directors, or in his or her absence, by the President, or in the absence of the Chairman of the Board of Directors and the President by such other person as the Board of Directors may designate or the members present may select.

 

3.7            Actions of Board of Directors Without Meeting . Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing, and the writing or writings are filled with the minutes of proceedings of the Board of Directors or committee.

 

3.8            Removal of Directors by Stockholders . The entire Board of Directors or any individual Director may be removed from office with or without cause by a majority vote of the holders of the outstanding shares then entitled to vote at an election of directors. In case the Board of Directors or any one or more Directors be so removed, new Directors may be elected at the same time for the unexpired portion of the full term of the Director or Directors so removed.

 

3.9            Resignations . Any Director may resign at any time by submitting his written resignation to the Board of Directors or Secretary of the Corporation. Such resignation shall take effect at the time of its receipt by the Corporation unless another time be fixed in the resignation, in which case it shall become effective at the time so fixed. The acceptance of a resignation shall not be required to make it effective.

 

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3.10          Committees . The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided by law and in the resolution of the Board of Directors establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution or amending the Bylaws of the Corporation; and, unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.

 

3.11          Compensation . The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed amount (in cash or other form of consideration) for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

 

3.12          Interested Directors . No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if (i) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

 

3.13          Meetings by Means of Conference Telephone . Members of the Board of Directors or any committee designed by the Board of Directors may participate in a meeting of the Board of Directors or of a committee of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this subsection shall constitute presence in person at such meeting.

 

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ARTICLE IV
OFFICERS

 

4.1            General . The officers of the Corporation shall be elected by the Board of Directors and may consist of: a Chairman of the Board, Vice Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, Secretary and Treasurer. The Board of Directors, in its discretion, may also elect one or more Vice Presidents (including Executive Vice Presidents and Senior Vice Presidents), Assistant Secretaries, Assistant Treasurers, a Controller and such other officers as in the judgment of the Board of Directors may be necessary or desirable. Any number of offices may be held by the same person and more than one person may hold the same office, unless otherwise prohibited by law, the Certificate of Incorporation or these Bylaws. The officers of the Corporation need not be stockholders of the Corporation, nor need such officers be directors of the Corporation.

 

4.2            Election . The Board of Directors at its first meeting held after each annual meeting of stockholders shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal. Except as otherwise provided in this Article IV, any officer elected by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. The salaries of all officers who are directors of the Corporation shall be fixed by the Board of Directors.

 

4.3            Voting Securities Owned by the Corporation . Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President or any Vice President, and any such officer may, in the name and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.

 

4.4            Chief Executive Officer . Subject to the provisions of these Bylaws and to the direction of the Board of Directors, the Chief Executive Officer shall have ultimate authority for decisions relating to the general management and control of the affairs and business of the Corporation and shall perform such other duties and exercise such other powers which are or from time to time may be delegated to him or her by the Board of Directors or these Bylaws, all in accordance with basic policies as established by and subject to the oversight of the Board of Directors.

 

4.5            President . At the request of the Chief Executive Officer, or in the absence of the Chief Executive Officer, or in the event of his or her inability or refusal to act, the President shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon such office. The President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe .

 

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4.6            Chief Financial Officer . The Chief Financial Officer shall have general supervision, direction and control of the financial affairs of the Corporation and shall perform such other duties and exercise such other powers which are or from time to time may be delegated to him or her by the Board of Directors or these Bylaws, all in accordance with basic policies as established by and subject to the oversight of the Board of Directors. In the absence of a named Treasurer, the Chief Financial Officer shall also have the powers and duties of the Treasurer as hereinafter set forth and shall be authorized and empowered to sign as Treasurer in any case where such officer’s signature is required.

 

4.7            Vice Presidents . At the request of the President or in the absence of the President, or in the event of his or her inability or refusal to act, the Vice President or the Vice Presidents if there is more than one (in the order designated by the Board of Directors) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon such office. Each Vice President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe. If there be no Vice President, the Board of Directors shall designate the officer of the Corporation who, in the absence of the President or in the event of the inability or refusal of such officer to act, shall perform the duties of such office, and when so acting, shall have all the powers of and be subject to all the restrictions upon such office.

 

4.8            Secretary . The Secretary shall attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the President, under whose supervision the Secretary shall be. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, then any Assistant Secretary shall perform such actions. If there be no Assistant Secretary, then the Board of Directors or the President may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

 

4.9            Treasurer . The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.

 

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4.10          Assistant Secretaries . Except as may be otherwise provided in these Bylaws, Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of his disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary.

 

4.11          Assistant Treasurers . Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Treasurer, and in the absence of the Treasurer or in the event of his disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.

 

4.12          Controller . The Controller shall establish and maintain the accounting records of the Corporation in accordance with generally accepted accounting principles applied on a consistent basis, maintain proper internal control of the assets of the Corporation and shall perform such other duties as the Board of Directors, the President or any Vice President of the Corporation may prescribe.

 

4.13          Other Officers . Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.

 

4.14          Vacancies . The Board of Directors shall have the power to fill any vacancies in any office occurring from whatever reason.

 

4.15          Resignations . Any officer may resign at any time by submitting his written resignation to the Corporation. Such resignation shall take effect at the time of its receipt by the Corporation, unless another time be fixed in the resignation, in which case it shall become effective at the time so fixed. The acceptance of a resignation shall not be required to make it effective.

 

4.16          Removal . Subject to the provisions of any employment agreement approved by the Board of Directors, any officer of the Corporation may be removed at any time, with or without cause, by the Board of Directors.

 

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ARTICLE V
CAPITAL STOCK

 

5.1            Form of Certificates . The shares of stock in the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the Corporation’s stock shall be in uncertificated form. Stock certificates shall be in such forms as the Board of Directors may prescribe and signed by the Chairman of the Board, President or a Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation.

 

5.2            Signatures . Any or all of the signatures on a stock certificate may be a facsimile, including, but not limited to, signatures of officers of the Corporation and countersignatures of a transfer agent or registrar. In case an officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

 

5.3            Lost Certificates . The Board of Directors may direct a new stock certificate or certificates to be issued in place of any stock certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new stock certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

 

5.4            Transfers . Stock of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws. Transfers of certificated stock shall be made on the books of the Corporation only by the person named in the certificate or by such person’s attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be canceled before a new certificate shall be issued. Transfers of uncertificated stock shall be made on the books of the Corporation only by the person then registered on the books of the Corporation as the owner of such shares or by such person's attorney lawfully constituted in writing and written instruction to the Corporation containing such information as the Corporation or its agents may prescribe. No transfer of uncertificated stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred. The Corporation shall have no duty to inquire into adverse claims with respect to any stock transfer unless (a) the Corporation has received a written notification of an adverse claim at a time and in a manner which affords the Corporation a reasonable opportunity to act on it prior to the issuance of a new, reissued or re-registered share certificate, in the case of certificated stock, or entry in the stock record books of the Corporation, in the case of uncertificated stock, and the notification identifies the claimant, the registered owner and the issue of which the share or shares is a part and provides an address for communications directed to the claimant; or (b) the Corporation has required and obtained, with respect to a fiduciary, a copy of a will, trust, indenture, articles of co-partnership, Bylaws or other controlling instruments, for a purpose other than to obtain appropriate evidence of the appointment or incumbency of the fiduciary, and such documents indicate, upon reasonable inspection, the existence of an adverse claim. The Corporation may discharge any duty of inquiry by any reasonable means, including notifying an adverse claimant by registered or certified mail at the address furnished by him or, if there be no such address, at his residence or regular place of business that the security has been presented for registration of transfer by a named person, and that the transfer will be registered unless within thirty days from the date of mailing the notification, either (a) an appropriate restraining order, injunction or other process issues from a court of competent jurisdiction; or (b) an indemnity bond, sufficient in the Corporation’s judgment to protect the Corporation and any transfer agent, registrar or other agent of the Corporation involved from any loss which it or they may suffer by complying with the adverse claim, is filed with the Corporation.

 

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5.5            Fixing Record Date . In order that the Corporation may determine the stockholders entitled to notice or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than ten (10) days after the date upon which the resolution fixing the record date of action with a meeting is adopted by the Board of Directors, nor more than sixty (60) days prior to any other action. If no record date is fixed:

 

(a)          The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

 

(b)          The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the first date on which a signed written consent is delivered to the Corporation.

 

(c)          The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

 

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

 

5.6            Registered Stockholders . Prior to due presentment for transfer of any share or shares, the Corporation shall treat the registered owner thereof as the person exclusively entitled to vote, to receive notifications and to all other benefits of ownership with respect to such share or shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State Delaware.

 

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ARTICLE VI
NOTICES

 

6.1            Form of Notice . Notices to directors and stockholders other than notices to directors of special meetings of the board of Directors which may be given by any means stated in Article III, Section 4, shall be in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given by telegram.

 

6.2            Waiver of Notice . Whenever any notice is required to be given under the provisions of law or the Certificate of Incorporation or by these Bylaws of the Corporation, a written waiver, signed by the person or persons entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular, or special meeting of the stockholders, Directors, or members of a committee of Directors need be specified in any written waiver of notice unless so required by the Certificate of Incorporation.

 

ARTICLE VII
INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

7.1           The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

 

7.2           The Corporation shall indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

 

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7.3           To the extent that a director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 or 2 of this Article, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

 

7.4           Any indemnification under sections 1 or 2 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because he has met the applicable standard of conduct set forth in such section. Such determination shall be made:

 

(a)          By the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or

 

(b)          If such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or

 

(c)          By the stockholders.

 

7.5           Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this Section. Such expenses (including attorneys’ fees) incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Board of Directors deems appropriate.         

 

7.6           The indemnification and advancement of expenses provided by, or granted pursuant to the other sections of this Article shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

 

7.7           The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article.

 

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7.8           For purposes of this Article, references to “the Corporation” shall include, in addition to the resulting Corporation, any constituent Corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer employee or agent of such constituent Corporation, or is or was serving at the request of such constituent Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article with respect to the resulting or surviving Corporation as he would have with respect to such constituent Corporation of its separate existence had continued.

 

7.9           For purposes of this Article, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article.

 

7.10         The indemnification and advancement of expenses provided by, or granted pursuant to, this Article shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer of the Corporation and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

7.11         No director or officer of the Corporation shall be personally liable to the Corporation or to any stockholder of the Corporation for monetary damages for breach of fiduciary duty as a director or officer, provided that this provision shall not limit the liability of a director or officer (i) for any breach of the director’s or the officer’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of Delaware, or (iv) for any transaction from which the director or officer derived an improper personal benefit.

 

7.12         This Article VII shall not limit the right of the Corporation, to the extent and in the manner permitted by applicable law, to indemnify and to advance expenses to persons other than directors and officers of the Corporation when and as authorized by appropriate corporate action.

 

ARTICLE VIII
GENERAL PROVISIONS

 

8.1            Reliance on Books and Records . Each Director, each member of any committee designated by the Board of Directors, and each officer of the Corporation, shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation, including reports made to the Corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable care.

 

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8.2            Maintenance and Inspection of Records . The Corporation shall, either at its principal executive office or at such place or places as designated by the Board of Directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these by-laws, as may be amended to date, minute books, accounting books and other records.

 

Any such records maintained by the Corporation may be kept on, or by means of, or be in the form of, any information storage device or method, provided that the records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records pursuant to the provisions of the Delaware General Corporation Law. When records are kept in such manner, a clearly legible paper form produced from or by means of the information storage device or method shall be admissible in evidence, and accepted for all other purposes, to the same extent as an original paper form accurately portrays the record.

 

Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal executive office.

 

8.3            Inspection by Directors . Any director shall have the right to examine the Corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director.

 

8.4            Dividends . Subject to the provisions of the Certificate of Incorporation, if any, dividends upon the capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Directors shall think conducive to the interest of the Corporation, and the Directors may modify or abolish any such reserve in the manner in which it was created.

 

8.5            Annual Statement . The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the Corporation.

 

8.6            Checks . All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other persons as the Board of Directors may from time to time designate.

 

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8.7            Fiscal Year . The fiscal year of the Corporation shall be as determined by the Board of Directors. If the Board of Directors shall fail to do so, the President shall fix the fiscal year.

 

8.8            Seal . The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

 

8.9            Amendments . The original or other Bylaws may be adopted, amended or repealed by the stockholders entitled to vote thereon at any regular or special meeting or by the Board of Directors. The fact that such power has been so conferred upon the Board of Directors shall not divest the stockholders of the power nor limit their power to adopt, amend or repeal Bylaws.

 

8.10          Interpretation of Bylaws . All words, terms and provisions of these Bylaws shall be interpreted and defined by and in accordance with the General Corporation Law of the State of Delaware, as amended, and as amended from time to time hereafter.

 

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Exhibit 4.4

 

AMENDMENT NO. 1 TO WARRANT AGREEMENT

 

AMENDMENT NO. 1 (“Amendment”), dated as of June 24, 2012, to Warrant Agreement (“Warrant Agreement”) made as of June 21, 2011 between SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.), a Delaware corporation, with offices at 3333 8th St. SE, 3rd Fl., Calgary, Alberta T2G 3A4 (“Company”), and Continental Stock Transfer & Trust Company, a New York corporation, with offices at 17 Battery Place, New York, New York 10004 (“Warrant Agent”). Capitalized terms used herein and not otherwise defined have the meanings assigned to them in the Warrant Agreement.

 

WHEREAS, the Company has entered into an Agreement and Plan of Reorganization, dated as of December 10, 2012, as amended (“Merger Agreement”), with Trio Merger Sub, Inc. (“Merger Sub”), SAExploration Holdings, Inc. (“SAE”) and CLCH, LLC, pursuant to which SAE will merge with and into Merger Sub, with SAE surviving as a wholly owned subsidiary of the Company; and

 

WHEREAS, pursuant to the Merger Agreement, the Company agreed to amend the Warrant Agreement to (a) increase the exercise price of the Warrants from $7.50 to $12.00 per share of Common Stock and (b) increase the redemption price of the Warrants from $12.50 to $15.00 per share of Common Stock; and

 

WHEREAS, the Company desires that the Warrant Agreement be so amended and, on December 10, 2012, a majority of the then outstanding warrants consented to the amendments;

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

 

1. Amendment to Warrant Agreement . The parties agree that the Warrant Agreement is hereby immediately amended as follows:

 

(a) The reference to “$7.50” in Section 3.1 of the Warrant Agreement is replaced with “$12.00”.

 

(b) The reference to “$12.50” in Section 6.1 of the Warrant Agreement is replaced with “$15.00”.

 

2. Miscellaneous .

 

2.1 Governing Law . The validity, interpretation, and performance of this Amendment shall be governed in all respects by the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Amendment shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenience forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 9.2 of the Warrant Agreement. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim.

 

 
 

 

 

2.2 Binding Effect . This Amendment shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and assigns.

 

2.4 Severability . This Amendment shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

2.3 Entire Agreement . This Amendment and the Warrant Agreement set forth the entire agreement and understanding between the parties as to the subject matter thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. Except as set forth in this Amendment, the provisions of the Warrant Agreement which are not inconsistent with this Amendment shall remain in full force and effect. This Amendment may be executed in counterparts.

 

[signature page follows]

 

 

 
 

 

 

IN WITNESS WHEREOF, this Amendment has been duly executed by the parties hereto as of the day and year first above written.

 

 

  SAEXPLORATION HOLDINGS, INC.  
       
       
       
  By: /s/ Brian Beatty  
  Name:   Brian Beatty  
  Title:     President and Chief Executive Officer  
       
       
  CONTINENTAL STOCK TRANSFER  & TRUST COMPANY  
       
       
       
  By: /s/ Margaret Villani  
  Name:   Margaret Villani  
  Title:     Vice President  

 

 

 

 

 

 

Exhibit 4.5

 

AMENDED AND RESTATED PROMISSORY NOTE

 

$100,000.00 As of April 25, 2012

 

Trio Merger Corp. (“Maker”) promises to pay to the order of (“Payee”) the principal sum of One Hundred Thousand Dollars and No Cents ($100,000.00) in lawful money of the United States of America, on the terms and conditions described below. This Note supersedes and replaces the promissory note in the same principal amount made by Maker to Payee on April 25, 2012.

 

1.                   Principal . The principal balance of this Note shall be repayable on the 60 th calendar day following the date of consummation of the Maker’s initial merger, capital stock exchange, asset acquisition or other similar business combination with one or more businesses or entities (a “Business Combination”).

 

2.                   Interest . No interest shall accrue on the unpaid principal balance of this Note.

 

3.                   Application of Payments . All payments shall be applied first to payment in full of any costs incurred in the collection of any sum due under this Note, including (without limitation) reasonable attorneys’ fees, then to the payment in full of any late charges and finally to the reduction of the unpaid principal balance of this Note.

 

4.                   Events of Default . The following shall constitute Events of Default:

 

(a)                Failure to Make Required Payments . Failure by Maker to pay the principal of this Note within five (5) business days following the date when due.

 

(b)               Voluntary Bankruptcy, Etc. The commencement by Maker of a voluntary case under the Federal Bankruptcy Code, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy, insolvency, reorganization, rehabilitation or other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Maker or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the failure of Maker generally to pay its debts as such debts become due, or the taking of corporate action by Maker in furtherance of any of the foregoing.

 

(c)                Involuntary Bankruptcy, Etc. The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of maker in an involuntary case under the Federal Bankruptcy Code, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Maker or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days.

 

 
 

 

5.                   Remedies .

 

(a)                Upon the occurrence of an Event of Default specified in Section 4(a), Payee may, by written notice to Maker, declare this Note to be due and payable, whereupon the principal amount of this Note, and all other amounts payable thereunder, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding.

 

(b)               Upon the occurrence of an Event of Default specified in Sections 4(b) and 4(c), the unpaid principal balance of, and all other sums payable with regard to, this Note shall automatically and immediately become due and payable, in all cases without any action on the part of Payee.

 

6.                   Conversion . After consummation of a Business Combination and prior to payment in full of the principal balance of, and all other sums payable with regard to, this Note, the Holder shall have the option, but not the obligation, to convert the principal balance of this Note, in whole or in part at the option of the Holder, into warrants (“Warrants”) of the Maker at a price of $0.50 per Warrant; provided, however, that the Holder shall be permitted to convert this Note only if the stockholders of the Company have approved the issuance of the Warrants to the Holder if such approval is necessary under applicable rules. The Warrants will be identical to the “insider warrants” (as such term is defined in the Maker’s final prospectus for its initial public offering, dated June 21, 2011). As promptly after notice by Holder to Maker to convert the principal balance of this Note as is reasonably practicable and after Holder’s surrender of this Note, but in no event less than three (3) business days after the later of such notice and surrender of this Note, Maker shall have issued and delivered to Holder, without any charge to Holder, a certificate or certificates (issued in the name(s) requested by Holder) for the number of Warrants of Maker issuable upon the conversion of this Note.

 

7.                   Waivers . Maker and all endorsers and guarantors of, and sureties for, this Note waive presentment for payment, demand, notice of dishonor, protest, and notice of protest with regard to the Note, all errors, defects and imperfections in any proceedings instituted by Payee under the terms of this Note, and all benefits that might accrue to Maker by virtue of any present or future laws exempting any property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy or sale under execution, or providing for any stay of execution, exemption from civil process, or extension of time for payment; and Maker agrees that any real estate that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued hereon, may be sold upon any such writ in whole or in part in any order desired by Payee.

 

8.                   Unconditional Liability . Maker hereby waives all notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note, and agrees that its liability shall be unconditional, without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee, and consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by Payee with respect to the payment or other provisions of this Note, and agree that additional makers, endorsers, guarantors, or sureties may become parties hereto without notice to them or affecting their liability hereunder.

 

 
 

 

9.                   Notices . Any notice called for hereunder shall be deemed properly given if (i) sent by certified mail, return receipt requested, (ii) personally delivered, (iii) dispatched by any form of private or governmental express mail or delivery service providing receipted delivery, (iv) sent by telefacsimile or (v) sent by e-mail, to the following addresses or to such other address as either party may designate by notice in accordance with this Section:

 

 

If to Maker:

 

Trio Merger Corp.

777 Third Avenue, 37th Floor

New York, New York 10017

 

If to Payee:

 

c/o Trio Merger Corp.

777 Third Avenue, 37 th Floor

New York, New York 10017

 

Notice shall be deemed given on the earlier of (i) actual receipt by the receiving party, (ii) the date shown on a telefacsimile transmission confirmation, (iii) the date on which an e-mail transmission was received by the receiving party’s on-line access provider (iv) the date reflected on a signed delivery receipt, or (vi) two (2) Business Days following tender of delivery or dispatch by express mail or delivery service.

 

10.               Construction . This Note shall be construed and enforced in accordance with the domestic, internal law, but not the law of conflict of laws, of the State of New York.

 

11.               Severability . Any provision contained in this Note which 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 provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

 
 

 

IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Amended and Restated Promissory Note to be duly executed by its Chief Financial Officer as of the 24 th day of June, 2013.

 

 

  TRIO MERGER CORP.
     
     
     
  By:   /s/ David D. Sgro
    Name:  David D. Sgro
    Title: Chief Financial Officer

 

 
 

 

Schedule to Exhibit 4.5

 

Form of Amended and Restated Convertible Promissory Notes dated as of April 25, 2012

Issued to Eric S. Rosenfeld and David D. Sgro

 

Pursuant to Instruction 2 to Item 601 of Regulation S-K, this schedule identifies material details in which the five executed Amended and Restated Convertible Promissory Notes differed from the form of such document filed as Exhibit 4.5.

 

Name of Payee Number of Notes Issued
Eric S. Rosenfeld Three
David D. Sgro Two

  

 

 

Exhibit 10.1

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE BEING FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN A CONFIDENTIAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL “[***]” IN THIS EXHIBIT INDICATES THAT INFORMATION HAS BEEN OMITTED.

 

 

 

 

 

CREDIT AGREEMENT

 

among

 

SAExploration HOLDINGS, INC.,

 

as Parent,

 

SAExploration, Inc.,

 

SAExploration Seismic Services (US), LLC , and

 

NES, LLC,

 

as the Borrowers,

 

VARIOUS LENDERS,

 

and

 

CP ADMIN CO LLC,

as ADMINISTRATIVE AGENT

 

 

 

Dated as of November 28, 2012

 

 

 

CP ADMIN CO LLC,

as LEAD ARRANGER and BOOK RUNNER

 

 

 

 

 

i
 

 

CREDIT AGREEMENT, dated as of November 28, 2012 among SAExploration Holdings, Inc., a Delaware corporation (“ Parent ”), SAExploration, Inc., a Delaware corporation (“ SAE ”), SAExploration Seismic Services (US), LLC, a Delaware limited liability company (the “ Delaware Subsidiary Borrower ”) and NES, LLC, an Alaskan limited liability company (the “ Alaskan Subsidiary Borrower ” and, together with SAE and the Delaware Subsidiary Borrower, the “ Co-Borrowers ” or the “ Borrowers ”) the Lenders party hereto from time to time, CP Admin Co LLC, as Administrative Agent, and CP Admin Co LLC, as Lead Arranger. All capitalized terms used herein and defined in Section 1.01 are used herein as therein defined.

 

WITNESSETH :

 

WHEREAS, subject to and upon the terms and conditions set forth herein, the Lenders are willing to make available to the Borrowers the respective credit facilities provided for herein;

 

NOW, THEREFORE, IT IS AGREED:

 

SECTION 1.      Definitions and Accounting Terms .

 

1.01.      Defined Terms . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):  

 

“ Acquired Entity or Business ” shall mean either (x) the assets constituting a business, division or product line of any Person not already a Subsidiary of any of the Borrowers or (y) 100% of the Equity Interests of any such Person, which Person shall, as a result of the acquisition of such Equity Interests, become a Wholly-Owned Domestic Subsidiary of any of the Borrowers (or shall be merged with and into any of the Borrowers or another Wholly-Owned Domestic Subsidiary of such Borrower that is a Subsidiary Guarantor, with such Borrower or such Subsidiary Guarantor being the surviving or continuing Person).

 

“ Additional Lender ” shall have the meaning provided in Section 2.09.

 

“ Additional Loans ” shall have the meaning provided in Section 2.09.

 

“ Additional Security Documents ” shall have the meaning provided in Section 7.12.

 

“ Adjusted Consolidated Net Income ” shall mean, for any period, Consolidated Net Income for such period plus the sum of the amount of all net non-cash charges (including, without limitation, depreciation, amortization, deferred tax expense and non-cash interest expense) and net non-cash losses which were included in arriving at Consolidated Net Income for such period, less the amount of all net non-cash gains and non-cash credits which were included in arriving at Consolidated Net Income for such period.

 

 
 

 

“ Adjusted Consolidated Working Capital ” shall mean, at any time, Consolidated Current Assets (but excluding therefrom all cash and Cash Equivalents) less Consolidated Current Liabilities at such time.

 

“ Administrative Agent ” shall mean CP Admin Co LLC, in its capacity as Administrative Agent for the Lenders hereunder and under the other Credit Documents, and shall include any successor to the Administrative Agent appointed pursuant to Section 10.09.

 

“ Administrative Borrower ” shall mean SAE.

 

“ Affiliate ” shall mean, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power (i) to vote 5% or more of the securities having ordinary voting power for the election of directors (or equivalent governing body) of such Person or (ii) to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise; provided , however , that none of the Administrative Agent, any Lender or any of their respective Affiliates shall be considered an Affiliate of Parent or any Subsidiary thereof.

 

“ Aggregate Consideration ” shall mean, with respect to any Permitted Acquisition, the sum (without duplication) of (i) the fair market value of the Parent Common Stock (based on the good faith determination of the senior management of Parent, which determination shall be reasonably acceptable to the Administrative Agent, or, if the Parent Common Stock is listed on a stock exchange, the average closing trading price of the Parent Common Stock for the 20 trading days immediately prior to the date of such Permitted Acquisition on such stock exchange) issued (or to be issued) as consideration in connection with such Permitted Acquisition (including, without limitation, Parent Common Stock which may be required to be issued as earn-out consideration upon the achievement of certain future performance goals of the respective Acquired Entity or Business), (ii) the aggregate amount of all cash paid (or to be paid) by Parent or any of its Subsidiaries in connection with such Permitted Acquisition (including, without limitation, payments of fees and costs and expenses in connection therewith) and all contingent cash purchase price, earn-out, non-compete and other similar obligations of Parent and its Subsidiaries incurred and reasonably expected to be incurred in connection therewith (as determined in good faith by Parent), (iii) the aggregate principal amount of all Indebtedness assumed, incurred, refinanced and/or issued in connection with such Permitted Acquisition to the extent permitted by Section 8.04, (iv) the aggregate liquidation preference of all Qualified Preferred Stock issued as consideration in connection with the proposed Permitted Acquisition and (v) the Fair Market Value of all other consideration payable in connection with such Permitted Acquisition.

 

“ Agreement ” shall mean this Credit Agreement, as modified, supplemented, amended, restated (including any amendment and restatement hereof), extended or renewed from time to time.

 

“ Apache ” shall mean Apache Alaska Corporation, a Delaware corporation.

 

2
 

 

“ Applicable ECF Prepayment Percentage ” shall mean, at any time, 50%; provided that, so long as no Default or Event of Default is then in existence, if the Total Leverage Ratio is less than 1.50:1.00 (as set forth in the officer’s certificate delivered pursuant to Section 7.01(f) for the fiscal quarter or fiscal year, as the case may be, of Parent then last ended for which financial statements are available), the Applicable ECF Prepayment Percentage shall instead be 25%; provided further that, so long as no Default or Event of Default is then in existence, if the Total Leverage Ratio is less than 1.25:1.00 (as set forth in the officer’s certificate delivered pursuant to Section 7.01(f) for the fiscal quarter or fiscal year, as the case may be, of Parent then last ended for which financial statements are available), the Applicable ECF Prepayment Percentage shall instead be 0%.

 

“ Asset Sale ” shall mean any sale, transfer or other disposition by Parent or any of its Subsidiaries to any Person (including by way of redemption by such Person) other than to Parent or a Wholly-Owned Subsidiary of Parent of any asset (including, without limitation, any capital stock or other securities of, or Equity Interests in, another Person), but (x) excluding sales of assets pursuant to Sections 8.02(ii), (vi), (vii) (viii), (ix), (x) and (xii) and (y) any other sale, transfer or disposition (for such purpose, treating any series of related sales, transfers or dispositions as a single such transaction) that generates Net Sale Proceeds of less than $1,000,000.

 

“ Assignment and Assumption Agreement ” shall mean an Assignment and Assumption Agreement substantially in the form of Exhibit L (appropriately completed).

 

“ Authorized Officer ” shall mean, with respect to (i) delivering Notices of Borrowing and similar notices, any person or persons that has or have been authorized by the board of directors of any of the Borrowers to deliver such notices pursuant to this Agreement and that has or have appropriate signature cards on file with the Administrative Agent, (ii) delivering financial information and officer’s certificates pursuant to this Agreement, the chief financial officer, the treasurer or the principal accounting officer of any of the Borrowers, and (iii) any other matter in connection with this Agreement or any other Credit Document, any officer (or a person or persons so designated by any two officers) of any of the Borrowers.

 

“ Bankruptcy Code ” shall have the meaning provided in Section 9.05.

 

“ Borrowers ” shall have the meaning provided in the first paragraph of this Agreement.

 

“ Business Day ” shall mean for all purposes other than as covered by clause (ii) below, any day except Saturday, Sunday and any day which shall be in New York, New York, a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close.

 

“ Calculation Period ” shall mean, with respect to any Permitted Acquisition or any other event expressly required to be calculated on a Pro Forma Basis pursuant to the terms of this Agreement, the Test Period most recently ended prior to the date of such Permitted Acquisition or other event for which financial statements have been delivered to the Lenders pursuant to Section 7.01(b) or (c), as applicable.

 

3
 

 

“ Capital Expenditures ” shall mean, with respect to any Person, all expenditures by such Person which should be capitalized in accordance with GAAP and, without duplication, the amount of Capitalized Lease Obligations incurred by such Person.

 

“ Cap Table ” shall have the meaning provided in Section 5.14.

 

“ Capitalized Lease Obligations ” shall mean, with respect to any Person, all rental obligations of such Person which, under GAAP, are or will be required to be capitalized on the books of such Person, in each case taken at the amount thereof accounted for as indebtedness in accordance with such principles.

 

“ Cash Equivalents ” shall mean, as to any Person, (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof ( provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than six months from the date of acquisition, (ii) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within six months from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s, (iii) Dollar denominated time deposits, certificates of deposit and bankers acceptances of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company having, a long-term unsecured debt rating of at least “A” or the equivalent thereof from S&P or “A2” or the equivalent thereof from Moody’s with maturities of not more than six months from the date of acquisition by such Person, (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (iii) above, (v) commercial paper issued by any Person incorporated in the United States rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s and in each case maturing not more than six months after the date of acquisition by such Person, (vi) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (i) through (v) above, and (vii) in the case of any Foreign Subsidiary only, direct obligations of the sovereign nation (or any agency thereof) in which such Foreign Subsidiary is organized and is conducting business or in obligations fully and unconditionally guaranteed by such sovereign nation (or any agency thereof).

 

“ Cash Interest ” shall have the meaning provided in Section 2.03(c).

 

“ CERCLA ” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same has been amended and may hereafter be amended from time to time, 42 U.S.C. § 9601 et seq.

 

“ Change in Law ” shall have the meaning provided in Section 9.06.

 

4
 

 

“ Change of Control ” shall mean (i) Parent shall at any time cease to own directly 100% of the Equity Interests of SAE, (ii) SAE shall at any time cease to own directly 100% of the Equity Interests of the Delaware Subsidiary Borrower or the Alaskan Subsidiary Borrower, (iii) prior to the occurrence of a Qualified IPO, the Permitted Holders shall at any time and for any reason fail to own at least 51% of the economic interests and at least 66% of the voting interests in Parent’s capital stock (determined on a fully diluted basis), (iv) prior to the occurrence of a Qualified IPO, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than the Permitted Holders shall have obtained the power (whether or not exercised) to elect a majority of the Board of Directors of Parent, (v) after the occurrence of a Qualified IPO, the Permitted Holders shall at any time and for any reason fail to own at least 40% of the economic interests and at least 51% of the voting interests in Parent’s capital stock, (vi) after the occurrence of a Qualified IPO, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than the Permitted Holders is or shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 25% or more on a fully diluted basis of the economic or voting interests in Parent’s capital stock, (vii) the Board of Directors of Parent shall cease to consist of a majority of Continuing Directors, (viii) Jeff Hastings shall cease to be a Senior Executive Officer of Parent and SAE or Brian Beatty shall cease to be a Senior Executive Officer of Parent and SAE (in each case (a) for any reason other than his death or disability, or (b) due to his death or disability, and a successor satisfactory to the Required Lenders does not assume his responsibilities and position within 30 days of such cessation) or (ix) a “change of control” or similar event shall occur as provided in any Qualified Preferred Stock (or the documentation governing the same).

 

“ Claims ” shall have the meaning provided in the definition of “Environmental Claims”.

 

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to the Code are to the Code, as in effect at the date of this Agreement and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor.

 

“ Collateral ” shall mean all property (whether real or personal) with respect to which any security interests have been granted (or purported to be granted) pursuant to any Security Document, including, without limitation, all Pledge Agreement Collateral, all Security Agreement Collateral and all cash and Cash Equivalents delivered as collateral pursuant to Section 4.02 or Section 9.

 

“ Collateral Agent ” shall mean the Administrative Agent acting as collateral agent for the Secured Creditors pursuant to the Security Documents.

 

“ Commitment ” with respect to any Lender shall mean (i) such Lender’s Initial Commitment and (ii) such Lender’s portion of each Commitment Increase, if any, pursuant to Section 2.09.

 

“ Commitment Increase ” shall have the meaning provided in Section 2.09.

 

“ Company ” shall mean any corporation, limited liability company, partnership or other business entity (or the adjectival form thereof, where appropriate).

 

5
 

 

“ Consolidated Cash Interest Expense ” shall mean, with reference to any period, to the extent paid in cash during such period , (i) the total consolidated interest expense of Parent and its Subsidiaries (including, without limitation, all commissions, discounts and other commitment and banking fees and charges ( e.g. , fees with respect to letters of credit and Other Hedging Agreements) for such period, adjusted to exclude (to the extent same would otherwise be included in the calculation above in this clause (i)) the amortization of any deferred financing costs for such period, plus (ii) without duplication, (x) that portion of Capitalized Lease Obligations of Parent and its Subsidiaries on a consolidated basis representing the interest factor for such period and (y) the “deemed interest expense” ( i.e. , the interest expense which would have been applicable if the respective obligations were structured as on-balance sheet financing arrangements) with respect to all Indebtedness of Parent and its Subsidiaries of the type described in clause (viii) of the definition of Indebtedness contained herein (to the extent same does not arise from a financing arrangement constituting an operating lease) for such period. Notwithstanding anything to the contrary contained above, (x) interest expense of Parent in respect of the Shareholder Subordinated Notes shall be excluded in the determination of Consolidated Cash Interest Expense and (y) for purposes of determining the Debt Service, to the extent Consolidated Cash Interest Expense is to be determined for any Test Period which ends prior to the first anniversary of the Funding Date, Consolidated Cash Interest Expense for all portions of such period occurring prior to the Funding Date shall be calculated in accordance with the definition of Test Period contained herein.

 

“ Consolidated Current Assets ” shall mean, at any time, the consolidated current assets of Parent and its Subsidiaries at such time.

 

“ Consolidated Current Liabilities ” shall mean, at any time, the consolidated current liabilities of Parent and its Subsidiaries at such time, but excluding the current portion of any Indebtedness under this Agreement and the current portion of any other long-term Indebtedness which would otherwise be included therein.

 

“ Consolidated EBITDA ” shall mean, for any period, Consolidated Net Income for such period (without giving effect to (x) any extraordinary gains, (y) any non-cash income (other than equipment revenue), and (z) any gains or losses from sales of assets other than inventory sold in the ordinary course of business) adjusted by adding thereto (in each case to the extent deducted in determining Consolidated Net Income for such period), without duplication, the amount of (i) total interest expense (inclusive of amortization of deferred financing fees and other original issue discount and banking fees, charges and commissions ( e.g. , letter of credit fees and commitment fees) ) of Parent and its Subsidiaries determined on a consolidated basis for such period, (ii) provision for taxes based on income and foreign withholding taxes for Parent and its Subsidiaries determined on a consolidated basis for such period, (iii) all depreciation and amortization expense of Parent and its Subsidiaries determined on a consolidated basis for such period, and (iv) in the case of any period including the fiscal quarter of Parent ended December 31, 2012, the amount of all fees and expenses incurred in connection with the Transaction during such fiscal quarter. For the avoidance of doubt, it is understood and agreed that, to the extent any amounts are excluded from Consolidated Net Income by virtue of the proviso to the definition thereof contained herein, any add backs to Consolidated Net Income in determining Consolidated EBITDA as provided above shall be limited (or denied) in a fashion consistent with the proviso to the definition of Consolidated Net Income contained herein. Notwithstanding anything to the contrary contained above, for purposes of determining Consolidated EBITDA for any Test Period which ends prior to the first anniversary of the Funding Date, Consolidated EBITDA for all portions of such period occurring prior to the Funding Date shall be calculated in accordance with the definition of Test Period contained herein.

 

6
 

 

“ Consolidated Indebtedness ” shall mean, at any time, the sum of (without duplication) (i) all Indebtedness of Parent and its Subsidiaries (on a consolidated basis) as would be required to be reflected as debt or Capitalized Lease Obligations on the liability side of a consolidated balance sheet of Parent and its Subsidiaries in accordance with GAAP, (ii) all Indebtedness of Parent and its Subsidiaries of the type described in clauses (ii), (vii) and (viii) of the definition of Indebtedness and (iii) all Contingent Obligations of Parent and its Subsidiaries in respect of Indebtedness of any third Person of the type referred to in preceding clauses (i) and (ii); provided that (x) the aggregate amount available to be drawn ( i.e. , unfunded amounts) under all letters of credit, bankers’ acceptances, bank guaranties, surety bonds and similar obligations issued for the account of Parent or any of its Subsidiaries (but excluding, for avoidance of doubt, all unpaid drawings or other matured monetary obligations owing in respect of such letters of credit, bankers’ acceptances, bank guaranties, surety bonds and similar obligations) shall not be included in any determination of “Consolidated Indebtedness” (y) the amount of Indebtedness in respect of Other Hedging Agreements shall be at any time the unrealized net loss position, if any, of Parent and/or its Subsidiaries thereunder on a marked-to-market basis determined no more than one month prior to such time and (z) Indebtedness of Parent in respect of the Shareholder Subordinated Notes shall be excluded in the calculation of Consolidated Indebtedness .

 

“ Consolidated Net Income ” shall mean, for any period, the net income (or loss) of Parent and its Subsidiaries determined on a consolidated basis for such period (taken as a single accounting period) in accordance with GAAP, provided that the following items shall be excluded in computing Consolidated Net Income (without duplication): (i) the net income (or loss) of any Person in which a Person or Persons other than Parent and its Wholly-Owned Subsidiaries has an Equity Interest or Equity Interests to the extent of such Equity Interests held by Persons other than Parent and its Wholly-Owned Subsidiaries in such Person, (ii) except for determinations expressly required to be made on a Pro Forma Basis, the net income (or loss) of any Person accrued prior to the date it becomes a Subsidiary or all or substantially all of the property or assets of such Person are acquired by a Subsidiary and (iii) the net income of any Subsidiary to the extent that the declaration or payment of cash dividends or similar cash distributions by such Subsidiary of such net income is not at the time permitted by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary.

 

“ Consolidated Net Indebtedness ” shall mean, at any time, Consolidated Indebtedness minus the aggregate amount of cash and Cash Equivalents held by Parent and its Subsidiaries, other than cash and Cash Equivalents pledged in favor of a party other than the Administrative Agent and the Secured Creditors .

 

7
 

 

“ Contingent Obligation ” shall mean, as to any Person, any obligation of such Person as a result of such Person being a general partner of any other Person, unless the underlying obligation is expressly made non-recourse as to such general partner, and any obligation of such Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“ primary obligations ”) of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided , however , that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.

 

“ Continuing Directors ” shall mean the directors of Parent on the Effective Date and each other director if such director’s nomination for election to the Board of Directors of Parent is recommended by a majority of the then Continuing Directors.

 

“ Credit Documents ” shall mean this Agreement, the Subsidiaries Guaranty, the Pledge Agreement, the Security Agreement and, after the execution and delivery thereof pursuant to the terms of this Agreement, each Note and each other Security Document and all other agreements, documents, certificates and instruments executed and delivered to the Administrative Agent, the Collateral Agent or any Lender in their capacity as such by any Credit Party in connection therewith, including, without limitation, all letters for the payment of fees, guaranties and collateral documents.

 

“ Credit Event ” shall mean the making of the Loans comprising the Borrowing on the Funding Date.

 

“ Credit Party ” shall mean Parent, the Borrowers and each Subsidiary Guarantor.

 

“ Debt Service Coverage Ratio ” shall mean, for any period, the ratio of (a)  Consolidated EBITDA for such period to (b) Debt Service.

 

“ Debt Service ” shall mean, the sum of, without duplication, (i) Consolidated Cash Interest Expense for such period, plus (ii) the scheduled principal amount of all amortization payments on all Indebtedness of Parent and its Subsidiaries for such period (including the principal component of all Capitalized Lease Obligations but excluding payments pursuant to the Refinancing) as determined on the first day of such period (or, with respect to a given issue of Indebtedness incurred thereafter, on the date of the incurrence thereof), Notwithstanding anything to the contrary contained above, for purposes of determining the Debt Service Coverage Ratio, to the extent Debt Service is to be determined for any Test Period which ends prior to the first anniversary of the Funding Date, Debt Service for all portions of such period occurring prior to the Funding Date shall be calculated in accordance with the definition of Test Period contained herein.

 

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“ Default ” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

 

“ Dividend ” shall mean, with respect to any Person, that such Person has declared or paid a dividend, distribution or returned any equity capital to its stockholders, partners or members or authorized or made any other distribution, payment or delivery of property (other than common Equity Interests of such Person) or cash to its stockholders, partners or members in their capacity as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for a consideration any shares of any class of its capital stock or any other Equity Interests outstanding on or after the Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for a consideration any shares of any class of the capital stock or any other Equity Interests of such Person outstanding on or after the Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests). Without limiting the foregoing, “Dividends” with respect to any Person shall also include all payments made or required to be made by such Person (i) with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans or setting aside of any funds for the foregoing purposes or (ii) with respect to any agreement which allows cash compensation to be made in exchange for a right to otherwise receive Equity Interests of such Person.

 

“ Documents ” shall mean, collectively, (i) the Credit Documents, (ii) the Refinancing Documents and (iii) the Intercompany Secured Notes.

 

“ Dollars ” and the sign “ $ ” shall each mean freely transferable lawful money of the United States.

 

“ Domestic Subsidiary ” of any Person shall mean any Subsidiary of such Person incorporated or organized in the United States or any State or territory thereof or the District of Columbia.

 

“ Effective Date ” shall have the meaning provided in Section 11.10.

 

“ Eligible Transferee ” shall mean and include a commercial bank, an insurance company, a finance company, a financial institution, any fund that invests in loans or any other “accredited investor” (as defined in Regulation D of the Securities Act), but in any event excluding Parent and its Subsidiaries.

 

“ Environmental Claims ” shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, claims, liens, notices of noncompliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereafter, “ Claims ”), including, without limitation, (a) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief in connection with alleged injury or threat of injury to health, safety or the environment due to the presence of Hazardous Materials.

 

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“ Environmental Law ” shall mean any Federal, state, foreign or local statute, law, rule, regulation, ordinance, code, guideline, policy and rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, employee health and safety or Hazardous Materials, including, without limitation, CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. ; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq. ; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. ; the Clean Air Act, 42 U.S.C. § 7401 et seq. ; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq. ; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq. ; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq. ; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq. ; the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. ; and any state and local or foreign counterparts or equivalents, in each case as amended from time to time.

 

“ Equity Interests ” of any Person shall mean any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interest in (however designated) equity of such Person, including any common stock, preferred stock, any limited or general partnership interest and any limited liability company membership interest.

 

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the date of this Agreement and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.

 

“ ERISA Affiliate ” shall mean each person (as defined in Section 3(9) of ERISA) which together with Parent or a Subsidiary of Parent would be deemed to be a “single employer” (i) within the meaning of Section 414(b), (c), (m) or (o) of the Code or (ii) as a result of Parent or a Subsidiary of Parent being or having been a general partner of such person.

 

“ Event of Default ” shall have the meaning provided in Section 9.

 

“ Excess Cash Flow ” shall mean, for any period, the remainder of (a) the sum of, without duplication, (i) Adjusted Consolidated Net Income for such period and (ii) the decrease, if any, in Adjusted Consolidated Working Capital from the first day to the last day of such period, minus (b) the sum of, without duplication, (i) the aggregate amount of all Capital Expenditures made by Parent and its Subsidiaries during such period (other than Capital Expenditures to the extent financed with equity proceeds, Equity Interests, asset sale proceeds, insurance proceeds or Indebtedness), (ii) the aggregate amount of permanent principal payments of Indebtedness for borrowed money of Parent and its Subsidiaries and the permanent repayment of the principal component of Capitalized Lease Obligations of Parent and its Subsidiaries during such period (other than (1) repayments made pursuant to the Refinancing, (2) repayments made with the proceeds of asset sales, sales or issuances of Equity Interests, insurance or Indebtedness and (3) payments of Loans and/or other Obligations, provided that repayments of Loans shall be deducted in determining Excess Cash Flow to the extent such repayments were (x) required as a result of a Scheduled Repayment pursuant to Section 4.02(a) or (y) made as a voluntary prepayment pursuant to Section 4.01 with internally generated funds), (iii) the increase, if any, in Adjusted Consolidated Working Capital from the first day to the last day of such period and (iv) the aggregate amount of all cash payments made in respect of all Permitted Acquisitions consummated by Parent and its Subsidiaries during such period (other than any such payments to the extent financed with equity proceeds, asset sale proceeds, insurance proceeds or Indebtedness).

 

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“ Excess Cash Payment Date ” shall mean the date occurring 90 days after the last day of each fiscal year of Parent (commencing with the fiscal year of Parent ended 2013).

 

“ Excess Cash Payment Period ” shall mean, with respect to the repayment required on each Excess Cash Payment Date, the immediately preceding fiscal year of Parent.

 

“ Exchangeable Share Conversion ” shall mean the exercise of the rights of certain former shareholders of SAE Canada to exchange their shares into common stock of the Parent.

 

“ Existing Indebtedness ” shall have the meaning provided in Section 5.07(c).

 

“ Existing Shareholders Notes ” shall mean (i) that certain note issued by SAE to Encompass LLP on January 1, 2009, (ii) that certain note issued by SAE to CLCH, LLC on January 1, 2009 and (iii) that certain note issued by SAE to Margaret Seigfried, in an aggregate amount not to exceed $2,402,000 as of September 30, 2012.

 

“ Fair Market Value ” shall mean, with respect to any asset (including any Equity Interests of any Person), the price at which a willing buyer, not an Affiliate of the seller, and a willing seller who does not have to sell, would agree to purchase and sell such asset, as determined in good faith by the board of directors or other governing body or, pursuant to a specific delegation of authority by such board of directors or governing body, a designated senior executive officer, of Parent, or the Subsidiary of Parent selling such asset.

 

“ Fees ” shall mean all amounts payable pursuant to or referred to in Section 3.01.

 

“ Fee Letter ” shall have the meaning provided in Section 5.18.

 

“ Foreign Pension Plan ” shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States by Parent or any one or more of its Subsidiaries primarily for the benefit of employees of Parent or such Subsidiaries residing outside the United States, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.

 

“ Foreign Security Documents ” shall mean (i) that certain security agreement between SAE and the Agent, dated as of November 14, 2012, the Spanish text of which is substantially equivalent to the English text of Exhibit I-2 hereto, with respect to assets of SAE in Colombia and governed under the laws of Colombia, (ii) that certain security agreement between the Peruvian branch of SAE and the Agent, the Spanish text of which shall be substantially equivalent to the English text of Exhibit I-3 hereto, with respect to assets of SAE in Peru and governed under the laws of Peru and (iii) all other documents and filings delivered in connection therewith.

 

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“ Foreign Subsidiary ” of any Person shall mean any Subsidiary of such Person that is not a Domestic Subsidiary.

 

“ Funding Date ” shall mean the date occurring on or after the Effective Date on which the Borrowing occurs.

 

“ Funding Termination Date ” shall mean December 7, 2012.

 

“ GAAP ” shall mean generally accepted accounting principles in the United States as in effect from time to time; provided that determinations in accordance with GAAP for purposes of Sections 4.02, 7.15 and 8, including defined terms as used therein, and for all purposes of determining the Total Leverage Ratio and the Net Leverage Ratio, are subject (to the extent provided therein) to Section 11.07(a).

 

“ Governmental Authority ” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“ Guaranteed Creditors ” shall mean and include each of the Administrative Agent, the Collateral Agent, the Lenders and each party (other than any Credit Party) party to an Other Hedging Agreement to the extent such party constitutes a Secured Creditor under the Security Documents.

 

“ Guaranteed Obligations ” shall mean (i) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of the principal and interest on each Note issued by, and all Loans made to, the Borrowers under this Agreement, together with all the other obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), indebtedness and liabilities (including, without limitation, indemnities, fees and interest (including any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for herein, whether or not such interest is an allowed claim in any such proceeding) thereon) of the Borrowers to the Lenders, the Administrative Agent and the Collateral Agent now existing or hereafter incurred under, arising out of or in connection with this Agreement and each other Credit Document to which the Borrowers are parties and the due performance and compliance by the Borrowers with all the terms, conditions and agreements contained in the Credit Agreement and in each such other Credit Document and (ii) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due), liabilities and indebtedness (including any interest accruing after the commencement of any bankruptcy, insolvency, receivership or similar proceeding at the rate provided for herein, whether or not such interest is an allowed claim in any such proceeding) of the Borrowers owing under any Other Hedging Agreement entered into by the Borrowers with any Lender or any affiliate thereof (even if such Lender subsequently ceases to be a Lender under this Agreement for any reason) so long as such Lender or affiliate participates in such Other Hedging Agreement and their subsequent assigns, if any, whether now in existence or hereafter arising, and the due performance and compliance with all terms, conditions and agreements contained therein.

 

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“ Guarantor ” shall mean each of Parent or any Subsidiary Guarantor.

 

“ Guaranty ” shall mean each of the Parent Guaranty or any Subsidiaries Guaranty.

 

“ Hazardous Materials ” shall mean (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, dielectric fluid containing levels of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous waste,” “hazardous materials,” “extremely hazardous substances,” “restricted hazardous waste,” “toxic substances,” “toxic pollutants,” “contaminants,” or “pollutants,” or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, the exposure to, or Release of which is prohibited, limited or regulated by any Governmental Authority.

 

“ Indebtedness ” shall mean, as to any Person, without duplication, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (ii) the maximum amount available to be drawn or paid under all letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations issued for the account of such Person and all unpaid drawings and unreimbursed payments in respect of such letters of credit, bankers’ acceptances, bank guaranties, surety and appeal bonds and similar obligations, (iii) all indebtedness of the types described in clause (i), (ii), (iv), (v), (vi), (vii) or (viii) of this definition secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person ( provided that, if the Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the Fair Market Value of the property to which such Lien relates), (iv) all Capitalized Lease Obligations of such Person, (v) all obligations of such Person to pay a specified purchase price for goods or services, whether or not delivered or accepted, i.e. , take-or-pay and similar obligations, (vi) all Contingent Obligations of such Person, (vii) all obligations under any Other Hedging Agreement or under any similar type of agreement and (viii) all Off-Balance Sheet Liabilities of such Person. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is directly liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, Indebtedness shall not include trade payables, accrued expenses and deferred tax and other credits incurred by any Person in accordance with customary practices and in the ordinary course of business of such Person.

 

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“ Indebtedness Agreements to be Repaid ” shall mean (i) the loan agreement between the Colombian branch of SAE, as borrower, and HSBC Colombia, S.A., as lender, dated as of June 28, 2012, (ii) the loan agreement between the Colombian branch of SAE, as borrower, and Banco de Bogotá, as lender, dated as of February 14, 2012, (iii) the loan agreement between the Colombian branch of SAE, as borrower, and Banco de Bogotá, as lender, dated as of February 21, 2012, (iv) the loan agreement between the Colombian branch of SAE, as borrower, and Banco de Bogotá, as lender, dated as of June 4, 2012, (v) the loan agreement between the Colombian branch of SAE, as borrower, and Banco de Occidente, as lender, dated as of October 13, 2012, (vi) the loan agreement between the Colombian branch of SAE, as borrower, and Helm Bank S.A., as lender, dated as of July 29, 2011, (vii) the loan agreement between the Colombian branch of SAE, as borrower, and Helm Bank S.A., as lender, dated as of November 21, 2011, (vii) the loan agreement between the Colombian branch of SAE, as borrower, and Helm Bank S.A., as lender, dated as of January 18, 2012, (ix) the loan agreement between the Colombian branch of SAE, as borrower, and Helm Bank S.A., as lender, dated as of July 29, 2011, (x) the loan agreement between the Colombian branch of SAE, as borrower, and Bancolombia S.A., as lender, dated as of July 29, 2011, (xi) the loan agreement between SAE, as borrower, and Wells Fargo Bank, National Association, as lender, dated as of September 10, 2012, (xii) the purchase agreement, dated as of July 3, 2012, between the Alaskan Subsidiary Borrower, SAE and the Purchasers referred to therein and (xiii) the purchase agreement, dated as of July 6, 2012, between SAExploration (Canada) Ltd., SAE, the Alaskan Subsidiary Borrower and the Purchasers referred to therein.

 

“ Indemnified Person ” shall have the meaning provided in Section 11.01(a).

 

“ Initial Commitment ” with respect to any Lender shall mean such Lender’s “Commitment” as shall be evidenced in the Register maintained by the Administrative Agent pursuant to Section 11.15, which in the aggregate, shall be equal to the amount set forth on Schedule I-A hereto.

 

“ Intercompany Canadian Note ” shall mean the promissory note, duly executed and delivered in such form as shall be satisfactory to the Administrative Agent in its sole discretion, evidencing the Intercompany Secured Loans made by SAE to SAE Canada, together with the security agreement dated as of the Funding Date between SAE Canada and SAE and the limited recourse pledge between 1623753 Alberta Ltd. (Alberta) and SAE.

 

“ Intercompany Debt ” shall mean any Indebtedness, payables or other obligations, whether now existing or hereafter incurred, owed by Parent or any Subsidiary of Parent to Parent or any other Subsidiary of Parent, including but not limited to the Intercompany Loans and the Intercompany Notes.

 

“ Intercompany Global Note ” shall mean the promissory note dated as of the Funding Date evidencing Intercompany Loans, duly executed and delivered substantially in the form of Exhibit M (or such other form as shall be satisfactory to the Administrative Agent in its sole discretion), with blanks completed in conformity herewith, together with any joinder thereto satisfactory to the Administrative Agent executed and delivered after the Funding Date.

 

“ Intercompany Loans ” shall have the meaning provided in Section 8.05(viii).

 

“ Intercompany Note ” shall mean (i) the Intercompany Secured Notes and (ii) the Intercompany Global Note.

 

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“ Intercompany Secured Loans ” shall have the meaning provided in Section 8.05(viii). For the avoidance of doubt, the Intercompany Canadian Note shall evidence an “Intercompany Secured Loan.”

 

“ Intercompany Secured Note ” shall mean a promissory note evidencing an Intercompany Secured Loan.

 

“ Intercompany Secured Obligor Subsidiary ” shall mean any Foreign Subsidiary which has issued an Intercompany Secured Note to a Credit Party, which Credit Party has pledged its interests in such Intercompany Secured Note to the Administrative Agent and the Lenders, in each case in such form as shall be satisfactory to the Administrative Agent in its sole discretion.

 

“ Interest Rate ” shall have the meaning provided in Section 2.03(b).

 

“ Interim Interest Rate ” shall have the meaning provided in Section 2.03(a).

 

“ Investment Warrants ” shall mean the warrants issued to each of the Lenders in the amount set forth on Schedule I-B attached hereto, which shall collectively represent a right to purchase one percent (1%) of the capital stock of the Parent on a fully-diluted basis (after giving effect to the Exchangeable Share Conversion), pursuant to the terms and subject to the conditions set forth in this Agreement and the Warrant Agreements.

 

“ Investments ” shall have the meaning provided in Section 8.05.

 

“ Kuukpik Joint Venture ” shall mean the proposed joint venture, partnership or other similar arrangement between SAE and Kuukpik Corporation; provided that (i) a Credit Party shall own, directly or indirectly, at least 49% of the Equity Interests thereof and (ii) such newly formed entity shall be entitled to no more than 10% of the revenue stream from contracts of the Credit Parties that are to be performed on the North Slope of Alaska. For the avoidance of doubt, the Equity Interests of SAE in the Kuukpik Joint Venture shall be an “Excluded Joint Venture Interest” as set forth in Section 3.2(c) of the Pledge Agreement.

 

“ Lead Arranger ” shall mean CP Admin Co LLC, in its capacity as Lead Arranger and Book Runner, and any successor thereto.

 

“ Leaseholds ” of any Person shall mean all the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.

 

“ Lender ” shall mean each financial institution party hereto, as well as any Person that becomes a “Lender” or “Additional Lender” hereunder pursuant to Sections 2.07, 2.09 or 11.04(b), in each case as evidenced in the Register maintained by the Administrative Agent pursuant to Section 11.15.

 

“ Lien ” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), preference, priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the UCC or any other similar recording or notice statute, and any lease having substantially the same effect as any of the foregoing).

 

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“ Loan ” shall have the meaning provided in Section 2.01.

 

“ Lockbox Accounts ” shall have the meaning provided in Section 8.18.

 

“ Margin Stock ” shall have the meaning provided in Regulation U.

 

“ Material Adverse Effect ” shall mean (i) a material adverse effect on the business, operations, property, assets, liabilities, condition (financial or otherwise) or prospects of Parent and its Subsidiaries taken as a whole or (ii) a material adverse effect (x) on the rights or remedies of the Lenders, the Administrative Agent or the Collateral Agent hereunder or under any other Credit Document, (y) on the ability of any Credit Party to perform its obligations to the Lenders, the Administrative Agent or the Collateral Agent hereunder or under any other Credit Document or (z) on the ability of an Intercompany Secured Obligor Subsidiary to perform its obligations to a Credit Party under any Intercompany Secured Note.

 

“ Material Contract ” shall mean that certain Seismic Acquisition Contract, dated as of July 13, 2011, by and between Apache and the Alaskan Subsidiary Borrower.

 

“ Material Contract Collateral ” means all equipment described in Schedule X hereto, and all present and future additions, parts, accessories, attachments, substitutions, repairs, improvements and replacements of or to such equipment.

 

“ Material Contract Termination Event ” shall mean the occurrence of any of the following events: (i) the cancellation or termination of any of the Credit Parties’ rights under or in respect of the Material Contract, (ii) Parent or any of its Subsidiaries shall agree to any waiver, amendment, termination or cancellation of the Material Contract, in each case in a manner materially adverse to Parent and its Subsidiaries, without the consent of the Administrative Agent, (iii) the failure of Parent or any of its Subsidiaries to properly perform, in all material respects, its obligations under the Material Contract (except to the extent, if any, that such performance is inconsistent with its obligation under the Credit Documents) and (iv) the failure of Parent or any of its Subsidiaries to exercise its rights, under and in respect of the Material Contract consistently with its obligations under the Credit Documents.

 

“ Material Foreign Subsidiary ” means each Foreign Subsidiary (i) which, as of the most recent fiscal quarter of the Parent, for the period of four consecutive fiscal quarters then ended, contributed greater than $5,000,000 of revenue for such period or (ii) which held more than $1,000,000 of Consolidated Current Assets as of such date.

 

“ Maturity Date ” shall mean November 28, 2016.

 

“ Maximum Rate ” shall have the meaning provided in Section 11.20.

 

“ Moody’s ” shall mean Moody’s Investors Service, Inc.

 

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“ Mortgage ” shall mean a mortgage, leasehold mortgage, deed of trust, leasehold deed of trust, deed to secure debt, leasehold deed to secure debt or similar security instrument.

 

“ Mortgage Policy ” shall mean a Lender’s title insurance policy (Form 1992).

 

“ Mortgaged Property ” shall mean any Real Property owned or leased by Parent or any of its Subsidiaries which is encumbered (or required to be encumbered) by a Mortgage pursuant to the terms hereof.

 

“ NAIC ” shall mean the National Association of Insurance Commissioners.

 

“ Net Cash Proceeds ” shall mean for any event requiring a repayment of Loans pursuant to Section 4.02, as the case may be, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such event, net of reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary commissions and reasonable legal, advisory and other fees and expenses associated therewith) received from any such event.

 

“ Net Leverage Ratio ” shall mean, on any date of determination, the ratio of (x) Consolidated Net Indebtedness on such date to (y) Consolidated EBITDA for the Test Period most recently ended on or prior to such date; provided that (i) for purposes of any calculation of the Net Leverage Ratio pursuant to this Agreement, Consolidated EBITDA shall be determined on a Pro Forma Basis in accordance with clause (iii) of the definition of “ Pro Forma Basis” contained herein and (ii) for purposes of any calculation of the Net Leverage Ratio pursuant to Section 7.15(a) only , Consolidated Indebtedness shall be determined on a Pro Forma Basis in accordance with the requirements of the definition of “ Pro Forma Basis” contained herein

 

“ Net Sale Proceeds ” shall mean for any sale or other disposition of assets, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such sale or other disposition of assets, net of (i) reasonable transaction costs (including, without limitation, any underwriting, brokerage or other customary selling commissions, reasonable legal, advisory and other fees and expenses (including title and recording expenses), associated therewith and sales, VAT and transfer taxes arising therefrom), (ii) payments of unassumed liabilities relating to the assets sold or otherwise disposed of at the time of, or within 30 days after, the date of such sale or other disposition, (iii) the amount of such gross cash proceeds required to be used to permanently repay any Indebtedness (other than Indebtedness of the Lenders pursuant to this Agreement) which is secured by the respective assets which were sold or otherwise disposed of, and (iv) the estimated net marginal increase in income taxes which will be payable by Parent’s consolidated group or any Subsidiary of Parent with respect to the fiscal year of Parent in which the sale or other disposition occurs as a result of such sale or other disposition; provided , however , that such gross proceeds shall not include any portion of such gross cash proceeds which Parent determines in good faith should be reserved for post-closing adjustments (to the extent Parent delivers to the Lenders a certificate signed by an Authorized Officer as to such determination), it being understood and agreed that on the day that all such post-closing adjustments have been determined (which shall not be later than six months following the date of the respective asset sale), the amount (if any) by which the reserved amount in respect of such sale or disposition exceeds the actual post-closing adjustments payable by Parent or any of its Subsidiaries shall constitute Net Sale Proceeds on such date received by Parent and/or any of its Subsidiaries from such sale or other disposition.

 

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“ Non-Wholly Owned Subsidiary ” shall mean, as to any Person, each Subsidiary of such Person which is not a Wholly-Owned Subsidiary of such Person.

 

“ Notice Office ” shall mean the office of the Administrative Agent located at 1251 Avenue of the Americas, 28th Floor, New York, NY 10020, Attention: Jonathan Tunis, or such other office or person as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

 

“ Obligations ” shall mean all amounts owing to the Administrative Agent, the Collateral Agent, or any Lender pursuant to the terms of this Agreement or any other Credit Document (including, in each case, (i) PIK Interest and (ii) all interest which accrues after the commencement of any case or proceeding in bankruptcy after the insolvency of, or for the reorganization of Parent or any of its Subsidiaries, whether or not allowed in such case or proceeding).

 

“ Off-Balance Sheet Liabilities ” of any Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability of such Person under any sale and leaseback transactions that do not create a liability on the balance sheet of such Person, (iii) any obligation under a Synthetic Lease or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person.

 

“ Organization Charts ” shall have the meaning provided in Section 5.15.

 

“ Other Hedging Agreements ” shall mean any foreign exchange contracts, currency swap agreements, commodity agreements or other similar arrangements, or arrangements designed to protect against fluctuations in currency values or commodity prices.

 

“ Parent ” shall have the meaning provided in the first paragraph of this Agreement.

 

“ Parent Guaranty ” shall mean the guaranty provided by Parent pursuant to Section 12.

 

“ Parent Common Stock ” shall have the meaning provided in Section 6.13(a).

 

“ Payment Office ” shall mean the office of the Administrative Agent located at 1251 Avenue of the Americas, 28th Floor, New York, NY 10020 or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

 

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

 

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“ Permitted Acquisition ” shall mean the acquisition by any of the Borrowers or a Wholly-Owned Domestic Subsidiary of such Borrower which is a Subsidiary Guarantor of an Acquired Entity or Business (including by way of merger of such Acquired Entity or Business with and into such Borrower (so long as such Borrower is the surviving corporation) or a Wholly-Owned Domestic Subsidiary of any of the Borrowers which is a Subsidiary Guarantor (so long as the Subsidiary Guarantor is the surviving corporation)), provided that (in each case) (A) the consideration paid or to be paid by such Borrower or such Wholly-Owned Domestic Subsidiary consists solely of cash, Parent Common Stock, Qualified Preferred Stock, the issuance or incurrence of Indebtedness otherwise permitted by Section 8.04 and the assumption/acquisition of any Indebtedness (calculated at face value) which is permitted to remain outstanding in accordance with the requirements of Section 8.04, (B) in the case of the acquisition of 100% of the Equity Interests of any Acquired Entity or Business (including by way of merger), such Acquired Entity or Business shall own no Equity Interests of any other Person unless either (x) such Acquired Entity or Business owns 100% of the Equity Interests of such other Person or (y) if such Acquired Entity or Business owns Equity Interests in any other Person which is a Non-Wholly Owned Subsidiary of such Acquired Entity or Business, (1) such Acquired Entity or Business shall not have been created or established in contemplation of, or for purposes of, the respective Permitted Acquisition, (2) any such Non-Wholly Owned Subsidiary of the Acquired Entity or Business shall have been a Non-Wholly Owned Subsidiary of such Acquired Entity or Business prior to the date of the respective Permitted Acquisition and shall not have been created or established in contemplation thereof and (3) such Acquired Entity or Business and/or its Wholly-Owned Subsidiaries own at least 90% of the total value of all the assets owned by such Acquired Entity or Business and its subsidiaries (for purposes of such determination, excluding the value of the Equity Interests of Non-Wholly Owned Subsidiaries held by such Acquired Entity or Business and its Wholly-Owned Subsidiaries) , (C) all of the business, division or product line acquired pursuant to the respective Permitted Acquisition, or the business of the Person acquired pursuant to the respective Permitted Acquisition and its Subsidiaries taken as a whole, is in the United States, (D) the Acquired Entity or Business acquired pursuant to the respective Permitted Acquisition is in a business permitted by Section 8.15 and (E) all requirements of Sections 7.15, 8.02 and 8.16 applicable to Permitted Acquisitions are satisfied. Notwithstanding anything to the contrary contained in the immediately preceding sentence, an acquisition which does not otherwise meet the requirements set forth above in the definition of “Permitted Acquisition” shall constitute a Permitted Acquisition if, and to the extent, the Required Lenders agree in writing, prior to the consummation thereof, that such acquisition shall constitute a Permitted Acquisition for purposes of this Agreement; provided further that the Kuukpik Joint Venture shall be deemed to be a “Permitted Acquisition hereunder.

 

“ Permitted Acquisition Basket Amount ” shall mean $5,000,000.

 

“ Permitted Encumbrance ” shall mean, with respect to any Mortgaged Property, such exceptions to title as are set forth in the Mortgage Policy delivered with respect thereto, all of which exceptions must be acceptable to the Administrative Agent in its reasonable discretion.

 

“ Permitted Holders ” shall mean, either through direct or indirect ownership, Jeff Hastings, Brian A. Beatty and Sheri L. Beatty.

 

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“ Permitted Liens ” shall have the meaning provided in Section 8.01.

 

“ Person ” shall mean any individual, partnership, joint venture, firm, corporation, association, limited liability company, trust or other enterprise or any Governmental Authority.

 

“ PIK Interest ” shall have the meaning provided in Section 2.03(c).

 

“ PIK Notice ” shall have the meaning provided in Section 2.03(d).

 

“ Plan ” shall mean any pension plan as defined in Section 3(2) of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) Parent or a Subsidiary of Parent or an ERISA Affiliate, and each such plan for the five year period immediately following the latest date on which Parent, a Subsidiary of Parent or an ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.

 

“ Pledge Agreement ” shall have the meaning provided in Section 5.11.

 

“ Pledge Agreement Collateral ” shall mean all “Collateral” as defined in the Pledge Agreement.

 

“ Pledgee ” shall have the meaning provided in the Pledge Agreement.

 

“ Post-Closing Cap Table ” shall have the meaning provided in Section 5.14.

 

“ Post-Closing Organization Chart ” shall have the meaning provided in Section 5.15.

 

“ Preferred Equity ”, as applied to the Equity Interests of any Person, means Equity Interests of such Person (other than common Equity Interests of such Person) of any class or classes (however designed) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Equity Interests of any other class of such Person, and shall include any Qualified Preferred Stock.

 

“ Pre-Closing Cap Table ” shall have the meaning provided in Section 5.14.

 

“ Pre-Closing Organization Chart ” shall have the meaning provided in Section 5.15.

 

“ Pro Forma Basis ” shall mean, in connection with any calculation of compliance with any financial covenant or financial term, the calculation thereof after giving effect on a pro forma basis to (x) the incurrence of any Indebtedness (other than revolving Indebtedness, except to the extent same is incurred to refinance other outstanding Indebtedness or to finance a Permitted Acquisition) after the first day of the relevant Calculation Period or Test Period, as the case may be, as if such Indebtedness had been incurred (and the proceeds thereof applied) on the first day of such Test Period or Calculation Period, as the case may be, (y) the permanent repayment of any Indebtedness (other than revolving Indebtedness, except to the extent accompanied by a corresponding permanent commitment reduction) after the first day of the relevant Test Period or Calculation Period, as the case may be, as if such Indebtedness had been retired or repaid on the first day of such Test Period or Calculation Period, as the case may be, and (z) any Permitted Acquisition then being consummated as well as any other Permitted Acquisition if consummated after the first day of the relevant Test Period or Calculation Period, as the case may be, and on or prior to the date of the respective Permitted Acquisition then being effected, with the following rules to apply in connection therewith:

 

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(i)     all Indebtedness (x) (other than revolving Indebtedness, except to the extent same is incurred to refinance other outstanding Indebtedness or to finance Permitted Acquisitions) incurred or issued after the first day of the relevant Test Period or Calculation Period (whether incurred to finance a Permitted Acquisition, to refinance Indebtedness or otherwise) shall be deemed to have been incurred or issued (and the proceeds thereof applied) on the first day of such Test Period or Calculation Period, as the case may be, and remain outstanding through the date of determination (and thereafter, in the case of projections pursuant to Section 7.15(a)) and (y) (other than revolving Indebtedness, except to the extent accompanied by a corresponding permanent commitment reduction) permanently retired or redeemed after the first day of the relevant Test Period or Calculation Period, as the case may be, shall be deemed to have been retired or redeemed on the first day of such Test Period or Calculation Period, as the case may be, and remain retired through the date of determination (and thereafter, in the case of projections pursuant to Section 7.15(a));

 

(ii)     all Indebtedness assumed to be outstanding pursuant to preceding clause (i) shall be deemed to have borne interest at (x) the rate applicable thereto, in the case of fixed rate indebtedness, or (y) the rates which would have been applicable thereto during the respective period when same was deemed outstanding, in the case of floating rate Indebtedness (although interest expense with respect to any Indebtedness for periods while same was actually outstanding during the respective period shall be calculated using the actual rates applicable thereto while same was actually outstanding); provided that all Indebtedness (whether actually outstanding or deemed outstanding) bearing interest at a floating rate of interest shall be tested on the basis of the rates applicable at the time the determination is made pursuant to said provisions; and

 

(iii)     in making any determination of Consolidated EBITDA on a Pro Forma Basis, pro forma effect shall be given to any Permitted Acquisition if effected during the respective Calculation Period or Test Period (or thereafter, for purposes of determinations pursuant to Sections 7.15(a) only) as if same had occurred on the first day of the respective Calculation Period or Test Period, as the case may be, taking into account, in the case of any Permitted Acquisition, factually supportable and identifiable cost savings and expenses which would otherwise be accounted for as an adjustment pursuant to Article 11 of Regulation S-X under the Securities Act, as if such cost savings or expenses were realized on the first day of the respective period but without taking into account any pro forma cost savings and expenses.

 

“ Projections ” shall mean the projections that were prepared by or on behalf of the Borrowers in connection with the Transaction and delivered to the Administrative Agent and the Lenders on November 12, 2012.

 

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“ Qualified IPO ” shall mean a bona fide underwritten sale to the public of common stock of Parent pursuant to a registration statement (other than on Form S-8 or any other form relating to securities issuable under any benefit plan of Parent or any of its Subsidiaries, as the case may be) that is declared effective by the SEC and (x) such offering results in Net Cash Proceeds received by Parent of at least $25,000,000 and (y) after giving effect to such offering, the shareholders’ equity in Parent (as calculated in accordance with GAAP) shall be at least $80,000,000.

 

“ Qualified Preferred Stock ” shall mean any Preferred Equity of Parent so long as the terms of any such Preferred Equity (v) do not contain any mandatory put, redemption, repayment, sinking fund or other similar provision prior to March 31, 2017, (w) do not require the cash payment of dividends or distributions that would otherwise be prohibited by the terms of this Agreement or any other agreement or contract of Parent or any of its Subsidiaries, (x) do not contain any covenants (other than periodic reporting requirements), (y) do not grant the holders thereof any voting rights except for (I) voting rights required to be granted to such holders under applicable law and (II) limited customary voting rights on fundamental matters such as mergers, consolidations, sales of all or substantially all of the assets of Parent, or liquidations involving Parent, and (z) are otherwise reasonably satisfactory to the Administrative Agent.

 

“ Quarterly Payment Date ” shall mean the last Business Day of each March, June, September and December occurring after the Funding Date.

 

“ Real Property ” of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds.

 

“ Recovery Event ” shall mean the receipt by Parent or any of its Subsidiaries of any cash insurance proceeds or condemnation awards payable (i) by reason of theft, loss, physical destruction, damage, taking or any other similar event with respect to any property or assets of Parent or any of its Subsidiaries and (ii) under any policy of insurance required to be maintained under Section 7.03.

 

“ Refinanced Loans ” shall have the meaning provided in Section 11.12(d).

 

“ Refinancing ” shall mean the refinancing transactions described in Sections 5.07(a), (b) and (c).

 

“ Refinancing Documents ” shall mean all pay-off letters, guaranty releases, Lien releases (including, without limitation, UCC termination statements) and other documents and agreements entered into in connection with the Refinancing.

 

“ Register ” shall have the meaning provided in Section 11.15.

 

“ Regulation D ” shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.

 

“ Regulation T ” shall mean Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

 

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“ Regulation U ” shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

 

“ Regulation X ” shall mean Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

 

“ Release ” shall mean actively or passively disposing, discharging, injecting, spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring, seeping, migrating or the like, into or upon any land or water or air, or otherwise entering into the environment.

 

“ Replaced Lender ” shall have the meaning provided in Section 2.07.

 

“ Replacement Loans ” shall have the meaning provided in Section 11.12(d).

 

“ Replacement Lender ” shall have the meaning provided in Section 2.07.

 

“ Reportable Event ” shall mean an event described in Section 4043(c) of ERISA with respect to a Plan that is subject to Title IV of ERISA other than those events as to which the 30-day notice period is waived under subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.

 

“ Required Lenders ” shall mean, at any time, Lenders the sum of whose outstanding Loans at such time represents at least 66 2/3% of the sum of all outstanding Loans; provided, however, that at any time there are two or more Lenders, “Required Lenders” must include at least two Lenders.

 

“ Returns ” shall have the meaning provided in Section 6.09.

 

“ S&P ” shall mean Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc.

 

“ SAE ” shall have the meaning provided in the first paragraph of this Agreement.

 

“ SAE Canada ” shall mean SAExploration (Canada) Ltd., a company organized under the laws of the Province of Alberta in Canada.

 

“ SEC ” shall have the meaning provided in Section 7.01(h).

 

“ Section 4.04(b)(ii) Certificate ” shall have the meaning provided in Section 4.04(b)(ii).

 

“ Secured Creditors ” shall have the meaning assigned that term in the respective Security Documents.

 

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“ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“ Security Agreement ” shall have the meaning provided in Section 5.12.

 

“ Security Agreement Collateral ” shall mean all “Collateral” as defined in the Security Agreement.

 

“ Security Document ” shall mean and include each of the Security Agreement, the Pledge Agreement, the Foreign Security Agreements, and, after the execution and delivery thereof, each Mortgage and Additional Security Document.

 

“ Senior Executive Officer ” shall mean any of the positions of Chairman, President or Chief Executive Officer.

 

“ Shareholder Subordinated Note ” shall mean an unsecured junior subordinated note issued by Parent and not guaranteed by any Subsidiary of Parent in form and substance acceptable to the Administrative Agent, as the same may be modified, amended or supplemented from time to time pursuant to the terms hereof and thereof.

 

“ Shareholders’ Agreements ” shall have the meaning provided in Section 5.05.

 

“ Subsidiaries Guaranty ” shall have the meaning provided in Section 5.10.

 

“ Subsidiary ” shall mean, as to any Person, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% equity interest at the time. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of Parent.

 

“ Subsidiary Guarantor ” shall mean, to the extent required by Section 8.16, each Domestic Subsidiary of Parent (other than the Borrowers) and, to the extent required by Section 7.16, each Foreign Subsidiary of Parent (in each case, whether existing on the Funding Date or established, created or acquired after the Funding Date), unless and until such time as the respective Subsidiary is released from all of its obligations under the Subsidiaries Guaranty in accordance with the terms and provisions thereof.

 

“ Synthetic Lease ” shall mean a lease transaction under which the parties intend that (i) the lease will be treated as an “operating lease” by the lessee and (ii) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.

 

“ Taxes ” shall have the meaning provided in Section 4.04(a).

 

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“ Test Period ” shall mean each period of four consecutive fiscal quarters of Parent then last ended, in each case taken as one accounting period; provided that in the case of any Test Period which includes any fiscal quarter ended on or prior to December 31, 2013, the rules set forth in the two immediately succeeding sentences shall apply; provided further , that in the case of determinations of the Total Leverage Ratio or Net Leverage Ratio pursuant to this Agreement, such further adjustments (if any) as described in the proviso or provisos to the definition of “Total Leverage Ratio” or “Net Leverage Ratio”, as the case may be, contained herein shall be made to the extent applicable. If the respective Test Period (I) includes the fiscal quarter of Parent ended March 31, 2012, Consolidated EBITDA for such fiscal quarter shall be deemed to be $10,902,507, (II) includes the fiscal quarter of Parent ended June 30, 2012, Consolidated EBITDA for such fiscal quarter shall be deemed to be $9,085,596, (III) includes the fiscal quarter of Parent ended September 30, 2012, Consolidated EBITDA for such fiscal quarter shall be deemed to be $6,939,969, and (IV) includes the fiscal quarter of Parent ended December 31, 2012, (x) Consolidated EBITDA shall be deemed to be the actual Consolidated EBITDA for the period from and including the Funding Date to and including the last day of such fiscal quarter. If the respective Test Period is prior to December 31, 2013, Debt Service shall be calculated as Debt Service for the period from the Funding Date through the last day of the Test Period multiplied by a fraction, the numerator of which is 365 and the denominator of which is the number of days from the Funding Date through the last day of the Test Period.

 

“ Total Leverage Ratio ” shall mean, on any date of determination, the ratio of (x) Consolidated Indebtedness on such date to (y) Consolidated EBITDA for the Test Period most recently ended on or prior to such date; provided that (i) for purposes of any calculation of the Total Leverage Ratio pursuant to this Agreement, Consolidated EBITDA shall be determined on a Pro Forma Basis in accordance with clause (iii) of the definition of “ Pro Forma Basis” contained herein and (ii) for purposes of any calculation of the Total Leverage Ratio pursuant to Section 7.15(a) only , Consolidated Indebtedness shall be determined on a Pro Forma Basis in accordance with the requirements of the definition of “ Pro Forma Basis” contained herein.

 

“ Transaction ” shall mean, collectively, (i) the consummation of the Refinancing, (ii) the execution, delivery and performance by each Credit Party of the Credit Documents to which it is a party, the incurrence of Loans on the Funding Date and the use of proceeds thereof and (iii) the payment of all fees and expenses in connection with the foregoing.

 

“ Treasury Rate ” means, with respect to any prepayment pursuant to Section 3.02, the yield to maturity at a time of computation of United States Treasury securities with a constant maturity (as determined by the Administrative Agent in good faith based on publicly available market data) most nearly equal to the period from the applicable prepayment date to the Maturity Date, provided, however, that if the period from the applicable prepayment date to the Maturity Date is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given.

 

“ UCC ” shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.

 

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“ Unfunded Current Liability ” of any Plan shall mean the amount, if any, by which the value of the accumulated plan benefits under the Plan determined on a plan termination basis in accordance with actuarial assumptions at such time consistent with those prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds the Fair Market Value of all plan assets allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid contributions).

 

“ United States ” and “ U.S. ” shall each mean the United States of America.

 

“ Warrant Agreements ” shall means those certain warrants, dated as of the date hereof, pursuant to which each Lender purchased its pro rata share of the Investment Warrants.

 

“ Wholly-Owned Domestic Subsidiary ” shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.

 

“ Wholly-Owned Foreign Subsidiary ” shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.

 

“ Wholly-Owned Subsidiary ” shall mean, as to any Person, (i) any corporation 100% of whose capital stock is at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any partnership, limited liability company, association, joint venture or other entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such time (other than, in the case of a Foreign Subsidiary of any Borrower with respect to the preceding clauses (i) and (ii), director’s qualifying shares and/or other nominal amount of shares required to be held by Persons other than the Borrowers and their Subsidiaries under applicable law).

 

SECTION 2.      Amount and Terms of Credit .  

 

2.01.        The Commitments; Funding . (a) Subject to and upon the terms and conditions set forth herein, each Lender with a Commitment severally agrees to make a term loan (each, a “Loan” and, collectively, the “ Loans ”) to the Borrowers, which Loans (i) shall be incurred pursuant to a single drawing on the Funding Date (the “ Borrowing ”), (ii) shall be denominated in Dollars, and (iii) shall be made by each such Lender in an aggregate principal amount which does not exceed the Commitment of such Lender on the Funding Date. Once repaid, Loans incurred hereunder may not be reborrowed. All references herein to a “Loan” or “Loans”, to “principal” or the “principal amount” of any Loan or Loans and other terms of like import shall mean Loans incurred by the Borrowers, plus PIK Interest that is added to outstanding principal of Loans pursuant to Section 2.03, minus repayments and prepayments of Loans pursuant to this Agreement.  

 

(b)           Each Lender will make available the Loans to be made by it hereunder on the Funding Date by wire transfer in immediately available funds to the Administrative Agent. The Administrative Agent will make such Loans available to the Borrowers by promptly crediting the amounts that it receives, in like funds by the close of business on such proposed date by effecting a wire transfer of such amounts to an account designated by the Borrowers to the Administrative Agent. No Lender shall be responsible for any default by any other Lender in its obligations hereunder, and each Lender shall be obligated to make its Loans provided to be made by it hereunder, regardless of the failure of any other Lender to make its Loans hereunder. The Initial Commitment of each Lender shall terminate in its entirety on the Funding Date (after giving effect to the incurrence of Loans on such date).

 

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2.02.        Notes . (a) The Borrowers’ obligation to pay the principal of, and interest on, the Loans made by each Lender shall be evidenced in the Register maintained by the Administrative Agent pursuant to Section 11.15 and shall, if requested by such Lender, also be evidenced by a promissory note duly executed and delivered by the Borrowers substantially in the form of Exhibit B, with blanks appropriately completed in conformity herewith (each a “ Note ” and, collectively, the “ Notes ”).  

 

(b)           Each Lender will note on its internal records the amount of each Loan made by it and each payment in respect thereof and prior to any transfer of any of its Notes will endorse on the reverse side thereof the outstanding principal amount of Loans evidenced thereby. Failure to make any such notation or any error in such notation shall not affect the Borrowers’ obligations in respect of such Loans.

 

(c)           Notwithstanding anything to the contrary contained above in this Section 2.02 or elsewhere in this Agreement, Notes shall only be delivered to Lenders which at any time specifically request the delivery of such Notes. No failure of any Lender to request or obtain a Note evidencing its Loans to the Borrowers shall affect or in any manner impair the obligations of the Borrowers to pay the Loans (and all related Obligations) incurred by the Borrowers which would otherwise be evidenced thereby in accordance with the requirements of this Agreement, and shall not in any way affect the security or guaranties therefor provided pursuant to the various Credit Documents. Any Lender which does not have a Note evidencing its outstanding Loans shall in no event be required to make the notations otherwise described in preceding clause (b). At any time when any Lender requests the delivery of a Note to evidence any of its Loans, the Borrowers shall promptly execute and deliver to the respective Lender the requested Note in the appropriate amount or amounts to evidence such Loans.

 

2.03.        Interest .  

 

(a)           The Borrowers agree to pay interest in respect of the unpaid principal amount of all Commitments from the Effective Date to the Funding Date at a rate per annum equal to 13.5% (the “ Interim Interest Rate ”). All amounts of the Interim Interest Rate shall be paid in cash on each Quarterly Payment Date and, if the Funding has not yet occurred, the Funding Termination Date.

 

(b)           The Borrowers agree to pay interest in respect of the unpaid principal amount of each Loan from the Funding Date until the maturity thereof (whether by acceleration or otherwise) at a rate per annum equal to 13.5% (the “ Interest Rate ”).

 

(c)           The Borrowers may elect to pay up to 250 basis points of the Interest Rate (the “ PIK Interest ”) by capitalizing such amount of interest and adding such amount of interest to the outstanding principal amount of the Loans on the applicable Quarterly Payment Date. The PIK Interest shall be deemed paid, and the principal amount of the Loans as so increased shall be deemed “Loans” hereunder and under the other Credit Documents for all purposes and shall thereafter accrue interest in accordance with the terms of this Agreement. Any amount of the Interest Rate otherwise due on a Quarterly Payment Date which is not paid as PIK Interest in accordance with this Section 2.03 shall be paid in cash (“ Cash Interest ”) on the relevant Quarterly Payment Date.

 

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(d)           In the event that the Borrowers shall determine to pay PIK Interest for any Quarterly Payment Date, then the Borrowers shall deliver a notice (a “ PIK Notice ”) to the Administrative Agent at least 10 Business Days prior to the relevant Quarterly Payment Date, which notice shall state the total amount of interest to be paid on such Quarterly Payment Date, the amount of such interest that will be paid as Cash Interest and the amount that will be paid as PIK Interest. For the avoidance of doubt, interest on the Loans in respect of any Quarterly Payment Date for which a PIK Notice is not delivered in accordance with the first sentence of this clause (c) must be paid entirely in cash. Notwithstanding anything to the contrary, interest to be paid on the first Quarterly Payment Date after the Funding Date, accrued interest to be paid at stated maturity and accrued interest to be paid in connection with any prepayment of Loans pursuant to Sections 4.01 or 4.02 shall be made solely in cash.

 

(e)           Overdue principal and, to the extent permitted by law, overdue interest in respect of each Loan shall, in each case, bear interest at a rate per annum equal to the rate which is 2% in excess of the Interest Rate, and all other overdue amounts payable hereunder and under any other Credit Document shall bear interest at a rate per annum equal to the rate which is 2% in excess of the Interest Rate. Interest that accrues under this Section 2.03(e) shall be payable in cash on demand.

 

(f)            Accrued (and theretofore unpaid) interest shall be (x) payable as Cash Interest and, if applicable, as PIK Interest, in each case quarterly in arrears on each Quarterly Payment Date in accordance with this Section 2.03, (y) payable in cash on the date of any repayment or prepayment in full of all Loans, and (z) payable in cash at maturity (whether by acceleration or otherwise) and, after such maturity, payable in cash on demand.

 

2.04.        Increased Costs, Illegality, etc. (a) In the event that any Lender shall have determined (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) at any time, that such Lender shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to any Loan because of (x) any change since the Effective Date in any applicable law or governmental rule, regulation, order, guideline or request (whether or not having the force of law) or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, order, guideline or request, such as, but not limited to: (A) a change in the basis of taxation of payment to any Lender of the principal of or interest on the Loans or the Notes or any other amounts payable hereunder (except for changes in the rate of tax on, or determined by reference to, the net income or net profits of such Lender pursuant to the laws of the jurisdiction in which it is organized or in which its principal office or applicable lending office is located or any subdivision thereof or therein) or (B) a change in official reserve requirements, and/or (y) other circumstances arising since the Effective Date affecting such Lender, then, and in any such event, such Lender shall promptly give notice (by telephone promptly confirmed in writing) to the Borrowers to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other Lenders). Thereafter, the Borrowers agree to pay to such Lender, upon such Lender’s written request therefor, such additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as shall be required to compensate such Lender for such increased costs or reductions in amounts received or receivable hereunder (a written notice as to the additional amounts owed to such Lender, showing in reasonable detail the basis for the calculation thereof, submitted to the Borrowers by such Lender shall, absent manifest error, be final and conclusive and binding on all the parties hereto).  

 

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(b)           If any Lender determines that after the Effective Date the introduction of or any change in any applicable law or governmental rule, regulation, order, guideline, directive or request (whether or not having the force of law) concerning capital adequacy, or any change in interpretation or administration thereof by the NAIC or any Governmental Authority, central bank or comparable agency, will have the effect of increasing the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender based on the existence of such Lender’s Commitments hereunder or its obligations hereunder, then the Borrowers agree to pay to such Lender, upon its written demand therefor, such additional amounts as shall be required to compensate such Lender or such other corporation for the increased cost to such Lender or such other corporation or the reduction in the rate of return to such Lender or such other corporation as a result of such increase of capital. In determining such additional amounts, each Lender will act reasonably and in good faith and will use averaging and attribution methods which are reasonable, provided that such Lender’s determination of compensation owing under this Section 2.04(b) shall, absent manifest error, be final and conclusive and binding on all the parties hereto. Each Lender, upon determining that any additional amounts will be payable pursuant to this Section 2.04(b), will give prompt written notice thereof to the Borrowers, which notice shall show in reasonable detail the basis for calculation of such additional amounts, although the failure to give any such notice shall not release or diminish the Borrowers’ obligations to pay additional amounts pursuant to this Section 2.04(b) upon the subsequent receipt of such notice.

 

2.05.        Compensation . The Borrowers agree to compensate each Lender, upon its written request (which request shall set forth in reasonable detail the basis for requesting such compensation), for all losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Loans but excluding loss of anticipated profits) which such Lender may sustain: (i) if any prepayment or repayment (including any prepayment or repayment made pursuant to Section 4.01, Section 4.02 or as a result of an acceleration of the Loans pursuant to Section 9) of any of its Loans is not made on any date specified in a notice of prepayment given by the Borrowers; or (ii) as a consequence of any other default by the Borrowers to repay Loans when required by the terms of this Agreement or any Note held by such Lender.  

 

2.06.        Change of Lending Office . Each Lender agrees that on the occurrence of any event giving rise to the operation of Section 2.04(a), Section 2.04(b) or Section 4.04 with respect to such Lender, it will, if requested by the Borrowers, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event, provided that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of such Section. Nothing in this Section 2.06 shall affect or postpone any of the obligations of the Borrowers or the right of any Lender provided in Sections 2.04 and 4.04.  

 

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2.07.        Replacement of Lenders . Upon the occurrence of the following: (x) any event giving rise to the operation of Section 2.04(a), Section 2.04(b) or Section 4.04 with respect to any Lender which results in such Lender charging to the Borrowers increased costs in excess of those being generally charged by the other Lenders or (y) a refusal by a Lender to consent to a proposed change, waiver, discharge or termination with respect to this Agreement which has been approved by the Required Lenders as (and to the extent) provided in Section 11.12(b), in each case the Borrowers shall have the right, in accordance with Section 11.04(b), if no Default or Event of Default then exists or would exist after giving effect to such replacement, to replace such Lender (the “ Replaced Lender ”) with one or more other Eligible Transferees (collectively, the “ Replacement Lender ”) and each of which shall be reasonably acceptable to the Administrative Agent; provided that:  

 

(a)           at the time of any replacement pursuant to this Section 2.07, the Replacement Lender shall enter into one or more Assignment and Assumption Agreements pursuant to Section 11.04(b) (and with all fees payable pursuant to said Section 11.04(b) to be paid by the Replacement Lender and/or the Replaced Lender (as may be agreed to at such time by and among the Borrowers, the Replacement Lender and the Replaced Lender)) pursuant to which the Replacement Lender shall acquire all of the outstanding Loans of the Replaced Lender and, in connection therewith, shall pay to (x) the Replaced Lender in respect thereof an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the respective Replaced Lender and (B) an amount equal to all accrued, but theretofore unpaid, Fees owing to the Replaced Lender pursuant to Section 3.01; and

 

(b)           all obligations of the Borrowers then owing to the Replaced Lender (other than those specifically described in clause (a) above in respect of which the assignment purchase price has been, or is concurrently being, paid, but including all amounts, if any, owing under Section 2.05) shall be paid in full to such Replaced Lender concurrently with such replacement.

 

Upon receipt by the Replaced Lender of all amounts required to be paid to it pursuant to this Section 2.07, the Administrative Agent shall be entitled (but not obligated) and authorized to execute an Assignment and Assumption Agreement on behalf of such Replaced Lender, and any such Assignment and Assumption Agreement so executed by the Administrative Agent and the Replacement Lender shall be effective for purposes of this Section 2.07 and Section 11.04. Upon the execution of the respective Assignment and Assumption Agreement, the payment of amounts referred to in clauses (a) and (b) above, recordation of the assignment on the Register by the Administrative Agent pursuant to Section 11.15 and, if so requested by the Replacement Lender, delivery to the Replacement Lender of the appropriate Note or Notes executed by the Borrowers, the Replacement Lender shall become a Lender hereunder and the Replaced Lender shall cease to constitute a Lender hereunder, except with respect to indemnification provisions under this Agreement (including, without limitation, Sections 2.04, 2.05, 4.04, 10.06, 11.01 and 11.06), which shall survive as to such Replaced Lender.

 

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2.08.        Allocation of Purchase Price . It is hereby agreed that, for purposes of Treasury Regulations § 1.1273-2(h), (i) the Lenders that will receive the Investment Warrants (as defined herein) will be treated as acquiring “units” with an aggregate "issue price" of $80,000,000; (ii) the "units" will consist of the following two elements: (1) the Investment Warrants, which have an aggregate a fair market value of $1,050,000 and (2) the aggregate amount of the Loans of all Lenders which have a fair market value of $80,000,000; and (iii) the aggregate "issue price" of such Loans is $78,950,000 (the issue price of the units ($80,000,000) minus the fair market value of the Investment Warrants ($1,050,000)). Each of the Credit Parties and the Lenders agrees to use the foregoing issue price and fair market values for U.S. federal income tax purposes with respect to the transactions contemplated hereby (unless otherwise required by a final determination by the IRS or a court of competent jurisdiction) and for all other financial accounting purposes.

 

2.09.        Incremental Loans . The Borrowers may at any time after the Funding Date, by written notice to the Administrative Agent (whereupon the Administrative Agent shall promptly deliver a copy to each of the Lenders) at least 30 days prior to the requested funding date of such Commitment Increase, request no more than two increases in the amount of the Commitments, each such increase, a “ Commitment Increase ,” and such increase shall thereupon become effective upon the effectiveness of the Incremental Amendment referred to below; provided that (i) both at the time of such request and upon the effectiveness of the Incremental Amendment referred to below, no Default or Event of Default shall exist, (ii) both at the time of any such request and upon the effectiveness of the Incremental Amendment referred to below, all representations and warranties contained in this Agreement and in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on such date (it being understood and agreed that (x) any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date and (y) any representation or warranty that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct in all respects on such date), (iii) as of the date of incurrence of Additional Loans (a) if such date is prior to March 31, 2013, the Total Leverage Ratio as of the most recently fiscal quarter of the Parent would be less than 2.50:1.00 on a Pro Forma Basis and, as applicable, calculated in accordance with the definition of Test Period contained herein, after giving effect to the incurrence of the Additional Loans and (b) if such date is after March 31, 2013, the Parent and its Subsidiaries would be in compliance with the financial covenants contained in Sections 8.07 through 8.11, inclusive, as of the most recently ended Calculation Period on a Pro Forma Basis, after giving effect to the incurrence of the Additional Loans and (iv) unless otherwise agreed to by the Required Lenders, the amount of each Commitment Increase shall be in integral multiples of $10,000,000 and the amount of all such Commitment Increases shall not be more than $20,000,000. Loans made pursuant to the Commitment Increase (the “ Additional Loans ”) shall have the same terms and conditions as those applicable to the Loans and shall constitute “Loans” hereunder. The notice from the Borrower pursuant to this Section 2.09 shall set forth the requested amount of the Commitment Increase and the funding date of such Commitment Increase. Each of the existing Lenders shall have a right of first refusal to provide its pro rata share of the requested Commitment Increase (but no existing Lender will have any obligation to make any portion of the Commitment Increase); provided that if any existing Lender shall choose to not participate in the Commitment Increase, the other existing Lenders shall have the right (but not the obligation) to provide its pro rata share (excluding the share of any non-participating Lender) to provide such amount of the Commitment Increase; provided further that any shortfall of the requested Commitment Increase that has not been provided by an existing Lender pursuant to the terms of this Section 2.09 may be provided by any other bank or other financial institution that is an Eligible Transferee (any such other bank or other financial institution being called an “ Additional Lender ”); provided that the Administrative Agent shall have consented (not to be unreasonably withheld, conditioned or delayed) to such Additional Lender’s providing a portion of such Commitment Increase. Additional Loans shall be provided pursuant to an amendment (the “ Incremental Amendment ”) to this Agreement and, as appropriate, the other Credit Documents, executed by each Credit Party, each Lender agreeing to provide such Additional Loans, if any, each Additional Lender, if any, and the Administrative Agent. The Incremental Amendment may, with the consent of the Parent, the Borrowers and the Administrative Agent, but without the consent of any other Credit Party or the Lenders, effect such amendments to this Agreement and the other Credit Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrowers, to effect the provisions of this Section 2.09 . The Borrower may use the proceeds of the Additional Loans for any purpose not prohibited by this Agreement.

 

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SECTION 3.      Fees; Prepayment Premiums .

 

3.01.        Fees . The Borrowers agree to pay to the Administrative Agent the fees, costs and expenses set forth in the Fee Letter and as may be agreed in writing from time to time by Parent or any of its Subsidiaries and the Administrative Agent.

 

3.02.        Prepayment Premiums .

 

(a)           Upon the occurrence of any prepayment of all or a portion of the principal of the Loans pursuant to Sections 4.01 or as a result of an acceleration of the Loans pursuant to Section 9 (or upon the occurrence of any prepayment of all or a portion of the principal of the Loans pursuant to 4.02, but solely to the extent that the action giving rise to such prepayment constitutes a Default hereunder), then, in addition to the payment of the principal amount of the Loans, accrued and unpaid interest, and Fees, the Borrowers shall pay the following prepayment premium (each a “ Prepayment Premium ”) to the Lenders:

 

(i)            if any such prepayment occurs after the Funding Date but prior to the second year anniversary of the Funding Date (the “ Make Whole Period ”), the Borrowers shall pay the Lenders a prepayment premium equal to the sum of (x) five percent (5.00%) of the principal amount of the Loan prepaid at such time plus (y) the amount which causes the Lender’s return on the Loan prepaid at such time to equal the full amount of interest that would otherwise have been payable in respect of the Loan if such Loan had remained outstanding during the entire Make Whole Period, and which shall in each case be calculated by the Lender in its discretion, utilizing a discount rate on such stream of principal and interest payments equal to the Treasury Rate plus 50 basis points; provided that under no circumstances shall such Prepayment Premium apply to any Scheduled Repayment;

 

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(ii)           if any such prepayment occurs after the second year anniversary of the Funding Date but prior to or on the third year anniversary of the Funding Date, the Borrowers shall pay the Lenders a prepayment premium equal to five percent (5.00%) of the principal amount of the Loans prepaid at such time; provided that under no circumstances shall such Prepayment Premium apply to any Scheduled Repayment;

 

(iii)          if any such prepayment occurs after the third year anniversary of the Funding Date, the Borrowers shall pay the Lenders a prepayment premium equal to three percent (3.00%) of the principal amount of the Loans prepaid at such time; provided that under no circumstances shall such Prepayment Premium apply to any Scheduled Repayment. In addition, notwithstanding anything herein to the contrary, the Prepayment Premium shall not apply to any repayment of Loans on and after the Maturity Date, unless a Default shall have occurred and be continuing as of such date.

 

(b)           The Borrowers agree that the Prepayment Premiums required under Section 3.02(a) are a reasonable calculation of the Lenders’ lost profits in view of the difficulties and impracticality of determining actual damages resulting from a prepayment of the Loan. All Prepayment Premiums under this Section 3.02 shall be in addition to all other amounts which may be due to the Lenders from time to time pursuant to the terms of this Agreement and the other Credit Documents. All of the Loans shall be subject to the Prepayment Premiums set forth in this Section 3.02 and the payment of one Prepayment Premium on a portion of the Loans shall not excuse or reduce the prepayment of a Prepayment Premium on any subsequent prepayment of the Loans.

 

SECTION 4.      Prepayments; Payments; Taxes .  

 

4.01.        Voluntary Prepayments . The Borrowers shall have the right to prepay the Loans, together with accrued and unpaid interest, Fees, and any applicable Prepayment Premium as set forth in Section 3.02, in whole or in part at any time and from time to time after the second anniversary of the Funding Date on the following terms and conditions: (i) the Borrowers shall give the Administrative Agent prior to 12:00 Noon (New York City time) at the Notice Office at least one Business Day’s prior written notice (or telephonic notice promptly confirmed in writing) of their intent to prepay Loans, which notice shall specify the amount of such prepayment, and which notice the Administrative Agent shall promptly transmit to each of the Lenders; (ii) each partial prepayment of Loans pursuant to this Section 4.01(a) shall be in an aggregate principal amount of at least $1,000,000 (or such lesser amount as is acceptable to the Administrative Agent in any given case), (iii) each prepayment pursuant to this Section 4.01(a) shall be applied pro rata among all Loans ); and (v) each prepayment of Loans pursuant to this Section 4.01(a) shall reduce the then remaining Scheduled Repayments of the Loans in inverse order of maturity .  

 

4.02.        Mandatory Repayments . (a) In addition to any other mandatory repayments pursuant to this Section 4.02, on each date set forth below (each, a “ Scheduled Repayment Date ”), the Borrowers shall be required to repay that principal amount of Loans, to the extent then outstanding, as is set forth opposite each such date below (each such repayment, as the same may be reduced as provided in Section 4.01(a) or 4.02(g), a “ Scheduled Repayment ”):

 

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Scheduled Repayment Date   Amortization
Amount 		 
       
The last Business Day of Parent’s fiscal quarter ending December 31, 2012   $ 100,000  
         
The last Business Day of Parent’s fiscal quarter ending March 31, 2013   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending June 30, 2013   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending September 30, 2013   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending December 31, 2013   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending March 31, 2014   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending June 30, 2014   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending September 30, 2014   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending December 31, 2014   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending March 31, 2015   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending June 30, 2015   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending September 30, 2015   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending December 31, 2015   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending March 31, 2016   $ 200,000  

 

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Scheduled Repayment Date   Amortization
Amount 		 
       
The last Business Day of Parent’s fiscal quarter ending June 30, 2016   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending September 30, 2016   $ 200,000  
         
Maturity Date     Aggregate outstanding principal amount of all Loans as of such date  

 

In the event that Additional Loans are borrowed pursuant to Section 2.09, for any Scheduled Repayment Date after the funding date of such Additional Loans (other than the Maturity Date), each “Scheduled Repayment” shall include an amount equal to 0.25% of the aggregate initial principal amount of Additional Loans made after the Funding Date. Any remainder of the Additional Loans shall be repaid in full on the Maturity Date.

 

(b)           In addition to any other mandatory repayments pursuant to this Section 4.02, on each date on or after the Funding Date upon which Parent or any of its Subsidiaries receives any Net Cash Proceeds from any capital contribution or any sale or issuance of its Equity Interests (other than (i) issuances of Equity Interests to Parent or any Subsidiary of Parent by any Subsidiary of Parent, (ii) any capital contributions to any Subsidiary of Parent made by Parent or any Subsidiary of Parent or (iii) sales or issuances of Parent Common Stock to employees, officers and/or directors of Parent and its Subsidiaries (including as a result of the exercise of any options with respect thereto) in an aggregate amount not to exceed $1,000,000 in any fiscal year of Parent), an amount equal to (x) 50%, if the issuer of such Equity Interests or recipient of such capital contribution is Parent, and (y) 100%, if the issuer of such Equity Interests or recipient of such capital contribution is a Subsidiary of Parent, in each case of the Net Cash Proceeds of such capital contribution or sale or issuance of Equity Interests shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 4.02(g).

 

(c)           In addition to any other mandatory repayments pursuant to this Section 4.02, on each date on or after the Funding Date upon which Parent or any of its Subsidiaries receives any cash proceeds from any issuance or incurrence by Parent or any of its Subsidiaries of Indebtedness for borrowed money (other than Indebtedness for borrowed money permitted to be incurred pursuant to Section 8.04 as in effect on the Effective Date), an amount equal to 100% of the Net Cash Proceeds of the respective incurrence of Indebtedness shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 4.02(g).

 

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(d)           In addition to any other mandatory repayments pursuant to this Section 4.02, on each date on or after the Funding Date upon which Parent or any of its Subsidiaries receives any cash proceeds from any Asset Sale, an amount equal to 100% of the Net Sale Proceeds therefrom shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 4.02(g); provided , however , that with respect to no more than $7,500,000 in the aggregate of such Net Sale Proceeds received by Parent or its Subsidiaries in any fiscal year of Parent, such Net Sale Proceeds shall not be required to be so applied on such date so long as no Default or Event of Default then exists and such Net Sale Proceeds shall be used to purchase assets (other than inventory and working capital) used or to be used in the businesses permitted pursuant to Section 8.15 within 360 days following the date of such Asset Sale, and provided further , that if all or any portion of such Net Sale Proceeds not required to be so applied as provided above in this Section 4.02(d) are not so reinvested within such 360-day period (or such earlier date, if any, as Parent or the relevant Subsidiary determines not to reinvest the Net Sale Proceeds from such Asset Sale as set forth above), such remaining portion shall be applied on the last day of such period (or such earlier date, as the case may be) as provided above in this Section 4.02(d) without regard to the preceding proviso.

 

(e)           In addition to any other mandatory repayments pursuant to this Section 4.02, on each Excess Cash Payment Date, an amount equal to the Applicable ECF Prepayment Percentage of the Excess Cash Flow for the related Excess Cash Payment Period shall be applied as a mandatory repayment in accordance with the requirements of Section 4.02(g).

 

(f)            In addition to any other mandatory repayments pursuant to this Section 4.02, on each date on or after the Funding Date upon which Parent or any of its Subsidiaries receives any cash proceeds from any Recovery Event (other than Recovery Events where the Net Cash Proceeds therefrom do not exceed $100,000), an amount equal to 100% of the Net Cash Proceeds from such Recovery Event shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 4.02(g); provided , however , that (x) so long as no Default or Event of Default then exists and such Net Cash Proceeds do not exceed $7,500,000, such Net Cash Proceeds shall not be required to be so applied on such date to the extent that Parent has delivered a certificate to the Administrative Agent on such date stating that such Net Cash Proceeds shall be used to replace or restore any properties or assets in respect of which such Net Cash Proceeds were paid within 360 days following the date of the receipt of such Net Cash Proceeds (which certificate shall set forth the estimates of the Net Cash Proceeds to be so expended), and (y) so long as no Default or Event of Default then exists and if (i) the amount of such Net Cash Proceeds exceeds $7,500,000, (ii) the amount of such Net Cash Proceeds, together with other cash available to the Borrowers and permitted to be spent by it on Capital Expenditures during the relevant period pursuant to Section 8.07, equals at least 100% of the cost of replacement or restoration of the properties or assets in respect of which such Net Cash Proceeds were paid as determined by Parent and as supported by such estimates or bids from contractors or subcontractors or such other supporting information as the Administrative Agent may reasonably request, (iii) Parent has delivered to the Administrative Agent a certificate on or prior to the date the application would otherwise be required pursuant to this Section 4.02(f) in the form described in clause (x) above and also certifying Parent’s determination as required by preceding clause (ii) and certifying the sufficiency of business interruption insurance as required by succeeding clause (iv), and (iv) Parent has delivered to the Administrative Agent such evidence as the Administrative Agent may reasonably request in form and substance reasonably satisfactory to the Administrative Agent establishing that the Borrowers have sufficient business interruption insurance and that the Borrowers will receive payments thereunder in such amounts and at such times as are necessary to satisfy all obligations and expenses of the Borrowers (including, without limitation, all debt service requirements, including pursuant to this Agreement), without any delay or extension thereof, for the period from the date of the respective casualty, condemnation or other event giving rise to the Recovery Event and continuing through the completion of the replacement or restoration of the respective properties or assets, then the entire amount of the Net Cash Proceeds of such Recovery Event and not just the portion in excess of $7,500,000 shall be deposited with the Administrative Agent pursuant to a cash collateral arrangement reasonably satisfactory to the Administrative Agent, whereby such Net Cash Proceeds shall be disbursed to the Borrowers from time to time as needed to pay actual costs incurred by it in connection with the replacement or restoration of the respective properties or assets (pursuant to such certification requirements as may be established by the Administrative Agent), it being understood and agreed that at any time while an Event of Default has occurred and is continuing, the Required Lenders may direct the Administrative Agent (in which case the Administrative Agent shall, and is hereby authorized by the Borrowers to, follow said directions) to apply any or all proceeds then on deposit in such cash collateral account to the repayment of Obligations hereunder, and provided further , that if all or any portion of such Net Cash Proceeds not required to be so applied pursuant to the preceding proviso (whether pursuant to clause (x) or (y) thereof) are not so used within 360 days after the date of the receipt of such Net Cash Proceeds (or such earlier date, if any, as Parent or the relevant Subsidiary determines not to reinvest the Net Cash Proceeds relating to such Recovery Event as set forth above), such remaining portion shall be applied on the last day of such period (or such earlier date, as the case may be) as provided above in this Section 4.02(f) without regard to the preceding proviso.

 

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(g)           Each amount required to be repaid pursuant to Sections 4.02(b), (c), (d), (e) and (f) and applied in accordance with this Section 4.02(g) shall be applied to reduce the then remaining Scheduled Repayments of the Loans in inverse order of maturity (based upon the then remaining principal amounts of the Scheduled Repayments of such Loans after giving effect to all prior reductions thereto).

 

(h)           In addition to any other mandatory repayments pursuant to this Section 4.02, (i) all then outstanding Loans shall be repaid in full on the Maturity Date and (ii) unless the Required Lenders otherwise agree in writing, all then outstanding Loans shall be repaid in full on the date on which a Change of Control occurs.

 

4.03.        Method and Place of Payment . Except as otherwise specifically provided herein, all payments under this Agreement and under any Note shall be made to the Administrative Agent for the account of the Lender or Lenders entitled thereto not later than 12:00 Noon (New York City time) on the date when due and shall be made in Dollars in immediately available funds at the Payment Office. Any payments received by the Administrative Agent after such time shall be deemed to have been received on the next Business Day. Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension.  

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4.04.        Net Payments . (a)  All payments made by the Borrowers hereunder and under any Note will be made without setoff, counterclaim or other defense. Except as provided in Section 4.04(b), all such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding, except as provided in the second succeeding sentence, any tax imposed on or measured by the net income or net profits of a Lender pursuant to the laws of the jurisdiction in which it is organized or the jurisdiction in which the principal office or applicable lending office of such Lender is located or any subdivision thereof or therein) and all interest, penalties or similar liabilities with respect to such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges (all such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as “ Taxes ”). If any Taxes are so levied or imposed, the Borrowers agree to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement or under any Note, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in such Note. If any amounts are payable in respect of Taxes pursuant to the preceding sentence, the Borrowers agree to reimburse each Lender, upon the written request of such Lender, for taxes imposed on or measured by the net income or net profits of such Lender pursuant to the laws of the jurisdiction in which such Lender is organized or in which the principal office or applicable lending office of such Lender is located or under the laws of any political subdivision or taxing authority of any such jurisdiction in which such Lender is organized or in which the principal office or applicable lending office of such Lender is located and for any withholding of taxes as such Lender shall determine are payable by, or withheld from, such Lender, in respect of such amounts so paid to or on behalf of such Lender pursuant to the preceding sentence and in respect of any amounts paid to or on behalf of such Lender pursuant to this sentence. The Borrowers will furnish to the Administrative Agent within 45 days after the date the payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment by such Borrower. The Borrowers agree to indemnify and hold harmless each Lender, and reimburse such Lender upon its written request, for the amount of any Taxes so levied or imposed and paid by such Lender.  

 

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(b)           Each Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes agrees to deliver to the Borrowers and the Administrative Agent on or prior to the Effective Date or, in the case of a Lender that is an assignee or transferee of an interest under this Agreement pursuant to Section 2.07 or 11.04(b) (unless the respective Lender was already a Lender hereunder immediately prior to such assignment or transfer), on the date of such assignment or transfer to such Lender, (i) two accurate and complete original signed copies of Internal Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete exemption under an income tax treaty) (or successor forms) certifying to such Lender’s entitlement as of such date to a complete exemption from United States withholding tax with respect to payments to be made under this Agreement and under any Note, or (ii) if the Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form W-8ECI or Form W-8BEN (with respect to a complete exemption under an income tax treaty) (or any successor forms) pursuant to clause (i) above, (x) a certificate substantially in the form of Exhibit D (any such certificate, a “ Section 4.04(b)(ii) Certificate ”) and (y) two accurate and complete original signed copies of Internal Revenue Service Form W-8BEN (with respect to the portfolio interest exemption) (or successor form) certifying to such Lender’s entitlement as of such date to a complete exemption from United States withholding tax with respect to payments of interest to be made under this Agreement and under any Note. In addition, each Lender agrees that from time to time after the Effective Date, when a lapse in time or change in circumstances renders the previous certification obsolete or inaccurate in any material respect, such Lender will deliver to the Borrowers and the Administrative Agent two new accurate and complete original signed copies of Internal Revenue Service Form W-8ECI, Form W-8BEN (with respect to the benefits of any income tax treaty), or Form W-8BEN (with respect to the portfolio interest exemption) and a Section 4.04(b)(ii) Certificate, as the case may be, and such other forms as may be required in order to confirm or establish the entitlement of such Lender to a continued exemption from or reduction in United States withholding tax with respect to payments under this Agreement and any Note, or such Lender shall immediately notify the Borrowers and the Administrative Agent of its inability to deliver any such Form or Certificate, in which case such Lender shall not be required to deliver any such Form or Certificate pursuant to this Section 4.04(b). Notwithstanding anything to the contrary contained in Section 4.04(a), but subject to Section 11.04(b) and the immediately succeeding sentence, (x) each Borrower shall be entitled, to the extent it is required to do so by law, to deduct or withhold income or similar taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein) from interest, Fees or other amounts payable hereunder for the account of any Lender which is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that such Lender has not provided to such Borrower U.S. Internal Revenue Service Forms that establish a complete exemption from such deduction or withholding and (y) the Borrowers shall not be obligated pursuant to Section 4.04(a) to gross-up payments to be made to a Lender in respect of income or similar taxes imposed by the United States if (I) such Lender has not provided to the Borrowers the Internal Revenue Service Forms required to be provided to the Borrowers pursuant to this Section 4.04(b) or (II) in the case of a payment, other than interest, to a Lender described in clause (ii) above, to the extent that such forms do not establish a complete exemption from withholding of such taxes. Notwithstanding anything to the contrary contained in the preceding sentence or elsewhere in this Section 4.04 and except as set forth in Section 11.04(b), the Borrowers agree to pay any additional amounts and to indemnify each Lender in the manner set forth in Section 4.04(a) (without regard to the identity of the jurisdiction requiring the deduction or withholding) in respect of any amounts deducted or withheld by them as described in the immediately preceding sentence as a result of any changes that are effective after the Effective Date in any applicable law, treaty, governmental rule, regulation, guideline or order, or in the interpretation thereof, relating to the deducting or withholding of such Taxes.

 

SECTION 5.      Conditions Precedent to the Loans . The obligation of each Lender to make Loans on the Funding is subject at the time of the making of such Loans to the satisfaction of the following conditions:

 

5.01.        Funding Date; Notes .  On or prior to the Funding Date, (i) the Effective Date shall have occurred as provided in Section 11.10 and (ii) there shall have been delivered to the Administrative Agent for the account of each of the Lenders that has requested a Note, the appropriate Note executed by the Borrowers, in each case in the amount, maturity and as otherwise provided herein.  

 

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5.02.        Officer’s Certificate .  On the Funding Date, the Administrative Agent shall have received a certificate, dated the Funding Date and signed on behalf of the Borrowers by the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President or any Vice President of the Borrowers, certifying on behalf of the Borrowers that (i) there shall exist no Default or Event of Default, (ii) all representations and warranties contained herein and in the other Credit Documents shall be true and correct and (iii) all of the conditions in Sections 5.03 through 5.22, inclusive, have been satisfied as of such date.  

 

5.03.        Opinions of Counsel .  On the Funding Date, the Administrative Agent shall have received (i) from Strasburger & Price L.L.P., special counsel to the Credit Parties, an opinion addressed to the Administrative Agent, the Collateral Agent and each of the Lenders and dated the Funding Date covering the matters set forth in Exhibit E and such other matters incident to the transactions contemplated herein as the Administrative Agent may reasonably request, (ii) from Alaskan counsel, an opinion, in form and substance reasonably satisfactory to the Administrative Agent, addressed to the Administrative Agent, the Collateral Agent and each of the Lenders and dated the Funding Date covering such matters incident to the transactions contemplated herein as the Administrative Agent may reasonably request, and (iii) from Canadian counsel, an opinion, in form and substance reasonably satisfactory to the Administrative Agent, addressed to the Administrative Agent, the Collateral Agent and each of the Lenders and dated the Funding Date covering such matters incident to the transactions contemplated herein as the Administrative Agent may reasonably request.  

 

5.04.        Company Documents; Proceedings; etc .  (a)  On the Funding Date, the Administrative Agent shall have received a certificate from each Credit Party, dated the Funding Date, signed by the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President or any Vice President of such Credit Party, and attested to by the Secretary or any Assistant Secretary of such Credit Party, in the form of Exhibit F with appropriate insertions, together with copies of the certificate or articles of incorporation and by-laws (or other equivalent organizational documents), as applicable, of such Credit Party and the resolutions of such Credit Party referred to in such certificate, and each of the foregoing shall be in form and substance reasonably acceptable to the Administrative Agent.  

 

(b)           On the Funding Date, all Company and legal proceedings and all instruments and agreements in connection with the transactions contemplated by this Agreement and the other Documents shall be reasonably satisfactory in form and substance to the Administrative Agent, and the Administrative Agent shall have received all information and copies of all documents and papers, including records of Company proceedings, governmental approvals, good standing certificates and bring-down telegrams or facsimiles, if any, which the Administrative Agent reasonably may have requested in connection therewith, such documents and papers where appropriate to be certified by proper Company officers or Governmental Authorities.

 

5.05.        Employee Benefit Plans; Shareholders’ Agreements; Management Agreements; Employment Agreements; Non-Compete Agreements; Collective Bargaining Agreements; Tax Sharing Agreements; Existing Indebtedness Agreements . On or prior to the Funding Date, there shall have been delivered to the Administrative Agent true and correct copies of the following documents, certified as such by an Authorized Officer of Parent, solely to the extent Parent or its Subsidiaries have any of the following documents:  

 

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(i)            all Plans (and for each Plan that is required to file an annual report on Internal Revenue Service Form 5500-series, a copy of the most recent such report (including, to the extent required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information), and for each Plan that is a “single-employer plan” as defined in Section 4001(a)(15) of ERISA, the most recently prepared actuarial valuation therefor) and any other “employee benefit plans” as defined in Section 3(3) of ERISA, and any other material agreements, plans or arrangements, with or for the benefit of current or former employees of Parent or any of its Subsidiaries or any ERISA Affiliate (provided that the foregoing shall apply in the case of any multiemployer plan, as defined in 4001(a)(3) of ERISA, only to the extent that any document described herein is in the possession of Parent or any Subsidiary of Parent or any ERISA Affiliate or is reasonably available thereto from the sponsor or trustee of any such plan);

 

(ii)           all agreements entered into by Parent or any of its Subsidiaries governing the terms and relative rights of its equity interests and any agreements entered into by its shareholders relating to any such entity with respect to its equity interests (collectively, the “ Shareholders’ Agreements ”);

 

(iii)          all material agreements with members of, or with respect to, the management of Parent or any of its Subsidiaries;

 

(iv)          all material employment agreements entered into by Parent or any of its Subsidiaries;

 

(v)           all non-compete agreements entered into by Parent or any of its Subsidiaries which restrict the activities of Parent or any of its Subsidiaries;

 

(vi)          all collective bargaining agreements applying or relating to any employee of Parent or any of any of its Subsidiaries;

 

(vii)         all tax sharing, tax allocation and other similar agreements entered into by Parent or any of its Subsidiaries; and

 

(viii)        all agreements evidencing or relating to Indebtedness of Parent or any of its Subsidiaries which is to remain outstanding after giving effect to the Transaction;

 

all of which shall be in form and substance reasonably satisfactory to the Administrative Agent and shall be in full force and effect on the Funding Date.

 

5.06.        Intercompany Canadian Note .  The Intercompany Canadian Note shall have been issued pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders.  

 

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5.07.        Consummation of the Refinancing

 

(a)           On or prior to the Funding Date and concurrently with the incurrence of Loans and the use of such Loans to finance the Refinancing on such date, all Indebtedness of Parent and its Subsidiaries under the Indebtedness Agreements to be Repaid shall have been repaid in full, together with all fees, prepayment penalties and other amounts owing thereon, all commitments under the Indebtedness Agreements to be Repaid shall have been terminated and all letters of credit issued pursuant to the Indebtedness Agreements to be Repaid shall have been terminated.

 

(b)           On the Funding Date and concurrently with the incurrence of Loans on such date, all security interests in respect of, and Liens securing, the Indebtedness under the Indebtedness Agreements to be Repaid created pursuant to the security documentation relating to the Indebtedness Agreements to be Repaid shall have been terminated and released, and the Administrative Agent shall have received all such releases as may have been requested by the Administrative Agent, which releases shall be in form and substance satisfactory to the Administrative Agent. Without limiting the foregoing, there shall have been delivered to the Administrative Agent (x) proper termination statements (Form UCC-3 or the appropriate equivalent) for filing under the UCC or equivalent statute or regulation of each jurisdiction where a financing statement or application for registration (Form UCC-1 or the appropriate equivalent) was filed with respect to Parent or any of its Subsidiaries in connection with the security interests created with respect to the Indebtedness Agreements to be Repaid, (y) terminations or reassignments of any security interest in, or Lien on, any patents, trademarks, copyrights, or similar interests of Parent or any of its Subsidiaries on which filings have been made and (z) terminations of all mortgages, leasehold mortgages, hypothecs and deeds of trust created with respect to property of Parent or any of its Subsidiaries, in each case, to secure the obligations under the Indebtedness Agreements to be Repaid, all of which shall be in form and substance reasonably satisfactory to the Administrative Agent.

 

(c)           On the Funding Date and after giving effect to the consummation of the Transaction, Parent and its Subsidiaries shall have no outstanding Preferred Equity or Indebtedness, except for (i) Indebtedness pursuant to or in respect of the Credit Documents, (ii) the Existing Shareholders Notes, (iii) certain other indebtedness existing on the Effective Date as listed on Schedule VI in an aggregate outstanding principal amount not to exceed $2,000,000, (iv) Intercompany Loans then outstanding and permitted under Section 8.05(viii) (with the Indebtedness described in sub-clauses (iii) and (iv) being herein called the “ Existing Indebtedness ”) and (iv) Preferred Equity existing on the Effective Date as listed on Schedule VI. On and as of the Funding Date , all of the Existing Indebtedness shall remain outstanding after giving effect to the Transaction without any breach, required repayment, required offer to purchase, default, event of default or termination rights existing thereunder or arising as a result of the Transaction.

 

(d)           The Administrative Agent shall have received evidence in form, scope and substance reasonably satisfactory to it that the matters set forth in this Section 5.07 have been satisfied on the Funding Date.

 

5.08.        Adverse Change, Approvals .  (a)  Since December 31, 2011, nothing shall have occurred (and neither the Administrative Agent nor any Lender shall have become aware of any facts or conditions not previously known) which the Administrative Agent or the Required Lenders shall determine has had, or could reasonably be expected to have, (i) a Material Adverse Effect or (ii) a material adverse effect on the Transaction.  

 

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(b)           On or prior to the Funding Date, all necessary governmental (domestic and foreign) and material third party approvals and/or consents in connection with the Transaction, the other transactions contemplated hereby and the granting of Liens under the Credit Documents shall have been obtained and remain in effect, and all applicable waiting periods with respect thereto shall have expired without any action being taken by any competent authority which restrains, prevents or imposes materially adverse conditions upon the consummation of the Transaction or the other transactions contemplated by the Documents or otherwise referred to herein or therein. On the Funding Date, there shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon the Transaction or the other transactions contemplated by the Documents or otherwise referred to herein or therein.

 

5.09.        Litigation .  On the Funding Date, there shall be no actions, suits or proceedings pending or threatened (i) with respect to the Transaction, this Agreement or any other Document, or (ii) which the Administrative Agent or the Required Lenders shall determine has had, or could reasonably be expected to have, a Material Adverse Effect.  

 

5.10.        Subsidiaries Guaranty; Intercompany Notes . (a) On the Funding Date, each Subsidiary Guarantor, if any, shall have duly authorized, executed and delivered the Subsidiaries Guaranty in the form of Exhibit G (as amended, modified and/or supplemented from time to time, the “ Subsidiaries Guaranty ”), and the Subsidiaries Guaranty shall be in full force and effect.  

 

(b)           On the Funding Date, each Intercompany Note shall have been executed and pledged to the Lenders pursuant to the terms of the Pledge Agreement.

 

5.11.        Pledge Agreement .  On the Funding Date, each Credit Party shall have duly authorized, executed and delivered the Pledge Agreement in the form of Exhibit H (as amended, modified, restated and/or supplemented from time to time, the “ Pledge Agreement ”) and shall have delivered to the Collateral Agent, as Pledgee thereunder, all of the Pledge Agreement Collateral, if any, referred to therein and then owned by such Credit Party, (x) endorsed in blank, or together with executed and undated endorsements for transfer, in the case of promissory notes (including but not limited to the Intercompany Notes) constituting Pledge Agreement Collateral and (y) together with executed and undated endorsements for transfer in the case of Equity Interests constituting certificated Pledge Agreement Collateral, along with evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Pledge Agreement have been taken, and the Pledge Agreement shall be in full force and effect.  

 

5.12.        Security Agreement .  On the Funding Date, each Credit Party shall have duly authorized, executed and delivered the Security Agreement in the form of Exhibit I-1 (as amended, modified, restated and/or supplemented from time to time, the “ Security Agreement ”) covering all of such Credit Party’s Security Agreement Collateral, together with:  

 

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(i)            proper financing statements (Form UCC-1 or the equivalent) fully executed for filing under the UCC or other appropriate filing offices of each jurisdiction as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Security Agreement;

 

(ii)           certified copies of requests for information or copies, or equivalent reports as of a recent date, listing all effective financing statements that name Parent or any of its Subsidiaries as debtor and that are filed in the jurisdictions referred to in clause (i) above and in such other jurisdictions in which Collateral is located on the Funding Date, together with copies of such other financing statements that name Parent or any of its Subsidiaries as debtor (none of which shall cover any of the Collateral except (x) to the extent evidencing Permitted Liens or (y) those in respect of which the Collateral Agent shall have received termination statements (Form UCC-3) or such other termination statements as shall be required by local law fully executed for filing);

 

(iii)          evidence of the completion of all other recordings and filings of, or with respect to, the Security Agreement as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests intended to be created by the Security Agreement; and

 

(iv)          evidence that all other actions necessary or, in the reasonable opinion of the Collateral Agent, desirable to perfect and protect the security interests purported to be created by the Security Agreement have been taken, and the Security Agreement shall be in full force and effect.

 

5.13.        Foreign Security Agreements   (a) Prior to the Funding Date, (a) SAE executed and delivered, as of November 14, 2012, a security agreement covering all of its property and assets in Colombia, the Spanish text of which is substantially equivalent to the text in English of Exhibit I-2, (b) such security agreement was filed or registered on November 16, 2012 at, and was accepted on November 19, 2012 for filing or registration by, the Chamber of Commerce in Bogotá, Colombia, (c) such financing statements or other appropriate documents as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Security Agreement were filed in the applicable filing offices, and (d) such legal opinions and other documentation as may reasonably requested by the Collateral Agent in connection with the foregoing shall have been delivered to the Administrative Agent.

 

(b)           SAE shall have duly authorized, executed and delivered a security agreement covering all of its property and assets in Peru substantially in the form of Exhibit I-3, (b) such security agreement shall have been filed or registered at, and accepted for filing or registration by, the Public Registry of Lima, Peru, (III) such financing statements or other appropriate documents as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable, to perfect the security interests purported to be created by the Security Agreement shall have been filed in the applicable filing offices, and (IV) such legal opinions and other documentation as may be reasonably requested by the Collateral Agent in connection with the foregoing shall have been delivered to the Administrative Agent.

 

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5.14.        Capitalization Information .  . Parent shall have provided an accurate and complete capitalization table reflecting all of the direct and indirect owners of the Parent and its Subsidiaries (including the applicable ownership percentages) as of: (i) the date immediately prior to the Funding Date (the “ Pre-Closing Cap Table ”), and (ii) the date immediately following the Funding Date (the “ Post-Closing Cap Table ”)(collectively, the “ Cap Table ”).

 

5.15.        Organization Chart . The Parent shall have provided an accurate and complete organization chart reflecting all of the direct and indirect subsidiaries and/or affiliates of the Parent (including the applicable ownership percentages) as of: (i) the date immediately prior to the Funding Date (the “ Pre-Closing Organization Chart ”), and (ii) the date immediately following the Funding Date (the “ Post-Closing Organization Chart ”)(collectively, the “ Organization Charts ”).   

 

5.16.        Financial Statements; Pro Forma Balance Sheet; Projections . On or prior to the Funding Date, the Administrative Agent shall have received true and correct copies of the historical financial statements, the pro forma financial statements and the Projections referred to in Sections 6.05(a) and (d), which historical financial statements, pro forma financial statements and Projections shall be in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders.  

 

5.17.        Solvency Certificate; Insurance Certificates, etc . On the Funding Date, the Administrative Agent shall have received:  

 

(i)            a solvency certificate from the chief financial officer of Parent in the form of Exhibit J hereto;

 

(ii)           certificates of insurance complying with the requirements of Section 7.03 for the business and properties of Parent and its Subsidiaries, in form and substance reasonably satisfactory to the Administrative Agent and naming the Collateral Agent as an additional insured and/or as loss payee, and stating that such insurance shall not be canceled or materially revised without at least 30 days’ prior written notice by the insurer to the Collateral Agent; and

 

(iii)          if requested by the Administrative Agent, environmental and hazardous substance analyses with respect to the Real Property of Parent and its Subsidiaries in scope, form and substance reasonably acceptable to the Administrative Agent and the Required Lenders, together with a satisfactory reliance letter addressed to the Administrative Agent and the Lenders.

 

5.18.        Fees, etc .  Prior to the Funding Date, the Borrowers shall have executed a fee letter in scope, form and substance reasonably acceptable to the Administrative Agent (the “ Fee Letter ”) and shall have paid to the Administrative Agent (and its relevant affiliates) and each Lender all costs, fees and expenses (including, without limitation, all diligence expenses and legal fees and expenses) and other compensation contemplated hereby and under the fee letter payable to the Administrative Agent or such Lender to the extent then due.  

 

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5.19.        Notice of Borrowing . Prior to the making of the Loans on the Funding Date, the Administrative Agent shall have received a notice of borrowing substantially in the form of Exhibit A hereto at least one Business Day prior to the Funding Date.  

 

5.20.        Due Diligence . Prior to the making of the Loans on the Funding Date, the Administrative Agent shall have completed, to its satisfaction, all legal, tax, accounting, environmental, business and other due diligence (including but not limited to satisfactory diligence calls with parties to the Credit Parties’ contracts) with respect to the business, contracts, assets, liabilities, operations and condition (financial or otherwise) of Parent and its Subsidiaries in scope and determination satisfactory to the Administrative Agent in its sole discretion.  

 

5.21.        Investment Warrants . The Investment Warrants shall have been issued on the Funding Date on terms and conditions acceptable to the Administrative Agent and in accordance with the terms of this Agreement and the Warrant Agreements.

 

5.22.        Funding Date . The conditions precedent set forth in Sections 5.01 through 5.21 shall have been satisfied, and the Funding Date shall have occurred, on or prior to the Funding Termination Date.

 

In determining the satisfaction of the conditions specified in this Section 5, (x) to the extent any item is required to be satisfactory to any Lender, such item shall be deemed satisfactory to each Lender which has not notified the Administrative Agent in writing prior to the occurrence of the Funding Date that the respective item or matter does not meet its satisfaction and (y) in determining whether any Lender is aware of any fact, condition or event that has occurred and which would reasonably be expected to have a Material Adverse Effect or a material adverse effect of the type described in Section 5.08, each Lender which has not notified the Administrative Agent in writing prior to the occurrence of the Funding Date of such fact, condition or event shall be deemed not to be aware of any such fact, condition or event on the Funding Date. Upon the Administrative Agent’s good faith determination that the conditions specified in this Section 5 have been met (after giving effect to the preceding sentence), then the Funding Date shall have been deemed to have occurred, regardless of any subsequent determination that one or more of the conditions thereto had not been met (although the occurrence of the Funding Date shall not release the Borrowers from any liability for failure to satisfy one or more of the applicable conditions contained in this Section 5). The acceptance of the Loans shall constitute a representation and warranty by each of the Borrowers to the Administrative Agent and each of the Lenders that all the conditions specified in this Section 5 are satisfied as of that time. All of the Notes, certificates, legal opinions and other documents and papers referred to in this Section 5, unless otherwise specified, shall be delivered to the Administrative Agent at the Notice Office for the account of each of the Lenders and, except for the Notes, in sufficient counterparts or copies for each of the Lenders and shall be in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders.

 

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SECTION 6.      Representations, Warranties and Agreements .     In order to induce the Lenders to enter into this Agreement and to make the Loans comprising the Borrowing as provided herein, each of the Borrowers make the following representations, warranties and agreements, in each case after giving effect to the Transaction, all of which shall survive the execution and delivery of this Agreement and the Notes and the making of the Borrowing, with the occurrence of each Credit Event on the Funding Date being deemed to constitute a representation and warranty that the matters specified in this Section 6 are true and correct in all material respects on and as of the Funding Date.

 

6.01.        Company Status . Each of Parent and each of its Subsidiaries (i) is a duly organized and validly existing Company in good standing (or, in the case of any non-U.S. Subsidiary of Parent, the applicable equivalent of “good standing” to the extent that such concept exists in such non-U.S. Subsidiary’s jurisdiction of organization) under the laws of the jurisdiction of its organization, (ii) has the Company power and authority to own its property and assets and to transact the business in which it is engaged and presently proposes to engage and (iii) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the ownership, leasing or operation of its property or the conduct of its business requires such qualifications except for failures to be so qualified or authorized which, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No certifications by any Governmental Authority are required for operation of the business of Parent and its Subsidiaries that are not in place, except for such certifications or agreements, the absence of which could not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  

 

6.02.        Power and Authority . Each Credit Party and each of their respective Subsidiaries has the Company power and authority to execute, deliver and perform the terms and provisions of each of the Documents to which it is party and has taken all necessary Company action to authorize the execution, delivery and performance by it of each of such Documents. Each Credit Party and each of their respective Subsidiaries has duly executed and delivered each of the Documents to which it is party, and each of such Documents constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).  

 

6.03.        No Violation . Neither the execution, delivery or performance by any Credit Party or any Subsidiary of the Documents to which it is a party, nor compliance by it with the terms and provisions thereof, (i) will contravene any provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or Governmental Authority, (ii) will conflict with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Security Documents) upon any of the property or assets of any Credit Party or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other material agreement, contract or instrument, in each case to which any Credit Party or any of its Subsidiaries is a party or by which it or any its property or assets is bound or to which it may be subject, or (iii) will violate any provision of the certificate or articles of incorporation, certificate of formation, limited liability company agreement or by-laws (or equivalent organizational documents), as applicable, of any Credit Party or any of its Subsidiaries.  

 

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6.04.        Approvals . No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except for (x) those that have otherwise been obtained or made on or prior to the Funding Date and which remain in full force and effect on the Funding Date and (y) filings which are necessary to perfect the security interests created or intended to be created under the Security Documents, which filings will be made on the Funding Date), or exemption by, any Governmental Authority is required to be obtained or made by, or on behalf of, any Credit Party or any Subsidiary to authorize, or is required to be obtained or made by, or on behalf of, any Credit Party or any Subsidiary in connection with, (i) the execution, delivery and performance of any Document or (ii) the legality, validity, binding effect or enforceability of any such Document.  

 

6.05.        Financial Statements; Financial Condition; Undisclosed Liabilities; Projections . (a)(i) (I) The audited consolidated and consolidating balance sheet of Parent and its Subsidiaries at December 31, 2010 and December 31, 2011 and the related consolidated and consolidating statements of income and cash flows and changes in shareholders’ equity of Parent for the two fiscal year of Parent ended on December 31, 2010 and December 31, 2011, in each case furnished to the Lenders prior to the Effective Date, present fairly in all material respects the consolidated and consolidating financial position of Parent and its Subsidiaries at the date of said financial statements and the results for the respective periods covered thereby and (II) the unaudited consolidated and consolidating balance sheet of Parent and its Subsidiaries at March 31, 2012, June 30, 2012 and September 30, 2012 and the related consolidated and consolidating statements of income and cash flows and changes in shareholders’ equity of Parent and its Subsidiaries for the three-month period ended on each such date, furnished to the Lenders prior to the Effective Date, present fairly in all material respects the consolidated and consolidating financial condition of Parent and its Subsidiaries at the date of said financial statements and the results for the period covered thereby, subject to normal year-end adjustments. All such financial statements have been prepared in accordance with GAAP consistently applied except to the extent provided in the notes to said financial statements and subject, in the case of the unaudited financial statements, to normal year-end audit adjustments (all of which are of a recurring nature and none of which, individually or in the aggregate, would be material) and the absence of footnotes.  

 

(ii)           The pro forma consolidated and consolidating balance sheet of Parent and its Subsidiaries as of September 30, 2012 (after giving effect to the Transaction and the financing therefor), a copy of which has been furnished to the Lenders prior to the Funding Date, presents a good faith estimate of the pro forma consolidated and consolidating financial position of Parent and its Subsidiaries as of such date.

 

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(b)           On and as of the Funding Date, and after giving effect to the Transaction and to all Indebtedness (including the Loans) being incurred or assumed and Liens created by the Credit Parties in connection therewith, (i) the sum of the fair value of the assets, at a fair valuation, of each Credit Party (on a stand-alone basis) and of each Credit Party and its Subsidiaries (taken as a whole) will exceed its or their respective debts, (ii) the sum of the present fair salable value of the assets of each Credit Party (on a stand-alone basis) and of each Credit Party and its Subsidiaries (taken as a whole) will exceed its or their respective debts, (iii) each Credit Party (on a stand-alone basis) and each Credit Party and its Subsidiaries (taken as a whole) has or have not incurred and does or do not intend to incur, and does or do not believe that it or they will incur, debts beyond its or their respective ability to pay such debts as such debts mature, and (iv) each Credit Party (on a stand-alone basis) and each Credit Party and its Subsidiaries (taken as a whole) will have sufficient capital with which to conduct its or their respective businesses. For purposes of this Section 6.05(b), “ debt ” means any liability on a claim, and “ claim ” means (a) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (b) right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. 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.

 

(c)           Except as fully disclosed in the financial statements delivered pursuant to Section 6.05(a), and except for the Indebtedness incurred under this Agreement and the Existing Shareholders Notes, there were as of the Funding Date no liabilities or obligations with respect to Parent or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, could reasonably be expected to be material to Parent or any of its Subsidiaries. As of the Funding Date, neither Parent nor the Borrowers know of any basis for the assertion against it or any of its Subsidiaries of any liability or obligation of any nature whatsoever that is not fully disclosed in the financial statements delivered pursuant to Section 6.05(a) or referred to in the immediately preceding sentence which, either individually or in the aggregate, could reasonably be expected to be material to Parent and its Subsidiaries taken as a whole.

 

(d)           The Projections delivered to the Administrative Agent and the Lenders prior to the Funding Date have been prepared in good faith and are based on reasonable assumptions, and there are no statements or conclusions in the Projections which are based upon or include information known to Parent or the Borrowers to be misleading in any material respect or which fail to take into account material information known to Parent or the Borrowers regarding the matters reported therein. On the Funding Date, Parent and the Borrowers believe that the Projections are reasonable and attainable, it being recognized by the Lenders, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections may differ from the projected results included in such Projections.

 

(e)           After giving effect to the Transaction (but for this purpose assuming that the Transaction and the related financing had occurred prior to December 31, 2011), since December 31, 2011, nothing has occurred that has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.

 

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6.06.        Litigation . There are no actions, suits or proceedings pending or, to the knowledge of Parent and the Borrowers, threatened (i) with respect to the Transaction or any Document or (ii) that has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.  

 

6.07.        True and Complete Disclosure . All factual information (taken as a whole) furnished by or on behalf of Parent or the Borrowers in writing to the Administrative Agent or any Lender (including, without limitation, all information contained in the Documents) for purposes of or in connection with this Agreement, the other Credit Documents or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of Parent or the Borrowers in writing to the Administrative Agent or any Lender will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided , it being understood and agreed that for purposes of this Section 6.07, such factual information shall not include the Projections or any pro forma financial information .  

 

6.08.        Use of Proceeds; Margin Regulations . (a) All proceeds of the Loans will be used by the Borrowers (i) to fund capital expenditures, (ii) to repay existing indebtedness (including, the Indebtedness Agreements to be Repaid), (iii) to fund the initial borrowing under the Intercompany Canadian Note, (iv) for general corporate purposes and (v) to pay fees and expenses incurred in connection with the Transaction.  

 

(b)           No part of any Loan (or the proceeds thereof) will be used to purchase or carry any Margin Stock or to extend credit for the purpose of purchasing or carrying any Margin Stock. Neither the making of any Loan nor the use of the proceeds thereof will violate or be inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

 

6.09.        Tax Returns and Payments . Each of Parent and each of its Subsidiaries has timely filed or caused to be timely filed with the appropriate taxing authority all returns, statements, forms and reports for taxes (the “ Returns ”) required to be filed by, or with respect to the income, properties or operations of, Parent and/or any of its Subsidiaries. The Returns accurately reflect in all material respects all liability for taxes of Parent and its Subsidiaries, as applicable, for the periods covered thereby. Each of Parent and each of its Subsidiaries has paid all taxes and assessments payable by it which have become due, other than those that are being contested in good faith and adequately disclosed and fully provided for on the financial statements of Parent and its Subsidiaries in accordance with GAAP. There is no material action, suit, proceeding, investigation, audit or claim now pending or, to the best knowledge of Parent or any of its Subsidiaries, threatened by any authority regarding any taxes relating to Parent or any of its Subsidiaries. As of the Funding Date, neither Parent nor any of its Subsidiaries has entered into an agreement or waiver or been requested to enter into an agreement or waiver extending any statute of limitations relating to the payment or collection of taxes of Parent or any of its Subsidiaries, or is aware of any circumstances that would cause the taxable years or other taxable periods of Parent or any of its Subsidiaries not to be subject to the normally applicable statute of limitations. Neither Parent nor any of its Subsidiaries has incurred, nor will any of them incur, any material tax liability in connection with the Transaction or any other transactions contemplated hereby (it being understood that the representation contained in this sentence does not cover any future tax liabilities of Parent or any of its Subsidiaries arising as a result of the operation of their businesses in the ordinary course of business).  

 

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6.10.        Compliance with ERISA . (a) Schedule IV sets forth each Plan as of the Funding Date; each Plan (and each related trust, insurance contract or fund) is in substantial compliance with its terms and with all applicable laws, including without limitation ERISA and the Code; each Plan (and each related trust, if any) which is intended to be qualified under Section 401(a) of the Code has received a determination letter from the Internal Revenue Service to the effect that it meets the requirements of Sections 401(a) and 501(a) of the Code or has adopted a prototype or volume submitter plan document and is entitled to reliance on the sponsor’s opinion letter from the Internal Revenue Service; no Reportable Event has occurred; no Plan which is a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) is insolvent or in reorganization; no Plan has an Unfunded Current Liability which, when added to the aggregate amount of Unfunded Current Liabilities with respect to all other Plans, exceeds $100,000; no Plan which is subject to Section 412 of the Code or Section 302 of ERISA has an accumulated funding deficiency, within the meaning of such sections of the Code or ERISA, or has applied for or received a waiver of an accumulated funding deficiency or an extension of any amortization period, within the meaning of Section 412 of the Code or Section 303 or 304 of ERISA; all contributions required to be made with respect to a Plan have been timely made; neither Parent nor any Subsidiary of Parent nor any ERISA Affiliate has incurred any material liability (including any indirect, contingent or secondary liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or expects to incur any such liability under any of the foregoing sections with respect to any Plan; no condition exists which presents a material risk to Parent or any Subsidiary of Parent or any ERISA Affiliate of incurring a material liability to or on account of a Plan pursuant to the foregoing provisions of ERISA and the Code; no proceedings have been instituted to terminate or appoint a trustee to administer any Plan which is subject to Title IV of ERISA; no action, suit, proceeding, hearing, audit or investigation with respect to the administration, operation or the investment of assets of any Plan (other than routine claims for benefits) is pending, expected or threatened; using actuarial assumptions and computation methods consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of Parent and its Subsidiaries and its ERISA Affiliates to all Plans which are multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Plan, would not exceed $250,000; each group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) which covers or has covered employees or former employees of Parent, any Subsidiary of Parent, or any ERISA Affiliate has at all times been operated in compliance with the provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code; each group health plan (as defined in 45 Code of Federal Regulations Section 160.103) which covers or has covered employees or former employees of Parent, any Subsidiary of Parent, or any ERISA Affiliate has at all times been operated in compliance with the provisions of the Health Insurance Portability and Accountability Act of 1996 and the regulations promulgated thereunder; no lien imposed under the Code or ERISA on the assets of Parent or any Subsidiary of Parent or any ERISA Affiliate exists or is likely to arise on account of any Plan; and Parent and its Subsidiaries may cease contributions to or terminate any employee benefit plan maintained by any of them without incurring any material liability.  

 

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(b)   Each Foreign Pension Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. All contributions required to be made with respect to a Foreign Pension Plan have been timely made. Neither Parent nor any of its Subsidiaries has incurred any obligation in connection with the termination of, or withdrawal from, any Foreign Pension Plan. The present value of the accrued benefit liabilities (whether or not vested) under each Foreign Pension Plan, determined as of the end of Parent’s most recently ended fiscal year on the basis of actuarial assumptions, each of which is reasonable, did not exceed the current value of the assets of such Foreign Pension Plan allocable to such benefit liabilities.

 

6.11.        Security Documents . (a)  The provisions of the Security Agreement are effective to create in favor of the Collateral Agent for the benefit of the Secured Creditors a legal, valid and enforceable security interest in all right, title and interest of the Credit Parties in the Security Agreement Collateral described therein, and the Collateral Agent, for the benefit of the Secured Creditors, has a fully perfected security interest in all right, title and interest in all of the Security Agreement Collateral described therein, subject to no other Liens other than Permitted Liens. The recordation of (x) the Grant of Security Interest in U.S. Patents and (y) the Grant of Security Interest in U.S. Trademarks in the respective form attached to the Security Agreement, in each case in the United States Patent and Trademark Office, together with filings on Form UCC-1 made pursuant to the Security Agreement, will create, as may be perfected by such filings and recordation, a perfected security interest in the United States trademarks and patents covered by the Security Agreement, and the recordation of the Grant of Security Interest in U.S. Copyrights in the form attached to the Security Agreement with the United States Copyright Office, together with filings on Form UCC-1 made pursuant to the Security Agreement, will create, as may be perfected by such filings and recordation, a perfected security interest in the United States copyrights covered by the Security Agreement.  

 

(b)           The security interests created under the Pledge Agreement in favor of the Collateral Agent, as Pledgee, for the benefit of the Secured Creditors, constitute perfected security interests in the Pledge Agreement Collateral described in the Pledge Agreement, subject to no security interests of any other Person). No filings or recordings are required in order to perfect (or maintain the perfection or priority of) the security interests created in the Pledge Agreement Collateral under the Pledge Agreement other than with respect to that portion of the Pledge Agreement Collateral constituting a “general intangible” under the UCC.

 

6.12.        Properties . All Real Property owned or leased by Parent or any of its Subsidiaries as of the Funding Date, and the nature of the interest therein, is correctly set forth in Schedule III. Each of Parent and each of its Subsidiaries has good and indefeasible title to all material properties (and to all buildings, fixtures and improvements located thereon) owned by it, including all material property reflected in the most recent historical balance sheets referred to in Section 6.05(a) (except as sold or otherwise disposed of since the date of such balance sheet in the ordinary course of business or as permitted by the terms of this Agreement), free and clear of all Liens, other than Permitted Liens. Each of Parent and each of its Subsidiaries has a valid and indefensible leasehold interest in the material properties leased by it free and clear of all Liens other than Permitted Liens.  

 

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6.13.        Capitalization .  (a) On the Funding Date, the authorized capital stock of Parent consists of (x) 1,250,000 shares of common stock, $0.0001 par value per share (such authorized shares of common stock, together with any subsequently authorized shares of common stock of Parent, the “ Parent Common Stock ”) and (y) 5,000,000 shares of preferred stock, $0.0001 par value per share (such authorized shares of preferred stock, together with any subsequently authorized shares of preferred stock of Parent, the “ Parent Preferred Stock ”). On the Funding Date, 1,048,770 shares of Parent Common Stock and 5,000,000 shares of Parent Preferred Stock are issued and outstanding. All such outstanding shares have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. As of the Funding Date, except as set forth on Schedule XI hereto, Parent does not have outstanding any capital stock or other securities convertible into or exchangeable for its capital stock or any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.  

 

(b)           On the Funding Date, (i) the authorized capital stock of SAE consists of (x) 1,250,000 shares of common stock, $0.0001 par value per share (such authorized shares of common stock, together with any subsequently authorized shares of common stock of SAE, the “ SAE Common Stock ”) of which 948,750 are issued and outstanding and (y) 15,000,000 shares of preferred stock, $0.0001 par value per share (such authorized shares of preferred stock, together with any subsequently authorized shares of preferred stock of SAE, the “ SAE Preferred Stock ”) of which 5,000,000 are issued and outstanding; all of such outstanding SAE Common Stock and SAE Preferred Stock is owned by Parent, (ii) SAE owns a 100% membership interest in the Delaware Subsidiary Borrower and (iii) SAE owns a 100% membership interest in the Alaskan Subsidiary Borrower. All such outstanding shares have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights.  As of the Funding Date, except as set forth on Schedule XI hereto, SAE, the Delaware Subsidiary Borrower and the Alaskan Subsidiary Borrower do not have outstanding any securities convertible into or exchangeable for its capital stock or membership interests, as the case may be, or outstanding any rights to subscribe for or to purchase, or any options for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of, or any calls, commitments or claims of any character relating to, its capital stock or any stock appreciation or similar rights.

 

6.14.        Subsidiaries . On and as of the Funding Date, Parent has no Subsidiaries other than those Subsidiaries listed on Schedule V. Schedule V sets forth, as of the Funding Date, the percentage ownership (direct and indirect) of Parent in each class of capital stock or other Equity Interests of each of its Subsidiaries and also identifies the direct owner thereof. All outstanding shares of Equity Interests of each Subsidiary of Parent have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights. No Subsidiary of Parent has outstanding any securities convertible into or exchangeable for its Equity Interests or outstanding any right to subscribe for or to purchase, or any options or warrants for the purchase of, or any agreement providing for the issuance (contingent or otherwise) of or any calls, commitments or claims of any character relating to, its Equity Interests or any stock appreciation or similar rights.  

 

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6.15.        Compliance with Statutes, etc . Each of Parent and each of its Subsidiaries is in compliance with all applicable laws, statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including, without limitation, applicable statutes, regulations, orders and restrictions relating to environmental standards and controls), except such non-compliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  

 

6.16.        Investment Company Act . Neither Parent nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.  

 

6.17.        Insurance . Schedule VII sets forth a listing of all insurance maintained by Parent and its Subsidiaries as of the Funding Date (other than local insurance policies maintained by Foreign Subsidiaries of the Borrowers that are not material), with the amounts insured (and any deductibles) set forth therein.  

 

6.18.        Environmental Matters .  (a)  Each of Parent and each of its Subsidiaries is in compliance with all applicable Environmental Laws and the requirements of any permits issued under such Environmental Laws. There are no pending or, to the knowledge of Parent or the Borrowers, threatened Environmental Claims against Parent or any of its Subsidiaries or any Real Property owned, leased or operated by Parent or any of its Subsidiaries (including any such claim arising out of the ownership, lease or operation by Parent or any of its Subsidiaries of any Real Property formerly owned, leased or operated by Parent or any of its Subsidiaries but no longer owned, leased or operated by Parent or any of its Subsidiaries). There are no facts, circumstances, conditions or occurrences with respect to the business or operations of Parent or any of its Subsidiaries, or any Real Property owned, leased or operated by Parent or any of its Subsidiaries (including any Real Property formerly owned, leased or operated by Parent or any of its Subsidiaries but no longer owned, leased or operated by Parent or any of its Subsidiaries) or, to the knowledge of Parent or the Borrowers, any property adjoining or adjacent to any such Real Property that could be reasonably expected (i) to form the basis of an Environmental Claim against Parent or any of its Subsidiaries or any Real Property owned, leased or operated by Parent or any of its Subsidiaries or (ii) to cause any Real Property owned, leased or operated by Parent or any of its Subsidiaries to be subject to any restrictions on the ownership, lease, occupancy or transferability of such Real Property by Parent or any of its Subsidiaries under any applicable Environmental Law.  

 

(b)           Hazardous Materials have not at any time been generated, used, treated or stored on, or transported to or from, or Released on or from, any Real Property owned, leased or operated by Parent or any of its Subsidiaries or, to the knowledge of Parent or the Borrowers, any property adjoining or adjacent to any Real Property, where such generation, use, treatment, storage, transportation or Release has violated or could be reasonably expected to violate any applicable Environmental Law or give rise to an Environmental Claim.

 

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(c)           Notwithstanding anything to the contrary in this Section 6.18, the representations and warranties made in this Section 6.18 shall be untrue only if the effect of any or all conditions, violations, claims, restrictions, failures and noncompliances of the types described above could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

6.19.        Employment and Labor Relations . Neither Parent nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against Parent or any of its Subsidiaries or, to the knowledge of Parent or the Borrowers, threatened against any of them, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against Parent or any of its Subsidiaries or, to the knowledge of Parent or the Borrowers, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against Parent or any of its Subsidiaries or, to the knowledge of Parent or the Borrowers, threatened against Parent or any of its Subsidiaries, (iii) no union representation question exists with respect to the employees of Parent or any of its Subsidiaries, (iv) no equal employment opportunity charges or other claims of employment discrimination are pending or, to the knowledge of Parent or the Borrowers, threatened against Parent or any of its Subsidiaries and (v) no wage and hour department investigation has been made of Parent or any of its Subsidiaries, except (with respect to any matter specified in clauses (i) – (iv) above, either individually or in the aggregate) such as could not reasonably be expected to have a Material Adverse Effect.  

 

6.20.        Intellectual Property, etc . Each of Parent and each of its Subsidiaries owns or has the right to use all the patents, trademarks, permits, domain names, service marks, trade names, copyrights, licenses, franchises, inventions, trade secrets, proprietary information and know-how of any type, whether or not written (including, but not limited to, rights in computer programs and databases) and formulas, or rights with respect to the foregoing, and has obtained assignments of all leases, licenses and other rights of whatever nature, necessary for the present conduct of its business, without any known conflict with the rights of others which, or the failure to own or have which, as the case may be, could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.  

 

6.21.        Indebtedness . Schedule VI sets forth a list of all Indebtedness (including Contingent Obligations) of Parent and its Subsidiaries as of the Funding Date and which is to remain outstanding after giving effect to the Transaction (excluding the Loans and the Existing Shareholders Notes), in each case showing the aggregate principal amount thereof and the name of the respective borrower and any Credit Party or any of its Subsidiaries which directly or indirectly guarantees such debt.  

 

6.22.        Representations and Warranties in Other Documents . All representations and warranties set forth in the other Documents were true and correct in all material respects at the time as of which such representations and warranties were made (or deemed made) and shall be true and correct in all material respects as of the Funding Date as if such representations or warranties were made on and as of such date (it being understood and agreed that any such representation or warranty which by its terms is made as of a specified date shall be true and correct in all material respects as of such specified date).  

 

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6.23.        Subordination . The subordination provisions contained in the Intercompany Global Note are enforceable against the Borrowers and/or the Subsidiary Guarantors, as applicable, and the holders of such Indebtedness, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).  

 

6.24.        Holding Company Activities . Parent, 1623739 Alberta Ltd. (Alberta) and 1623753 Alberta Ltd. (Alberta) do not engage in any business or own any significant assets or have any material liabilities other than (i) in the case of Parent, (a) the ownership of the Equity Interests of SAE, (b) liabilities in respect of this Agreement and the Documents and (c) the issuance, and liabilities in respect, of Shareholder Subordinated Notes and the Existing Shareholders Notes, in each case, to the extent otherwise permitted under this Agreement, (ii) in the case of 1623739 Alberta Ltd. (Alberta), the ownership of the Equity Interests of 1623753 Alberta Ltd. (Alberta), (iii) in the case of 1623753 Alberta Ltd. (Alberta), the ownership of the Equity Interests of SAE Canada and (iv) the activities permitted under Section 8.03(iii). 

 

SECTION 7.      Affirmative Covenants . Each of Parent and the Borrowers hereby covenants and agrees that on and after the Effective Date and until the Loans, Notes, Fees and all other Obligations (other than indemnities described in Section 11.13 which are not then due and payable) incurred hereunder and thereunder, are paid in full:

 

7.01.        Information Covenants . Parent will furnish to each Lender:  

 

(a)            Monthly Reports . Within 45 days after the end of each fiscal month of Parent, (i) the consolidated and consolidating balance sheet of Parent and its Subsidiaries as at the end of such fiscal month and the related consolidated and consolidating statements of income and retained earnings and statement of cash flows for such fiscal month and for the elapsed portion of the fiscal year ended with the last day of such fiscal month, in each case setting forth comparative figures for the corresponding fiscal month in the prior fiscal year and comparable budgeted figures for such fiscal month as set forth in the respective budget delivered pursuant to Section 7.01(e), all of which shall be in reasonable detail satisfactory to the Administrative Agent and certified by the chief financial officer of Parent that they fairly present in all material respects in accordance with GAAP the financial condition of Parent and its Subsidiaries as of the dates indicated and the results of their operations for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes, (ii) management’s discussion and analysis of the important operational and financial developments during such quarterly accounting period, (iii) a monthly EBITDA forecast on a consolidating basis by country for the remainder of such fiscal year, a historical summary of EBITDA to such date from the beginning of such fiscal year, together with an EBITDA forecast for the next fiscal year, in each case on a consolidating basis and (iv) a backlog statement on a quarterly basis for the remainder of such fiscal year (including details for each contract) and an annual basis for the following two succeeding years.

 

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(b)            Quarterly Financial Statements . Within 45 days after the close of each quarterly accounting period in each fiscal year of Parent (or in the case of each quarterly accounting period in the fiscal year of Parent ending December 31, 2013, within 60 days after the close of each such quarterly accounting period), (i) the consolidated and consolidating balance sheet of Parent and its Subsidiaries as at the end of such quarterly accounting period and the related consolidated and consolidating statements of income and retained earnings and statement of cash flows for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly accounting period, in each case setting forth comparative figures for the corresponding quarterly accounting period in the prior fiscal year and comparable budgeted figures for such quarterly accounting period as set forth in the respective budget delivered pursuant to Section 7.01(e), all of which shall be in reasonable detail satisfactory to the Administrative Agent and certified by the chief financial officer of Parent that they fairly present in all material respects in accordance with GAAP the financial condition of Parent and its Subsidiaries as of the dates indicated and the results of their operations for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes, and (ii) management’s discussion and analysis of the important operational and financial developments during such quarterly accounting period.

 

(c)            Annual Financial Statements . Within 90 days after the close of each fiscal year of Parent (or in the case of the fiscal year of Parent ending December 31, 2012, within 105 days after the close of such fiscal year), (i) the consolidated and consolidating balance sheet of Parent and its Subsidiaries as at the end of such fiscal year and the related consolidated and consolidating statements of income and retained earnings and statement of cash flows for such fiscal year setting forth comparative figures for the preceding fiscal year and with respect to consolidated statements, certified without qualification by Grant Thornton LLP or other independent certified public accountants of recognized national standing reasonably acceptable to the Administrative Agent, together with a report of such accounting firm stating that in the course of its regular audit of the financial statements of Parent and its Subsidiaries, which audit was conducted in accordance with generally accepted auditing standards, such accounting firm obtained no knowledge of any Default or an Event of Default relating to financial or accounting matters which has occurred and is continuing or, if in the opinion of such accounting firm such a Default or an Event of Default has occurred and is continuing, a statement as to the nature thereof, and with respect to consolidating statements, certified by the chief financial officer of Parent that they fairly present in all material respects in accordance with GAAP the financial condition of Parent and its Subsidiaries as of the dates indicated and the results of their operations for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes and (ii) management’s discussion and analysis of the important operational and financial developments during such fiscal year.

 

(d)            Management Letters . Promptly after Parent’s or any of its Subsidiaries’ receipt thereof, a copy of any “management letter” received from its certified public accountants and management’s response thereto.

 

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(e)            Budgets . Prior to the end of each fiscal year of Parent, a budget in form reasonably satisfactory to the Administrative Agent (including budgeted statements of income, sources and uses of cash and balance sheets for Parent and its Subsidiaries on a consolidated and consolidating basis and including a report tracking such budgeted statements against projected EBITDA) (i) for each of the twelve months of the forthcoming fiscal year prepared in detail and (ii) for the three immediately succeeding fiscal years prepared in summary form, in each case setting forth, with appropriate discussion, the principal assumptions upon which such budget is based.

 

(f)             Officer’s Certificates . At the time of the delivery of the financial statements provided for in Sections 7.01(b) and (c), a compliance certificate from the chief financial officer of Parent in the form of Exhibit K certifying on behalf of Parent that, to such officer’s knowledge after due inquiry, no Default or Event of Default has occurred and is continuing or, if any Default or Event of Default has occurred and is continuing, specifying the nature and extent thereof, which certificate shall (i) set forth in reasonable detail the calculations required to establish whether Parent and its Subsidiaries were in compliance with the provisions of Sections 4.02(d), 4.02(f), 8.01(xii), 8.01(xix), 8.01(xviii), 8.02(iv), 8.03(iii), 8.03(v), 8.03(vii), 8.04(iv), 8.04(vii), 8.04(ix), 8.04(xi), 8.04(xiii), 8.04(xiv), 8.05(v), 8.05(viii), 8.05(ix), 8.05(xv), 8.05(xvi) and 8.07 through 8.11, inclusive, at the end of such fiscal quarter or year, as the case may be, (ii) if delivered with the financial statements required by Section 7.01(c), set forth in reasonable detail the amount of (and the calculations required to establish the amount of) Excess Cash Flow for the respective Excess Cash Payment Period, and (iii) certify that there have been no changes to Annexes A through F and Annexes H through K, in each case of the Security Agreement and Annexes A through G of the Pledge Agreement, in each case since the Funding Date or, if later, since the date of the most recent certificate delivered pursuant to this Section 7.01(f), or if there have been any such changes, a list in reasonable detail of such changes (but, in each case with respect to this clause (iii), only to the extent that such changes are required to be reported to the Collateral Agent pursuant to the terms of such Security Documents) and whether Parent and the other Credit Parties have otherwise taken all actions required to be taken by them pursuant to such Security Documents in connections with any such changes.

 

(g)            Notice of Default, Litigation and Material Adverse Effect . Promptly, and in any event within three Business Days after any officer of Parent or any of its Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of any event which constitutes a Default or an Event of Default, (ii) any litigation or governmental investigation or proceeding pending against Parent or any of its Subsidiaries (x) which, either individually or in the aggregate, has had, or could reasonably be expected to have, a Material Adverse Effect or (y) with respect to any Document, (iii) any default or event of default or breach of any Intercompany Secured Note, and (iv) any other event, change or circumstance that has had, or could reasonably be expected to have, a Material Adverse Effect.

 

(h)            Other Reports and Filings . Promptly after the filing or delivery thereof, copies of all financial information, proxy materials and reports, if any, which Parent or any of its Subsidiaries shall publicly file with the Securities and Exchange Commission or any successor thereto (the “ SEC ”) or deliver to holders (or any trustee, agent or other representative therefor) of any Qualified Preferred Stock or any of its material Indebtedness pursuant to the terms of the documentation governing the same.

 

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(i)            Environmental Matters .  Promptly after any officer of Parent or any of its Subsidiaries obtains knowledge thereof, notice of one or more of the following environmental matters to the extent that such environmental matters, either individually or when aggregated with all other such environmental matters, could reasonably be expected to have a Material Adverse Effect:

 

(i)         any pending or threatened Environmental Claim against Parent or any of its Subsidiaries or any Real Property owned, leased or operated by Parent or any of its Subsidiaries;

 

(ii)        any condition or occurrence on or arising from any Real Property owned, leased or operated by Parent or any of its Subsidiaries that (a) results in noncompliance by Parent or any of its Subsidiaries with any applicable Environmental Law or (b) could reasonably be expected to form the basis of an Environmental Claim against Parent or any of its Subsidiaries or any such Real Property;

 

(iii)       any condition or occurrence on any Real Property owned, leased or operated by Parent or any of its Subsidiaries that could reasonably be expected to cause such Real Property to be subject to any restrictions on the ownership, lease, occupancy, use or transferability by Parent or any of its Subsidiaries of such Real Property under any Environmental Law; and

 

(iv)       the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property owned, leased or operated by Parent or any of its Subsidiaries as required by any Environmental Law or any governmental or other administrative agency; provided that in any event Parent shall deliver to each Lender all notices received by Parent or any of its Subsidiaries from any government or governmental agency under, or pursuant to, CERCLA which identify Parent or any of its Subsidiaries as potentially responsible parties for remediation costs or which otherwise notify Parent or any of its Subsidiaries of potential liability under CERCLA.

 

All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and Parent’s or such Subsidiary’s response thereto.

 

(j)          Insurance . Prior to the end of each fiscal year of Parent, Parent shall deliver current copies of all insurance policies of the Parent and its Subsidiaries maintained in accordance with Section 7.03 hereof, together with an explanation of any projected changes to such insurance coverage for the forthcoming fiscal year.

 

(k)         Other Information . From time to time, such other information or documents (financial or otherwise) with respect to Parent or any of its Subsidiaries as the Administrative Agent or any Lender (through the Administrative Agent) may reasonably request.

 

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7.02.        Books, Records and Inspections; Annual Meetings . (a) Parent will, and will cause each of its Subsidiaries to, keep proper books of record and accounts in which full, true and correct entries in conformity with GAAP and all requirements of law shall be made of all dealings and transactions in relation to its business and activities. Parent will, and will cause each of its Subsidiaries to, permit officers and designated representatives of the Administrative Agent or any Lender to visit and inspect, under guidance of officers of Parent or such Subsidiary, any of the properties of Parent or such Subsidiary, and to examine the books of account of Parent or such Subsidiary and discuss the affairs, finances and accounts of Parent or such Subsidiary with, and be advised as to the same by, its and their officers and independent accountants, in person or via a telephonic conference call, all upon reasonable prior notice and at such reasonable times and intervals and to such reasonable extent as the Administrative Agent or any such Lender may reasonably request.  

 

(b)           At a date to be mutually agreed upon between the Administrative Agent and Parent occurring on or prior to the 120th day after the close of each fiscal year of Parent, Parent will, at the request of the Administrative Agent, hold a meeting with all of the Lenders at which meeting will be reviewed the financial results of Parent and its Subsidiaries for the previous fiscal year and the budgets presented for the current fiscal year of Parent.

 

7.03.        Maintenance of Property; Insurance . (a) Parent will, and will cause each of its Subsidiaries to, (i) keep all property necessary to the business of Parent and its Subsidiaries in good working order and condition, ordinary wear and tear excepted and subject to the occurrence of casualty, natural catastrophe and other covered occurrences or events that may cause damage to, or partial or complete loss of, the property, (ii) maintain with financially sound and reputable insurance companies having a rating from A.M Best Company of A or better, policies of insurance, lawfully issued and enforceable, on all such property and against all such risks in amounts not less than sufficient to cover the full replacement of the property, in addition to any taxes or assessments that may be due or payable, on such terms and subject to such conditions as is consistent and in accordance with industry practice for companies similarly situated owning similar properties and engaged in similar businesses as Parent and its Subsidiaries, and (iii) furnish to the Administrative Agent, upon its request therefor, full information as to the insurance carried. In addition to the requirements of the immediately preceding sentence, Parent and the Borrowers will at all times cause insurance of the types described in Schedule VII to be maintained (with the same scope of coverage as that described in Schedule VII) at levels which are consistent with their practices immediately before the Funding Date. Such insurance shall include physical damage insurance on all real and personal property (whether now owned or hereafter acquired) on an all risk basis and including any business interruption and any contingent business interruption insurance. The provisions of this Section 7.03 shall be deemed supplemental to, but not duplicative of, the provisions of any Security Documents that require the maintenance of insurance. In addition to the foregoing, Parent and the Borrowers acknowledge and agree that (x) the Administrative Agent has the right, at any time, to review the insurance then being maintained by Parent and its Subsidiaries and to require Parent and its Subsidiaries to increase their levels of coverage from that which then exists to the extent that the Administrative Agent has a reasonable basis to require same and (y) they will, within 30 days following such a request by the Administrative Agent, obtain such increased insurance coverage. All such insurance policies are valid and enforceable in accordance with their terms and are in full force and effect (assuming no default by any such insurer), all premiums thereon have been paid when due and the Parent and Borrowers are otherwise in compliance in all material respects with the terms and provisions of such policies. No written notice of cancellation, termination or revocation or other written notice that any such policy is no longer in full force or effect or that the issuer of any policy is not willing or able to perform its obligations thereunder has been received by the Parent or Borrowers.  

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(b)           Parent will, and will cause each of its Subsidiaries to, at all times keep its property insured in favor of the Collateral Agent, and all policies or certificates (or certified copies thereof) with respect to such insurance (and any other insurance maintained by Parent and/or such Subsidiaries) (i) shall be endorsed to the Collateral Agent’s satisfaction for the benefit of the Collateral Agent (including, without limitation, by naming the Collateral Agent as loss payee and/or additional insured), (ii) shall state that such insurance policies shall not be canceled without at least 30 days’ prior written notice thereof by the respective insurer to the Collateral Agent, (iii) shall provide that the respective insurers irrevocably waive any and all rights of subrogation with respect to the Collateral Agent and the other Secured Creditors, and (iv) shall be deposited with the Collateral Agent.

 

(c)           If Parent or any of its Subsidiaries shall fail to maintain insurance in accordance with this Section 7.03, or if Parent or any of its Subsidiaries shall fail to so endorse and deposit all policies or certificates with respect thereto, the Administrative Agent shall have the right (but shall be under no obligation) to procure such insurance and Parent and the Borrowers jointly and severally agree to reimburse the Administrative Agent for all costs and expenses of procuring such insurance.

 

7.04.        Existence; Franchises . Parent will, and will cause each of its Subsidiaries to, do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and its material rights, franchises, licenses, permits, copyrights, trademarks and patents; provided , however , that nothing in this Section 7.04 shall prevent (i) sales of assets and other transactions by Parent or any of its Subsidiaries in accordance with Section 8.02 or (ii) the withdrawal by Parent or any of its Subsidiaries of its qualification as a foreign Company in any jurisdiction if such withdrawal could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  

 

7.05.        Compliance with Statutes, etc . Parent will, and will cause each of its Subsidiaries to, comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities in respect of the conduct of its business and the ownership of its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls), except such non-compliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  

 

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7.06.        Compliance with Environmental Laws .  (a) Parent will comply, and will cause each of its Subsidiaries to comply, with all Environmental Laws and permits applicable to, or required by, the ownership, lease or use of its Real Property now or hereafter owned, leased or operated by Parent or any of its Subsidiaries, except such noncompliances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and will promptly pay or cause to be paid all costs and expenses incurred in connection with such compliance, and will keep or cause to be kept all such Real Property free and clear of any Liens imposed pursuant to such Environmental Laws. Neither Parent nor any of its Subsidiaries will generate, use, treat, store, Release or dispose of, or permit the generation, use, treatment, storage, Release or disposal of Hazardous Materials on any Real Property now or hereafter owned, leased or operated by Parent or any of its Subsidiaries, or transport or permit the transportation of Hazardous Materials to or from any such Real Property, except for Hazardous Materials generated, used, treated, stored, Released or disposed of at any such Real Properties in compliance in all material respects with all applicable Environmental Laws and as required in connection with the normal operation, use and maintenance of the business or operations of Parent or any of its Subsidiaries.  

 

(b)           (i) After the receipt by the Administrative Agent or any Lender of any notice of the type described in Section 7.01(i), (ii) at any time that Parent or any of its Subsidiaries are not in compliance with Section 7.06(a) or (iii) in the event that the Administrative Agent or the Lenders have exercised any of the remedies pursuant to the last paragraph of Section 9, Parent and the Borrowers will (in each case) provide, at the sole expense of Parent and the Borrowers and at the request of the Administrative Agent, an environmental site assessment report concerning any Real Property owned, leased or operated by Parent or any of its Subsidiaries, prepared by an environmental consulting firm reasonably approved by the Administrative Agent, indicating the presence or absence of Hazardous Materials and the potential cost of any removal or remedial action in connection with such Hazardous Materials on such Real Property. If Parent or the Borrowers fail to provide the same within 30 days after such request was made, the Administrative Agent may order the same, the cost of which shall be borne by Parent and the Borrowers, and Parent and the Borrowers shall grant and hereby grant to the Administrative Agent and the Lenders and their respective agents access to such Real Property and specifically grant the Administrative Agent and the Lenders an irrevocable non-exclusive license, subject to the rights of tenants, to undertake such an assessment at any reasonable time upon reasonable notice to Parent and the Borrowers, all at the sole expense of Parent and the Borrowers.

 

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7.07.        ERISA . (a) As soon as possible and, in any event, within ten (10) days after Parent, any Subsidiary of Parent or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following, Parent will deliver to each of the Lenders a certificate of the chief financial officer of Parent setting forth the full details as to such occurrence and the action, if any, that Parent, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given or filed by Parent, such Subsidiary, the Plan administrator or such ERISA Affiliate to or with the PBGC or any other Governmental Authority, or a Plan participant and any notices received by Parent, such Subsidiary or ERISA Affiliate from the PBGC or any other Government Authority, or a Plan participant with respect thereto: that a Reportable Event has occurred (except to the extent that Parent has previously delivered to the Lenders a certificate and notices (if any) concerning such event pursuant to the next clause hereof); that a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is reasonably expected to occur with respect to such Plan within the following 30 days; that an accumulated funding deficiency, within the meaning of Section 412 of the Code or Section 302 of ERISA, has been incurred or an application may be or has been made for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code or Section 303 or 304 of ERISA with respect to a Plan; that any contribution required to be made with respect to a Plan or Foreign Pension Plan has not been timely made; that a Plan has been or may be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA; that a Plan has an Unfunded Current Liability which, when added to the aggregate amount of Unfunded Current Liabilities with respect to all other Plans, exceeds the aggregate amount of such Unfunded Current Liabilities that existed on the Funding Date by $1,000,000; that proceedings may be or have been instituted to terminate or appoint a trustee to administer a Plan which is subject to Title IV of ERISA; that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan; that Parent, any Subsidiary of Parent or any ERISA Affiliate will or may incur any liability (including any indirect, contingent, or secondary liability) to or on account of the termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or any material liability with respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or Section 409, 502(i) or 502(l) of ERISA or with respect to a group health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the Code; or that Parent or any Subsidiary of Parent may incur any material liability pursuant to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any Plan or any Foreign Pension Plan. Parent will deliver to each of the Lenders copies of any records, documents or other information that must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA. Parent will also deliver to each of the Lenders a complete copy of the annual report (on Internal Revenue Service Form 5500-series) of each Plan subject to Section 412 of the Code (including, to the extent required, the related financial and actuarial statements and opinions and other supporting statements, certifications, schedules and information) required to be filed with the Internal Revenue Service. In addition to any certificates or notices delivered to the Lenders pursuant to the first sentence hereof, copies of annual reports and any records, documents or other information required to be furnished to the PBGC or any other Governmental Authority, and any material notices received by Parent, any Subsidiary of Parent or any ERISA Affiliate with respect to any Plan subject to Section 412 of the Code or with respect to any Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA or Foreign Pension Plan shall be delivered to the Lenders no later than ten (10) days after the date such annual report has been filed with the Internal Revenue Service or such records, documents and/or information has been furnished to the PBGC or any other Government Authority or such notice has been received by Parent, the Subsidiary or the ERISA Affiliate, as applicable. If, at any time after the Funding Date, Parent, any Subsidiary of Parent or any ERISA Affiliate maintains, or contributes to (or incurs an obligation to contribute to), a pension plan as defined in Section 3(2) of ERISA that is subject to Section 412 of the Code or that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA and which is not set forth in Schedule IV, as may be updated from time to time, then Parent shall deliver to the Lenders an updated Schedule IV as soon as possible and, in any event, within ten (10) days after Parent, such Subsidiary or such ERISA Affiliate maintains, or contributes to (or incurs an obligation to contribute to), such pension plan. Such updated Schedule IV shall supersede and replace the existing Schedule IV.  

 

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(b)           Parent and each of its applicable Subsidiaries shall ensure that all Foreign Pension Plans administered by it or into which it makes payments obtains or retains (as applicable) registered status under and as required by applicable law and is administered in a timely manner in all respects in compliance with all applicable laws except where the failure to do any of the foregoing would not be reasonably likely to result in a Material Adverse Effect.

 

7.08.        End of Fiscal Years; Fiscal Quarters . Parent will cause (i) its and each of its Subsidiaries’ fiscal years to end on December 31 of each calendar year and (ii) its and each of its Subsidiaries’ fiscal quarters to end on March 31, June 30, September 30 and December 31 of each calendar year.  

 

7.09.        Performance of Obligations . Parent will, and will cause each of its Subsidiaries to, perform all of its obligations under the terms of each mortgage, indenture, security agreement, loan agreement or credit agreement and each other agreement, contract or instrument by which it is bound, except such non-performances as could not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  

 

7.10.        Payment of Taxes . Parent will pay and discharge, and will cause each of its Subsidiaries to pay and discharge, all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien or charge upon any properties of Parent or any of its Subsidiaries not otherwise permitted under Section 8.01(i); provided that neither Parent nor any of its Subsidiaries shall be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP.  

 

7.11.        Use of Proceeds . The Borrowers will use the proceeds of the Loans only as provided in Section 6.08.  

 

7.12.        Additional Security; Further Assurances; etc . (a)  Parent will, and will cause each other Credit Party to, grant to the Collateral Agent for the benefit of the Secured Creditors security interests and Mortgages in such assets and Real Property of Parent and such other Credit Party as are not covered by the original Security Documents and as may be reasonably requested from time to time by the Administrative Agent or the Required Lenders (collectively, the “ Additional Security Documents ”). All such security interests and Mortgages shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Collateral Agent and shall constitute valid and enforceable perfected security interests, hypothecations and Mortgages superior to and prior to the rights of all third Persons and enforceable against third parties and subject to no other Liens except for Permitted Liens or, in the case of Real Property, the Permitted Encumbrances related thereto. The Additional Security Documents or instruments related thereto shall have been duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Additional Security Documents and all taxes, fees and other charges payable in connection therewith shall have been paid in full. Notwithstanding the foregoing, this Section 7.12(a) shall not apply to (and Parent and its Subsidiaries shall not be required to grant a Mortgage in) any owned Real Property the Fair Market Value of which is less than $750,000, any Leasehold for which the aggregate annual rental payments are less than $500,000 or any Leasehold with respect to which the respective Credit Party has not obtained (after using commercially reasonable efforts to obtain same) the consent of the lessor to grant a mortgage in such Leasehold.  

 

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(b)           Parent will, and will cause each of the other Credit Parties to, at the expense of the Borrowers, make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, real property surveys, reports, landlord waivers, bailee agreements, control agreements and other assurances or instruments and take such further steps relating to the Collateral covered by any of the Security Documents as the Collateral Agent may reasonably require. Furthermore, Parent will, and will cause the other Credit Parties that are Subsidiaries of Parent to, deliver to the Collateral Agent such opinions of counsel, title insurance and other related documents as may be reasonably requested by the Administrative Agent to assure itself that this Section 7.12 has been complied with.

 

(c)           If the Administrative Agent or the Required Lenders reasonably determine that they are required by law or regulation to have appraisals prepared in respect of any Real Property of Parent and the other Credit Parties constituting Collateral, Parent and the Borrowers will, at their own expense, provide to the Administrative Agent appraisals which satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments of the Financial Institution Reform, Recovery and Enforcement Act of 1989, as amended, and which shall otherwise be in form and substance reasonably satisfactory to the Administrative Agent.

 

(d)           The Borrowers agree that each action required by clauses (a) through (c) of this Section 7.12 shall be completed as soon as possible, but in no event later than 60 days after such action is requested to be taken by the Administrative Agent or the Required Lenders; provided that, in no event will Parent or any of its Subsidiaries be required to take any action, other than using its best efforts, to obtain consents from third parties with respect to its compliance with this Section 7.12.

 

(e)           As promptly as possible but in any event within thirty (30) days (or such later date as may be agreed upon by the Administrative Agent) after any Person becomes a “Material Foreign Subsidiary,” the Credit Parties shall provide the Administrative Agent with written notice thereof setting forth information in reasonable detail describing the material assets of such Person and such Credit Party shall take, or cause to be taken, the actions set forth in Section 7.16.

 

7.13.        Ownership of Subsidiaries; etc . Except pursuant to a Permitted Acquisition consummated in accordance with the terms hereof, Parent will, and will cause each of its Subsidiaries to, own 100% of the Equity Interests of each of their Subsidiaries (other than directors’ qualifying shares to the extent required by applicable law).  

 

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7.14.        Contributions . (a) Parent will, upon its receipt thereof, contribute as an equity contribution to the capital of the Borrowers, any cash proceeds received by Parent from any asset sale, any incurrence of Indebtedness, any Recovery Event, any sale or issuance of its equity, any cash capital contributions or any tax refunds.  

 

(b)           The Borrowers will use the proceeds of all equity contributions received by them from Parent as provided in the relevant clause of Section 4.02 to the extent required to be so applied.

 

7.15.        Permitted Acquisitions . (a)  Subject to the provisions of this Section 7.15 and the requirements contained in the definition of Permitted Acquisition, each Borrower and each Wholly-Owned Domestic Subsidiary of a Borrower which is a Subsidiary Guarantor may from time to time effect Permitted Acquisitions, so long as (in each case except to the extent the Required Lenders otherwise specifically agree in writing in the case of a specific Permitted Acquisition): (i) no Default or Event of Default shall have occurred and be continuing at the time of the consummation of the proposed Permitted Acquisition or immediately after giving effect thereto; (ii) the Borrowers shall have given to the Administrative Agent and the Lenders at least 10 Business Days’ prior written notice of any Permitted Acquisition (or such shorter period of time as may be reasonably acceptable to the Administrative Agent), which notice shall describe in reasonable detail the principal terms and conditions of such Permitted Acquisition; (iii) calculations are made by the Borrowers with respect to the financial covenants contained in Sections 8.08 through 8.11, inclusive, for the respective Calculation Period on a Pro Forma Basis as if the respective Permitted Acquisition (as well as all other Permitted Acquisitions theretofore consummated after the first day of such Calculation Period) had occurred on the first day of such Calculation Period, and such calculations shall show that such financial covenants would have been complied with if the Permitted Acquisition had occurred on the first day of such Calculation Period; (iv) based on good faith projections prepared by the Borrowers for the period from the date of the consummation of the respective Permitted Acquisition to the date which is one year thereafter, the level of financial performance measured by the financial covenants set forth in Sections 8.08 through 8.11, inclusive, shall be better than or equal to such level as would be required to provide that no Default or Event of Default would exist under the financial covenants contained in such Sections 8.08 through 8.11, inclusive, as compliance with such financial covenants would be required through the date which is one year from the date of the consummation of the respective Permitted Acquisition; (v) all representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of such Permitted Acquisition (both before and after giving effect thereto), unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date; (vi) the Aggregate Consideration payable for the proposed Permitted Acquisition, when added to the Aggregate Consideration paid or payable for all other Permitted Acquisitions theretofore consummated since the Funding Date, does not exceed the Permitted Acquisition Basket Amount; (vii) the Borrowers shall have delivered to the Administrative Agent and each Lender a certificate executed by their chief financial officers, certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clauses (i) through (vi), inclusive, and containing the calculations (in reasonable detail) required by preceding clauses (iii), (iv), and (vi); and (viii) a Material Contract Termination Event shall not have occurred and be continuing.  

 

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(b)           At the time of each Permitted Acquisition involving the creation or acquisition of a Subsidiary, or the acquisition of capital stock or other Equity Interest of any Person, the capital stock or other Equity Interests thereof created or acquired in connection with such Permitted Acquisition shall be pledged for the benefit of the Secured Creditors pursuant to (and to the extent required by) the Pledge Agreement.

 

(c)           The Borrowers will cause each Subsidiary which is formed to effect, or is acquired pursuant to, a Permitted Acquisition to comply with, and to execute and deliver all of the documentation as and to the extent required by, Sections 7.12 and 8.16, to the reasonable satisfaction of the Administrative Agent.

 

(d)           The consummation of each Permitted Acquisition shall be deemed to be a representation and warranty by Parent and each of the Borrowers that the certifications pursuant to this Section 7.15 are true and correct and that all conditions thereto have been satisfied and that same is permitted in accordance with the terms of this Agreement, which representation and warranty shall be deemed to be a representation and warranty for all purposes hereunder, including, without limitation, Section 9.

 

7.16.        Foreign Subsidiaries Security . If (a) following a change in the relevant sections of the Code or the regulations, rules, rulings, notices or other official pronouncements issued or promulgated thereunder or (b) any Person becomes a “Material Foreign Subsidiary,” and in each case, counsel for the Borrowers reasonably acceptable to the Administrative Agent does not, in the case of clause (a), within 30 days after a request from the Administrative Agent or the Required Lenders and in the case of clause (b), promptly after such Person becomes a “Material Foreign Subsidiary,” deliver evidence, in form and substance mutually satisfactory to the Administrative Agent and the Borrowers, with respect to any Foreign Subsidiary of a Borrower which has not already had all of its Equity Interests pledged pursuant to the Pledge Agreement to secure all of the Obligations (as defined in the Pledge Agreement) that (i) a pledge of more than 65% of the total combined voting power of all classes of Equity Interests of such Foreign Subsidiary entitled to vote, (ii) the entering into by such Foreign Subsidiary of a security agreement in substantially the form of the Security Agreement, (iii) the entering into by such Foreign Subsidiary of a pledge agreement in substantially the form of the Pledge Agreement and (iv) the entering into by such Foreign Subsidiary of a guaranty in substantially the form of the Subsidiaries Guaranty, in any such case could reasonably be expected to cause the undistributed earnings of such Foreign Subsidiary as determined for Federal income tax purposes to be treated as a deemed dividend to such Foreign Subsidiary’s United States parent for Federal income tax purposes, then in the case of a failure to deliver the evidence described in clause (i) above, that portion of such Foreign Subsidiary’s outstanding Equity Interests so issued by such Foreign Subsidiary, in each case not theretofore pledged pursuant to the Pledge Agreement to secure all of the Obligations (as defined in the Pledge Agreement), shall be pledged to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Pledge Agreement (or another pledge agreement in substantially similar form, if needed), and in the case of a failure to deliver the evidence described in clause (ii) or (iii) above, such Foreign Subsidiary shall execute and deliver the Security Agreement (or another security agreement in substantially similar form, if needed) or the Pledge Agreement (or another pledge agreement in substantially similar form, if needed), as the case may be, granting to the Collateral Agent for the benefit of the Secured Creditors a security interest in all of such Foreign Subsidiary’s assets or Equity Interests and promissory notes owned by such Foreign Subsidiary, as the case may be, and securing the obligations of the Borrowers under the Credit Documents and under any Other Hedging Agreement and, in the event the Subsidiaries Guaranty shall have been executed by such Foreign Subsidiary, the obligations of such Foreign Subsidiary thereunder, and in the case of a failure to deliver the evidence described in clause (iv) above, such Foreign Subsidiary shall execute and deliver the Subsidiaries Guaranty (or another guaranty in substantially similar form, if needed), guaranteeing the obligations of the Borrowers under the Credit Documents and under any Other Hedging Agreement, in each case to the extent that the entering into of such Security Agreement, the Pledge Agreement or the Subsidiaries Guaranty (or substantially similar document) is permitted by the laws of the respective foreign jurisdiction and with all documents delivered pursuant to this Section 7.16 to be in form and substance reasonably satisfactory to the Administrative Agent and/or the Collateral Agent. If any Foreign Subsidiary shall be required to provide a security interest over its assets in accordance with this Section 7.16, such Foreign Subsidiary shall only be permitted to conduct long-term operations in those jurisdictions in which it has taken steps to perfect the security interest over such assets. For the avoidance of doubt, each Intercompany Secured Obligor Subsidiary shall only conduct long-term operations in those jurisdictions in which it has filed a financing statement with respect to the applicable Intercompany Secured Note.  

 

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7.17.        Maintenance of Company Separateness .  Parent will, and will cause each of its Subsidiaries to, satisfy customary Company formalities, including, as applicable, (i) the holding of regular board of directors’ and shareholders’ meetings or action by directors or shareholders without a meeting, (ii) the maintenance of separate Company offices and records and (iii) the maintenance of separate bank accounts in its own name. Neither Parent nor any of its Subsidiaries shall take any action, or conduct its affairs in a manner, which is likely to result in the Company existence of Parent or any of its Subsidiaries being ignored, or in the assets and liabilities of Parent or any of its Subsidiaries being substantively consolidated with those of any other such Person in a bankruptcy, reorganization or other insolvency proceeding.  

 

7.18.        Kuukpik Joint Venture . The Credit Parties shall ensure that all payments from contracts on the North Slope of Alaska are required by the terms of such contracts to be remitted to, and are in fact remitted to, the Credit Parties, and will not allow more than 10% of the revenue stream from each such contract to be remitted to the Kuukpik Joint Venture. The Credit Parties shall not allow the Kuukpik Joint Venture to become a counterparty to any of such contracts.  

 

7.19.        Intercompany Canadian Note. The Credit Parties shall cause SAE Canada to maintain a balance under the Intercompany Canadian Note equal to the greater of (x) $15,000,000 and (y) the then-current book value of the assets of SAE Canada. Within 30 days following each delivery of quarterly financial statements pursuant to Section 7.01(b), the Credit Parties shall cause such balance to be increased to the extent required by the prior sentence.

 

SECTION 8.      Negative Covenants .  

 

Each of Parent and the Borrowers hereby covenants and agrees that on and after the Effective Date and until the Loans, Notes, Fees and all other Obligations (other than any indemnities described in Section 11.13 which are not then due and payable) incurred hereunder and thereunder, are paid in full:

 

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8.01.        Liens . Parent will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets (real or personal, tangible or intangible) of Parent or any of its Subsidiaries (including, without limitation, any equity interests in the Kuukpik Joint Venture), whether now owned or hereafter acquired, or sell any such property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets (including sales of accounts receivable with recourse to Parent or any of its Subsidiaries), or assign any right to receive income or permit the filing of any financing statement under the UCC or any other similar notice of Lien under any similar recording or notice statute; provided that the provisions of this Section 8.01 shall not prevent the creation, incurrence, assumption or existence of the following (Liens described below are herein referred to as “ Permitted Liens ”):  

 

(i)            inchoate Liens for taxes, assessments or governmental charges or levies not yet due or Liens for taxes, assessments or governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP;

 

(ii)           Liens in respect of property or assets of Parent or any of its Subsidiaries imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers’, warehousemen’s, materialmen’s and mechanics’ liens and other similar Liens arising in the ordinary course of business, and (x) which do not in the aggregate materially detract from the value of Parent’s or such Subsidiary’s property or assets or materially impair the use thereof in the operation of the business of Parent or such Subsidiary or (y) which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to any such Lien;

 

(iii)          Liens in existence on the Funding Date which are listed, and the property subject thereto described, in Schedule VIII, but only to the respective date, if any, set forth in such Schedule VIII for the removal, replacement and termination of any such Liens, plus renewals, replacements and extensions of such Liens to the extent set forth on such Schedule VIII, provided that (x) the aggregate principal amount of the Indebtedness, if any, secured by such Liens does not increase from that amount outstanding at the time of any such renewal, replacement or extension and (y) any such renewal, replacement or extension does not encumber any additional assets or properties of Parent or any of its Subsidiaries;

 

(iv)          Liens created by or pursuant to this Agreement and the Security Documents;

 

(v)           (x) licenses, sublicenses, leases or subleases granted by Parent or any of its Subsidiaries to other Persons not materially interfering with the conduct of the business of Parent or any of its Subsidiaries and (y) any interest or title of a lessor, sublessor or licensor under any lease or license agreement permitted by this Agreement to which the Borrowers or any of their Subsidiaries is a party;

 

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(vi)          Liens upon assets of the Borrowers or any of their Subsidiaries subject to Capitalized Lease Obligations to the extent such Capitalized Lease Obligations are permitted by Section 8.04(iv), provided that (x) such Liens only serve to secure the payment of Indebtedness arising under such Capitalized Lease Obligation and (y) the Lien encumbering the asset giving rise to the Capitalized Lease Obligation does not encumber any asset of Parent or the Borrowers or any Subsidiary of Parent;

 

(vii)         Liens placed upon equipment or machinery acquired after the Funding Date and used in the ordinary course of business of the Borrowers or any of their Subsidiaries and placed at the time of the acquisition thereof by the Borrowers or such Subsidiary or within 90 days thereafter to secure Indebtedness incurred to pay all or a portion of the purchase price thereof or to secure Indebtedness incurred solely for the purpose of financing the acquisition of any such equipment or machinery or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided that (x) the Indebtedness secured by such Liens is permitted by Section 8.04(iv) and (y) in all events, the Lien encumbering the equipment or machinery so acquired does not encumber any asset of Parent, the Borrowers or such Subsidiary;

 

(viii)        easements, rights-of-way, restrictions, encroachments and other similar charges or encumbrances, and minor title deficiencies, in each case not securing Indebtedness and not materially interfering with the conduct of the business of Parent or any of its Subsidiaries;

 

(ix)           Liens arising from precautionary UCC financing statement filings (or, in a jurisdiction outside the United States, any analogous filing in compliance with local law) regarding operating leases entered into in the ordinary course of business;

 

(x)            Liens arising out of the existence of judgments or awards that do not constitute an Event of Default under Section 9.09;

 

(xi)           statutory and common law landlords’ liens under leases to which the Borrowers or any of their Subsidiaries is a party;

 

(xii)          Liens (other than Liens imposed under ERISA) incurred in the ordinary course of business in connection with workers compensation claims, unemployment insurance and social security benefits, provided that the aggregate amount of all cash and the Fair Market Value of all other property subject to all Liens permitted by this clause (xii) shall not at any time exceed $500,000;

 

(xiii)        Permitted Encumbrances;

 

(xiv)        Liens on property or assets acquired pursuant to a Permitted Acquisition, or on property or assets of a Subsidiary of any of the Borrowers in existence at the time such Subsidiary is acquired pursuant to a Permitted Acquisition, provided that (x) any Indebtedness that is secured by such Liens is permitted to exist under Section 8.04(vii), and (y) such Liens are not incurred in connection with, or in contemplation or anticipation of, such Permitted Acquisition and do not attach to any asset of Parent, any other asset of the Borrowers or any of their Subsidiaries;

 

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(xv)         Liens arising out of any conditional sale, title retention, consignment or other similar arrangements for the sale of goods entered into by the Borrowers or any of their Subsidiaries in the ordinary course of business to the extent such Liens do not attach to any assets other than the goods subject to such arrangements;

 

(xvi)        Liens (x) incurred in the ordinary course of business in connection with the purchase or shipping of goods or assets (or the related assets and proceeds thereof), which Liens are in favor of the seller or shipper of such goods or assets and only attach to such goods or assets, and (y) in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

 

(xvii)       bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by Parent or any Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank or banks with respect to cash management and operating account arrangements;

 

(xviii)      Liens on assets of Foreign Subsidiaries securing Indebtedness permitted to be incurred by such Foreign Subsidiaries pursuant to Section 8.04(xiii);

 

(xix)         Liens on cash deposits of a Credit Party pledge to secure performance bonds, surety bonds, appeal bonds or customs bonds; provided that the aggregate amount of all cash subject to all Liens permitted by this clause (xix) shall not at any time exceed the amounts permitted under Section 8.04(ix) and 8.05(xv);

 

(xx)          Liens on assets of an Intercompany Secured Obligor Subsidiary securing Indebtedness permitted to be incurred by such Intercompany Secured Obligor Subsidiary pursuant to Section 8.05(viii)(VI); and

 

(xxi)         additional Liens of the Borrowers or any Subsidiary of a Borrower not otherwise permitted by this Section 8.01 that (w) were not incurred in connection with borrowed money, (x) do not encumber any assets of Parent or any of its Subsidiaries the Fair Market Value of which exceeds the amount of the Indebtedness or other obligations secured by such assets, (y) do not materially impair the use of such assets in the operation of the business of the Borrowers or such Subsidiary and (z) do not secure obligations in excess of $500,000 in the aggregate for all such Liens at any time.

 

In connection with the granting of Liens of the type described in clauses (iii), (vi), (vii), (ix), (xiv) and (xix) of this Section 8.01 by the Borrowers or any of their Subsidiaries, the Administrative Agent and the Collateral Agent shall be authorized to take any actions deemed appropriate by it in connection therewith (including, without limitation, by executing appropriate lien releases or lien subordination agreements in favor of the holder or holders of such Liens, in either case solely with respect to the item or items of equipment or other assets subject to such Liens).

 

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8.02.        Consolidation, Merger, Purchase or Sale of Assets, etc . Parent will not, and will not permit any of its Subsidiaries to, wind up, liquidate or dissolve its affairs or enter into any partnership, joint venture, or consummate a transaction of merger or consolidation, or convey, sell, lease or otherwise dispose of all or any part of its property or assets (other than sales of inventory in the ordinary course of business), or enter into any sale-leaseback transactions, or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or assets (other than purchases or other acquisitions of inventory, materials and equipment in the ordinary course of business) of any Person (or agree to do any of the foregoing at any future time), except that:  

 

(i)            Capital Expenditures by the Borrowers and their Subsidiaries shall be permitted to the extent not in violation of Section 8.07;

 

(ii)           the Borrowers and their Subsidiaries may liquidate or otherwise dispose of obsolete or worn-out property in the ordinary course of business;

 

(iii)          Investments may be made to the extent permitted by Section 8.05;

 

(iv)          the Borrowers and their Subsidiaries may sell assets (other than the capital stock or other Equity Interests of any Wholly-Owned Subsidiary, unless all of the capital stock or other Equity Interests of such Wholly-Owned Subsidiary are sold in accordance with this clause (iv)), so long as (v) no Default or Event of Default then exists or would result therefrom, (w) each such sale is in an arm’s-length transaction and such Borrower or the respective Subsidiary receives at least Fair Market Value, (x) the consideration received by the Borrowers or such Subsidiary consists of at least 90% cash and is paid at the time of the closing of such sale, (y) the Net Sale Proceeds therefrom are applied and/or reinvested as (and to the extent) required by Section 4.02(d) and (z) the aggregate amount of the cash and non-cash proceeds received from all assets sold pursuant to this clause (iv) shall not exceed $7,500,000 in any fiscal year of Parent (for purposes of this clause (z), using the Fair Market Value of property other than cash);

 

(v)           each of the Borrowers and their Subsidiaries may lease (as lessee) or license (as licensee) real or personal property (so long as any such lease or license does not create a Capitalized Lease Obligation except to the extent permitted by Section 8.04(iv));

 

(vi)          each of the Borrowers and their Subsidiaries may sell or discount, in each case without recourse and in the ordinary course of business, accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof and not as part of any financing transaction;

 

(vii)         each of the Borrowers and their Subsidiaries may grant licenses, sublicenses, leases or subleases to other Persons not materially interfering with the conduct of the business of the Borrowers or any of their Subsidiaries, in each case so long as no such grant otherwise affects the Collateral Agent’s security interest in the asset or property subject thereto;

 

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(viii)        (a) any Credit Party may convey, sell or otherwise transfer all or any part of its business, properties and assets to another Credit Party, so long as any security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the assets so transferred shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such transfer) and all actions required to maintain said perfected status have been taken, (b) any Credit Party may convey, sell or otherwise transfer all or any part of its business, properties and assets to a Foreign Subsidiary provided that the Fair Market Value of such business, properties and assets shall not exceed $1,000,000 in any fiscal year and (c) any Foreign Subsidiary may convey, sell or otherwise transfer all or any part of its business, properties and assets to a Credit Party.

 

(ix)           any Subsidiary of a Borrower may merge or consolidate with and into, or be dissolved or liquidated into, such Borrower or any Wholly-Owned Domestic Subsidiary of such Borrower which is a Subsidiary Guarantor, so long as (i) in the case of any such merger, consolidation, dissolution or liquidation involving such Borrower, such Borrower is the surviving or continuing entity of any such merger, consolidation, dissolution or liquidation, (ii) in all other cases, a Wholly-Owned Domestic Subsidiary of such Borrower which is a Subsidiary Guarantor is the surviving or continuing corporation of any such merger, consolidation, dissolution or liquidation, and (iii) any security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the assets of such Subsidiary shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such merger, consolidation, dissolution or liquidation) and all actions required to maintain said perfected status have been taken;

 

(x)            any Foreign Subsidiary of a Borrower may be merged, consolidated or amalgamated with and into, or be dissolved or liquidated into, or transfer any of its assets to, any Wholly-Owned Foreign Subsidiary of a Borrower, so long as (i) such Wholly-Owned Foreign Subsidiary of a Borrower is the surviving or continuing entity of any such merger, consolidation, amalgamation, dissolution or liquidation and (ii) any security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the Equity Interests of such Wholly-Owned Foreign Subsidiary and such Foreign Subsidiary shall remain in full force and effect and perfected and enforceable (to at least the same extent as in effect immediately prior to such merger, consolidation, amalgamation, dissolution, liquidation or transfer) and all actions required to maintain said perfected status have been taken;

 

(xi)           Permitted Acquisitions may be consummated in accordance with the requirements of Section 7.15; and

 

(xii)          the Borrowers and their Subsidiaries may liquidate or otherwise dispose of Cash Equivalents in the ordinary course of business, in each case for cash at Fair Market Value.

 

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To the extent the Required Lenders waive the provisions of this Section 8.02 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 8.02 (other than to Parent or a Subsidiary thereof), such Collateral shall be sold free and clear of the Liens created by the Security Documents, and the Administrative Agent and the Collateral Agent shall be authorized to take any actions deemed appropriate in order to effect the foregoing.

 

8.03.        Dividends . Parent will not, and will not permit any of its Subsidiaries to, authorize, declare or pay any Dividends with respect to Parent or any of its Subsidiaries, except that:  

 

(i)            any Subsidiary of each Borrower may pay cash Dividends to such Borrower or to any Wholly-Owned Domestic Subsidiary of such Borrower and any Foreign Subsidiary of each Borrower also may pay cash Dividends to any Wholly-Owned Foreign Subsidiary of such Borrower; provided that no such Dividends shall be paid to 1623739 Alberta Ltd. (Alberta) or to 1623753 Alberta Ltd. (Alberta);

 

(ii)           provided that a Material Contract Termination Event shall not have occurred and be continuing, any direct Non-Wholly-Owned Subsidiary of each Borrower may pay cash Dividends to its shareholders, members or partners generally, so long as the Borrower or its respective Subsidiary which owns the Equity Interest in such Subsidiary paying such Dividends receives at least its proportionate share thereof (based upon its relative holding of the Equity Interest in the Subsidiary paying such Dividends and taking into account the relative preferences, if any, of the various classes of Equity Interests of such Subsidiary);

 

(iii)          SAE, the Delaware Subsidiary Borrower and the Alaskan Subsidiary Borrower may pay cash Dividends to Parent, so long as the proceeds thereof are promptly used by Parent to pay operating expenses incurred in the ordinary course of business (including, without limitation, outside directors and professional fees, expenses and indemnities) and other similar corporate overhead costs and expenses, provided that the aggregate amount of all cash Dividends paid pursuant to this clause (iii) shall not exceed $100,000 in any fiscal year of Parent;

 

(iv)          SAE, the Delaware Subsidiary Borrower and the Alaskan Subsidiary Borrower may pay cash Dividends to Parent at the times and in the amounts necessary to enable Parent to pay its tax obligations; provided that (x) the amount of cash Dividends paid pursuant to this clause (iv) to enable Parent to pay Federal and state income taxes at any time shall not exceed the amount of such Federal and state income taxes actually owing by Parent at such time for the respective period and (y) any refunds received by Parent shall promptly be returned by Parent to SAE, the Delaware Subsidiary Borrower or the Alaskan Subsidiary Borrower, as applicable;

 

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(v)           provided that a Material Contract Termination Event shall not have occurred and be continuing, SAE, the Delaware Subsidiary Borrower and the Alaskan Subsidiary Borrower may pay cash Dividends to Parent in an aggregate amount for all such Dividends not to exceed $500,000 (although no more than $250,000 of such Dividends may be paid in any fiscal year of Parent) for the purpose of enabling Parent to redeem, repurchase or otherwise acquire for value, and Parent may redeem, repurchase or otherwise acquire for value, outstanding shares of Parent Common Stock (or options or warrants to purchases Parent Common Stock) following the death, disability or termination of employment of officers, directors or employees of Parent or any of its Subsidiaries, provided that (x) the only consideration paid by Parent in respect of such redemptions or purchases shall be cash and Shareholder Subordinated Notes, (y) the sum of (I) the aggregate amount paid by Parent in cash in respect of all such redemptions or purchases plus (II) the aggregate amount of all cash payments made on all Shareholder Subordinated Notes shall not exceed $500,000 in respect of all such redemptions, purchases and payments (although no more than $500,000 of such redemptions, purchases and payments may be made in any fiscal year of Parent) and (z) at the time of any cash Dividend, purchase or payment permitted to be made pursuant to this Section 8.03(v), including any cash payment made under a Shareholder Subordinated Note, no Default or Event of Default shall then exist or result therefrom;

 

(vi)          Parent may pay regularly scheduled Dividends on its Qualified Preferred Stock pursuant to the terms thereof solely through the issuance of additional shares of such Qualified Preferred Stock (but not in cash), provided that in lieu of issuing additional shares of such Qualified Preferred Stock as Dividends, Parent may increase the liquidation preference of the shares of Qualified Preferred Stock in respect of which such Dividends have accrued;

 

(vii)         SAE may pay regularly scheduled Dividends to Parent on its Qualified Preferred Stock pursuant to the terms thereof, provided that Parent must make an immediate corresponding cash contribution to SAE in the same amount as any such Dividend paid in cash;

 

(viii)        Parent may pay Dividends in an aggregate amount not to exceed 50% of the Net Cash Proceeds of all issuances of Equity Interests by Parent (other than sales or issuances of Parent Common Stock to employees, officers and/or directors of Parent and its Subsidiaries (including as a result of the exercise of any options with respect thereto) following the Funding Date, provided that (a) all mandatory prepayments in respect of such issuance shall have been completed in accordance with Section 4.02, (b) no Default or Event of Default shall have occurred or could reasonably be expected to result from such Dividend, (c) no Material Contract Termination Event shall have occurred and be continuing and (d) the aggregate amount of cash and Cash Equivalents held by Parent and its Subsidiaries (without giving effect to the receipt of any such Net Cash Proceeds) immediately after giving effect to the payment of such Dividend shall be equal to or greater than the aggregate amount of cash and Cash Equivalents held by Parent and its Subsidiaries (without giving effect to the receipt of any such Net Cash Proceeds) immediately prior to the payment of such Dividend;

 

(ix)           Parent may pay a Dividend in an aggregate amount not to exceed $15,000,000 prior to December 31, 2012, provided that all of the proceeds of such Dividend are immediately applied by the recipients thereof to purchase Shareholder Subordinated Notes (which, for the avoidance of doubt, shall be issued on terms and conditions satisfactory to the Administrative Agent); and

 

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(x)            provided that a Material Contract Termination Event shall not have occurred and be continuing, SAE, the Delaware Subsidiary Borrower and the Alaskan Subsidiary Borrower may pay cash Dividends to Parent in an aggregate amount not to exceed $1,750,000; provided that (x) Parent must use such funds to make the loans and advances as set forth in Section 8.05(xvi) and (y) any repayment received by Parent shall promptly be returned by Parent to SAE, the Delaware Subsidiary Borrower or the Alaskan Subsidiary Borrower, as applicable.

 

8.04.        Indebtedness . Parent will not, and will not permit any of its Subsidiaries to, contract, create, incur, assume or suffer to exist any Indebtedness, except:  

 

(i)            Indebtedness incurred pursuant to this Agreement and the other Credit Documents;

 

(ii)           Existing Indebtedness outstanding on the Funding Date and listed on Schedule VI (as reduced by any repayments of principal thereof), without giving effect to any subsequent extension, renewal or refinancing thereof except to the extent set forth on Schedule VI, provided that the aggregate principal amount of the Indebtedness to be extended, renewed or refinanced does not increase from that amount outstanding at the time of any such extension, renewal or refinancing and, provided further , that any Intercompany Debt listed on Schedule VI (and subsequent extensions, refinancings, renewals, replacements and refundings thereof as permitted pursuant to this Section 8.04(ii)) shall be subject to the requirements of clauses (w), (x) and (y) appearing in the proviso to Section 8.05(viii);

 

(iii)          Indebtedness of the Borrowers under Other Hedging Agreements entered into in the ordinary course of business and providing protection to the Borrowers and their Subsidiaries against fluctuations in currency values in connection with the Borrowers’ or any of their Subsidiaries’ operations, so long as the entering into of such Other Hedging Agreements are bona fide hedging activities and are not for speculative purposes; provided that the Administrative Agent, in its sole discretion, shall have approved the form of each Other Hedging Agreement;

 

(iv)          Indebtedness of the Borrowers and their Subsidiaries evidenced by Capitalized Lease Obligations (to the extent permitted pursuant to Section 8.07) and purchase money Indebtedness described in Section 8.01(vii), provided that except as further provided below, in no event shall the sum of the aggregate principal amount of all Capitalized Lease Obligations and purchase money Indebtedness permitted by this clause (iv) exceed $2,500,000 at any time outstanding; provided further that, (a) in the event Consolidated EBITDA for the then-applicable Test Period is greater than $60,000,000, the limitation in the foregoing proviso shall be increased to $10,000,000 and (b) thereafter, in the event Consolidated EBITDA in future Test Periods declines to or below $60,000,000, the limitation set forth in the foregoing proviso shall apply, but any Indebtedness incurred in accordance with the foregoing clause (a) of this proviso shall be permitted;

 

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(v)           Indebtedness constituting Intercompany Loans to the extent permitted by Section 8.05(viii);

 

(vi)          Indebtedness consisting of guaranties (x) by the Borrowers and the Wholly-Owned Domestic Subsidiaries of the Borrowers that are Subsidiary Guarantors of each other’s Indebtedness and lease and other contractual obligations permitted under this Agreement and (y) by Wholly-Owned Foreign Subsidiaries of the Borrowers of each other’s Indebtedness and lease and other contractual obligations permitted under this Agreement;

 

(vii)         Indebtedness of a Subsidiary of a Borrower acquired pursuant to a Permitted Acquisition (or Indebtedness assumed at the time of a Permitted Acquisition of an asset securing such Indebtedness), provided that (x) such Indebtedness was not incurred in connection with, or in anticipation or contemplation of, such Permitted Acquisition, (y) such Indebtedness does not constitute debt for borrowed money, it being understood and agreed that Capitalized Lease Obligations and purchase money Indebtedness shall not constitute debt for borrowed money for purposes of this clause (y) and (z) the aggregate principal amount of all Indebtedness permitted by this clause (vii) shall not exceed $1,000,000 at any one time outstanding;

 

(viii)        Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, so long as such Indebtedness is extinguished within four Business Days of its incurrence;

 

(ix)           Indebtedness of the Borrowers and their Subsidiaries with respect to performance bonds, surety bonds, appeal bonds or customs bonds required in the ordinary course of business or in connection with the enforcement of rights or claims of the Borrowers or any of their Subsidiaries or in connection with judgments that do not result in a Default or an Event of Default, provided that the aggregate outstanding amount of all such performance bonds, surety bonds, appeal bonds and customs bonds permitted by this clause (ix), together with the amount of Investments outstanding under Section 8.05(xv), shall not at any time exceed $7,500,000;

 

(x)            Indebtedness of Parent under the Shareholder Subordinated Notes (a) issued after the Effective Date in connection with a redemption or repurchase of Parent Common Stock pursuant to Section 8.03(v) and (b) purchased with the proceeds of Dividends permitted pursuant to Section 8.03(ix);

 

(xi)           Indebtedness of SAE incurred under the Existing Shareholders Notes, in an aggregate principal amount not to exceed $2,402,000 as of September 30, 2012 plus pay-in-kind interest thereon following such date to the extent provided in the Existing Shareholders Notes as in effect on the Funding Date less the amount of any repayments of principal thereof after the Funding Date, which Indebtedness shall be unsecured;

 

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(xii)          Indebtedness of the Borrowers or any of their Subsidiaries which may be deemed to exist in connection with agreements providing for indemnification, purchase price adjustments and similar obligations in connection with the acquisition or disposition of assets in accordance with the requirements of this Agreement, so long as any such obligations are those of the Person making the respective acquisition or sale, and are not guaranteed by any other Person except as permitted by Section 8.04(vi);

 

(xiii)         Indebtedness of Foreign Subsidiaries of the Borrowers (other than an Intercompany Secured Obligor Subsidiary) under lines of credit to any such Foreign Subsidiary from Persons other than the Borrowers or any of their Subsidiaries, the proceeds of which Indebtedness are used for such Foreign Subsidiary’s working capital purposes, provided that the aggregate principal amount of all such Indebtedness outstanding at any time for all such Foreign Subsidiaries shall not exceed $2,500,000; and

 

(xiv)        so long as no Default or Event of Default then exists or would result therefrom, additional Indebtedness incurred by the Borrowers and their Subsidiaries in an aggregate principal amount not to exceed $2,500,000 at any one time outstanding, which Indebtedness shall be unsecured.

 

8.05.        Advances, Investments and Loans . Parent will not, and will not permit any of its Subsidiaries to, directly or indirectly, lend money or credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other Equity Interest in, or make any capital contribution to, any other Person, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract, or hold any cash or Cash Equivalents (each of the foregoing an “ Investment ” and, collectively, “ Investments ”), except that, the following shall be permitted:

 

(i)            the Borrowers and their Subsidiaries may acquire and hold accounts receivables owing to any of them, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms of the Borrowers or such Subsidiary;

 

(ii)           Parent and its Subsidiaries may acquire and hold cash and Cash Equivalents.

 

(iii)          Parent and its Subsidiaries may hold the Investments held by them on the Funding Date and described on Schedule IX, provided that any additional Investments made with respect thereto shall be permitted only if permitted under the other provisions of this Section 8.05;

 

(iv)          the Borrowers and their Subsidiaries may acquire and own investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in good faith settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;

 

(v)           provided that a Material Contract Termination Event shall not have occurred and be continuing, the Borrowers and their Subsidiaries may make loans and advances to their officers and employees for moving, relocation and travel expenses and other similar expenditures, in each case in the ordinary course of business in an aggregate amount not to exceed $500,000 at any time (determined without regard to any write-downs or write-offs of such loans and advances);

 

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(vi)          Parent and its Subsidiaries may acquire and hold obligations of their officers and employees in connection with such officers’ and employees’ acquisition of shares of Parent Common Stock (so long as no cash is actually advanced by Parent or any of its Subsidiaries in connection with the acquisition of such obligations);

 

(vii)         the Borrowers may enter into Other Hedging Agreements to the extent permitted by Section 8.04(iii);

 

(viii)         (I) any Credit Party may make intercompany loans and advances to any other Credit Party, (II) the Borrowers and its Domestic Subsidiaries may make intercompany loans and advances to any Wholly-Owned Foreign Subsidiary (other than intercompany loans and advances to (i) 1623739 Alberta Ltd. (Alberta), (ii) 1623753 Alberta Ltd. (Alberta), or (iii) an Intercompany Secured Obligor Subsidiary (which shall be governed by clause (VI) hereof)) provided that such intercompany loans and advances are evidenced by an Intercompany Global Note , (III) any Subsidiary which is not a Credit Party may make intercompany loans and advances to any other Wholly-Owned Subsidiary which is not a Credit Party, (IV) any Foreign Subsidiary may make intercompany loans and advances to any other Foreign Subsidiary that is a Wholly-Owned Subsidiary, (V) any Foreign Subsidiary may make intercompany loans and advances to any Credit Party provided that such intercompany loans and advances are evidenced by an Intercompany Global Note , and (VI) after the Funding Date, SAE may make secured intercompany loans and advances to an Intercompany Secured Obligor Subsidiary in the aggregate principal amount not to exceed, in the case of intercompany loans and advances to SAE Canada, $30,000,000 and in the case of intercompany loans and advances to any other Intercompany Secured Obligor Subsidiary , $10,000,000 in the aggregate (collectively, the “ Intercompany Secured Loans ” and, together with such intercompany loans and advances referred to in preceding clauses (I) through (VI), collectively, the “ Intercompany Loans ”), provided , that (t) no new Intercompany Loans may be made pursuant to the preceding sub-clause (II) of this clause (viii) if a Material Contract Termination Event has occurred and is continuing , (u) at no time shall the aggregate outstanding principal amount of all Intercompany Loans made pursuant to preceding sub-clause (II) of this clause (viii), when added to the amount of contributions, acquisitions of Equity Interests, capitalizations and forgivenesses theretofore made pursuant to subclause (II) of Section 8.05(ix) (for this purposes, taking the Fair Market Value of any property (other than cash) so contributed at the time of such contribution), exceed $5,000,000 (determined without regard to any write-downs or write-offs of such loans and advances and net of any returns on any such Investment in the form of a principal repayment, distribution, dividend or redemption, as applicable), (v) no Intercompany Loan may be made pursuant to subclause (II) above at any time that a Default or an Event of Default has occurred and its continuing, (w) each Intercompany Loan shall be evidenced by an Intercompany Note, (x) each such Intercompany Note owned or held by a Credit Party shall be pledged to the Collateral Agent pursuant to the Pledge Agreement and each such Intercompany Note owned or held by an Intercompany Secured Obligor Subsidiary shall be pledged to a Credit Party to secure the payment of obligations under the applicable Intercompany Secured Note, (y) each Intercompany Loan made by any Subsidiary of a Borrower that is not a Credit Party to a Credit Party shall be subject to the subordination provisions contained in the Intercompany Global Note and (z) any Intercompany Loans made to any Subsidiary Guarantor or any Wholly-Owned Foreign Subsidiary pursuant to this clause (viii) shall cease to be permitted by this clause (viii) if such Subsidiary Guarantor or Wholly-Owned Foreign Subsidiary, as the case may be, ceases to constitute a Subsidiary Guarantor that is a Wholly-Owned Domestic Subsidiary or a Wholly-Owned Foreign Subsidiary, as the case may be;

 

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(ix)            (I) the Borrowers and any Subsidiary Guarantor may make capital contributions to, or acquire Equity Interests of, any Subsidiary Guarantor which is a Wholly-Owned Domestic Subsidiary, (II) provided that a Material Contract Termination Event shall not have occurred and be continuing , the Borrowers and its Domestic Subsidiaries may make capital contributions to, or acquire Equity Interests of, Wholly-Owned Foreign Subsidiaries (other than (i) 1623739 Alberta Ltd. (Alberta), (ii) 1623753 Alberta Ltd. (Alberta), or (iii) an Intercompany Secured Obligor Subsidiary) , and may capitalize or forgive any Indebtedness owed to them by a Wholly-Owned Foreign Subsidiary (other than (i) 1623739 Alberta Ltd. (Alberta), (ii) 1623753 Alberta Ltd. (Alberta), or (iii) an Intercompany Secured Obligor Subsidiary) and outstanding under clause (viii) of this Section 8.05, and (III) any Wholly-Owned Foreign Subsidiary may make capital contributions to, or acquire Equity Interests of, any other Wholly-Owned Foreign Subsidiary, and may capitalize or forgive any Indebtedness owed to it by a Wholly-Owned Foreign Subsidiary; provided that (w) the aggregate amount of contributions, acquisitions of Equity Interests, capitalizations and forgiveness on and after the Funding Date made pursuant to preceding subclause (II) (for this purpose, taking the Fair Market Value of any property (other than cash) so contributed at the time of such contribution), when added to the aggregate outstanding principal amount of Intercompany Loans made to Wholly-Owned Foreign Subsidiaries pursuant to subclause (II) of Section 8.05(viii) (determined without regard to any write-downs or write-offs thereof and net of any returns on any such Investment in the form of a principal repayment, distribution, dividend or redemption, as applicable), shall not exceed the limitation set forth in such subclause (II) of Section 8.05(viii), (x) no contribution, capitalization or forgiveness may be made pursuant to preceding subclause (II) at any time that a Default or an Event of Default has occurred and its continuing, (y) in the case of any contribution pursuant to preceding subclause (I), any security interest granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in any assets so contributed shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such contribution) and all actions required to maintain said perfected status have been taken and (z) any Investment made in or to any Subsidiary Guarantor or any Wholly-Owned Foreign Subsidiary pursuant to this clause (ix) shall cease to be permitted hereunder if such Subsidiary Guarantor or Wholly-Owned Foreign Subsidiary, as the case may be, ceases to constitute a Subsidiary Guarantor that is a Wholly-Owned Domestic Subsidiary or a Wholly-Owned Foreign Subsidiary, as the case may be;

 

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(x)            Parent and its Subsidiaries may own the Equity Interests of their respective Subsidiaries created or acquired in accordance with the terms of this Agreement (so long as all amounts invested in such Subsidiaries are independently justified under another provision of this Section 8.05);

 

(xi)            Contingent Obligations permitted by Section 8.04, to the extent constituting Investments;

 

(xii)          Permitted Acquisitions shall be permitted in accordance with the requirements of Section 7.15;

 

(xiii)         the Borrowers and their Subsidiaries may receive and hold promissory notes and other non-cash consideration received in connection with any asset sale permitted by Section 8.02(iv);

 

(xiv)        the Borrowers and their Subsidiaries may make advances in the form of a prepayment of expenses to vendors, suppliers and trade creditors consistent with their past practices, so long as such expenses were incurred in the ordinary course of business of the Borrowers or such Subsidiary;

 

(xv)          Investments of the Borrowers and their Subsidiaries with respect to cash deposits to be made in connection with performance bonds, surety bonds, appeal bonds or customs bonds required in the ordinary course of business or in connection with the enforcement of rights or claims of the Borrowers or any of their Subsidiaries or in connection with judgments that do not result in a Default or an Event of Default, provided that the aggregate outstanding amount of all such performance bonds, surety bonds, appeal bonds and customs bonds permitted by this clause (xv), together with the amount of Indebtedness outstanding under Section 8.04(ix), shall not at any time exceed $7,500,000;

 

(xvi)        Parent may make loans and advances to its shareholders in order to allow them to pay certain taxes for the fiscal years 2011 and 2012, in an aggregate amount not to exceed $1,750,000; provided that such loans and advances must be repaid by such shareholders prior to, or concurrently with, the payment of any Dividend pursuant to Section 8.03(viii) or any other payment made to the shareholders; and

 

(xvii)       provided that a Material Contract Termination Event shall not have occurred and be continuing, in addition to Investments permitted by clauses (i) through (xvi) of this Section 8.05, the Borrowers and their Subsidiaries may make additional loans, advances and other Investments to or in a Person in an aggregate amount for all loans, advances and other Investments made pursuant to this clause (xv) (determined without regard to any write-downs or write-offs thereof), net of cash repayments of principal in the case of loans, sale proceeds in the case of Investments in the form of debt instruments and cash equity returns (whether as a distribution, dividend, redemption or sale) in the case of equity investments, not to exceed $500,000.

 

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8.06.        Transactions with Affiliates . Parent will not, and will not permit any of its Subsidiaries to, enter into any transaction or series of related transactions with any Affiliate of Parent or any of its Subsidiaries, other than in the ordinary course of business and on terms and conditions substantially as favorable to Parent or such Subsidiary as would reasonably be obtained by Parent or such Subsidiary at that time in a comparable arm’s-length transaction with a Person other than an Affiliate, except that the following in any event shall be permitted:  

 

(i)            Dividends may be paid to the extent provided in Section 8.03;

 

(ii)           loans may be made and other transactions may be entered into by Parent and its Subsidiaries to the extent permitted by Sections 8.02, 8.04 and 8.05;

 

(iii)          customary fees, indemnities and reimbursements may be paid to non-officer directors of Parent and its Subsidiaries;

 

(iv)          Parent may issue Parent Common Stock and Qualified Preferred Stock;

 

(v)           Parent and its Subsidiaries may enter into, and may make payments under, employment agreements, employee benefits plans, stock option plans, indemnification provisions and other similar compensatory arrangements with officers, employees and directors of Parent and its Subsidiaries in the ordinary course of business;

 

(vi)          Subsidiaries of the Borrowers may pay management fees, licensing fees and similar fees to the Borrowers or to any Wholly-Owned Domestic Subsidiary of a Borrower that is a Subsidiary Guarantor; and

 

(vii)         SAE may make payments of principal and interest under the Existing Shareholders Notes, to the extent permitted by Section 8.12.

 

Notwithstanding anything to the contrary contained above in this Section 8.06, in no event shall Parent or any of its Subsidiaries pay any management, consulting or similar fee to any of their respective Affiliates except as specifically provided in clauses (vi) of this Section 8.06.

 

8.07.        Capital Expenditures . (a)  Parent will not, and will not permit any of its Subsidiaries to, make any Capital Expenditures, except that, provided a Material Contract Termination Event shall not have occurred and be continuing, during any fiscal year of Parent set forth below (taken as one accounting period), the Borrowers and their Subsidiaries may make Capital Expenditures so long as the aggregate amount of all such Capital Expenditures does not exceed in any fiscal year of Parent set forth below the amount set forth opposite such fiscal year below; provided, that to the extent that the full amount of Capital Expenditures permitted in any fiscal year is not expended in such fiscal year (without regard to any carry forward amounts as permitted under this sentence), such unused amount shall be deemed added to the amounts permitted to be spent in the immediately succeeding fiscal year (with Capital Expenditures made in such succeeding fiscal year applied last to such unused amount):

 

Fiscal Year Ending   Amount  
       
December 31, 2012   $ 42,500,000  
December 31, 2013   $ 47,500,000  

 

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Fiscal Year Ending   Amount  
       
December 31, 2014   $ 22,500,000  
December 31, 2015   $ 22,500,000  
December 31, 2016   $ 42,500,000  

 

(b)           In addition to the foregoing, provided that a Material Contract Termination Event shall not have occurred and be continuing, the Borrowers and their Subsidiaries may make additional Capital Expenditures (which Capital Expenditures will not be included in any determination under Section 8.07(a) or (b)) with the amount of Net Sale Proceeds received by the Borrowers or any of their Subsidiaries from any Asset Sale so long as such Net Sale Proceeds are reinvested within 360 days following the date of such Asset Sale, but only to the extent that such Net Sale Proceeds are not otherwise required to be applied as a mandatory repayment pursuant to Section 4.02(d).

 

(c)           At any time that a Material Contract Termination Event has occurred and is continuing, the Borrowers and their Subsidiaries may make, without duplication of any Capital Expenditures permitted under clauses (a) and (b) above, Capital Expenditures in an amount not to exceed $1,000,000 in the aggregate for all such periods.

 

8.08.        Debt Service Coverage Ratio . Parent will not permit the Debt Service Coverage Ratio for any Test Period ending on the last day of a fiscal quarter of Parent set forth below to be less than the amount set forth opposite such fiscal quarter below: 

 

Fiscal Quarter End   Ratio
     
March 31, 2013   3.25:1.00
June 30, 2013   3.25:1.00
September 30, 2013   3.25:1.00
December 31, 2013   3.25:1.00
March 31, 2014   3.50:1.00
June 30, 2014   3.50:1.00
September 30, 2014   3.75:1.00
December 31, 2014   3.75:1.00
March 31, 2015   4.00:1.00
June 30, 2015   4.00:1.00
September 30, 2015   4.00:1.00
December 31, 2015   4.00:1.00
March 31, 2016   4.00:1.00
June 30, 2016   4.00:1.00
September 30, 2016   4.00:1.00

 

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8.09.        Reserved .

 

8.10.        Net Leverage Ratio . Parent will not permit the Net Leverage Ratio as of any quarter end date set forth below to be greater than the ratio set forth opposite such date below: 

 

Fiscal Quarter End   Ratio
     
March 31, 2013   2.25:1.00
June 30, 2013   2.25:1.00
September 30, 2013   2.25:1.00
December 31, 2013   2.00:1.00
March 31, 2014   1.75:1.00
June 30, 2014   1.50:1.00
September 30, 2014   1.25:1.00
December 31, 2014   1.25:1.00
March 31, 2015   1.25:1.00
June 30, 2015   1.25:1.00
September 30, 2015   1.25:1.00
December 31, 2015   1.25:1.00
March 31, 2016   1.25:1.00
June 30, 2016   1.25:1.00
September 30, 2016   1.25:1.00

 

8.11.        Total Leverage Ratio . Parent will not permit the Total Leverage Ratio as of any quarter end date set forth below to be greater than the ratio set forth opposite such date below: 

 

Fiscal Quarter End   Ratio
     
March 31, 2013   2.50:1.00
June 30, 2013   2.50:1.00
September 30, 2013   2.50:1.00
December 31, 2013   2.25:1.00
March 31, 2014   2.25:1.00
June 30, 2014   2.00:1.00
September 30, 2014   2.00:1.00
December 31, 2014   1.75:1.00
March 31, 2015   1.75:1.00
June 30, 2015   1.75:1.00
September 30, 2015   1.75:1.00
December 31, 2015   1.75:1.00
March 31, 2016   1.75:1.00
June 30, 2016   1.75:1.00
September 30, 2016   1.75:1.00

 

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8.12.        Modifications of the Existing Shareholders Notes; Certificate of Incorporation, By-Laws and Certain Other Agreements; Limitations on Voluntary Payments, etc. Parent will not, and will not permit any of its Subsidiaries to:  

 

(i)            amend, modify or change its certificate or articles of incorporation (including, without limitation, by the filing or modification of any certificate or articles of designation), certificate of formation, limited liability company agreement or by-laws (or the equivalent organizational documents), as applicable, or any agreement entered into by it with respect to its capital stock or other Equity Interests (including any Shareholders’ Agreement and any Qualified Preferred Stock), or enter into any new Shareholders’ Agreement, unless such amendment, modification, change or other action contemplated by this clause (ii) could not reasonably be expected to be adverse to the interests of the Lenders; provided further, that any Shareholders’ Agreement entered into after the Funding Date must be satisfactory to the Administrative Agent in its sole discretion;

 

(ii)           amend, modify or change any provision of any tax sharing agreement or enter into any new tax sharing agreement, tax allocation agreement or similar agreement without the prior written consent of the Administrative Agent;

 

(iii)          amend, modify or change any provision of the Existing Shareholders Notes, or make any payment of principal or interest under the Existing Shareholders Notes; provided that such payments may be made if (a) no Default or Event of Default shall have occurred or could reasonably be expected to result from such payment and (b) no Material Contract Termination Event shall have occurred and be continuing;

 

(iv)          amend, modify or change any provision of the documentation governing the Kuukpik Joint Venture in a manner materially adverse to the interests of the Administrative Agent or the Lenders;

 

(v)           designate any Indebtedness (or related interest obligations) as senior debt having priority over the Obligations;

 

(vi)          on and after the execution and delivery thereof, amend, modify or waive, or permit the amendment, modification or waiver of, any provision of any Shareholder Subordinated Note or Existing Shareholder Notes;

 

(vii)         allow any prepayment of any Intercompany Secured Note or amend or modify, or permit the amendment or modification of, any provision of any Intercompany Secured Note, in each case without the consent of the Required Lenders, or allow the waiver of any provision thereof without the consent of the Administrative Agent; or

 

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(viii)        make (or give any notice in respect of) any principal or interest payment on, or any redemption or acquisition for value of, any Shareholder Subordinated Note, except to the extent permitted by Section 8.03(v).

 

8.13.        Limitation on Certain Restrictions on Subsidiaries . Parent will not, and will not permit any of its Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any such Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other Equity Interest or participation in its profits owned by Parent or any of its Subsidiaries, or pay any Indebtedness owed to Parent or any of its Subsidiaries, (b) make loans or advances to Parent or any of its Subsidiaries or (c) transfer any of its properties or assets to Parent or any of its Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) applicable law, (ii) this Agreement and the other Credit Documents, (iii) the Intercompany Secured Notes, (iv) customary provisions restricting subletting or assignment of any lease governing any leasehold interest of Parent or any of its Subsidiaries, (v) customary provisions restricting assignment of any licensing agreement (in which Parent or any of its Subsidiaries is the licensee) or other contract entered into by Parent or any of its Subsidiaries in the ordinary course of business, (vi) restrictions on the transfer of any asset pending the close of the sale of such asset, and (vii) restrictions on the transfer of any asset subject to a Lien permitted by Section 8.01(iii), (vi), (vii), (xiv), (xv) or (xvi).  

 

8.14.        Limitation on Issuance of Equity Interests . (a) Parent will not, and will not permit any of its Subsidiaries to, issue (i) any Preferred Equity, except as permitted under paragraph (c) of this Section 8.14, or (ii) any redeemable common stock or other redeemable common Equity Interests other than common stock or other redeemable common Equity Interests that is or are redeemable at the sole option of Parent or such Subsidiary, as the case may be.  

 

(b)           Parent will not permit any of its Subsidiaries to issue any capital stock or other Equity Interests (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, capital stock or other Equity Interests, except (i) for transfers and replacements of then outstanding shares of capital stock or other Equity Interests, (ii) for stock splits, stock dividends and other issuances which do not decrease the percentage ownership of Parent or any of its Subsidiaries in any class of the capital stock or other Equity Interests of such Subsidiary, (iii) in the case of Foreign Subsidiaries of Parent, to qualify directors to the extent required by applicable law and for other nominal share issuances to Persons other than Parent and its Subsidiaries to the extent required under applicable law, (iv) for issuances by Subsidiaries of the Borrowers which are newly created or acquired in accordance with the terms of this Agreement and (v) Non-Wholly Owned Subsidiaries may issue Equity Interests, subject to compliance with Section 4.02(b).

 

(c)           Parent may from time to time (i) issue Qualified Preferred Stock, so long as (x) no Default or Event of Default shall exist at the time of any such issuance or immediately after giving effect thereto, and (y) with respect to each issuance of Qualified Preferred Stock, the gross cash proceeds therefrom (or in the case of Qualified Preferred Stock directly issued as consideration for a Permitted Acquisition, the Fair Market Value of the assets received therefor) shall be at least equal to 100% of the liquidation preference thereof at the time of issuance and (ii) issue additional shares of Qualified Preferred Stock to pay in kind regularly scheduled Dividends on Qualified Preferred Stock theretofore issued in compliance with this Section 8.14(c).

 

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8.15.        Business; etc . Parent will not, and will not permit any of its Subsidiaries to, engage directly or indirectly in any business other than the businesses engaged in by Parent and its Subsidiaries as of the Funding Date.  

 

8.16.        Limitation on Creation of Subsidiaries . (a) Parent will not, and will not permit any of its Subsidiaries to, establish, create or acquire after the Funding Date any Subsidiary (other than Non-Wholly Owned Subsidiaries permitted to be established, created or acquired in accordance with the requirements of Section 8.16(b)), provided that the Borrowers and its Wholly-Owned Subsidiaries shall be permitted to establish, create and, to the extent permitted by this Agreement, acquire Wholly-Owned Subsidiaries, so long as, in each case, (i) at least 5 days’ prior written notice thereof is given to the Administrative Agent (or such shorter period of time as is acceptable to the Administrative Agent in any given case), (ii) the capital stock or other Equity Interests of such new Subsidiary are promptly pledged pursuant to, and to the extent required by, this Agreement and the Pledge Agreement and the certificates, if any, representing such stock or other Equity Interests, together with stock or other appropriate powers duly executed in blank, are delivered to the Collateral Agent, (iii) each such new Wholly-Owned Domestic Subsidiary (and, to the extent required by Section 7.16, each such new Wholly-Owned Foreign Subsidiary) executes a counterpart of the Subsidiaries Guaranty, the Security Agreement, the Pledge Agreement and the Intercompany Global Note, and (iv) each such new Wholly-Owned Domestic Subsidiary (and, to the extent required by Section 7.16, each such new Wholly-Owned Foreign Subsidiary), to the extent requested by the Administrative Agent or the Required Lenders, takes all actions required pursuant to Section 7.12. In addition, each new Wholly-Owned Subsidiary that is required to execute any Credit Document shall execute and deliver, or cause to be executed and delivered, all other relevant documentation (including opinions of counsel) of the type described in Section 5 as such new Subsidiary would have had to deliver if such new Subsidiary were a Credit Party on the Funding Date.  

 

(b)           In addition to Subsidiaries of the Borrowers created pursuant to preceding clause (a), the Borrowers and their Subsidiaries may establish, acquire or create, and make Investments in, Non-Wholly Owned Subsidiaries after the Funding Date as a result of Permitted Acquisitions (subject to the limitations contained in the definition thereof) and Investments expressly permitted to be made pursuant to Section 8.05, provided that (i) all of the capital stock or other Equity Interests of each such Non-Wholly Owned Subsidiary shall be pledged by any Credit Party which owns same as, and to the extent, required by the Pledge Agreement, and (ii) each such Non-Wholly Owned Subsidiary shall take the actions specified in Section 8.16(a) to the same extent that such Non-Wholly Owned Subsidiary would have been required to take if it were a Wholly-Owned Subsidiary of a Borrower.

 

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8.17.        Certain Deposit Accounts . Without limiting the provisions of Sections 6.03 and 9.05(ii), none of the Credit Parties will maintain a Lockbox Account or a Deposit Account (as defined in the Security Agreement) in which the Credit Parties hold more than an average daily balance of $100,000 measured on a rolling trailing thirty (30) day basis for the Credit Parties (on an individual basis), unless such Lockbox Account or Deposit Account is (x) subject to a “control agreement” referred to in Section 3.9 of the Security Agreement or (y) otherwise under the “control” (within the meaning of Section 9-104 of the New York UCC) of the Collateral Agent. In addition, no Intercompany Secured Obligor Subsidiary shall maintain a Lockbox Account or a Deposit Account unless such Lockbox Account or Deposit Account is subject to a perfected security interest in favor of a Credit Party, to secure payment of the obligations under the applicable Intercompany Secured Note. Notwithstanding anything herein to the contrary, this Section 8.17 shall not apply to any Deposit Accounts located in jurisdictions outside the United States, provided that the average daily balance in all such Deposit Accounts not subject to a control agreement or perfected security interest in such jurisdictions shall not exceed at any time the sum of $5,000,000 plus the aggregate amount of trade payables due in such jurisdictions within sixty (60) days of the date of determination.

 

8.18.        Lockbox Accounts . Notwithstanding anything in the Security Agreement to the contrary, at all times during this Agreement the Credit Parties will instruct all customers and other Persons making payment on Accounts and other Collateral to make all payments thereon to a designated account (the “Lockbox Account”). The Credit Parties agree that, at the request of the Administrative Agent after the occurrence and during the continuation of an Event of Default, they will cause the funds on deposit in such Lockbox Accounts to be paid to the Administrative Agent on a daily basis by automated wire transfer.

 

SECTION 9.      Events of Default .  

 

Upon the occurrence of any of the following specified events (each, an “ Event of Default ”):

 

9.01.        Payments . The Borrowers shall (i) default in the payment when due of any principal of any Loan or any Note or (ii) default, and such default shall continue unremedied for three or more Business Days, in the payment when due of any interest on any Loan or Note, any Fees or any other amounts owing hereunder or under any other Credit Document; or  

 

9.02.        Representations, etc . Any representation, warranty or statement made or deemed made by any Credit Party herein or in any other Credit Document or in any certificate delivered to the Administrative Agent or any Lender pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or  

 

9.03.        Covenants . Parent or any of its Subsidiaries shall (i) default in the due performance or observance by it of any term, covenant or agreement contained in Section 7.01(a), 7.01(b), 7.01(c), 7.01(g)(i), 7.08, 7.11, 7.14, 7.15, 7.18 or Section 8 or (ii) default in the due performance or observance by it of any other term, covenant or agreement contained in this Agreement (other than those set forth in Sections 9.01, 9.02 or 9.03(i)) and such default shall continue unremedied for a period of 30 days after written notice thereof to the defaulting party by the Administrative Agent or the Required Lenders; or  

 

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9.04.        Default Under Other Agreements . (i)  Parent or any of its Subsidiaries shall (x) default in any payment of any Indebtedness (other than the Obligations) beyond the period of grace, if any, provided in an instrument or agreement under which such Indebtedness was created or (y) default in the observance or performance of any agreement or condition relating to any Indebtedness (other than the Obligations) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause (determined without regard to whether any notice is required), any such Indebtedness to become due prior to its stated maturity, or (ii) any Indebtedness (other than the Obligations) of Parent or any of its Subsidiaries shall be declared to be (or shall become) due and payable, or required to be prepaid (other than by (x) a regularly scheduled required prepayment or (y) a mandatory prepayment (unless such required prepayment or mandatory prepayment results from a default thereunder or an event of the type that constitutes an Event of Default)), prior to the stated maturity thereof, provided that it shall not be a Default or an Event of Default under this Section 9.04 unless the aggregate principal amount of all Indebtedness as described in preceding clauses (i) and (ii) is at least $500,000; or  

 

9.05.        Bankruptcy, etc. Parent or any of its Subsidiaries shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled “Bankruptcy,” as now or hereafter in effect, or any successor thereto (the “ Bankruptcy Code ”); or an involuntary case is commenced against Parent or any of its Subsidiaries, and the petition is not controverted within 10 days, or is not dismissed within 45 days after the filing thereof, provided , however , that during the pendency of such period, each Lender shall be relieved of its obligation to extender credit hereunder; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of Parent or any of its Subsidiaries, to operate all or any substantial portion of the business of Parent or any of its Subsidiaries, or Parent or any of its Subsidiaries commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Parent or any of its Subsidiaries, or there is commenced against Parent or any of its Subsidiaries any such proceeding which remains undismissed for a period of 45 days after the filing thereof, or Parent or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or Parent or any of its Subsidiaries makes a general assignment for the benefit of creditors; or any Company action is taken by Parent or any of its Subsidiaries for the purpose of effecting any of the foregoing; or  

 

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9.06.        ERISA . (a) Any Plan shall fail to satisfy the minimum funding standard required for any plan year or part thereof under Section 412 of the Code or Section 302 of ERISA or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Code or Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA shall be subject to the advance reporting requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1) thereof) and an event described in subsection .62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur with respect to such Plan within the following 30 days, any determination that any Plan is considered at-risk or in endangered or critical status as defined in Sections 303, 304, and 305 of ERISA or Sections 430, 431, and 432 of the Code, any Plan which is subject to Title IV of ERISA shall have had or is likely to have a trustee appointed to administer such Plan, any Plan which is subject to Title IV of ERISA is, shall have been or is likely to be terminated or to be the subject of termination proceedings under ERISA, any Plan shall have an Unfunded Current Liability, a contribution required to be made with respect to a Plan or a Foreign Pension Plan has not been timely made, Parent or any Subsidiary of Parent or any ERISA Affiliate has incurred or is likely to incur any liability to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4071, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or on account of a group health plan (as defined in Section 607(1) of ERISA, Section 4980B(g)(2) of the Code or 45 Code of Federal Regulations Section 160.103) under Section 4980B of the Code and/or the Health Insurance Portability and Accountability Act of 1996, or Parent or any Subsidiary of Parent has incurred or is likely to incur liabilities pursuant to one or more employee welfare benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or Plans or Foreign Pension Plans, a “default,” within the meaning of Section 4219(c)(5) of ERISA, shall occur with respect to any Plan; any applicable law, rule or regulation is adopted, changed or interpreted, or the interpretation or administration thereof is changed, in each case after the date hereof, by any Governmental Authority (a “ Change in Law ”), or, as a result of a Change in Law, an event occurs following a Change in Law, with respect to or otherwise affecting any Plan; (b) there shall result from any such event or events described in subsection (a) the imposition of a lien, the granting of a security interest, or a liability or a material risk of incurring a liability; and (c) such lien, security interest or liability, described in subsection (b) individually, and/or in the aggregate, in the opinion of the Required Lenders, has had, or could reasonably be expected to have, a Material Adverse Effect; or  

 

9.07.        Security Documents . Any of the Security Documents shall cease to be in full force and effect, or shall cease to give the Collateral Agent for the benefit of the Secured Creditors the Liens, rights, powers and privileges purported to be created thereby (including, without limitation, a perfected security interest in, and Lien on, all of the Collateral, in favor of the Collateral Agent, superior to and prior to the rights of all third Persons (except as permitted by Section 8.01), and subject to no other Liens (except as permitted by Section 8.01), or any Credit Party shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to any such Security Document and such default shall continue beyond the period of grace, if any, specifically applicable thereto pursuant to the terms of such Security Document; or  

 

9.08.        Guaranties . Any Guaranty or any provision thereof shall cease to be in full force or effect as to any Guarantor (except as a result of a release of any Subsidiary Guarantor in accordance with the terms thereof), or any Guarantor or any Person acting for or on behalf of such Guarantor shall deny or disaffirm such Guarantor’s obligations under the Guaranty to which it is a party or any Guarantor shall default in the due performance or observance of any term, covenant or agreement on its part to be performed or observed pursuant to the Guaranty to which it is a party; or  

 

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9.09.        Judgments . One or more judgments or decrees shall be entered against Parent or any Subsidiary of Parent involving in the aggregate for Parent and its Subsidiaries a liability (not paid or to the extent not covered by a reputable and solvent insurance company) and such judgments and decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for any period of 30 consecutive days, and the aggregate amount of all such judgments equals or exceeds $1,000,000; or  

 

9.10.        Change of Control . A Change of Control shall occur; or  

 

9.11.        Material Adverse Effect . There shall have occurred a change in the business, operations, property, assets, liabilities, condition (financial or otherwise) or prospects of Parent or any of its Subsidiaries since December 31, 2011 that has had, or could reasonably be expected to have, a material adverse effect on the business, operations, property, assets, liabilities, condition (financial or otherwise) or prospects of Parent and its Subsidiaries taken as a whole;  

 

then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent, upon the written request of the Required Lenders, shall by written notice to the Borrowers, take any or all of the following actions, without prejudice to the rights of the Administrative Agent, any Lender or the holder of any Note to enforce its claims against any Credit Party ( provided that, if an Event of Default specified in Section 9.05 shall occur with respect to the Borrowers, the result which would occur upon the giving of written notice by the Administrative Agent as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such notice): (i) declare the principal of and any accrued interest in respect of all Loans and the Notes and all Obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Credit Party; (ii) enforce, as Collateral Agent, all of the Liens and security interests created pursuant to the Security Documents; and (iii) enforce each Guaranty.

 

SECTION 10.      The Administrative Agent .  

 

10.01.      Appointment . The Lenders hereby irrevocably designate and appoint CP Admin Co LLC as Administrative Agent (for purposes of this Section 10 and Section 11.01, the term “Administrative Agent” also shall include CP Admin Co LLC in its capacity as Collateral Agent pursuant to the Security Documents) to act as specified herein and in the other Credit Documents. Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of such Note shall be deemed irrevocably to authorize, the Administrative Agent to take such action on its behalf under the provisions of this Agreement, the other Credit Documents and any other instruments and agreements referred to herein or therein and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Administrative Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Administrative Agent may perform any of its respective duties hereunder by or through its officers, directors, agents, employees or affiliates.  

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10.02.      Nature of Duties . (a) The Administrative Agent shall not have any duties or responsibilities except those expressly set forth in this Agreement and in the other Credit Documents. Neither the Administrative Agent nor any of its officers, directors, agents, employees or affiliates shall be liable for any action taken or omitted by it or them hereunder or under any other Credit Document or in connection herewith or therewith, unless caused by its or their gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision). The duties of the Administrative Agent shall be mechanical and administrative in nature; the Administrative Agent shall not have by reason of this Agreement or any other Credit Document a fiduciary relationship in respect of any Lender or the holder of any Note; and nothing in this Agreement or in any other Credit Document, expressed or implied, is intended to or shall be so construed as to impose upon the Administrative Agent any obligations in respect of this Agreement or any other Credit Document except as expressly set forth herein or therein.  

 

(b)           Notwithstanding any other provision of this Agreement or any provision of any other Credit Document, the Lead Arranger is named as such for recognition purposes only, and in its capacity as such shall have no powers, duties, responsibilities or liabilities with respect to this Agreement or the other Credit Documents or the transactions contemplated hereby and thereby; it being understood and agreed that the Lead Arranger shall be entitled to all indemnification and reimbursement rights in favor of the Administrative Agent as, and to the extent, provided for under Sections 10.06 and 11.01. Without limitation of the foregoing, the Lead Arranger shall not, solely by reason of this Agreement or any other Credit Documents, have any fiduciary relationship in respect of any Lender or any other Person.

 

10.03.      Lack of Reliance on the Administrative Agent .     (a) Each Lender from time to time party to this Agreement (i) confirms that it has received a copy of this Agreement and the other Credit Documents, together with copies of the financial statements referred to therein, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to become a Lender under this Agreement, (ii) agrees that it has made and will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Credit Documents and, except as expressly provided in this Agreement, the Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to provide any Lender or the holder of any Note with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, (iii) acknowledges and agrees that no fiduciary or advisory relationship between the Administrative Agent and any Lender is intended to be or has been created in respect of any of the transactions contemplated by this Agreement, (iv) acknowledges and agrees that the Administrative Agent, on the one hand, and each Lender on the other hand, have an arms-length business relationship that does not directly or indirectly give rise to, and no Lender relies on, any fiduciary duty on the Administrative Agent’s part, (v) acknowledges and agrees that each Lender is capable of evaluating and understanding, and each such Lender understands and accepts, the terms, risks and conditions of the transactions contemplated by this Agreement, (vi) acknowledges and agrees that the Administrative Agent or any of its Affiliates may have received fees or other compensation from Parent or any of its Affiliates in connection with this Agreement which may or may not be publicly disclosed and such fees or compensation do not affect any Lender’s independent credit decision to enter into the transactions contemplated by this Agreement, (vii) acknowledges and agrees that notwithstanding that no fiduciary or similar relationship exists between the Administrative Agent and any Lender, each such Lender hereby waives, to the fullest extent permitted by law, any claims it may have against the Administrative Agent or its Affiliates for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the Administrative Agent and its Affiliates shall have no liability (whether direct or indirect) to any Lender in respect of such a fiduciary duty claim or to any Person asserting a fiduciary duty claim on behalf of or in right of any Lender, including any such Lender’s stockholders, employees or creditors, and (viii) agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the other Credit Documents are required to be performed by it as a Lender. The Administrative Agent shall not be responsible to any Lender or the holder of any Note for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectability, priority or sufficiency of this Agreement or any other Credit Document or the financial condition of Parent or any of its Subsidiaries or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Credit Document, or the financial condition of Parent or any of its Subsidiaries or the existence or possible existence of any Default or Event of Default.  

 

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(b)         To the full extent permitted by applicable law, each party hereto and each Indemnified Person shall not assert, and hereby waives, any claim against any other party hereto or any other Indemnified Person, on any theory of liability, for special, indirect, consequential or incidental damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Credit Document, any other agreement or instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby or any Loan or the use of the proceeds thereof; provided, however, that the foregoing provisions shall not relieve any Borrower of its indemnification obligations as provided in Section 11.01(a) to the extent any Indemnified Person is found liable for any such damages. No party hereto and no Indemnified Person shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby, except to the extent the liability of such Person results from such Person’s gross negligence, willful misconduct or bad faith (as determined by a court of competent jurisdiction in a final and non-appealable decision); provided, however, that the foregoing provisions shall not relieve the Borrower of its indemnification obligations as provided in Section 11.01(a) to the extent any Indemnified Person is found liable for any such damages.

 

10.04.      Certain Rights of the Administrative Agent . If the Administrative Agent requests instructions from the Required Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Credit Document, the Administrative Agent shall be entitled to refrain from such act or taking such action unless and until the Administrative Agent shall have received instructions from the Required Lenders; and the Administrative Agent shall not incur liability to any Lender by reason of so refraining. Without limiting the foregoing, the Administrative Agent shall be entitled to refrain from any act or action, and neither any Lender nor the holder of any Note shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent refraining from such act or action, unless or until the Administrative Agent shall have received, pursuant to an escrow arrangement satisfactory to it, from the Borrower or the Lenders an amount initially equal to $250,000 and supplemented or increased thereafter on a monthly basis to the extent necessary (in the reasonable judgment of the Administrative Agent) to reimburse the Administrative Agent for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature that may be imposed on, asserted against or incurred by the Administrative Agent as a result of such act or action and for which the Administrative Agent would be entitled to indemnification pursuant to Section 10.06 or Section 11.01 hereof. Any amounts subject to such escrow arrangement remaining after payment in full of all such indemnification obligations shall be returned to the Lenders or the Borrower, as applicable.  

 

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10.05.      Reliance . The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by any Person that the Administrative Agent believed to be the proper Person, and, with respect to all legal matters pertaining to this Agreement and any other Credit Document and its duties hereunder and thereunder, upon advice of counsel selected by the Administrative Agent.  

 

10.06.      Indemnification . To the extent the Administrative Agent (or any affiliate thereof) is not reimbursed and indemnified by the Borrowers, the Lenders will reimburse and indemnify the Administrative Agent (and any affiliate thereof) in proportion to their respective “percentage” as used in determining the Required Lenders for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature (including, without limitation, any customary indemnifications provided to a deposit account bank pursuant to a “control agreement” referred to in the Security Agreement) which may be imposed on, asserted against or incurred by the Administrative Agent (or any affiliate thereof) in performing its duties hereunder or under any other Credit Document or in any way relating to or arising out of this Agreement or any other Credit Document; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, claims, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s (or such affiliate’s) gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).  

 

10.07.      The Administrative Agent in its Individual Capacity . With respect to its obligation to make Loans under this Agreement, the Administrative Agent shall have the rights and powers specified herein for a “ Lender ” and may exercise the same rights and powers as though it were not performing the duties specified herein; and the term “ Lender ,” “ Required Lenders ,” “ Holders of Notes ” or any similar terms shall, unless the context clearly indicates otherwise, include the Administrative Agent in its respective individual capacities. The Administrative Agent and its affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, investment banking, trust or other business with, or provide debt financing, equity capital or other services (including financial advisory services) to any Credit Party or any Affiliate of any Credit Party (or any Person engaged in a similar business with any Credit Party or any Affiliate thereof) as if they were not performing the duties specified herein, and may accept fees and other consideration from any Credit Party or any Affiliate of any Credit Party for services in connection with this Agreement and otherwise without having to account for the same to the Lenders.  

 

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10.08.      Holders . The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the case may be, shall have been filed with the Administrative Agent. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee, assignee or endorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor.  

 

10.09.      Resignation by the Administrative Agent . (a) The Administrative Agent may resign from the performance of all its respective functions and duties hereunder and/or under the other Credit Documents at any time by giving 15 Business Days’ prior written notice to the Lenders and, unless a Default or an Event of Default under Section 9.05 then exists, the Borrowers. Any such resignation by an Administrative Agent hereunder shall also constitute its resignation as the Collateral Agent, and upon the effectiveness of such resignation of an Administrative Agent in accordance with this Section 10.09, the resigning Administrative Agent shall no longer be required to discharge any duties of the “Collateral Agent” under the Security Documents. Such resignation shall take effect upon the appointment of a successor Administrative Agent pursuant to clauses (b) and (c) below or as otherwise provided below.  

 

(b)           Upon any such notice of resignation by the Administrative Agent, the Required Lenders shall appoint a successor Administrative Agent hereunder or thereunder who shall be a commercial bank or trust company reasonably acceptable to the Borrowers, which acceptance shall not be unreasonably withheld or delayed ( provided that the Borrowers’ approval shall not be required if an Event of Default then exists).

 

(c)           If a successor Administrative Agent shall not have been so appointed within such 15 Business Day period, the Administrative Agent, with the consent of the Borrowers (which consent shall not be unreasonably withheld or delayed, provided that the Borrowers’ consent shall not be required if an Event of Default then exists), shall then appoint a successor Administrative Agent who shall serve as Administrative Agent hereunder or thereunder until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above.

 

(d)           If no successor Administrative Agent has been appointed pursuant to clause (b) or (c) above by the 20th Business Day after the date such notice of resignation was given by the Administrative Agent, the Administrative Agent’s resignation shall become effective and the Required Lenders shall thereafter perform all the duties of the Administrative Agent hereunder and/or under any other Credit Document until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above.

 

(e)           Upon a resignation of the Administrative Agent pursuant to this Section 10.09, the Administrative Agent shall remain indemnified to the extent provided in this Agreement and the other Credit Documents and the provisions of this Section 10 (and the analogous provisions of the other Credit Documents) shall continue in effect for the benefit of the Administrative Agent for all of its actions and inactions while serving as the Administrative Agent.

 

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(f)            CP Admin Co LLC may by giving (5) five days' written notice to the Borrower designate any Person employing, or otherwise affiliated with, any one or more Persons who were, as of the date hereof, principals of CP Admin Co LLC, to act as Administrative Agent hereunder, in which case CP Admin Co LLC shall be deemed to have resigned as Administrative Agent pursuant to preceding clause (a) and such designee shall be deemed to have been appointed as a successor Administrative Agent pursuant to preceding clause (b).

 

10.10.      Collateral Matters . (a)  Each Lender authorizes and directs the Collateral Agent to enter into the Security Documents for the benefit of the Lenders and the other Secured Creditors. Each Lender hereby agrees, and each holder of any Note by the acceptance thereof will be deemed to agree, that, except as otherwise set forth herein, any action taken by the Required Lenders in accordance with the provisions of this Agreement or the Security Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders. The Collateral Agent is hereby authorized on behalf of all of the Lenders, without the necessity of any notice to or further consent from any Lender, from time to time prior to an Event of Default, to take any action with respect to any Collateral or Security Documents which may be necessary to perfect and maintain perfected the security interest in and liens upon the Collateral granted pursuant to the Security Documents.  

 

(b)           The Lenders hereby authorize the Collateral Agent, at its option and in its discretion, to release any Lien granted to or held by the Collateral Agent upon any Collateral (i) upon payment and satisfaction of all of the Obligations (other than inchoate indemnification obligations) at any time arising under or in respect of this Agreement or the Credit Documents or the transactions contemplated hereby or thereby, (ii) constituting property being sold or otherwise disposed of (to Persons other than Parent and its Subsidiaries) upon the sale or other disposition thereof in compliance with Section 8.02, (iii) if approved, authorized or ratified in writing by the Required Lenders (or all of the Lenders hereunder, to the extent required by Section 11.12) or (iv) as otherwise may be expressly provided in the relevant Security Documents. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Collateral Agent’s authority to release particular types or items of Collateral pursuant to this Section 10.10.

 

(c)           The Collateral Agent shall have no obligation whatsoever to the Lenders or to any other Person to assure that the Collateral exists or is owned by any Credit Party or is cared for, protected or insured or that the Liens granted to the Collateral Agent herein or pursuant hereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to the Collateral Agent in this Section 10.10 or in any of the Security Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion, given the Collateral Agent’s own interest in the Collateral as one of the Lenders and that the Collateral Agent shall have no duty or liability whatsoever to the Lenders, except for its gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).

 

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10.11.      Delivery of Information . The Administrative Agent shall not be required to deliver to any Lender originals or copies of any documents, instruments, notices, communications or other information received by the Administrative Agent from any Credit Party, any Subsidiary, the Required Lenders, any Lender or any other Person under or in connection with this Agreement or any other Credit Document except (i) as specifically provided in this Agreement or any other Credit Document and (ii) as specifically requested from time to time in writing by any Lender with respect to a specific document, instrument, notice or other written communication received by and in the possession of the Administrative Agent at the time of receipt of such request and then only in accordance with such specific request.  

 

10.12.      Delegation of Duties . The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Credit Document by or through any one or more sub-agents appointed by the Administrative Agent (including, without limitation, CP Admin Co LLC or any of its Affiliates). The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective officers directors, employees, representatives, agents, sub-agents or advisors thereof. . The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents. 

 

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SECTION 11.      Miscellaneous .  

 

11.01.      Payment of Expenses, etc.

 

(a)           The Borrowers hereby agree to: (i) whether or not the transactions herein contemplated are consummated, pay all reasonable out-of-pocket costs and expenses of the Administrative Agent (including, without limitation, the reasonable fees and disbursements of DLA Piper LLP (US) and the Administrative Agent’s other counsel and consultants) in connection with the preparation, execution, delivery and administration of this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein and any amendment, waiver or consent relating hereto or thereto, of the Administrative Agent and its Affiliates in connection with its or their syndication efforts with respect to this Agreement and of the Administrative Agent, and, after the occurrence and during the continuation of an Event of Default, each of the Lenders in connection with the enforcement of this Agreement and the other Credit Documents and the documents and instruments referred to herein and therein or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a “work-out” or pursuant to any insolvency or bankruptcy proceedings (including, in each case without limitation, the reasonable fees and disbursements of counsel and consultants for the Administrative Agent and, after the occurrence and during the continuation of an Event of Default, counsel for each of the Lenders); (ii) pay and hold the Administrative Agent, each of the Lenders harmless from and against any and all present and future stamp, excise and other similar documentary taxes with respect to the foregoing matters and save the Administrative Agent, each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to the Administrative Agent or such Lender) to pay such taxes; and (iii) indemnify the Administrative Agent and each Lender, and each of their respective officers, directors, employees, representatives, agents, affiliates, trustees and investment advisors (each, an “ Indemnified Person ”) from and hold each of them harmless against any and all liabilities, obligations (including with respect to removal or remedial actions), losses, damages, penalties, claims, actions, judgments, suits, costs, expenses and disbursements (including reasonable attorneys’ and consultants’ fees and disbursements) incurred by, imposed on or assessed against any of them as a result of, or arising out of, or in any way related to, or by reason of, (a) any investigation, litigation or other proceeding (whether or not the Administrative Agent or any Lender is a party thereto and whether or not such investigation, litigation or other proceeding is brought by or on behalf of any Credit Party) related to the entering into and/or performance of this Agreement or any other Credit Document or the proceeds of any Loans hereunder or the consummation of the Transaction or any other transactions contemplated herein or in any other Credit Document or the exercise of any of their rights or remedies provided herein or in the other Credit Documents, or (b) the actual or alleged presence of Hazardous Materials in the air, surface water or groundwater or on the surface or subsurface of any Real Property at any time owned, leased or operated by Parent or any of its Subsidiaries or any of their respective predecessors, the generation, storage, transportation, handling or disposal of Hazardous Materials by Parent or any of its Subsidiaries or any of their respective predecessors at any location, whether or not owned, leased or operated by Parent or any of its Subsidiaries or any of their respective predecessors, the non-compliance by Parent or any of its Subsidiaries or any of their respective predecessors with any Environmental Law (including applicable permits thereunder) applicable to any Real Property, or any Environmental Claim asserted against Parent, any of its Subsidiaries or any of their respective predecessors or any Real Property at any time owned, leased or operated by Parent or any of its Subsidiaries or any of their respective predecessors, including, in each case, without limitation, the reasonable fees and disbursements of counsel and other consultants incurred in connection with any such investigation, litigation or other proceeding (but excluding any losses, liabilities, claims, damages or expenses to the extent incurred by reason of the gross negligence or willful misconduct of the Indemnified Person to be indemnified (as determined by a court of competent jurisdiction in a final and non-appealable decision)). To the extent that the undertaking to indemnify, pay or hold harmless the Administrative Agent or any Lender set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Borrowers shall make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities which is permissible under applicable law .

 

(b)            To the full extent permitted by applicable law, each of Parent and the Borrowers shall not assert, and hereby waives, any claim against any Indemnified Person, on any theory of liability, for special, indirect, consequential or incidental damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnified Person shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby, except to the extent the liability of such Indemnified Person results from such Indemnified Person’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision).

 

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11.02.      Right of Setoff . In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, the Administrative Agent and each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any Credit Party or to any other Person, any such notice being hereby expressly waived to the extent permitted by applicable law, to set off and to appropriate and apply any and all deposits (general or special but excluding, in any event, deposits for payroll, tax, employee benefit payments or trust or fiduciary purposes) and any other Indebtedness at any time held or owing by the Administrative Agent or such Lender or any Affiliate, branch or agency thereof (including, without limitation, by branches and agencies of the Administrative Agent or such Lender or Affiliate wherever located) to or for the credit or the account of Parent or any of its Subsidiaries against and on account of the Obligations and liabilities of the Credit Parties to the Administrative Agent or such Lender under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations purchased by such Lender pursuant to Section 11.04(b), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not the Administrative Agent or such Lender shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured.  

 

11.03.      Notices . Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telegraphic, telecopier or cable communication) and mailed, telegraphed, telecopied, cabled or delivered: if to any Credit Party, at the address specified opposite its signature below or in the other relevant Credit Documents; if to any Lender, at its address specified to the Administrative Agent; and if to the Administrative Agent, at the Notice Office; or, as to any Credit Party or the Administrative Agent, at such other address as shall be designated by such party in a written notice to the other parties hereto and, as to each Lender, at such other address as shall be designated by such Lender in a written notice to the Borrowers and the Administrative Agent. All such notices and communications shall, when mailed, telegraphed, telecopied, or cabled or sent by overnight courier, be effective when deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telecopier, except that notices and communications to the Administrative Agent and any Credit Party shall not be effective until received by the Administrative Agent, the Administrative Borrower or any Credit Party, as the case may be.

 

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11.04.      Benefit of Agreement; Assignments; Participations . (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided , however , neither Parent nor the Borrowers may assign or transfer any of its rights, obligations or interest hereunder without the prior written consent of the Lenders and, provided further , that, although any Lender may transfer, assign or grant participations in its rights hereunder, such Lender shall remain a “Lender” for all purposes hereunder and the transferee, assignee or participant, as the case may be, shall not constitute a “Lender” hereunder (except for a transfer or assignment as provided in Sections 2.07 or 11.04(b)) and, provided further , that no Lender shall transfer or grant any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement or any other Credit Document except to the extent such amendment or waiver would (i) extend the final scheduled maturity of any Loan or Note in which such participant is participating, or reduce the rate or extend the time of payment of interest or Fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof (it being understood that any amendment or modification to the financial definitions in this Agreement or to Section 11.07(a) shall not constitute a reduction in the rate of interest or Fees payable hereunder), or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default shall not constitute a change in the terms of such participation, and that an increase in any Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (ii) consent to the assignment or transfer by Parent or the Borrowers of any of its rights and obligations under this Agreement or (iii) release all or substantially all of the Collateral under all of the Security Documents (except as expressly provided in the Credit Documents) supporting the Loans hereunder in which such participant is participating. In the case of any such participation, the participant shall not have any rights under this Agreement or any of the other Credit Documents (the participant’s rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto) and all amounts payable by the Borrowers hereunder shall be determined as if such Lender had not sold such participation.  

 

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(b)           Notwithstanding the foregoing, any Lender (or any Lender together with one or more other Lenders) may (x) assign all or a portion of its outstanding Obligations hereunder to (i)(A) its parent company and/or any affiliate of such Lender which is at least 50% owned by such Lender or its parent company or (B) to one or more other Lenders or any affiliate of any such other Lender which is at least 50% owned by such other Lender or its parent company ( provided that any fund that invests in loans and is managed or advised by the same investment advisor of another fund which is a Lender (or by an Affiliate of such investment advisor) shall be treated as an affiliate of such other Lender for the purposes of this sub-clause (x)(i)(B)), or (ii) in the case of any Lender that is a fund that invests in loans, any other fund that invests in loans and is managed or advised by the same investment advisor of any Lender or by an Affiliate of such investment advisor or (y) assign all, or if less than all, a portion equal to at least $1,000,000 in the aggregate for the assigning Lender or assigning Lenders, of such outstanding Obligations hereunder to one or more Eligible Transferees (treating any fund that invests in loans and any other fund that invests in loans and is managed or advised by the same investment advisor of such fund or by an Affiliate of such investment advisor as a single Eligible Transferee), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Assumption Agreement, provided that (i) at such time, the Register shall be deemed modified to reflect the outstanding Loans of such new Lender and of the existing Lenders after giving effect to such assignment, (ii) upon the surrender of the relevant Notes by the assigning Lender (or, upon such assigning Lender’s indemnifying the Borrowers for any lost Note pursuant to a customary indemnification agreement) new Notes will be issued, at the Borrowers’ expense, to such new Lender and to the assigning Lender upon the request of such new Lender or assigning Lender, such new Notes to be in conformity with the requirements of Section 2.02 (with appropriate modifications) to the extent needed to reflect the revised outstanding Loans after giving effect to such assignment, (iii) the consent of the Administrative Agent and, so long as no Default or Event of Default then exists, the Borrowers, shall be required in connection with any such assignment pursuant to clause (y) above (such consent, in any case, not to be unreasonably withheld, delayed or conditioned), provided that the Borrowers shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within 5 Business Days after having received notice thereof, (iv) the Administrative Agent shall receive at the time of each such assignment, from the assigning or assignee Lender, the payment of a non-refundable assignment fee of $5,000 (which may be waived by the Administrative Agent in its sole discretion) and (v) no such transfer or assignment will be effective until recorded by the Administrative Agent on the Register pursuant to Section 11.15. To the extent of any assignment pursuant to this Section 11.04(b), the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned outstanding Loans. At the time of each assignment pursuant to this Section 11.04(b) to a Person which is not already a Lender hereunder and which is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for Federal income tax purposes, the respective assignee Lender shall, to the extent legally entitled to do so, provide to the Borrowers the appropriate Internal Revenue Service Forms (and, if applicable, a Section 4.04(b)(ii) Certificate) described in Section 4.04(b). To the extent that an assignment of all or any portion of a Lender’s outstanding Obligations pursuant to Section 2.07 or this Section 11.04(b) would, at the time of such assignment, result in increased costs under Section 2.04 or 4.04 from those being charged by the respective assigning Lender prior to such assignment, then the Borrowers shall not be obligated to pay such increased costs (although the Borrowers, in accordance with and pursuant to the other provisions of this Agreement, shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective assignment).

 

(c)           Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of borrowings made by such Lender from such Federal Reserve Bank and, with prior notification to the Administrative Agent (but without the consent of the Administrative Agent or the Borrowers), any Lender which is a fund may pledge all or any portion of its Loans and Notes to its trustee or to a collateral agent providing credit or credit support to such Lender in support of its obligations to such trustee, such collateral agent or a holder of such obligations, as the case may be. No pledge pursuant to this clause (c) shall release the transferor Lender from any of its obligations hereunder.

 

(d)           Any Lender which assigns all of its Loans hereunder in accordance with Section 11.04(b) shall cease to constitute a “Lender” hereunder, except with respect to indemnification provisions under this Agreement (including, without limitation, Sections 2.04, 2.11, 4.04, 10.06, 11.01 and 11.06), which shall survive as to such assigning Lender.

 

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11.05.      No Waiver; Remedies Cumulative . No failure or delay on the part of the Administrative Agent, the Collateral Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrowers or any other Credit Party and the Administrative Agent, the Collateral Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights, powers and remedies expressly provided herein or in any other Credit Document are cumulative and not exclusive of any rights, powers or remedies which the Administrative Agent, the Collateral Agent or any Lender would otherwise have. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent, the Collateral Agent or any Lender to any other or further action in any circumstances without notice or demand.  

 

11.06.      Payments Pro Rata . (a) Except as otherwise provided in this Agreement, the Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrowers in respect of any Obligations hereunder, the Administrative Agent shall distribute such payment to the Lenders entitled thereto (other than (i) if any Lender that has consented in writing to waive its pro rata share of any such payment, in which case such amounts shall be reallocated on a pro rata basis among the other Lenders or (ii) if all Lenders shall have consented in writing to waive their pro rata share of such payment, such payment shall be returned to the Borrowers) pro rata based upon their respective shares, if any, of the Obligations with respect to which such payment was received.  

 

(b)           Each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker’s lien, by counterclaim or cross action, by the enforcement of any right under the Credit Documents, or otherwise), which is applicable to the payment of the principal of, or interest on, the Loans, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligations then owed and due to such Lender bears to the total of such Obligations then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations of the respective Credit Party to such Lenders in such amount as shall result in a proportional participation by all the Lenders in such amount; provided that if all or any portion of such excess amount is thereafter recovered from such Lenders, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.

 

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11.07.      Calculations; Computations . (a)   All accounting determinations under this Agreement and all financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by Parent to the Lenders); provided that, (i) notwithstanding anything to the contrary contained elsewhere herein, all financial covenants contained herein shall be calculated without giving effect to any election made by Parent or any of its Subsidiaries to value financial liabilities or Indebtedness at the fair value thereof pursuant to Statement of Financial Accounting Standards No. 159 (or any similar accounting principle), (ii) except as otherwise specifically provided herein, all computations and all definitions (including accounting terms) used in determining compliance with Sections 8.07 through 8.11, inclusive, shall utilize GAAP and policies in conformity with those used to prepare the financial statements of Parent and its Subsidiaries referred to in Section 6.05(a) for the fiscal year ended nearest to December 31, 2010 and (iii) to the extent expressly provided herein, certain calculations shall be made on a Pro Forma Basis . In the event of any change in GAAP (any such change, for the purpose of this Section 11.07, an “ Accounting Change ”) that occurs after the date of this Agreement, then the Credit Parties and the Administrative Agent, on behalf of the Lenders, agree to enter into good faith negotiations in order to amend such provisions of this Agreement so as to equitably reflect any such Accounting Change with the desired result that the criteria for evaluating the financial condition of Parent and its Subsidiaries shall be the same after such Accounting Change as if such Accounting Change had not been made, and until such time as such an amendment shall have been executed and delivered by the Credit Parties and Required Lenders, (i) all financial covenants, standards and terms in this Agreement shall be calculated and/or construed as if such Accounting Change had not been made, and (ii) Parent shall prepare footnotes to each certificate and the financial statements required to be delivered pursuant to Sections 7.01(a), (b), (c), and (f) hereunder that show the differences between the financial statements delivered (which reflect such Accounting Change) and the basis for calculating financial covenant compliance (without reflecting such Accounting Change).  

 

(b)           All computations of interest and other Fees hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or Fees are payable.

 

11.08.      GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL . (a)  THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN ANY SECURITY DOCUMENT (INCLUDING, WITHOUT LIMITATION, THE FOREIGN SECURITY DOCUMENTS), BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK (OR (X) IN THE CASE OF ANY SECURITY DOCUMENT, PROCEEDINGS MAY ALSO BE BROUGHT BY THE ADMINISTRATIVE AGENT OR COLLATERAL AGENT IN THE STATE OR OTHER JURISDICTION IN WHICH THE RESPECTIVE COLLATERAL IS LOCATED OR ANY OTHER RELEVANT JURISDICTION AND (Y) IN THE CASE OF ANY BANKRUPTCY, INSOLVENCY OR SIMILAR PROCEEDINGS WITH RESPECT TO ANY CREDIT PARTY, ACTIONS OR PROCEEDINGS RELATED TO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS MAY BE BROUGHT IN SUCH COURT HOLDING SUCH BANKRUPTCY, INSOLVENCY OR SIMILAR PROCEEDINGS), AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, EACH OF PARENT AND THE BORROWERS HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF PARENT AND THE BORROWERS HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER PARENT OR THE BORROWERS, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFOREMENTIONED COURTS, THAT SUCH COURTS LACK PERSONAL JURISDICTION OVER PARENT OR THE BORROWERS. EACH OF PARENT AND THE BORROWERS FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO PARENT OR THE BORROWERS AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH OF PARENT AND THE BORROWERS HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST PARENT OR THE BORROWERS IN ANY OTHER JURISDICTION.  

 

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(b)           EACH OF PARENT AND THE BORROWERS HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

(c)           EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

11.09.      Counterparts . This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Borrowers and the Administrative Agent. Delivery of an executed counterpart hereof by facsimile or electronic transmission shall be as effective as delivery of any original executed counterpart hereof.  

 

11.10.      Effectiveness . This Agreement shall become effective on the date (the “ Effective Date ”) on which Parent, the Borrowers, the Administrative Agent, the Lead Arranger and each of the Lenders shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered the same to the Administrative Agent at the Notice Office or, in the case of the Lenders, shall have given to the Administrative Agent telephonic (confirmed in writing), written or telex notice (actually received) at such office that the same has been signed and mailed to it. The Administrative Agent will give Parent, the Borrowers and each Lender prompt written notice of the occurrence of the Effective Date.  

 

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11.11.      Headings Descriptive . The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.  

 

11.12.      Amendment or Waiver; etc. (a) Neither this Agreement nor any other Credit Document nor any terms hereof or thereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by the respective Credit Parties party hereto or thereto and the Required Lenders (although additional parties may be added to (and annexes may be modified to reflect such additions), and Subsidiaries of the Borrowers may be released from, the Subsidiaries Guaranty and the Security Documents in accordance with the provisions hereof and thereof without the consent of the other Credit Parties party thereto or the Required Lenders), provided that no such change, waiver, discharge or termination shall, without the consent of each Lender (with Obligations being directly affected in the case of following clause (i)), (i) extend the final scheduled maturity of any Loan or Note, or reduce the rate or extend the time of payment of interest or Fees thereon (except in connection with the waiver of applicability of any post-default increase in interest rates), or reduce (or forgive) the principal amount thereof (it being understood that any amendment or modification to the financial definitions in this Agreement or to Section 11.07(a) shall not constitute a reduction in the rate of interest or Fees for the purposes of this clause (i)), (ii) release all or substantially all of the Collateral (except as expressly provided in the Credit Documents) under all the Security Documents, (iii) amend, modify or waive any provision of this Section 11.12(a) (except for technical amendments with respect to additional extensions of credit pursuant to this Agreement which afford the protections to such additional extensions of credit of the type provided to the Loans on the Funding Date), (iv) reduce the “majority” voting threshold specified in the definition of Required Lenders (it being understood that, with the consent of the Required Lenders, additional extensions of credit pursuant to this Agreement may be included in the determination of the Required Lenders on substantially the same basis as the extensions of Loans are included on the Funding Date) or (v) consent to the assignment or transfer by Parent or the Borrowers of any of its rights and obligations under this Agreement; provided further , that no such change, waiver, discharge or termination shall (1) increase the Commitments of any Lender over the amount thereof then in effect without the consent of such Lender (it being understood that waivers or modifications of conditions precedent, covenants, Defaults or Events of Default or of a mandatory reduction in the Commitment shall not constitute an increase of the Commitment of any Lender, and that an increase in the available portion of any Commitment of any Lender shall not constitute an increase of the Commitment of such Lender), (2) without the consent of the Administrative Agent, amend, modify or waive any provision of Section 10 or any other provision of this Agreement or any other Credit Document as same relates to the rights or obligations of the Administrative Agent or (3) without the consent of the Collateral Agent, amend, modify or waive any provision relating to the rights or obligations of the Collateral Agent.  

 

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(b)           If, in connection with any proposed change, waiver, discharge or termination of or to any of the provisions of this Agreement as contemplated by clauses (i) through (v), inclusive, of the first proviso to Section 11.12(a), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then the Borrowers shall have the right, so long as all non-consenting Lenders whose individual consent is required are treated as described in either clause (A) or (B) below, to replace each such non-consenting Lender or Lenders with one or more Replacement Lenders pursuant to Section 2.07 so long as at the time of such replacement, each such Replacement Lender consents to the proposed change, waiver, discharge or termination, provided , that the Borrowers shall not have the right to replace a Lender solely as a result of the exercise of such Lender’s rights (and the withholding of any required consent by such Lender) pursuant to the second proviso to Section 11.12(a).

 

(c)           Notwithstanding the foregoing, (x) any provision of this Agreement may be amended by an agreement in writing entered into by Parent, the Borrowers, the Required Lenders and the Administrative Agent if at the time such amendment becomes effective, each Lender not consenting thereto receives payment (including pursuant to an assignment to a replacement Lender in accordance with Section 11.04) in full of this principal of and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement and (y) this Agreement may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrowers (a) to add one or more additional credit facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Credit Documents with the Loans and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders.

 

(d)           In addition, notwithstanding the foregoing, this Agreement may be amended with the written consent of the Administrative Agent, Parent, the Borrowers and the Lenders providing the relevant Replacement Loans to permit the refinancing of all outstanding Loans (the “ Refinanced Loans ”), with a replacement term loan tranche denominated in Dollars (the “ Replacement Loans ”) hereunder; provided that (a) the aggregate principal amount of such Replacement Loans shall not exceed the aggregate principal amount of such Refinanced Loans, (b) the Interest Rate for such Replacement Loans shall not be higher than the Interest Rate for such Refinanced Loans, (c) the Weighted Average Life to Maturity of such Replacement Loans shall not be shorter than the Weighted Average Life to Maturity of such Refinanced Loans at the time of such refinancing (except to the extent of nominal amortization for periods where amortization has been eliminated as a result of prepayment of the applicable Loans), and (d) all other terms applicable to such Replacement Loans shall be substantially identical to, or less favorable to the Lenders providing such Replacement Loans than, those applicable to such Refinanced Loans, except to the extent necessary to provide for covenants and other terms applicable to any period after the latest final maturity of the Loans in effect immediately prior to such refinancing.

 

11.13.      Survival . All indemnities set forth herein including, without limitation, in Sections 2.04, 2.05, 4.04, 10.06 and 11.01 shall survive the execution, delivery and termination of this Agreement and the Notes and the making and repayment of the Obligations.  

 

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11.14.      Domicile of Loans .  Each Lender may transfer and carry its Loans at, to or for the account of any office, Subsidiary or Affiliate of such Lender. Notwithstanding anything to the contrary contained herein, to the extent that a transfer of Loans pursuant to this Section 11.14 would, at the time of such transfer, result in increased costs under Section 2.04, 2.05 or 4.04 from those being charged by the respective Lender prior to such transfer, then the Borrowers shall not be obligated to pay such increased costs (although the Borrowers shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective transfer).  

 

11.15.      Register . The Borrowers hereby designate the Administrative Agent to serve as their agent, solely for purposes of this Section 11.15, to maintain a register (the “ Register ”) on which it will record the Loans made by each of the Lenders (including any increases to the principal amounts thereof as a result of payment of PIK Interest) and each repayment in respect of the principal amount of the Loans of each Lender. Failure to make any such recordation, or any error in such recordation, shall not affect the Borrowers’ obligations in respect of such Loans. With respect to any Lender, the transfer of the rights to the principal of, and interest on, any Loan shall not be effective until such transfer is recorded on the Register maintained by the Administrative Agent with respect to ownership of such Loans and prior to such recordation all amounts owing to the transferor with respect to such Loans shall remain owing to the transferor. The registration of assignment or transfer of all or part of any Loans shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment and Assumption Agreement pursuant to Section 11.04(b). Coincident with the delivery of such an Assignment and Assumption Agreement to the Administrative Agent for acceptance and registration of assignment or transfer of all or part of a Loan, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender to the Borrowers the Note (if any) evidencing such Loan, and thereupon one or more new Notes in the same aggregate principal amount shall be issued by the Borrowers to the assigning or transferor Lender and/or the new Lender at the request of any such Lender. The Borrowers agree to indemnify the Administrative Agent from and against any and all losses, claims, damages and liabilities of whatsoever nature which may be imposed on, asserted against or incurred by the Administrative Agent in performing its duties under this Section 11.15.  

 

11.16.      Confidentiality . (a) Subject to the provisions of clause (b) of this Section 11.16, each Lender agrees that it will use its reasonable efforts not to disclose without the prior consent of Parent (other than to its employees, auditors, advisors or counsel or to another Lender if such Lender or such Lender’s holding or parent company in its sole discretion determines that any such party should have access to such information, provided such Persons shall be subject to the provisions of this Section 11.16 to the same extent as such Lender) any information with respect to Parent or any of its Subsidiaries which is now or in the future furnished pursuant to this Agreement or any other Credit Document, provided that any Lender may disclose any such information (i) as has become generally available to the public other than by virtue of a breach of this Section 11.16(a) by the respective Lender, (ii) as may be required or appropriate in any report, statement or testimony submitted to any municipal, state or Federal regulatory body having or claiming to have jurisdiction over such Lender or to the Federal Reserve Board or the Federal Deposit Insurance Corporation or similar organizations (whether in the United States or elsewhere) or their successors, (iii) as may be required or appropriate with respect to any summons or subpoena or in connection with any litigation, (iv) in order to comply with any law, order, regulation or ruling applicable to such Lender, (v) to the Administrative Agent or the Collateral Agent, (vi) to any direct or indirect contractual counterparty in any swap, hedge or similar agreement (or to any such contractual counterparty’s professional advisor), so long as such contractual counterparty (or such professional advisor) agrees to be bound by the provisions of this Section 11.16, (vii) to any prospective or actual transferee or participant in connection with any contemplated transfer or participation of any of the Notes or any interest therein by such Lender, provided that such prospective transferee agrees to be bound by the confidentiality provisions contained in this Section 11.16, and (viii) to (A) any bank or financial institution and (B) S&P, Moody’s, Fitch Ratings and/or other ratings agencies, as such Lender deems necessary or appropriate in connection with such Lender’s obtaining financing; provided , however , that such financial institution or ratings agency shall be informed of the confidentiality of such information or (x) to its investors or potential investors as such Lender reasonably deems necessary or appropriate; provided , however , that such investors or potential investors shall be informed of the confidentiality of such information. 

 

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(b)           Each of Parent and the Borrowers hereby acknowledges and agrees that each Lender may share with any of its affiliates, and such affiliates may share with such Lender, any information related to Parent or any of its Subsidiaries (including, without limitation, any non-public customer information regarding the creditworthiness of Parent and its Subsidiaries), provided such Persons shall be subject to the provisions of this Section 11.16 to the same extent as such Lender.

 

(c)           Notwithstanding anything to the contrary contained in this Section 11.16, each of Parent and the Borrower hereby agrees that the Administrative Agent and its Affiliates may publicize its services in connection with this Agreement and the other Credit Documents and the transactions contemplated herein and therein, including, without limitation, through granting interviews with and providing information to the financial press and other media and by publicizing such services on its web-site or other electronic medium; provided, however, that the Administrative Agent and its Affiliates shall not publicize as contemplated above in this clause (c) until the earlier to occur of (i) the fifth day following the Initial Funding Date and (ii) such date as Parent shall have publicly announced the consummation of the Transaction.  In addition, each of Parent and the Borrower hereby authorizes the Administrative Agent to place a customary “tombstone” advertisement regarding this Agreement and the transactions contemplated herein related hereto in publications of its choice at the Borrower’s expense.

 

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11.17.      Special Provisions Regarding Pledges of Equity Interests in, and Promissory Notes Owed by, Persons Not Organized in the United States or Pledged over Assets not located in the United States . The parties hereto acknowledge and agree that the provisions of the various Security Documents executed and delivered by the Credit Parties require that, among other things, all promissory notes executed by, assets, and capital stock and other Equity Interests in, various Persons owned by the respective Credit Party be pledged, and delivered for pledge, pursuant to the Security Documents. The parties hereto further acknowledge and agree that each Credit Party shall be required to take all actions under the laws of the jurisdiction in which such Credit Party is organized or where the respective assets are located to create and perfect all security interests granted pursuant to the various Security Documents and to take all actions under the laws of the United States and any State thereof to perfect the security interests in the assets, capital stock and other Equity Interests of, and promissory notes issued by, any Person organized under the laws of said jurisdictions (in each case, to the extent said capital stock, other Equity Interests or promissory notes are owned by any Credit Party). Except as provided in the immediately preceding sentence, to the extent any Security Document requires or provides for the pledge of assets or promissory notes issued by, or capital stock or other Equity Interests in, any Person organized under the laws of a jurisdiction other than those specified in the immediately preceding sentence, it is acknowledged that, as of the Funding Date, no actions have been required to be taken to perfect, under local law of the jurisdiction where the respective assets are located or of the Person who issued the respective promissory notes or whose capital stock or other Equity Interests are pledged, under the Security Documents. The Borrowers hereby agree that, following any request by the Administrative Agent or the Required Lenders to do so, the Borrowers will, and will cause their Subsidiaries to, take such actions under the local law of any jurisdiction with respect to which such actions have not already been taken as are determined by the Administrative Agent or the Required Lenders to be necessary or desirable in order to fully perfect, preserve or protect the security interests granted pursuant to the various Security Documents under the laws of such jurisdictions. If requested to do so pursuant to this Section 11.17, all such actions shall be taken in accordance with the provisions of this Section 11.17 and Section 7.12 and within the time periods set forth therein. All conditions and representations contained in this Agreement and the other Credit Documents shall be deemed modified to the extent necessary to effect the foregoing and so that same are not violated by reason of the failure to take actions under local law (but only with respect to capital stock of, other Equity Interests in, and promissory notes issued by, Persons organized under laws of jurisdictions other than the United States and any State thereof or assets located in jurisdictions other than the United States and any State thereof) not required to be taken in accordance with the provisions of this Section 11.17, provided that to the extent any representation or warranty would not be true because the foregoing actions were not taken, the respective representation of warranties shall be required to be true and correct in all material respects at such time as the respective action is required to be taken in accordance with the foregoing provisions of Section 7.12 and this Section 11.17.

 

11.18.      Patriot Act . Each Lender subject to the USA PATRIOT ACT (Title 111 of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Act ”) hereby notifies Parent and the Borrowers that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies Parent and the Borrowers and the other Credit Parties and other information that will allow such Lender to identify Parent, the Borrowers and the other Credit Parties in accordance with the Act. 

 

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11.19.      Post-Closing Actions . The Credit Parties hereby agree to deliver or take the actions described on Schedule XII hereto, within the applicable time periods set forth therein (which periods may be extended by the Administrative Agent in its sole discretion), in form and substance reasonably satisfactory to the Administrative Agent. All conditions precedent and representations contained in this Agreement and the other Credit Documents shall be deemed modified to the extent necessary to effect the foregoing (and to permit the taking of the actions described above within the time periods required above, rather than as elsewhere provided in the Credit Documents), provided that (x) to the extent any representation and warranty would not be true because the foregoing actions were not taken on the Funding Date, the respective representation and warranty shall be required to be true and correct in all material respects at the time the respective action is taken (or was required to be taken) in accordance with the foregoing provisions of this Section 11.19 and (y) all representations and warranties relating to the Security Documents shall be required to be true immediately after the actions required to be taken by Section 11.19 have been taken (or were required to be taken). The parties hereto acknowledge and agree that the failure to take any of the actions required above, within the relevant time periods required above, shall give rise to an immediate Event of Default pursuant to this Agreement. 

 

11.20.      Interest Rate Limitation . Notwithstanding anything to the contrary contained in any Credit Document, the interest paid or agreed to be paid under the Credit Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “ Maximum Rate ”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrowers. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

 

SECTION 12.      Parent Guaranty .  

 

12.01.      Guaranty . In order to induce the Administrative Agent and the Lenders to enter into this Agreement and to extend credit hereunder and in recognition of the direct benefits to be received by Parent from the proceeds of the Loans, Parent hereby agrees with the Guaranteed Creditors as follows: Parent hereby unconditionally and irrevocably guarantees as primary obligor and not merely as surety the full and prompt payment when due, whether upon maturity, acceleration or otherwise, of any and all of the Guaranteed Obligations of the Borrowers to the Guaranteed Creditors. If any or all of the Guaranteed Obligations of the Borrowers to the Guaranteed Creditors becomes due and payable hereunder, Parent, unconditionally and irrevocably, promises to pay such indebtedness to the Administrative Agent and/or the other Guaranteed Creditors, or order, on demand, together with any and all expenses which may be incurred by the Administrative Agent and the other Guaranteed Creditors in collecting any of the Guaranteed Obligations. If claim is ever made upon any Guaranteed Creditor for repayment or recovery of any amount or amounts received in payment or on account of any of the Guaranteed Obligations and any of the aforesaid payees 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 such payee or any of its property or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including any Borrower), then and in such event Parent agrees that any such judgment, decree, order, settlement or compromise shall be binding upon Parent, notwithstanding any revocation of this Parent Guaranty or other instrument evidencing any liability of any Borrower, and Parent shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee.  

 

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12.02.      Bankruptcy . Additionally, Parent unconditionally and irrevocably guarantees the payment of any and all of the Guaranteed Obligations to the Guaranteed Creditors whether or not due or payable by any Borrower upon the occurrence of any of the events specified in Section 9.05, and irrevocably and unconditionally promises to pay such indebtedness to the Guaranteed Creditors, or order, on demand, in lawful money of the United States.  

 

12.03.      Nature of Liability . The liability of Parent hereunder is primary, absolute and unconditional, exclusive and independent of any security for or other guaranty of the Guaranteed Obligations, whether executed by any other guarantor or by any other party, and the liability of Parent hereunder shall not be affected or impaired by (a) any direction as to application of payment by any Borrower or by any other party, or (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the Guaranteed Obligations, or (c) any payment on or in reduction of any such other guaranty or undertaking, or (d) any dissolution, termination or increase, decrease or change in personnel by any Borrower, or (e) any payment made to any Guaranteed Creditor on the Guaranteed Obligations which any such Guaranteed Creditor repays to any Borrower pursuant to court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and Parent waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding, or (f) any action or inaction by the Guaranteed Creditors as contemplated in Section 12.05, or (g) any invalidity, irregularity or enforceability of all or any part of the Guaranteed Obligations or of any security therefor.  

 

12.04.      Independent Obligation . The obligations of Parent hereunder are independent of the obligations of any other guarantor, any other party or any Borrower, and a separate action or actions may be brought and prosecuted against Parent whether or not action is brought against any other guarantor, any other party or any Borrower and whether or not any other guarantor, any other party or any Borrower be joined in any such action or actions. Parent waives, to the fullest extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement thereof. Any payment by any Borrower or other circumstance which operates to toll any statute of limitations as to such Borrower shall operate to toll the statute of limitations as to Parent.  

 

12.05.      Authorization . Parent authorizes the Guaranteed Creditors without notice or demand (except as shall be required by applicable statute and cannot be waived), and without affecting or impairing its liability hereunder, from time to time to:  

 

(a)           change the manner, place or terms of payment of, and/or change or extend the time of payment of, renew, increase, accelerate or alter, any of the Guaranteed Obligations (including any increase or decrease in the principal amount thereof or the rate of interest or fees thereon), any security therefor, or any liability incurred directly or indirectly in respect thereof, and this Parent Guaranty shall apply to the Guaranteed Obligations as so changed, extended, renewed or altered;

 

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(b)           take and hold security for the payment of the Guaranteed Obligations and sell, exchange, release, impair, surrender, realize upon or otherwise deal with in any manner and in any order any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed Obligations or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset thereagainst;

 

(c)           exercise or refrain from exercising any rights against any Borrower, any other Credit Party or others or otherwise act or refrain from acting;

 

(d)           release or substitute any one or more endorsers, guarantors, any Borrower, other Credit Parties or other obligors;

 

(e)           settle or compromise any of the Guaranteed Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of any Borrower to its creditors other than the Guaranteed Creditors;

 

(f)            apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of any Borrower to the Guaranteed Creditors regardless of what liability or liabilities of such Borrower remain unpaid;

 

(g)           consent to or waive any breach of, or any act, omission or default under, this Agreement, any other Credit Document or any Other Hedging Agreement or any of the instruments or agreements referred to herein or therein, or otherwise amend, modify or supplement this Agreement, any other Credit Document or any Other Hedging Agreement or any of such other instruments or agreements; and/or

 

(h)           take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of Parent from its liabilities under this Parent Guaranty.

 

12.06.      Reliance . It is not necessary for any Guaranteed Creditor to inquire into the capacity or powers of Parent or any of its Subsidiaries or the officers, directors, partners or agents acting or purporting to act on their behalf, and any Guaranteed Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.  

 

12.07.      Subordination . Any indebtedness of any Borrower now or hereafter owing to Parent is hereby subordinated to the Guaranteed Obligations owing to the Guaranteed Creditors; and if the Administrative Agent so requests at a time when an Event of Default exists, all such indebtedness of such Borrower to Parent shall be collected, enforced and received by Parent for the benefit of the Guaranteed Creditors and be paid over to the Administrative Agent on behalf of the Guaranteed Creditors on account of the Guaranteed Obligations to the Guaranteed Creditors, but without affecting or impairing in any manner the liability of Parent under the other provisions of this Parent Guaranty. Prior to the transfer by Parent of any note or negotiable instrument evidencing any such indebtedness of any Borrower to Parent, Parent shall mark such note or negotiable instrument with a legend that the same is subject to this subordination. Without limiting the generality of the foregoing, Parent hereby agrees with the Guaranteed Creditors that it will not exercise any right of subrogation which it may at any time otherwise have as a result of this Parent Guaranty (whether contractual, under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been irrevocably paid in full in cash.  

 

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12.08.      Waiver . (a)  Parent waives any right (except as shall be required by applicable statute and cannot be waived) to require any Guaranteed Creditor to (i) proceed against any Borrower, any other guarantor or any other party, (ii) proceed against or exhaust any security held from any Borrower, any other guarantor or any other party or (iii) pursue any other remedy in any Guaranteed Creditor’s power whatsoever. Parent waives any defense based on or arising out of any defense of any Borrower, any other guarantor or any other party, other than payment of the Guaranteed Obligations to the extent of such payment, based on or arising out of the disability of any Borrower, Parent, any other guarantor or any other party, or the validity, legality or unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any Borrower other than payment of the Guaranteed Obligations to the extent of such payment. The Guaranteed Creditors may, at their election, foreclose on any security held by the Administrative Agent, the Collateral Agent or any other Guaranteed Creditor by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Guaranteed Creditors may have against any Borrower or any other party, or any security, without affecting or impairing in any way the liability of Parent hereunder except to the extent the Guaranteed Obligations have been paid. Parent waives any defense arising out of any such election by the Guaranteed Creditors, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of Parent against any Borrower or any other party or any security.  

 

(b)           Parent waives all presentments, demands for performance, protests and notices, including without limitation notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Parent Guaranty, and notices of the existence, creation or incurring of new or additional Guaranteed Obligations. Parent assumes all responsibility for being and keeping itself informed of the Borrowers’ financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which Parent assumes and incurs hereunder, and agrees that neither the Administrative Agent nor any of the other Guaranteed Creditors shall have any duty to advise Parent of information known to them regarding such circumstances or risks.

 

(c)           Until such time as the Guaranteed Obligations have been paid in full in cash, Parent hereby waives all rights of subrogation which it may at any time otherwise have as a result of this Parent Guaranty (whether contractual, under Section 509 of the Bankruptcy Code, or otherwise) to the claims of the Guaranteed Creditors against any Borrower or any other guarantor of the Guaranteed Obligations and all contractual, statutory or common law rights of reimbursement, contribution or indemnity from any Borrower or any other guarantor which it may at any time otherwise have as a result of this Parent Guaranty.

 

(e)           Parent warrants and agrees that each of the waivers set forth above is made with full knowledge of its significance and consequences and that if any of such waivers are determined to be contrary to any applicable law of public policy, such waivers shall be effective only to the maximum extent permitted by law.

 

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12.09.      Payments . All payments made by Parent pursuant to this Section 12 shall be made in Dollars and will be made without setoff, counterclaim or other defense, and shall be subject to the provisions of Sections 4.03 and 4.04.  

 

12.10.      Maximum Liability. It is the desire and intent of Parent and the Guaranteed Creditors that this Parent Guaranty shall be enforced against Parent to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. If, however, and to the extent that, the obligations of Parent under this Parent Guaranty shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers), then the amount of Parent’s obligations under this Parent Guaranty shall be deemed to be reduced and Parent shall pay the maximum amount of the Guaranteed Obligations which would be permissible under applicable law.

 

SECTION 13.      Material Contract Collateral Loans Purchase Option .  

 

13.01.      Administrative Agent’s Notice . If either (a) the Loans have been accelerated or (b) the Required Lenders have instructed the Administrative Agent to foreclose or otherwise act against the Material Contract Collateral, the Administrative Agent shall promptly give Apache notice thereof (the “Administrative Agent’s Notice”), which notice shall specify that Apache shall have the option, but not the obligation, to purchase from the Lenders all, but not less than all, of the Loans relating to the Material Contract Collateral, which shall be limited to $15,000,000 of the principal amount of the Loans (the “Material Contract Collateral Loans”) of each Lender, by giving a written notice (the “Purchase Notice”) to each Lender and the Administrative Agent no later than the 5th Business Day after receipt by Apache of the Administrative Agent’s Notice. A Purchase Notice once delivered shall be irrevocable.  

 

13.02.      Purchase Option Closing . The right of Apache to purchase the Material Contract Collateral Loans shall be subject to the satisfaction in full of the following conditions: (A) the purchase of the Material Contract Collateral Loans by Apache shall occur on the date specified by Apache in the Purchase Notice, which shall not be less than 3 Business Days nor more than 5 Business Days after the receipt by the Lenders and the Administrative Agent of the Purchase Notice (the “Purchase Option Closing Date”), (B) Apache shall purchase all, but not less than all, of the Material Contract Collateral Loans for the Purchase Price (as defined in clause (iii) below), such Purchase Price to be paid in immediately available funds in the manner contemplated in Section 13.03 below; (C) such purchase and sale shall be made expressly without representation or warranty of any kind by, and without recourse to, the Administrative Agent or any Lender, except that a condition precedent to any obligation of Apache to purchase the Material Contract Collateral Loans shall be Apache’s receipt of a written representation and warranty by the Administrative Agent that the Lenders have good title to the Material Contract Collateral Loans they are selling to Apache, free and clear of all liens, encumbrances and other adverse claims, and are entitled to sell the Material Contract Collateral Loans to Apache; (D) such purchase and sale shall be effected pursuant to the procedure set forth in Section 11.04 for the assignment of Loans; and (E) at the option of Apache, Apache and the Borrowers shall enter into a new credit agreement to document the indebtedness of the Borrowers to Apache with respect to the Material Contract Collateral Loans purchased by Apache, and the Borrowers and the Administrative Agent shall enter into such amendments to this Agreement as are necessary to reflect such new credit agreement.

 

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13.03.      Purchase Price . On the Purchase Option Closing Date, Apache shall pay to each Lender as the purchase price for the Material Contract Collateral Loans of such Lender purchased by Apache an amount equal to such Lender’s pro rata share of the sum of (A) the aggregate principal amount of the Material Contract Collateral Loans then outstanding and unpaid (together with interest, fees, any matured indemnities and expenses, including reasonable attorneys’ fees and legal expenses), plus (B) all early termination fees, prepayment fees, breakage costs or similar fees (including, without limitation, the Prepayment Premium, if any) that would be due and payable if the Material Contract Collateral Loans were prepaid in full by the Borrowers on the date that Apache purchases the Material Contract Collateral Loans from the Lenders (the “Purchase Price”), by wire transfer of immediately available funds to such bank accounts of the Administrative Agent and each Lender, respectively, as the Administrative Agent and each such Lender may designate in writing to Apache for such purpose. For purposes of determining the Purchase Price, interest and fees shall be calculated to but excluding the Business Day on which such purchase and sale shall occur if the amounts so paid by Apache to the applicable bank account designated by the Administrative Agent and each Lender are received in such bank account prior to 1:00 p.m., New York City time, and interest and fees shall be calculated to and including such Business Day if the amounts so paid by Apache to the applicable bank account designated by the Administrative Agent and each Lender are received in such bank account on such Business Day but later than 1:00 p.m., New York City time.  

 

13.04.      Transfer of the Material Contract Collateral to Apache . Effective immediately upon the Material Contract Collateral Loans being purchased by Apache pursuant to this Section 13, (x) the Collateral Agent shall execute and deliver to Apache any documentation necessary to transfer and assign to Apache all rights of the Collateral Agent and the Lenders with respect to the security interest in the Material Contact Collateral and (y) Apache shall execute and deliver to the Collateral Agent any documentation necessary to transfer and assign to the Collateral Agent, for the benefit of the Lenders, all rights of Apache with respect to the security interest in all Collateral other than the Material Contact Collateral.  

 

13.05.      Third Party Beneficiary . Apache will not have the rights of a third party beneficiary under this Agreement or this Section 13; provided however that the Lenders and the Administrative Agent agree that the Administrative Agent will, if requested by Apache, amend this Agreement to provide Apache with the rights of a third party beneficiary with respect to this Section 13. 

 

* * *

 

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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.

 

Address :

 

  SAExploration HOLDINGS, INC.,
  as Parent
     
  By: /s/ Brent Whiteley
    Name: Brent Whiteley
    Title: Chief Operating Officer, Chief
      Financial Officer and Secretary
   
  SAExploration, Inc. , as a Borrower
   
  By:  /s/ Brent Whiteley
    Name: Brent Whiteley
    Title: Chief Operating Officer, Chief
      Financial Officer and Secretary
   
  SAExploration Seismic Services
  (US), LLC , as a Borrower
   
  By:  /s/ Brent Whiteley
    Name: Brent Whiteley
    Title: Chief Operating Officer, Chief
      Financial Officer and Secretary
   
  NES, LLC, as a Borrower
   
  By:  /s/ Brent Whiteley
    Name: Brent Whiteley
    Title: Chief Operating Officer, Chief
      Financial Officer and Secretary

 

1
 

 

  CP ADMIN CO LLC,
  Individually and as Administrative Agent
     
  By: /s/ Jonathan Tunis
    Name: Jonathan Tunis
    Title: Authorized Signatory
     
  CP ADMIN CO LLC,
  as Lead Arranger
     
  By: /s/ Jonathan Tunis
    Name: Jonathan Tunis
    Title: Authorized Signatory

 

2
 

 

  SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG SAExploration, Inc., SAExploration Seismic Services (US), LLC, NES, LLC, the Lenders party hereto from time to time, CP Admin Co LLC, as Administrative Agent, and CP Admin Co LLC, as Lead Arranger
   
  [***]
     
  By: /s/ [***]
    Name:
    Title:

 

3
 

 

  SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG SAExploration, Inc., SAExploration Seismic Services (US), LLC, NES, LLC, the Lenders party hereto from time to time, CP Admin Co LLC, as Administrative Agent, and CP Admin Co LLC, as Lead Arranger
   
  [***]
     
  By: [***]
     
  By: /s/ [***]
    Name:   [***]
    Title:    [***]

 

4
 

 

  SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG SAExploration, Inc., SAExploration Seismic Services (US), LLC, NES, LLC, the Lenders party hereto from time to time, CP Admin Co LLC, as Administrative Agent, and CP Admin Co LLC, as Lead Arranger
   
  [***]
     
  By: [***]
     
  By: /s/ [***]
    Name:   [***]
    Title:    [***]

 

5
 

 

  SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG SAExploration, Inc., SAExploration Seismic Services (US), LLC, NES, LLC, the Lenders party hereto from time to time, CP Admin Co LLC, as Administrative Agent, and CP Admin Co LLC, as Lead Arranger
   
  [***]
     
  By: [***]
     
  By: /s/ [***]
    Name:   [***]
    Title:    [***]

 

6
 

 

  SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG SAExploration, Inc., SAExploration Seismic Services (US), LLC, NES, LLC, the Lenders party hereto from time to time, CP Admin Co LLC, as Administrative Agent, and CP Admin Co LLC, as Lead Arranger
   
  [***]
     
  By: /s/ [***]
    Name:  [***]
    Title:   [***]
     
  By: /s/ [***]
    Name: [***]
    Title: [***]

 

7
 

 

  SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG SAExploration, Inc., SAExploration Seismic Services (US), LLC, NES, LLC, the Lenders party hereto from time to time, CP Admin Co LLC, as Administrative Agent, and CP Admin Co LLC, as Lead Arranger
   
  [***]
     
  By: /s/ [***]
    Name:
    Title:

 

8
 

 

  SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE, AMONG SAExploration, Inc., SAExploration Seismic Services (US), LLC, NES, LLC, the Lenders party hereto from time to time, CP Admin Co LLC, as Administrative Agent, and CP Admin Co LLC, as Lead Arranger
   
  [***]
     
  By: /s/ [***]
    Name:  [***]
    Title:   [***]

 

9
 

 

Schedule I-A

 

COMMITMENTS

 

All Lenders   Initial
Commitments 		    Allocation of 
Purchase Price 		 
                 
                 
TOTAL:   $ 80,000,000     $ 78,950,000  

 

Schedule I-B

 

Investment Warrants and Allocation of Purchase Price

 

All Lenders   Investment Warrants     Allocation of 
Purchase Price 		 
                 
               
TOTAL:    

Warrants for 1% of common stock of Parent, on a fully diluted basis.

    $ 1,050,000  

 

1
 

 

Schedule XII

 

POST CLOSING ACTIONS

:

 

1. UCC Filings; Filings with respect to Intellectual Property; etc. Not later than one day after the Funding Date, Parent and its Subsidiaries shall have filed (or cause to have filed) all of such Financing Statements (Form UCC-1) and any filings with the United States Patent and Trademark Office or the United States Copyright Office necessary to perfect the security interest purported to be created by the Security Agreement or the Pledge Agreement, as the case may be.

 

2. Landlord Waivers; etc. Each Credit Party shall use its commercially reasonable efforts to promptly deliver, fully executed landlord waivers and/or bailee agreements in respect of those Leaseholds of Parent or any of its Subsidiaries designated as “Leaseholds Subject to Landlord Waivers” on Schedule III, each of which landlord waivers and/or bailee agreements shall be in form and substance reasonably satisfactory to the Collateral Agent;

 

3. Lockbox Accounts . Each Credit Party shall take the actions set forth in Section 8.18 within 60 days after the Funding Date.

 

4. Control Agreements . Each Credit Party shall take the actions set forth in Section 8.17 within 5 days after the Funding Date.

 

5. Singapore Pledge Agreement . Not later than 45 days after the Funding Date, SAE shall have executed and delivered a pledge agreement in form and substance satisfactory to the Administrative Agent whereby SAE shall pledge 65% of the shares of Southeast Asian Exploration Pte., Ltd., a company organized under the laws of Singapore (“SAE Singapore”), and SAE shall have delivered such other documents related thereto as the Administrative Agent shall reasonably request.

 

6. Ratification of Actions in Peru . Not later than 15 days after the Funding Date, SAE shall have (a) executed and delivered a document signed by the members of its Board of Directors ratifying the execution and delivery by its Peruvian branch of the Peruvian Pledge Agreement, (b) caused such ratification to be notarized and apostilled in a manner reasonably satisfactory to Peruvian counsel to the Administrative Agent, and (c) caused such ratification document registered with a Public Registry of Lima, Peru, all of such steps to be reasonably satisfactory to Peruvian counsel to the Administrative Agent.

 

7. Shareholders’ Agreement . Within six months after the Funding Date, Parent shall have entered into a Shareholders’ Agreement with its shareholders, which must be satisfactory to the Administrative Agent in its sole discretion in accordance with Section 8.12(i).

 

ii
 

 

8. Motor Vehicles . Parent and the Borrowers shall have taken the actions set forth in Section 3.14 of the Security Agreement within 45 days after the Funding Date.

 

9. Insurance . Parent shall deliver the D&O Insurance policy of the Credit Parties within 10 days after the Funding Date and shall deliver all other insurance policies within 20 days after the Funding Date. Not later than 120 days after the Funding Date, the Credit Parties shall establish and maintain business interruption and contingent business interruption insurance in an amount and in a manner reasonably satisfactory to the Administrative Agent.

 

10. Intercompany Global Note . Parent shall cause each of SAExploration (Australia) Pty. Ltd., Southeast Asian Exploration Pte., Ltd. and SAExploration (Brasil) Serviços Sísmicos Ltda. to execute and deliver a joinder to the Intercompany Global Note within 45 days of the Funding Date.

 

11. Colombian Confirmatory Payoff Letters . Not later than 5 days after the Funding Date, Parent shall deliver to Administrative Agent confirmatory payoff letters from the applicable lending banks stating that each of the loans set forth in clauses (i) through (x) of the definition of “Indebtedness Agreements to be Repaid” has been paid in full and that all obligations thereunder have been released.

 

iii
 

 

TABLE OF CONTENTS

 

        Page
         
SECTION 1.   Definitions and Accounting Terms   1
         
1.01.   Defined Terms   1
         
SECTION 2.   Amount and Terms of Credit   26
         
2.01.   The Commitments; Funding   26
2.02.   Notes   27
2.03.   Interest   27
2.04.   Increased Costs, Illegality, etc.   28
2.05.   Compensation   29
2.06.   Change of Lending Office   29
2.07.   Replacement of Lenders   30
2.08.   Allocation of Purchase Price   31
2.09.   Incremental Loans   31
         
SECTION 3.   Fees; Prepayment Premiums   32
         
3.01.   Fees   32
3.02.   Prepayment Premiums   32
         
SECTION 4.   Prepayments; Payments; Taxes   33
         
4.01.   Voluntary Prepayments   33
4.02.   Mandatory Repayments   33
4.03.   Method and Place of Payment   37
4.04.   Net Payments   38
         
SECTION 5.   Conditions Precedent to the Loans   39
         
5.01.   Funding Date; Notes   39
5.02.   Officer’s Certificate   40
5.03.   Opinions of Counsel   40
5.04.   Company Documents; Proceedings; etc.   40
5.05.   Employee Benefit Plans; Shareholders’ Agreements; Management Agreements; Employment Agreements; Non-Compete Agreements; Collective Bargaining Agreements; Tax Sharing Agreements; Existing Indebtedness Agreements   40
5.06.   Intercompany Canadian Note   41
5.07.   Consummation of the Refinancing   42
5.08.   Adverse Change, Approvals   42
5.09.   Litigation   43
5.10.   Subsidiaries Guaranty; Intercompany Notes   43
5.11.   Pledge Agreement   43
5.12.   Security Agreement   43

 

i
 

 

5.13.   Foreign Security Agreements   44
5.14.   Capitalization Information   45
5.15.   Organization Chart   45
5.16.   Financial Statements; Pro Forma Balance Sheet; Projections   45
5.17.   Solvency Certificate; Insurance Certificates, etc.   45
5.18.   Fees, etc.   45
5.19.   Notice of Borrowing   46
5.20.   Due Diligence   46
5.21.   Investment Warrants   46
5.22.   Funding Date   46
         
SECTION 6.   Representations, Warranties and Agreements   47
         
6.01.   Company Status   47
6.02.   Power and Authority   47
6.03.   No Violation   47
6.04.   Approvals   48
6.05.   Financial Statements; Financial Condition; Undisclosed Liabilities; Projections   48
6.06.   Litigation   50
6.07.   True and Complete Disclosure   50
6.08.   Use of Proceeds; Margin Regulations   50
6.09.   Tax Returns and Payments   50
6.10.   Compliance with ERISA   51
6.11.   Security Documents   52
6.12.   Properties   52
6.13.   Capitalization   53
6.14.   Subsidiaries   53
6.15.   Compliance with Statutes, etc.   54
6.16.   Investment Company Act   54
6.17.   Insurance   54
6.18.   Environmental Matters   54
6.19.   Employment and Labor Relations   55
6.20.   Intellectual Property, etc.   55
6.21.   Indebtedness   55
6.22.   Representations and Warranties in Other Documents   55
6.23.   Subordination   56
6.24.   Holding Company Activities   56
         
SECTION 7.   Affirmative Covenants   56
         
7.01.   Information Covenants   56
7.02.   Books, Records and Inspections; Annual Meetings   60
7.03.   Maintenance of Property; Insurance   60
7.04.   Existence; Franchises   61
7.05.   Compliance with Statutes, etc.   61
7.06.   Compliance with Environmental Laws   62
7.07.   ERISA   63

 

ii
 

 

7.08.   End of Fiscal Years; Fiscal Quarters   64
7.09.   Performance of Obligations   64
7.10.   Payment of Taxes   64
7.11.   Use of Proceeds   64
7.12.   Additional Security; Further Assurances; etc.   64
7.13.   Ownership of Subsidiaries; etc.   65
7.14.   Contributions   66
7.15.   Permitted Acquisitions   66
7.16.   Foreign Subsidiaries Security   67
7.17.   Maintenance of Company Separateness   68
7.18.   Kuukpik Joint Venture   68
7.19.   Intercompany Canadian Note   68
         
SECTION 8.   Negative Covenants   68
         
8.01.   Liens   69
8.02.   Consolidation, Merger, Purchase or Sale of Assets, etc.   72
8.03.   Dividends   74
8.04.   Indebtedness   76
8.05.   Advances, Investments and Loans   78
8.06.   Transactions with Affiliates   82
8.07.   Capital Expenditures   82
8.08.   Debt Service Coverage Ratio   83
8.09.   Reserved   84
8.10.   Net Leverage Ratio   84
8.11.   Total Leverage Ratio   84
8.12.   Modifications of the Existing Shareholders Notes; Certificate of Incorporation, By-Laws and Certain Other Agreements; Limitations on Voluntary Payments, etc.   85
8.13.   Limitation on Certain Restrictions on Subsidiaries   86
8.14.   Limitation on Issuance of Equity Interests   86
8.15.   Business; etc.   87
8.16.   Limitation on Creation of Subsidiaries   87
8.17.   Certain Deposit Accounts   88
8.18.   Lockbox Accounts   88
         
SECTION 9.   Events of Default   88
         
9.01.   Payments   88
9.02.   Representations, etc.   88
9.03.   Covenants   88
9.04.   Default Under Other Agreements   89
9.05.   Bankruptcy, etc.   89
9.06.   ERISA   90
9.07.   Security Documents   90
9.08.   Guaranties   90
9.09.   Judgments   91
9.10.   Change of Control   91
9.11.   Material Adverse Effect   91

 

iii
 

 

SECTION 10.   The Administrative Agent   91
         
10.01.   Appointment   91
10.02.   Nature of Duties   92
10.03.   Lack of Reliance on the Administrative Agent. (a)   92
10.04.   Certain Rights of the Administrative Agent   93
10.05.   Reliance   94
10.06.   Indemnification   94
10.07.   The Administrative Agent in its Individual Capacity   94
10.08.   Holders   95
10.09.   Resignation by the Administrative Agent   95
10.10.   Collateral Matters   96
10.11.   Delivery of Information   97
10.12.   Delegation of Duties   97
         
SECTION 11.   Miscellaneous   98
         
11.01.   Payment of Expenses, etc.   98
11.02.   Right of Setoff   99
11.03.   Notices   99
11.04.   Benefit of Agreement; Assignments; Participations   100
11.05.   No Waiver; Remedies Cumulative   102
11.06.   Payments Pro Rata   102
11.07.   Calculations; Computations   103
11.08.   GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL   103
11.09.   Counterparts   104
11.10.   Effectiveness   104
11.11.   Headings Descriptive   105
11.12.   Amendment or Waiver; etc.   105
11.13.   Survival   106
11.14.   Domicile of Loans   107
11.15.   Register   107
11.16.   Confidentiality   107
11.17.   Special Provisions Regarding Pledges of Equity Interests in, and Promissory Notes Owed by, Persons Not Organized in the United States or Pledged over Assets not located in the United States   109
11.18.   Patriot Act   109
11.19.   Post-Closing Actions   110
11.20.   Interest Rate Limitation   110
         
SECTION 12.   Parent Guaranty   110
         
12.01.   Guaranty   110
12.02.   Bankruptcy   111
12.03.   Nature of Liability   111
12.04.   Independent Obligation   111

 

iv
 

 

12.05.   Authorization   111
12.06.   Reliance   112
12.07.   Subordination   112
12.08.   Waiver   113
12.09.   Payments   114
12.10.   Maximum Liability   114
         
SECTION 13.   Material Contract Collateral Loans Purchase Option   114
         
13.01.   Administrative Agent’s Notice   114
13.02.   Purchase Option Closing   114
13.03.   Purchase Price   115
13.04.   Transfer of the Material Contract Collateral to Apache   115
13.05.    Third Party Beneficiary   115

 

v
 

 

SCHEDULE I-A   Commitments
SCHEDULE I-B   Investment Warrants
SCHEDULE II   Reserved
SCHEDULE III   Real Property
SCHEDULE IV   Plans
SCHEDULE V   Subsidiaries
SCHEDULE VI   Existing Indebtedness
SCHEDULE VII   Insurance
SCHEDULE VIII   Existing Liens
SCHEDULE IX   Existing Investments
SCHEDULE X   Material Contract Collateral
SCHEDULE XI   Capitalization
SCHEDULE XII   Post-Closing Actions
     
EXHIBIT A   Form of Notice of Borrowing
EXHIBIT B   Form of Note
EXHIBIT C   Reserved
EXHIBIT D   Form of Section 4.04(b)(ii) Certificate
EXHIBIT E   Form of Opinion of Strasburger & Price S.C., counsel to the Credit Parties
EXHIBIT F   Form of Officers’ Certificate
EXHIBIT G   Form of Subsidiaries Guaranty
EXHIBIT H   Form of Pledge Agreement
EXHIBIT I-1   Form of Security Agreement
EXHIBIT I-2   Form of Colombian Security Agreement
EXHIBIT I-3   Form of Peruvian Security Agreement
EXHIBIT J   Form of Solvency Certificate
EXHIBIT K   Form of Compliance Certificate
EXHIBIT L   Form of Assignment and Assumption Agreement
EXHIBIT M   Form of Intercompany Note

 

vi

 

 

Exhibit 10.2

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE BEING FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN A CONFIDENTIAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL “[***]” IN THIS EXHIBIT INDICATES THAT INFORMATION HAS BEEN OMITTED.

 

AMENDMENT NO. 1

TO

CREDIT AGREEMENT

 

This AMENDMENT NO. 1 (this “ Amendment ”), dated as of December 5, 2012, is entered into among SAExploration Holdings, Inc., a Delaware corporation (“ Parent ”), SAExploration, Inc., a Delaware corporation (“ SAE ”), SAExploration Seismic Services (US), LLC, a Delaware limited liability company (the “ Delaware Subsidiary Borrower ”) and NES, LLC, an Alaskan limited liability company (the “ Alaskan Subsidiary Borrower ” and, together with Parent, SAE and the Delaware Subsidiary Borrower, the “ Credit Parties ”) the Lenders party hereto, and CP Admin Co LLC, as Administrative Agent (the “ Administrative Agent ”), amends the Credit Agreement dated as of November 28, 2012 (the “ Credit Agreement ”) entered into among the Credit Parties, the Administrative Agent and the Lenders party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

 

WITNESSETH:

 

WHEREAS, the Credit Parties have requested that the Required Lenders and the Administrative Agent amend the Credit Agreement to effect the changes described below in Section One;

 

WHEREAS, the Required Lenders and the Administrative Agent desire to amend the Credit Agreement to effect such changes;

 

WHEREAS, Section 11.12 of the Credit Agreement provides that the Credit Agreement may be amended, modified and waived from time to time;

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto hereby agree as follows:

 

SECTION ONE Amendments .

 

(a)      The definitions in Section 1.01 of the Credit Agreement listed below shall be amended and restated in their entirety as set forth below:

 

(1)         “ “ Asset Sale ” shall mean any sale, transfer or other disposition by Parent or any of its Subsidiaries to any Person (including by way of redemption by such Person) other than to Parent or a Wholly-Owned Subsidiary of Parent of any asset (including, without limitation, any capital stock or other securities of, or Equity Interests in, another Person), but (x) excluding sales of assets pursuant to Sections 8.02(ii), (vi), (vii) (viii), (ix), (x), (xi) and (xiii) and (y) any other sale, transfer or disposition (for such purpose, treating any series of related sales, transfers or dispositions as a single such transaction) that generates Net Sale Proceeds of less than $1,000,000.”

 

 
 

 

(2)         “ “ Change of Control ” shall mean (i) Parent shall at any time cease to own directly 100% of the Equity Interests of SAE, (ii) SAE shall at any time cease to own directly 100% of the Equity Interests of the Delaware Subsidiary Borrower or the Alaskan Subsidiary Borrower, (iii) prior to the occurrence of a Qualified IPO or a Qualified Merger, the Permitted Holders shall at any time and for any reason fail to own at least 51% of the economic interests and at least 66% of the voting interests in Parent’s capital stock (determined on a fully diluted basis), (iv) prior to the occurrence of a Qualified IPO, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than the Permitted Holders shall have obtained the power (whether or not exercised) to elect a majority of the Board of Directors of Parent, (v) after the occurrence of a Qualified IPO or a Qualified Merger, the Permitted Holders shall at any time and for any reason fail to own at least 40% of the economic interests and at least 51% of the voting interests in Parent’s capital stock, (vi) after the occurrence of a Qualified IPO, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than the Permitted Holders is or shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 25% or more on a fully diluted basis of the economic or voting interests in Parent’s capital stock, (vii) the Board of Directors of Parent shall cease to consist of a majority of Continuing Directors, (viii) Jeff Hastings shall cease to be a Senior Executive Officer of Parent and SAE or Brian Beatty shall cease to be a Senior Executive Officer of Parent and SAE (in each case (a) for any reason other than his death or disability, or (b) due to his death or disability, and a successor satisfactory to the Required Lenders does not assume his responsibilities and position within 30 days of such cessation) or (ix) a “change of control” or similar event shall occur as provided in any Qualified Preferred Stock (or the documentation governing the same).”

 

(3)         ““ Consolidated EBITDA ” shall mean, for any period, Consolidated Net Income for such period (without giving effect to (x) any extraordinary gains, (y) any non-cash income (other than equipment revenue), and (z) any gains or losses from sales of assets other than inventory sold in the ordinary course of business) adjusted by adding thereto (in each case to the extent deducted in determining Consolidated Net Income for such period), without duplication, the amount of (i) total interest expense (inclusive of amortization of deferred financing fees and other original issue discount and banking fees, charges and commissions ( e.g. , letter of credit fees and commitment fees) ) of Parent and its Subsidiaries determined on a consolidated basis for such period, (ii) provision for taxes based on income and foreign withholding taxes for Parent and its Subsidiaries determined on a consolidated basis for such period, (iii) all depreciation and amortization expense of Parent and its Subsidiaries determined on a consolidated basis for such period, (iv) in the case of any period including the fiscal quarter of Parent ended December 31, 2012, the amount of all fees and expenses incurred in connection with the Transaction during such fiscal quarter and (v) in the case of any period including the fiscal quarter of Parent ended December 31, 2012 and the two fiscal quarters of Parent ended June 30, 2013, the amount of all fees and expenses incurred in connection with a Qualified Merger (or any proposed transaction that failed to close, but had such transaction closed would have constituted a Qualified Merger), with respect to such Qualified Merger (or proposed failed Qualified Merger). For the avoidance of doubt, it is understood and agreed that, to the extent any amounts are excluded from Consolidated Net Income by virtue of the proviso to the definition thereof contained herein, any add backs to Consolidated Net Income in determining Consolidated EBITDA as provided above shall be limited (or denied) in a fashion consistent with the proviso to the definition of Consolidated Net Income contained herein. Notwithstanding anything to the contrary contained above, for purposes of determining Consolidated EBITDA for any Test Period which ends prior to the first anniversary of the Funding Date, Consolidated EBITDA for all portions of such period occurring prior to the Funding Date shall be calculated in accordance with the definition of Test Period contained herein. ”

 

(4)         ““ Net Cash Proceeds ” shall mean for any event requiring a repayment of Loans pursuant to Section 4.02, as the case may be, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such event, net of reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary commissions and reasonable legal, advisory and other fees and expenses associated therewith) received from any such event. In the context of a merger or other consolidation, (x) the cash on hand and in banks (including marketable securities) of parties to such merger or consolidation other than the Credit Parties and their Subsidiaries immediately prior to the consummation of such merger or consolidation net of a proportionate share of reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary commissions and reasonable legal, advisory and other fees and expenses associated therewith) and net of any such cash that is paid out or to be paid out (other than as a Dividend under Section 8.03(viii)) to any Person other than a Credit Party or wholly owned Subsidiary of a Credit Party upon or after the consummation of such merger or consolidation pursuant to and in accordance with its terms shall be counted towards, and treated as, Net Cash Proceeds of such merger or consolidation, (y) consideration received by the stockholders of Parent pursuant to the repayment of Shareholder Subordinated Notes permitted to be made in accordance with Section 8.04(x), the payment of any merger consideration, or the payment of any consideration in connection with the redemption or other sale of Equity Interests in Parent pursuant to and in accordance with the terms of such merger or consolidation shall be treated as a Dividend under Section 8.03(viii) irrespective of the source of such payment, actual flow of funds or characterization of such payments as something other than a dividend, and (z) the issuance of Shareholder Subordinated Notes pursuant to Section 8.04(x)(c) shall not be treated as a Dividend or be subtracted from such cash on hand in determining Net Cash Proceeds.”

 

 
 

(5)         “ “ Qualified IPO ” shall mean (i) a bona fide underwritten sale to the public of common stock of Parent pursuant to a registration statement (other than on Form S-8 or any other form relating to securities issuable under any benefit plan of Parent or any of its Subsidiaries, as the case may be) that is declared effective by the SEC and such offering results in Net Cash Proceeds received by Parent of at least $25,000,000 or (ii) a Qualified Merger where the Parent, or the surviving party of the Qualified Merger, is or will become a publicly listed company; provided that after giving effect to any such offering, the market value of shareholders’ equity in Parent shall be at least $80,000,000. ”

 

(b)      The following definition shall be added to Section 1.01 of the Credit Agreement in the appropriate alphabetical order:

 

(1)         “ “ Qualified Merger ” shall have the meaning provided in Section 8.02(ix). ”

 

(c)      Section 4.02(b) shall be amended and restated in its entirety as set forth below:

 

“In addition to any other mandatory repayments pursuant to this Section 4.02, on each date on or after the Funding Date upon which Parent or any of its Subsidiaries receives any Net Cash Proceeds from any capital contribution or any sale or issuance of its Equity Interests (other than (i) issuances of Equity Interests to Parent or any Subsidiary of Parent by any Subsidiary of Parent, (ii) any capital contributions to any Subsidiary of Parent made by Parent or any Subsidiary of Parent or (iii) sales or issuances of Parent Common Stock to employees, officers and/or directors of Parent and its Subsidiaries (including as a result of the exercise of any options with respect thereto) in an aggregate amount not to exceed $1,000,000 in any fiscal year of Parent) or if Parent or any of its Subsidiaries receives Net Cash Proceeds as the result of a merger or consolidation in accordance with Section 8.02(ix), an amount equal to (x) if the issuer of such Equity Interests, participant in such merger or consolidation or recipient of such capital contribution is Parent, (A) if such capital contribution or such sale or issuance of Equity Interests or such merger or consolidation is consummated prior to June 30, 2013 (or, if a bona fide merger agreement has been executed and the delay in closing prior to June 30, 2013 is solely due to the receipt of an approval from the Securities and Exchange Commission, prior to September 30, 2013), 0% and (B) if such capital contribution or such sale or issuance of Equity Interests or such merger or consolidation is consummated after such date, 50% and (y) 100%, if the issuer of such Equity Interests or recipient of such capital contribution is a Subsidiary of Parent, in each case of the Net Cash Proceeds of such capital contribution or sale or issuance of Equity Interests or such merger or consolidation, as applicable, shall be applied on such date as a mandatory repayment in accordance with the requirements of Section 4.02(g).”

 

(e)      Section 8.02 shall be amended by adding the following Section 8.02(ix), which shall be inserted following Section 8.02(viii), with the subsequent subsections of Section 8.02 renumbered accordingly, and read as follows:

 

“(ix)         On or after February 15, 2013, Parent may merge or consolidate with and into, or be dissolved or liquidated into, a special purpose acquisition company (or a subsidiary thereof) identified by Parent in writing to Administrative Agent and Lenders prior to the Closing Date (a “ Qualified Merger ”), so long as (i) Parent is the surviving or continuing entity of any such merger, consolidation, dissolution or liquidation or the surviving or continuing entity has assumed all obligations under this Agreement pursuant to documentation acceptable to the Administrative Agent, (ii) any security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the assets of Parent shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such merger, consolidation, dissolution or liquidation) and all actions required to maintain said perfected status have been taken, (iii) the shareholders of Parent shall receive no consideration therewith other than Dividends permitted to be made in accordance with Section 8.03, (iv) such merger or consolidation results in Net Cash Proceeds received by Parent or the Borrowers of at least $25,000,000 and such Net Cash Proceeds shall be applied as set forth in Section 4.02(b), and (v) after giving effect to any such offering, the market value of shareholders’ equity in Parent shall be at least $80,000,000;”

 

(f)       Section 8.03(viii) shall be amended and restated in its in entirety as set forth below:

 

“Parent may pay Dividends in an aggregate amount not to exceed (x) 50% of the Net Cash Proceeds of all issuances of Equity Interests by Parent (other than sales or issuances of Parent Common Stock to employees, officers and/or directors of Parent and its Subsidiaries (including as a result of the exercise of any options with respect thereto and other than in connection with a Qualified Merger) and (y) the lesser of $27,500,000 and 62% of the Net Cash Proceeds received by Parent as the result of a Qualified Merger, in each case, following the Funding Date, provided that in each case (a) all mandatory prepayments in respect of such issuance shall have been completed in accordance with Section 4.02, (b) no Default or Event of Default shall have occurred or could reasonably be expected to result from such Dividend, (c) no Material Contract Termination Event shall have occurred and be continuing, and (d) in the case of a Dividend issued pursuant to clause (y), such Dividend may not be paid until Consolidated EBITDA for the period of twelve consecutive calendar months then last ended for which financial statements are available is at least $33,000,000; and”

 

 
 

 

(g)      Section 8.04(x) shall be amended and restated in its entirety as set forth below:

 

“Indebtedness of Parent under the Shareholder Subordinated Notes (a) issued after the Effective Date in connection with a redemption or repurchase of Parent Common Stock pursuant to Section 8.03(v), (b) purchased with the proceeds of Dividends permitted pursuant to Section 8.03(ix) or (c) issued on the date of consummation of the Qualified Merger in an aggregate principal amount pursuant to this clause (c) not to exceed $17,500,000; provided that, in the case of this clause (c), (x) payments in respect of such Shareholder Subordinated Notes shall not exceed 10% per annum and (y) payments on such Shareholder Subordinated Notes shall be payable in cash only if (1) no Default or Event of Default has occurred and is continuing and (2)(i) if such payment date is on or prior to March 31, 2013, as of such payment date the Total Leverage Ratio (as set forth in the officer’s certificate delivered pursuant to Section 7.01(f) for the fiscal quarter or fiscal year, as the case may be, of Parent then last ended for which financial statements are available) is less than 2.50:1:00 or (ii) if such date is after March 31, 2013, Parent is in compliance with the financial covenants contained in Sections 8.07 through 8.11, inclusive, on a Pro Forma Basis;”

 

(h)      Section 8.14(a) shall be amended and restated in its entirety as set forth below:

 

“Parent will not, and will not permit any of its Subsidiaries to, issue (i) any Preferred Equity, except as permitted under paragraph (c) of this Section 8.14, or (ii) any redeemable common stock or other redeemable common Equity Interests other than common stock or other redeemable common Equity Interests that is or are redeemable at the sole option of Parent or such Subsidiary, as the case may be. Notwithstanding the preceding sentence, in the event of a Qualified Merger to which Parent is a party, the other party to such Qualified Merger may have issued common stock and warrants convertible to common stock, redeemable or convertible at the option of the holder, in which event such common Equity Interests shall be permitted and may remain outstanding with respect to Parent or the surviving entity, as the case may be.”

 

SECTION TWO Delayed Effectiveness . This Amendment shall automatically become effective as of January 31, 2013 (the “ Amendment No. 1 Effective Date ”), without any further action being required of any party to the Credit Agreement. The Lenders and the Administrative Agent acknowledge and agree that the Credit Parties have relied upon the inevitable effectiveness of this Amendment as a material inducement to enter into the Credit Agreement. Prior to the Amendment No. 1 Effective Date, this Amendment is coupled with an interest, irrevocable and may not be amended or modified except by a written instrument signed by the Credit Parties and Required Lenders.

 

SECTION THREE Reference to and Effect on the Credit Agreement . On and after the Amendment No. 1 Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring the Credit Agreement, and each reference in each of the Credit Documents to “the Credit Agreement,” “thereunder,” “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment. The Credit Agreement and each of the other Credit Documents, except as specifically amended by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Credit Documents, nor constitute a waiver of any provision of any of the Credit Documents.

 

SECTION FOUR Execution in Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier or electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.

 

SECTION FIVE Governing Law . THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

[Signature Pages Follow]

 

 
 

 

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first written above.

 

CREDIT PARTIES:  
   
SAEXPLORATION HOLDINGS, INC.  
     
By: /s/ Brent Whiteley  
  Name: Brent Whiteley  
  Title: Chief Operating Officer, Chief  
  Financial Officer and Secretary  
     
SAEXPLORATION, INC.  
     
By: /s/ Brent Whiteley  
  Name: Brent Whiteley  
  Title: Chief Operating Officer, Chief  
  Financial Officer and Secretary  
     
SAEXPLORATION SEISMIC SERVICES (US), LLC  
     
By: /s/ Brent Whiteley  
  Name: Brent Whiteley  
  Title: Chief Operating Officer, Chief  
  Financial Officer and Secretary  
     
NES, LLC  
     
By: /s/ Brent Whiteley  
  Name: Brent Whiteley  
  Title: Chief Operating Officer, Chief  
  Financial Officer and Secretary  
     
CP ADMIN CO LLC,  
as Administrative Agent and a Lender  
     
By: /s/ Jonathan Tunis  
  Name: Jonathan Tunis  
  Title: Authorized Signatory  
 
 

 

REQUIRED LENDER:  
   
[***]  
   
By:  /s/ [***]  
Name: [***]  
Title: [***]  
     
 
 

 

REQUIRED LENDER:  
   
[***]  
   
  By: [***]  
     
  By:  /s/ [***]  
  Name: [***]  
  Title: [***]  
       

 

 
 

 

REQUIRED LENDER:  
   
[***]  
   
  By: [***]  
     
  By:  /s/ [***]  
  Name: [***]  
  Title: [***]  
       

 

 
 

 

REQUIRED LENDER:  
   
[***]  
   
  By: [***]  
     
  By:  /s/ [***]  
  Name: [***]  
  Title: [***]  
       

 

 
 

 

REQUIRED LENDER:  
   
[***]  
   
By:  /s/ [***]  
Name: [***]  
Title: [***]  
     

 

 

 

Exhibit 10.3

 

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE BEING FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN A CONFIDENTIAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL “[***]” IN THIS EXHIBIT INDICATES THAT INFORMATION HAS BEEN OMITTED.

 

AMENDMENT NO. 2 AND CONSENT

TO

CREDIT AGREEMENT

 

This AMENDMENT NO. 2 AND CONSENT to Credit Agreement (this “ Amendment ”), dated effective as of June 24, 2013, is entered into among SAExploration Holdings, Inc., a Delaware corporation (“ Parent ”), SAExploration, Inc., a Delaware corporation (“ SAE ”), SAExploration Seismic Services (US), LLC, a Delaware limited liability company (the “ Delaware Subsidiary Borrower ”) and NES, LLC, an Alaskan limited liability company (the “ Alaskan Subsidiary Borrower ” and, together with Parent, SAE and the Delaware Subsidiary Borrower, the “ Credit Parties ”) the Lenders party hereto, and CP Admin Co LLC, as Administrative Agent (the “ Administrative Agent ”), amends the Credit Agreement dated as of November 28, 2012, as amended by Amendment No. 1 dated as of December 5, 2012 (such Credit Agreement as amended, the “ Credit Agreement ”), entered into among the Credit Parties, the Administrative Agent and the Lenders party thereto. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

 

WITNESSETH:

 

WHEREAS, the Credit Parties have requested that the Required Lenders and the Administrative Agent amend the Credit Agreement to effect the changes described below in Sections One, Two and Three;

 

WHEREAS, the Required Lenders and the Administrative Agent desire to amend the Credit Agreement to effect such changes;

 

WHEREAS, Section 11.12 of the Credit Agreement provides that the Credit Agreement may be amended, modified and waived from time to time;

 

WHEREAS, CP Admin Co LLC and its affiliates have ceased operations and have been shut down; accordingly, CP Admin Co LLC desires to resign as Administrative Agent and the Lenders desire to permit the appointment of, and the Borrowers consent to the appointment of, MC Admin Co LLC, a separate and distinct legal entity not affiliated with or related to CP Admin Co LLC in any way, as Administrative Agent;

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto hereby agree as follows:

 

SECTION ONE Amendments .

 

(a)          The definitions in Section 1.01 of the Credit Agreement listed below shall be amended and restated in their entirety as set forth below:

 

 
 

 

(1)         “ “ Change of Control ” shall mean (i) Parent shall at any time cease to own directly 100% of the Equity Interests of SAE, (ii) SAE shall at any time cease to own directly 100% of the Equity Interests of the Delaware Subsidiary Borrower or the Alaskan Subsidiary Borrower, (iii) prior to the occurrence of a Qualified IPO or a Qualified Merger, the Permitted Holders shall at any time and for any reason fail to own at least 51% of the economic interests and at least 66% of the voting interests in Parent’s capital stock (determined on a fully diluted basis), (iv) prior to the occurrence of a Qualified IPO or a Qualified Merger, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than the Permitted Holders shall have obtained the power (whether or not exercised) to elect a majority of the Board of Directors of Parent, (v) (A) during the first year following the occurrence of a Qualified IPO or a Qualified Merger, any of the Permitted Holders shall sell, transfer or otherwise dispose of any of the shares of the Parent’s capital stock owned by them immediately following such Qualified IPO or Qualified Merger, or (B) following such first year, any of the Permitted Holders shall sell, transfer or otherwise dispose any of such shares owned by them unless, immediately after giving effect to such transaction, the Permitted Holders own and control at least 25% of the economic interests and control at least 32.5% of the voting interests in Parent’s capital stock, (vi) after the occurrence of a Qualified IPO, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than the Permitted Holders, is or shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 25% or more on a fully diluted basis of the economic or voting interests in Parent’s capital stock, (vii) the Board of Directors of Parent shall cease to consist of a majority of Continuing Directors, (viii) Jeff Hastings shall cease to be a Senior Executive Officer of Parent and SAE or Brian Beatty shall cease to be a Senior Executive Officer of Parent and SAE (in each case (a) for any reason other than his death or disability, or (b) due to his death or disability, and a successor satisfactory to the Required Lenders does not assume his responsibilities and position within 30 days of such cessation), or (ix) a “change of control” or similar event (other than any such event that may be deemed to have occurred in connection with or as a result of a Qualified IPO, including a Qualified Merger) shall occur as provided in any Qualified Preferred Stock (or the documentation governing the same).”

 

(2)         ““ Continuing Directors ” shall mean the directors of Parent on the Effective Date and each other director if such director’s nomination for election to the Board of Directors of Parent is recommended by a majority of the then Continuing Directors, and after a Qualified Merger, shall mean the directors of the surviving or continuing entity in such merger, or the ultimate parent entity thereof, which assumes all obligations under this Agreement pursuant to Section 8.02(ix), as of the effective date of such merger and each other director if such director’s nomination for election to the Board of Directors of such entity is recommended by a majority of the then Continuing Directors, provided that prior to such the date of such recommendation no Person shall have commenced, or threatened to commence, a solicitation of proxies for the election of such person as a Continuing Director.”

 

(3)         “ “ Dividend ” shall mean, with respect to any Person, that such Person has declared or paid a dividend, distribution or returned any equity capital to its stockholders, partners or members or authorized or made any other distribution, payment or delivery of property (other than common Equity Interests of such Person) or cash to its stockholders, partners or members in their capacity as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for a consideration any shares of any class of its capital stock or any other Equity Interests outstanding on or after the Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for a consideration any shares of any class of the capital stock or any other Equity Interests of such Person outstanding on or after the Effective Date (or any options or warrants issued by such Person with respect to its capital stock or other Equity Interests). Without limiting the foregoing, “Dividends” with respect to any Person shall also include all cash payments (x) made or required to be made by such Person (i) with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans or setting aside of any funds for the foregoing purposes or (ii) with respect to any agreement which allows cash compensation to be made in exchange for a right to otherwise receive Equity Interests of such Person, or (y) treated as a Dividend pursuant to clause (y) of the definition of “Net Cash Proceeds” herein.”

 

2
 

(4)         ““ Net Cash Proceeds ” shall mean for any event requiring a repayment of Loans pursuant to Section 4.02, as the case may be, the gross cash proceeds (including any cash received by way of deferred payment pursuant to a promissory note, receivable or otherwise, but only as and when received) received from such event, net of reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary commissions and reasonable legal, advisory and other fees and expenses associated therewith) received from any such event. In the context of a merger or other consolidation, (x) the cash on hand and in banks (including marketable securities) of parties to such merger or consolidation other than the Credit Parties and their Subsidiaries immediately prior to the consummation of such merger or consolidation net of a proportionate share of reasonable transaction costs (including, as applicable, any underwriting, brokerage or other customary commissions and reasonable legal, advisory and other fees and expenses associated therewith) and net of any such cash that is paid out or to be paid out (other than as a Dividend under Section 8.03(viii)) to any Person other than a Credit Party or wholly owned Subsidiary of a Credit Party upon or after the consummation of such merger or consolidation pursuant to and in accordance with its terms shall be counted towards, and treated as, Net Cash Proceeds of such merger or consolidation, (y) cash consideration received by the stockholders of Parent pursuant to the repayment of Shareholder Subordinated Notes permitted to be made in accordance with Section 8.04(x), the payment of any cash merger consideration, or the payment of any cash consideration in connection with the redemption or other sale of Equity Interests in Parent pursuant to and in accordance with the terms of such merger or consolidation shall be treated as a Dividend under Section 8.03(viii) irrespective of the source of such payment, actual flow of funds or characterization of such payments as something other than a dividend, and (z) the issuance of Shareholder Subordinated Notes pursuant to Section 8.04(x)(c) shall not be treated as a Dividend or be subtracted from such cash on hand in determining Net Cash Proceeds.”

 

(5)         ““ Permitted Holders ” shall mean, either through direct or indirect ownership, Jeff Hastings, Lori Hastings, Brian A. Beatty, Sheri L. Beatty and Brent Whiteley.”

 

(6)         “ “ Qualified IPO ” shall mean (i) a bona fide underwritten sale to the public of common stock of Parent pursuant to a registration statement (other than on Form S-8 or any other form relating to securities issuable under any benefit plan of Parent or any of its Subsidiaries, as the case may be) that is declared effective by the SEC and such offering results in Net Cash Proceeds received by Parent of at least $25,000,000 or (ii) a Qualified Merger where the Parent, or the surviving party of the Qualified Merger or such surviving party’s ultimate parent entity, is or will become a publicly listed company; provided that after giving effect to any such offering, the market capitalization of Parent, or the applicable publicly listed company, shall be at least $80,000,000. ”

 

(b)      Section 8.02(ix) shall be amended and restated in its in entirety as set forth below:

 

“(ix)         On or after February 15, 2013, Parent may merge or consolidate with and into, or be dissolved or liquidated into, a special purpose acquisition company (or a subsidiary thereof) identified by Parent in writing to Administrative Agent and Lenders prior to the Closing Date (a “ Qualified Merger ”), so long as (a) Parent is the surviving or continuing entity of any such merger, consolidation, dissolution or liquidation or the surviving or continuing entity, or ultimate parent entity thereof, has assumed all obligations under this Agreement pursuant to documentation acceptable to the Administrative Agent, (b) any security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in the assets of Parent shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such merger, consolidation, dissolution or liquidation) and all actions required to maintain said perfected status have been taken, (c) the shareholders of Parent shall receive no cash consideration therewith other than Dividends permitted to be made in accordance with Section 8.03, (d) such merger or consolidation results in Net Cash Proceeds received by Parent or the Borrowers of at least $25,000,000 and such Net Cash Proceeds shall be applied as set forth in Section 4.02(b), (e) after giving effect to any such transaction, the market capitalization of the surviving or continuing entity, or ultimate parent entity thereof, if a publicly listed company, or the shareholder’s equity of Parent (calculated in accordance with GAAP), if no such entity is publicly listed, shall be at least $80,000,000, and (f) immediately after giving effect to such transaction, the Permitted Holders own and control at least 25% of the economic interests and control at least 32.5% of the voting interests in Parent’s capital stock;”

 

(c)       Section 8.03(viii) shall be amended and restated in its in entirety as set forth below:

 

3
 

 

“(viii)    Parent may pay Dividends in an aggregate amount not to exceed (x) 50% of the Net Cash Proceeds of all issuances of Equity Interests by Parent (other than sales or issuances of Parent Common Stock to employees, officers and/or directors of Parent and its Subsidiaries (including as a result of the exercise of any options with respect thereto and other than in connection with a Qualified Merger) and (y) the lesser of $27,500,000 and 62% of the Net Cash Proceeds received by Parent as the result of a Qualified Merger, in each case, following the Funding Date, provided that in each case (a) all mandatory prepayments in respect of such issuance shall have been completed in accordance with Section 4.02, (b) no Default or Event of Default shall have occurred or could reasonably be expected to result from such Dividend, (c) no Material Contract Termination Event shall have occurred and be continuing, and (d) in the case of a Dividend issued pursuant to clause (y), such Dividend may not be paid until Consolidated EBITDA for the period of the twelve consecutive calendar months ending at the close of the most recent calendar quarter for which financial statements are available is at least $33,000,000; and”

 

(d)       Section 8.11 shall be amended by replacing “2:50:1:00” with “2.65:1.00” for the Total Leverage Ratio for the Fiscal Quarter ending June 30, 2013.

 

SECTION TWO Conditional Amendments .

 

Each of the amendments set forth in this Section TWO shall only be effective upon (i) the effectiveness of this Amendment and (ii) the funding of a Commitment Increase in an aggregate principal amount equal to $20,000,000.

 

(a)       Section 4.02(a) shall be amended and restated in its entirety as set forth below:

 

“(a)          In addition to any other mandatory repayments pursuant to this Section 4.02, on each date set forth below (each, a “ Scheduled Repayment Date ”), the Borrowers shall be required to repay that principal amount of Loans, to the extent then outstanding, as is set forth opposite each such date below (each such repayment, as the same may be reduced as provided in Section 4.01(a) or 4.02(g), a “ Scheduled Repayment ”):

 

Scheduled Repayment Date   Amortization Amount  
       
The last Business Day of Parent’s fiscal quarter ending December 31, 2012   $ 100,000  
         
The last Business Day of Parent’s fiscal quarter ending March 31, 2013   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending June 30, 2013   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending September 30, 2013   $ 200,000  
         
The last Business Day of Parent’s fiscal quarter ending December 31, 2013   $ 250,000  
         
The last Business Day of Parent’s fiscal quarter ending March 31, 2014   $ 250,000  
         
The last Business Day of Parent’s fiscal quarter ending June 30, 2014   $ 250,000  
         
The last Business Day of Parent’s fiscal quarter ending September 30, 2014   $ 250,000  
         
The last Business Day of Parent’s fiscal quarter ending December 31, 2014   $ 250,000  
         
The last Business Day of Parent’s fiscal quarter ending March 31, 2015   $ 250,000  

 

4
 

 

Scheduled Repayment Date   Amortization Amount  
       
The last Business Day of Parent’s fiscal quarter ending June 30, 2015   $ 250,000  
         
The last Business Day of Parent’s fiscal quarter ending September 30, 2015   $ 250,000  
         
The last Business Day of Parent’s fiscal quarter ending December 31, 2015   $ 250,000  
         
The last Business Day of Parent’s fiscal quarter ending March 31, 2016   $ 250,000  
         
The last Business Day of Parent’s fiscal quarter ending June 30, 2016   $ 250,000  
         
The last Business Day of Parent’s fiscal quarter ending September 30, 2016   $ 250,000  
         
Maturity Date   Aggregate outstanding principal amount of all Loans as of such date”

 

(b)       Section 8.07(a) shall be amended and restated in its entirety as set forth below:

 

“(a)          Parent will not, and will not permit any of its Subsidiaries to, make any Capital Expenditures, except that, provided a Material Contract Termination Event shall not have occurred and be continuing, during any fiscal year of Parent set forth below (taken as one accounting period), the Borrowers and their Subsidiaries may make Capital Expenditures so long as the aggregate amount of all such Capital Expenditures does not exceed in any fiscal year of Parent set forth below the amount set forth opposite such fiscal year below; provided, that to the extent that the full amount of Capital Expenditures permitted in any fiscal year is not expended in such fiscal year (without regard to any carry forward amounts as permitted under this sentence), such unused amount shall be deemed added to the amounts permitted to be spent in the immediately succeeding fiscal year (with Capital Expenditures made in such succeeding fiscal year applied last to such unused amount):

 

Fiscal Year Ending   Amount  
       
December 31, 2012   $ 42,500,000  
December 31, 2013   $ 47,500,000  
December 31, 2014   $ 30,000,000  
December 31, 2015   $ 25,000,000  
December 31, 2016   $ 42,500,000”  

 

(c)       Section 8.08 shall be amended and restated in its entirety as set forth below:

 

“8.08          Debt Service Coverage Ratio  Parent will not permit the Debt Service Coverage Ratio for any Test Period ending on the last day of a fiscal quarter of Parent set forth below to be less than the amount set forth opposite such fiscal quarter below:

 

5
 

 

Fiscal Quarter End   Ratio
     
March 31, 2013   2.50:1.00
June 30, 2013   2.50:1.00
September 30, 2013   2.50:1.00
December 31, 2013   2.75:1.00
March 31, 2014   2.75:1.00
June 30, 2014   3.00:1.00
September 30, 2014   3.00:1.00
December 31, 2014   3.25:1.00
March 31, 2015   3.25:1.00
June 30, 2015   3.50:1.00
September 30, 2015   3.50:1.00
December 31, 2015   3.50:1.00
March 31, 2016   3.75:1.00
June 30, 2016   3.75:1.00
September 30, 2016   3.75:1.00”

 

(d)       Section 8.10 shall be amended and restated in its entirety as set forth below:

 

“8.10          Net Leverage Ratio Parent will not permit the Net Leverage Ratio as of any quarter end date set forth below to be greater than the ratio set forth opposite such date below:

 

Fiscal Quarter End   Ratio
     
March 31, 2013   3.00:1.00
June 30, 2013   3.00:1.00
September 30, 2013   2.75:1.00
December 31, 2013   2.50:1.00
March 31, 2014   2.50:1.00
June 30, 2014   2.25:1.00
September 30, 2014   2.00:1.00
December 31, 2014   2.00:1.00
March 31, 2015   2.00:1.00
June 30, 2015   1.75:1.00
September 30, 2015   1.75:1.00
December 31, 2015   1.75:1.00
March 31, 2016   1.75:1.00
June 30, 2016   1.75:1.00
September 30, 2016   1.75:1.00”

 

(e)       Section 8.11 shall be amended and restated in its entirety as set forth below:

 

“8.11          Total Leverage Ratio  Parent will not permit the Total Leverage Ratio as of any quarter end date set forth below to be greater than the ratio set forth opposite such date below:

 

Fiscal Quarter End   Ratio
     
March 31, 2013   3.50:1.00
June 30, 2013   3.50:1.00
September 30, 2013   3.25:1.00
December 31, 2013   2.75:1.00
March 31, 2014   2.75:1.00
June 30, 2014   2.50:1.00
September 30, 2014   2.50:1.00
December 31, 2014   2.25:1.00
March 31, 2015   2.25:1.00
June 30, 2015   2.00:1.00
September 30, 2015   2.00:1.00
December 31, 2015   2.00:1.00
March 31, 2016   2.00:1.00
June 30, 2016   2.00:1.00
September 30, 2016   2.00:1.00”

  

6
 

 

 

SECTION THREE Consent to Appointment of Administrative Agent . The parties to the Credit Agreement hereby confirm that (a) CP Admin Co LLC and its affiliates have ceased operations and have been shut down; accordingly, CP Admin Co LLC desires to resign as Administrative Agent under the Credit Agreement, (b) the Lenders desire to appoint MC Admin Co LLC as Administrative Agent under the Credit Agreement pursuant to Section 10.09 thereof, (c) pursuant to Section 10.09 of the Credit Agreement the Borrowers consent to the appointment of such Administrative Agent, (d) notwithstanding the consents contained herein, the resignation of CP Admin Co LLC and the appointment of MC Admin Co LLC shall not be effective until a Resignation and Appointment Agreement in form and substance acceptable to each of CP Admin Co LLC, MC Admin Co LLC and the Borrowers shall have been executed and delivered by each of CP Admin Co LLC, MC Admin Co LLC and each Borrower (it being understood and agreed that the Lenders acknowledge and consent to such resignation and appointment and no further Lender consent shall be required in respect of such agreement), (e) each Credit Party agrees to deliver any and all such further documentation as may be requested by CP Admin Co LLC or MC Admin Co LLC to maintain the perfection of the liens in favor of the Secured Creditors under the Credit Documents. CP Admin Co LLC and MC Admin Co LLC represent and warrant to each Credit Party and each Lender, and each Lender and each Credit Party understands and acknowledges, that CP Admin Co LLC and MC Admin Co LLC are separate and distinct legal entities not affiliated with or related to one another in any way.

 

SECTION FOUR Release of Claims. In consideration of each of CP Admin Co LLC’s and MC Admin Co LLC’s (collectively, the “Agent Parties”) execution of this Amendment, each Credit Party and each Lender (collectively, the “Releasors”) irrevocably acquits and fully forever releases and discharges each Agent Party and all its affiliates, partners, subsidiaries, officers, employees, agents, attorneys, principals, directors and shareholders and its respective heirs, legal representatives, successors and assigns (collectively, the “Releasees”) from any and all claims, demands, causes of action, obligations, remedies, suits, damages and liabilities of any nature whatsoever, whether now known, suspected or claimed, whether arising under common law, in equity or under statute, which any Releasor ever had or now has against any of the Releasees and which has arisen at any time prior to the date hereof out of this Amendment, the Credit Agreement, any Credit Document or any other related documents, instruments or agreements or the enforcement or attempted or threatened enforcement by any of the Releasees of any of their respective rights, remedies or recourse related thereto (collectively, the “Released Claims”) (but in each case referred to in this paragraph, excluding any claims, demands, causes of actions, obligations, remedies, suits, damages or liabilities to the extent same occurred by reason of the gross negligence or willful misconduct of the respective Releasee (as determined by a court of competent jurisdiction in a final and non-appealable decision)). Each party hereto covenants and agrees never to commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against any of the Releasees any action or other proceeding based upon any of the Released Claims.

 

SECTION FIVE Confirmation of Compliance with Section 11.19 of the Credit Agreement . The parties to the Credit Agreement hereby confirm that (a) all of the actions required to be taken by the Credit Parties pursuant to Section 11.19 of the Credit Agreement, except for the Shareholders’ Agreement contemplated by paragraph 7 of Schedule XII to the Credit Agreement, have been taken in accordance with the provisions of such Section and of such Schedule XII, and (b) if Parent completes a Qualified Merger on or before June 30, 2013, Parent shall no longer be required to enter into such Shareholders’ Agreement with its shareholders as contemplated by such paragraph 7 of Schedule XII.

 

7
 

 

SECTION SIX Joinder of Guarantor . On the completion date of the Qualified Merger to which Trio Merger Corp. (“Trio”) is a party, Trio shall execute and deliver a joinder to the Credit Agreement in form and substance reasonably satisfactory to the Administrative Agent, pursuant to which Trio shall join the Credit Agreement as a Guarantor and as Parent. Trio shall promptly thereafter deliver any and all collateral documents required by the terms of the Credit Agreement or otherwise requested by the Administrative Agent to perfect the security interests in favor of the Administrative Agent and the Lenders in Trio’s assets.

 

SECTION SEVEN Reference to and Effect on the Credit Agreement . On and after the Amendment No. 2 Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring the Credit Agreement, and each reference in each of the Credit Documents to “the Credit Agreement,” “thereunder,” “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment. The Credit Agreement and each of the other Credit Documents, except as specifically amended by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Administrative Agent under any of the Credit Documents, nor constitute a waiver of any provision of any of the Credit Documents.

 

SECTION EIGHT Execution in Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier or electronic mail shall be effective as delivery of a manually executed counterpart of this Amendment.

 

SECTION NINE Governing Law . THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

[Signature Pages Follow]

 

8
 

 

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first written above.

 

CREDIT PARTIES:

 

SAEXPLORATION HOLDINGS, INC.

 

By: /s/ Brent Whiteley  
  Name: Brent Whiteley  
  Title: CFO/General Counsel  
     
SAEXPLORATION, INC.
     
By: /s/ Brent Whiteley  
  Name: Brent Whiteley  
  Title: CFO/General Counsel  
     
SAEXPLORATION SEISMIC SERVICES (US), LLC
     
By: /s/ Brent Whiteley  
  Name: Brent Whiteley  
  Title: CFO/General Counsel  
     
NES, LLC
     
By: /s/ Brent Whiteley  
  Name: Brent Whiteley  
  Title: CFO/General Counsel  

 

ADMINISTRATIVE AGENT:      
       
CP ADMIN CO LLC,   MC ADMIN CO LLC,  
as Administrative Agent   as Administrative Agent  
       
By: /s/ Ashok Nayyar   By: /s/ Ashok Nayyar  
  Name: Ashok Nayyar     Name: Ashok Nayyar  
  Title:  Authorized Signatory     Title: Authorized Signatory  

 

9
 

 

LENDER:  
     
[***]    
     
By: /s/[***]  
  Name: [***]  
  Title: [***]  

 

10
 

 

LENDER:  
     
[***]    
     
By: [***]  
     
By: /s/ [***]  
  Name: [***]  
  Title: [***]  

 

11
 

  

LENDER:  
     
[***]    
     
By: [***]  
     
By: /s/ [***]  
  Name: [***]  
  Title: [***]  

 

12
 

 

LENDER:
     
[***]    
     
By: [***]  
     
By: /s/ [***]  
  Name: [***]  
  Title: [***]  

 

13
 

 

LENDER:      
       
[***]      
         
By: /s/ [***]   /s/ [***]  
  Title: [***]   [***]  

 

14
 

  

LENDER:
     
[***]    
     
By: /s/ [***]  
  Name: [***]  
  Title: [***]  

 

15

 

Exhibit 10.4

 

JOINDER TO CREDIT AGREEMENT

 

This JOINDER TO CREDIT AGREEMENT (this “Joinder”) dated as of this 24th day of June, 2013 from TRIO MERGER CORP ., a Delaware corporation (“Trio”), to MC ADMIN CO LLC , as Administrative Agent for the several financial institutions from time to time party to the Credit Agreement (as defined below) (collectively, the “Lenders”).

 

WITNESSETH THAT:

 

WHEREAS, SAExploration Holdings, Inc., a Delaware corporation (“Parent”), SAExploration, Inc. (“SAE”), a Delaware corporation, SAExploration Seismic Services (US), LLC, a Delaware limited liability company (“Seismic”), and NES, LLC, an Alaska limited liability company (“NES” and collectively with SAE and Seismic, the “Borrowers”), the Administrative Agent and the Lenders have entered into that certain Credit Agreement dated as of November 28, 2012 (as the same has been and may from time to time be amended, restated, amended and restated, supplemented or otherwise modified, including without limitation joinders thereto which add additional parties as Guarantors thereunder, being hereinafter referred to as the “Credit Agreement”; capitalized terms used but not defined herein but defined in the Credit Agreement shall have the meanings set forth in the Credit Agreement), whereby the Administrative Agent and the Lenders have agreed to provide certain credit facilities and financial accommodations to the Borrowers thereunder; and

 

WHEREAS, Parent entered into that certain Agreement and Plan of Reorganization on December 10, 2012, as amended, by and among Parent, Trio, Trio Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Trio (“Merger Sub”), and CLCH, LLC, an Alaska limited liability company, pursuant to which Parent will be merged with and into Merger Sub, with Merger Sub being the surviving entity (the “Trio Merger”), and in connection with the Trio Merger, Trio will change its name to “SAExploration Holdings, Inc.” and Merger Sub will change its name to “SAExploration Sub, Inc.”; and

 

WHEREAS, Trio desires that it be joined as a party to the Credit Agreement upon consummation of the Trio Merger;

 

NOW, THEREFORE, FOR VALUE RECEIVED, and in consideration of advances made or to be made, or credit accommodations given or to be given, to the Borrowers by the Lenders from time to time, Trio hereby agrees as follows:

 

1.          Trio acknowledges and agrees that, effective upon the date (the “Effective Date”) on which there shall have occurred both (a) consummation of the Trio Merger and (b) receipt by the Administrative Agent of a copy of this Agreement, duly executed by Trio, all references in the Credit Agreement and the other Credit Documents to the term “Parent” shall be deemed, with respect to all periods from and after the Effective Date, to include Trio. Without limiting the generality of the foregoing, as of the Effective Date Trio hereby repeats and reaffirms all covenants, agreements, representations and warranties of Parent contained in the Credit Agreement and the other Credit Documents with respect to all periods from and after the Effective Date.

 

 
 

 

2.          Trio further acknowledges and agrees that it has the obligations of Parent under the Parent Guaranty as well as under the Credit Agreement and the other Credit Documents to which Parent is a party, effective upon the Effective Date. All references in the Credit Agreement, and in the other Credit Documents to which Parent is a party, to the term “Guarantor” or “Guarantors”, except for references to any Subsidiary Guarantor, shall be deemed to include Trio, effective upon the Effective Date. Without limiting the generality of the foregoing, Trio hereby repeats and reaffirms all covenants, agreements, representations and warranties of Parent contained in the Guaranty, the Credit Agreement and the other Credit Documents to which Parent is a party with respect to all periods from and after the Effective Date, except that it is acknowledged that (a) pursuant to the Trio Merger, Parent is merging with and into Merger Sub, and Merger Sub will be the surviving entity obligated as a Credit Party under the Credit Documents to which Parent is a party, and (b) Merger Sub and Trio are changing their names in connection with the Trio Merger, as described in the recitals above.

 

3.          Except as specifically modified hereby, or otherwise in accordance with the terms hereof, all of the terms and conditions of the Credit Agreement and other Credit Documents shall remain unchanged and in full force and effect.

 

4.          Trio agrees to execute and deliver such further instruments and documents and do such further acts and things as the Administrative Agent may deem reasonably necessary or proper to carry out more effectively the purposes of this Joinder.

 

5.          No reference to this Joinder need be made in the Credit Agreement or in any other Credit Document or any other document or instrument (a “Referring Document”) making reference to the Credit Agreement or any such other Credit Document in order for this Joinder to be effective from and after the Effective Date. Any reference to the Credit Agreement or any other Credit Documents in any Referring Document shall be deemed a reference to the Credit Agreement, or other Credit Documents, as applicable, as modified hereby.

 

6.          This Joinder and the rights and obligations of the parties hereunder shall be construed in accordance with and be governed by the law of the State of New York.

 

7.          This Joinder may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. A set of counterparts executed by all the parties hereto shall be lodged with the Borrowers and the Administrative Agent. Delivery of an executed counterpart of this Joinder by facsimile transmission or electronic transmission shall be as effective as delivery of a manually executed counterpart hereof.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

2
 

 

Witness the due execution hereof by the respective duly authorized officers of the undersigned as of the date first written above.

 

  TRIO :
   
 

TRIO MERGER CORP. , a Delaware

corporation

   
  By: /s/ David D. Sgro
  Name:  David D. Sgro
  Its:        CFO

 

 
 

 

Acknowledged and accepted as of the  
year and date first written above:  
   
ADMINISTRATIVE AGENT :  
   
MC ADMIN CO LLC , as Administrative Agent  
     
By: /s/ Ashok Nayyar  
Name: Ashok Nayyar  
Its: Authorized Signatory  

 

 

 

Exhibit 10.5

 

ESCROW AGREEMENT

 

ESCROW AGREEMENT (“Agreement”) dated June 24, 2013, by and among SAEXPLORATION HOLDINGS, INC. (formerly called Trio Merger Corp.), a Delaware corporation (“Parent”), CLCH, LLC, an Alaska limited liability company, as the Company Stockholders’ Representative, being the representative of the former stockholders of SAEXPLORATION HOLDINGS, INC., a Delaware corporation (the “Representative”), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as escrow agent (the “Escrow Agent”).

 

Parent, Trio Merger Sub, Inc., a wholly-owned subsidiary of Parent (“Merger Sub”), SAExploration Holdings, Inc. (“Company”) and Representative are the parties to an Agreement and Plan of Reorganization dated as of December 10, 2012, and amended as of May 23, 2013 (the “Merger Agreement”), pursuant to which Company has merged into Merger Sub, with Merger Sub being the surviving entity of such merger and remaining a wholly-owned subsidiary of Parent. Pursuant to the Merger Agreement, Parent is to be indemnified in certain respects. The parties desire to establish an escrow fund as collateral security for the indemnification obligations under the Merger Agreement. The Representative has been designated pursuant to the Merger Agreement to represent all of the former stockholders of Company (the “Stockholders”), and to act on their behalf for purposes of this Agreement. Capitalized terms used herein that are not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement.

 

The parties agree as follows:

 

1.            Escrow Fund.         

 

(a)          Concurrently with the execution hereof, Representative (or Parent, on its behalf) is delivering to the Escrow Agent, to be held in escrow pursuant to the terms of this Agreement, a stock certificate for 545,635 shares of Parent’s common stock issued in the name of Representative, acting as the representative of the Stockholders, and representing a portion of the shares of Parent Common Stock to be issued to Stockholders in the Merger, together with two (2) assignments (separate from certificate) executed in blank by Representative, with medallion guaranties. The shares of Parent Common Stock represented by the stock certificates so delivered by the Representative to the Escrow Agent are herein referred to in the aggregate as the “Escrow Fund.”

 

(b)          The Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard and disburse the Escrow Fund pursuant to the terms and conditions hereof. It shall treat the Escrow Fund as a trust fund in accordance with the terms of this Agreement and not as the property of Parent. The Escrow Agent’s duties hereunder shall terminate upon its distribution of the entire Escrow Fund in accordance with this Agreement.

 

- 1 -
 

 

(c)          Representative, as the representative of the Stockholders, shall retain all of the rights as stockholder of Parent with respect to the shares of Parent Common Stock constituting the Escrow Fund (the “Escrow Shares”) during the period the Escrow Fund is held by the Escrow Agent (the “Escrow Period”), including, without limitation, the right to vote the Escrow Shares as directed by the Stockholders.

 

(d)          During the Escrow Period, all dividends payable in cash with respect to the Escrow Shares shall be paid to the Representative, who shall distribute such cash to the Stockholders, but all dividends payable in stock or other non-cash property (“Non-Cash Dividends”) shall be delivered to the Escrow Agent to hold in accordance with the terms hereof. As used herein, the term “Escrow Fund” shall be deemed to include the Non-Cash Dividends distributed thereon, if any.

 

(e)          During the Escrow Period, no sale, transfer or other disposition may be made by Representative of any or all of the shares of Parent Common Stock in the Escrow Fund, except to a Replacement Representative as provided in Section 10 herein. In connection with and as a condition of such transfer, the Replacement Representative shall deliver to the Escrow Agent an assignment (separate from the certificate) executed by the Representative, with medallion guaranty, evidencing the transfer of the shares to the Replacement Representative, together with two (2) assignments (separate from the certificate) executed in blank by the Replacement Representative, with medallion guaranties, with respect to the Escrow Shares. Parent, Representative and the Replacement Representative shall cooperate in all respects with the Escrow Agent in documenting such transfer and in effectuating the result intended to be accomplished thereby. During the Escrow Period, Representative shall not pledge nor grant a security interest in the shares of Parent Common Stock included in the Escrow Fund, nor grant a security interest in such Representative’s rights under this Agreement.

 

2.            (a)          Parent, acting through the current or former member or members of Parent’s Board of Directors who has or have been appointed by Parent to take all necessary actions and make all decisions on behalf of Parent with respect to its rights to indemnification under Article VII of the Merger Agreement (the “Committee”), may make a claim for indemnification pursuant to the Merger Agreement (“Indemnification Claim”) against the Escrow Fund by giving notice (a “Notice”) to the Representative (with a copy to the Escrow Agent) specifying (i) the covenant, representation, warranty, agreement, undertaking or obligation contained in the Merger Agreement which it asserts has been breached or otherwise entitles Parent to indemnification, (ii) in reasonable detail, the nature and dollar amount of any Indemnification Claim, (iii) whether the Indemnification Claim is a claim is a Basic Indemnification Claim, a Tax Indemnification Claim or an Environmental Indemnification Claim, and (iv) whether the Indemnification Claim results from a Third Party Claim against Parent or Company. The Committee also shall deliver to the Escrow Agent (with a copy to the Representative), concurrently with its delivery to the Escrow Agent of the Notice, a certification as to the date on which the Notice was delivered to the Representative. As used herein, “Basic Indemnification Claim” means an Indemnification Claim other than a Tax Indemnification Claim or an Environmental Indemnification Claim.

 

- 2 -
 

 

(b)          If the Representative shall give a notice to the Committee (with a copy to the Escrow Agent) (a “Counter Notice”), within 30 days following the date of receipt (as specified in the Committee’s certification) by the Representative of a copy of the Notice, disputing whether the Indemnification Claim is indemnifiable under the Merger Agreement, the Committee and the Representative shall attempt to resolve such dispute by voluntary settlement as provided in paragraph 2(c) below. If no Counter Notice with respect to an Indemnification Claim is received by the Escrow Agent from the Representative within such 30-day period, the Indemnification Claim shall be deemed to be an Established Claim (as hereinafter defined) for purposes of this Agreement.

 

(c)          If the Representative delivers a Counter Notice to the Escrow Agent, the Committee and the Representative shall, during the period of 60 days following the delivery of such Counter Notice or such greater period of time as the parties may agree to in writing (with a copy to the Escrow Agent), attempt to resolve the dispute with respect to which the Counter Notice was given. If the Committee and the Representative shall reach a settlement with respect to any such dispute, they shall jointly deliver written notice of such settlement to the Escrow Agent specifying the terms thereof. If the Committee and the Representative shall be unable to reach a settlement with respect to a dispute, such dispute shall be resolved by arbitration pursuant to paragraph 2(d) below.

 

(d)          If the Committee and the Representative cannot resolve a dispute prior to expiration of the 60-day period referred to in paragraph 2(c) above (or such longer period as the parties may have agreed to in writing), then such dispute shall be submitted (and either party may submit such dispute) for arbitration in accordance with Section 8.

 

(e)          As used in this Agreement, “Established Claim” means any (i) Indemnification Claim deemed established pursuant to the last sentence of paragraph 2(b) above, (ii) Indemnification Claim resolved in favor of Parent by settlement pursuant to paragraph 2(c) above, resulting in a dollar award to Parent, (iii) Indemnification Claim established by the decision of an arbitrator pursuant to paragraph 2(d) above, resulting in a dollar award to Parent, (iv) Third Party Claim that has been sustained by a final determination (after exhaustion of any appeals) of a court of competent jurisdiction, or (v) Third Party Claim that the Committee and the Representative have jointly notified the Escrow Agent has been settled in accordance with the provisions of the Merger Agreement.

 

(f)          (i)          Promptly after an Indemnification Claim becomes an Established Claim, the Committee and the Representative shall jointly deliver a notice to the Escrow Agent (a “Joint Notice”) directing the Escrow Agent to pay to Parent, and the Escrow Agent promptly shall pay to Parent, an amount equal to the aggregate dollar amount of the Established Claim (or, if at such time there remains in the Escrow Fund less than the full amount so payable, the full amount remaining in the Escrow Fund).

 

- 3 -
 

 

(ii)         Payment of an Established Claim shall be made from Escrow Shares. For purposes of each payment, such shares shall be valued at the “Fair Market Value” (as defined below). However, in no event shall the Escrow Agent be required to calculate Fair Market Value or make a determination of the number of shares to be delivered to Parent in satisfaction of any Established Claim; rather, such calculation shall be included in and made part of the Joint Notice. The Escrow Agent shall transfer to Parent out of the Escrow Fund that number of shares of Parent Common Stock necessary to satisfy each Established Claim, as set out in the Joint Notice. Any dispute between the Committee and the Representative concerning the calculation of Fair Market Value or the number of shares necessary to satisfy any Established Claim, or any other dispute regarding a Joint Notice, shall be resolved between the Committee and the Representative in accordance with the procedures specified in paragraph 2(d) above, and shall not involve the Escrow Agent. Each transfer of shares in satisfaction of an Established Claim shall be made by the Escrow Agent delivering to Parent one or more stock certificates evidencing the aggregate number of shares specified in the Joint Notice, together with assignments separate from certificate executed in blank by Representative and completed by the Escrow Agent in accordance with instructions included in the Joint Notice. Upon receipt of the stock certificates and assignments, Parent shall deliver to the Escrow Agent new certificates representing the number of shares issued in the name of Representative, as representative of the Stockholders, after such payment. The parties hereto (other than the Escrow Agent) agree that the foregoing right to make payments of Established Claims in shares of Parent Common Stock may be made notwithstanding any other agreements restricting or limiting the ability of Representative to sell any shares of Parent stock or otherwise. The Committee and the Representative shall be required to exercise utmost good faith in all matters relating to the preparation and delivery of each Joint Notice. As used herein, “Fair Market Value” means the average reported closing price for the Parent Common Stock for the ten trading days ending on the last trading day prior to (x) the day the Established Claim is paid with respect to Indemnification Claims paid on or before the Basic Indemnity Escrow Termination Date, (y) the Basic Indemnity Escrow Termination Date with respect to shares constituting the Pending Claims Reserve (as hereinafter defined) on the Basic Indemnity Escrow Termination Date, and (z) with respect to shares placed in the Pending Claims Reserve for a Tax Indemnification Claim or Environmental Indemnification Claim asserted after the Basic Indemnity Escrow Termination Date, the day such Tax Indemnification Claim or Environmental Indemnification Claim is asserted.

 

(iii)        Notwithstanding anything herein to the contrary, at such time as an Indemnification Claim has become an Established Claim, the Representative shall have the right to substitute for the Escrow Shares that otherwise would be paid in satisfaction of such claim (the “Claim Shares”), cash in an amount equal to the Fair Market Value of the Claim Shares (“Substituted Cash”). In such event (i) the Joint Notice shall include a statement describing the substitution of Substituted Cash for the Claim Shares, and (ii) substantially contemporaneously with the delivery of such Joint Notice, the Representative shall cause currently available funds to be delivered to the Escrow Agent in an amount equal to the Substituted Cash. Upon receipt of such Joint Notice and Substituted Cash, the Escrow Agent shall (y) in payment of the Established Claim described in the Joint Notice, deliver the Substituted Cash to Parent in lieu of the Claim Shares, and (z) cause the Claim Shares to be returned to the Representative.

 

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3.            (a)          On the first Business Day after the Basic Indemnity Escrow Termination Date, upon receipt of a Joint Notice, the Escrow Agent shall distribute and deliver to Representative certificates representing shares of Parent Common Stock then equal to one-half of the original number of shares placed in Representative’s account less that number of shares in Representative’s account equal to the sum of (i) the number of shares applied in satisfaction of Indemnification Claims made prior to that date and (ii) the number of shares in the Pending Claims Reserve allocated to Representative’s account, as provided in the following sentence, and shall continue to hold the remaining shares in Representative’s account as T/E Indemnity Shares. Representative shall cause the Parent’s transfer agent to transfer to the Stockholders their respective pro rata portions of such distributed shares, as determined in accordance with Section 1.5 of the Merger Agreement. If, at such time, there are any Indemnification Claims with respect to which Notices have been received but which have not been resolved pursuant to Section 2 hereof or in respect of which the Escrow Agent has not been notified of, and received a copy of, a final determination (after exhaustion of any appeals) by a court of competent jurisdiction, as the case may be (in either case, “Pending Claims”), and which, if resolved or finally determined in favor of Parent, would result in a payment to Parent, the Escrow Agent shall retain in the Pending Claims Reserve that number of shares of Parent Common Stock having a Fair Market Value equal to the dollar amount for which indemnification is sought in such Indemnification Claim. The Committee and the Representative shall certify to the Escrow Agent the Fair Market Value to be used in calculating the Pending Claims Reserve and the number of shares of Parent Common Stock to be retained therefor. Thereafter, if any Pending Claim becomes an Established Claim, the Committee and the Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to deliver to Parent the number of shares in the Pending Claims Reserve in respect thereof determined in accordance with paragraph 2(f) above and to deliver to Representative the remaining shares in the Pending Claims Reserve allocated to such Pending Claim, all as specified in a Joint Notice. If any Pending Claim is resolved against Parent, the Committee and the Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to the Representative the number of shares allocated to such Pending Claim in the Pending Claims Reserve, and Representative shall cause the Parent’s transfer agent to transfer to the Stockholders their respective pro rata portions of such shares.

 

(b)          On the first Business Day after the T/E Indemnity Escrow Termination Date, upon receipt of a Joint Notice, the Escrow Agent shall distribute and deliver to Representative certificates representing the shares of Parent Common Stock in the Escrow Fund that are T/E Indemnity Shares other than T/E Indemnity Shares in the Pending Claims Reserve. Upon the subsequent resolution of a Claim for which shares remain in the Pending Claims Reserve, upon receipt of a Joint Notice, the Escrow Agent shall distribute and deliver such shares to the Parent, if the Claim is resolved in favor of Parent, or, if resolved against Parent, to the Representative. Upon resolution of all Pending Claims, the Committee and the Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to Representative the remaining portion of the Escrow Fund. Representative shall cause the Parent’s transfer agent to issue to the Stockholders their respective pro rata portions of such shares.

 

(c)          As used herein, the “Pending Claims Reserve” shall mean, at the time any such determination is made, that number of shares of Parent Common Stock in the Escrow Fund having a Fair Market Value equal to the sum of the aggregate dollar amounts claimed to be due with respect to all Pending Claims (as shown in the Notices of such Claims).

 

4.            The Escrow Agent, the Committee and the Representative shall cooperate in all respects with one another in the calculation of any amounts determined to be payable to Parent and the Representative in accordance with this Agreement and in implementing the procedures necessary to effect such payments.

 

- 5 -
 

 

5.            (a)          The Escrow Agent undertakes to perform only such duties as are expressly set forth herein. It is understood that the Escrow Agent is not a trustee or fiduciary and is acting hereunder merely in a ministerial capacity.

 

(b)          The Escrow Agent shall not be liable for any action taken or omitted by it in good faith and in the exercise of its own best judgment, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons. The Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall have given its prior written consent thereto.

 

(c)          The Escrow Agent’s sole responsibility upon receipt of any notice requiring any payment to Parent pursuant to the terms of this Agreement or, if such notice is disputed by the Committee or the Representative, the settlement with respect to any such dispute, whether by virtue of joint resolution, arbitration or determination of a court of competent jurisdiction, is to pay to Parent the amount specified in such notice, and the Escrow Agent shall have no duty to determine the validity, authenticity or enforceability of any specification or certification made in such notice.

 

(d)          The Escrow Agent shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the rights or powers conferred upon it by this Agreement, and may consult with counsel of its own choice and shall have full and complete authorization and indemnification under Section 5(g), below, for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel.

 

(e)          The Escrow Agent may resign at any time and be discharged from its duties as escrow agent hereunder by its giving the other parties hereto written notice and such resignation shall become effective as hereinafter provided. Such resignation shall become effective at such time that the Escrow Agent shall turn over the Escrow Fund to a successor escrow agent appointed jointly by the Committee and the Representative. If no new escrow agent is so appointed within the 60 day period following the giving of such notice of resignation, the Escrow Agent may deposit the Escrow Fund with any court it reasonably deems appropriate.

 

(f)          The Escrow Agent shall be indemnified and held harmless by Parent from and against any expenses, including counsel fees and disbursements, or loss suffered by the Escrow Agent in connection with any action, suit or other proceeding involving any claim which in any way, directly or indirectly, arises out of or relates to this Agreement, the services of the Escrow Agent hereunder, or the Escrow Fund held by it hereunder, other than expenses or losses arising from the gross negligence or willful misconduct of the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of any demand or claim or the commencement of any action, suit or proceeding, the Escrow Agent shall notify the other parties hereto in writing. In the event of the receipt of such notice, the Escrow Agent, in its sole discretion, may commence an action in the nature of interpleader in the any state or federal court located in New York County, State of New York.

 

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(g)          The Escrow Agent shall be entitled to reasonable compensation from Parent for all services rendered by it hereunder. The Escrow Agent shall also be entitled to reimbursement from Parent for all expenses paid or incurred by it in the administration of its duties hereunder including, but not limited to, all counsel, advisors’ and agents’ fees and disbursements and all taxes or other governmental charges.

 

(h)          From time to time on and after the date hereof, the Committee and the Representative shall deliver or cause to be delivered to the Escrow Agent such further documents and instruments and shall do or cause to be done such further acts as the Escrow Agent shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.

 

(i)          Notwithstanding anything herein to the contrary, the Escrow Agent shall not be relieved from liability hereunder for its own gross negligence or its own willful misconduct.

 

6.            This Agreement expressly sets forth all the duties of the Escrow Agent with respect to any and all matters pertinent hereto. No implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not be bound by the provisions of any agreement among the parties hereto except this Agreement and shall have no duty to inquire into the terms and conditions of any agreement made or entered into in connection with this Agreement, including, without limitation, the Merger Agreement.

 

7.            This Agreement shall inure to the benefit of and be binding upon the parties and their respective heirs, successors, assigns and legal representatives shall be governed by and construed in accordance with the law of New York applicable to contracts made and to be performed therein. This Agreement cannot be changed or terminated except by a writing signed by the Committee, the Representative and the Escrow Agent.

 

8.             All disputes arising under this Agreement between the Committee and the Representative, including a dispute arising from a party’s failure or refusal to sign a Joint Notice, shall be submitted to arbitration to the American Arbitration Association in New York City. The Committee and the Representative each hereby consents to the exclusive jurisdiction of the federal and state courts sitting in New York County, State of New York, with respect to any claim or controversy arising out of this Agreement. Service of process in any action or proceeding brought against the Committee or the Representative in respect of any such claim or controversy may be made upon it by registered mail, postage prepaid, return receipt requested, at the address specified in Section 9, with copies delivered by nationally recognized overnight carrier to Graubard Miller, The Chrysler Building, 405 Lexington Avenue, New York, N.Y. 10174, Attention: David Alan Miller, Esq., and to Strasburger & Price, LLP, 909 Fannin Street, Suite 2300, Houston, TX 77010, Attention: W. Garney Griggs, Esq.

 

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9.            All notices and other communications under this Agreement shall be in writing and shall be deemed given if given by hand or delivered by nationally recognized overnight carrier, or if given by telecopier and confirmed by mail (registered or certified mail, postage prepaid, return receipt requested), to the respective parties as follows:

 

A.           If to the Committee, to it at:

 

Eric Rosenfeld
777 Third Avenue, 37th Floor
New York, New York 10017
Telecopier No.: 212-319-0760

 

with a copy to:

Graubard Miller
The Chrysler Building
405 Lexington Avenue
New York, New York 10174-1901
Attention: David Alan Miller, Esq.
Telecopier No.: 212-818-8881

 

B.           If to the Representative, to it at:

 

CLCH, LLC

1400 W. Benson Blvd. Ste. 370
Anchorage, AK 99503
Telecopier No.: 778-480-0516

 

with a copy to:

Strasburger & Price, LLP

909 Fannin Street, Suite 2300

Houston, TX 77010
Attention: W. Garney Griggs, Esq.
Telecopier No.: 832-397-3522

 

C.           If to the Escrow Agent, to it at:

 

Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Attention: Mark Zimkind
Telecopier No.: 212-509-5150

 

or to such other person or address as any of the parties hereto shall specify by notice in writing to all the other parties hereto.

 

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10.          Should the Representative resign or be unable to serve, a new Representative will be selected as provided in the Merger Agreement (the “Replacement Representative”). The appointment of the Replacement Representative shall be effective upon execution by Replacement Representative of a joinder agreement providing for such Replacement Representative to become a party to this Agreement and the Merger Agreement as the Representative, in which case such Replacement Representative shall for all purposes of this Agreement be the Representative (and the prior acts taken by the succeeded Representative shall remain valid for purposes of this Agreement).

 

11.          (a)          If this Agreement requires a party to deliver any notice or other document, and such party refuses to do so, the matter shall be submitted to arbitration pursuant to paragraph 2(d) of this Agreement.

 

(b)          All notices delivered to the Escrow Agent shall refer to the provision of this Agreement under which such notice is being delivered and, if applicable, shall clearly specify the aggregate dollar amount due and payable to Parent or the Representative.

 

(c)          This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original instrument and all of which together shall constitute a single agreement.

 

[Signatures are on following page]

 

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IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement on the date first above written.

 

  PARENT:  
     
  SAEXPLORATION HOLDINGS, INC.  
       
  By: /s/ Brian Beatty  
  Name: Brian Beatty  
  Title: President/CEO  
       
  REPRESENTATIVE:  
     
  CLCH, LLC  
       
  By: /s/ Jeff Hastings  
  Name: Jeff Hastings  
  Title: Manager  
       
  ESCROW AGENT:  
     
  CONTINENTAL STOCK TRANSFER &  
  TRUST COMPANY  
       
  By: /s/ Margaret Villani  
  Name: Margaret Villani  
  Title: Vice President  

 

 

 

 

Exhibit 10.6

 

MERGER CONSIDERATION ESCROW AGREEMENT

 

MERGER CONSIDERATION ESCROW AGREEMENT (“Agreement”) dated June 24, 2013, by and among SAEXPLORATION HOLDINGS, INC. (formerly called Trio Merger Corp.), a Delaware corporation (“Parent”), CLCH, LLC, an Alaska limited liability company, as the Company Stockholders’ Representative, being the representative of the former stockholders of SAEXPLORATION HOLDINGS, INC., a Delaware corporation (the “Representative”), and Continental Stock Transfer & Trust Company , as Escrow Agent (the “Escrow Agent”).

 

Parent, Trio Merger Sub, Inc., a wholly-owned subsidiary of Parent (“Merger Sub”), SAExploration Holdings, Inc. (“Company”) and Representative are the parties to an Agreement and Plan of Reorganization dated as of December 10, 2012, and amended on May 23, 2013 (the “Merger Agreement”), pursuant to which Company has merged into Merger Sub, with Merger Sub being the surviving entity of such merger and remaining a wholly-owned subsidiary of Parent. The Representative has been designated pursuant to the Merger Agreement to represent all of the former stockholders, on a fully-diluted basis, of Company (the “Stockholders”). Capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed to them in the Merger Agreement.

 

Pursuant to the Merger Agreement, the parties desire to establish an escrow fund to hold (i) the Seller Note, and all payments of interest and principal made by Parent thereunder (the “Seller Note Cash”), (ii) the Share Consideration allocable to the Company Derivative Securities remaining after deposit of the Escrow Shares in the Escrow Account pursuant to the Escrow Agreement (such remaining shares, the “Closing Share Consideration”), (iii) the Cash Consideration allocable to the Company Derivative Securities, (iv) upon release from the Escrow Account pursuant to the Escrow Agreement, the Escrow Shares to the extent allocable to Company Derivative Securities that have not been exercised or converted, and that have not been forfeited or otherwise terminated, as of the date such shares are released from the Escrow Account (the “Released Escrow Shares”), and (v) and upon issuance by Parent, the EBITDA Shares to the extent allocable to Company Derivative Securities that have not been exercised or converted, and that have not been forfeited or otherwise terminated, as of the date such shares are issued by Parent (the “Issued EBITDA Shares,” and collectively with the Closing Share Consideration and Released Escrow Shares, the “Merger Consideration Escrow Shares”).

 

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The parties agree as follows:

 

1.           Escrow Fund.

 

(a)          Concurrently with the execution hereof, Parent and Representative are delivering to the Escrow Agent, to be held in escrow pursuant to the terms of this Agreement, the Seller Note, a certificate for 357,786 shares of Parent Common Stock constituting the Closing Share Consideration in the name of the Representative, as nominee of Parent, together with at least ten (10) assignments (separate from the certificate) executed in blank by Representative and an indemnity letter from Parent in lieu of a medallion signature guarantee, and $454,582.52 in cash constituting the Cash Consideration allocable to the Company Derivative Securities. For such time as the Seller Note is held in escrow pursuant hereto, Parent shall pay the Seller Note Cash to the Escrow Agent to be held or distributed as provided in Section 2(d). Parent shall cause the Issued EBITDA Shares, when issued, to be issued in the name of Representative, as nominee of Parent, and Parent and Representative shall cause the Released Escrow Shares and the Issued EBITDA Shares, together with two (2) assignments (separate from the certificate) for each certificate representing such shares, executed in blank by Representative, to be delivered directly to the Escrow Agent. The Seller Note, the Seller Note Cash, the Cash Consideration and the Merger Consideration Escrow Shares delivered by the Parent or Escrow Agent to the Escrow Agent are herein referred to in the aggregate as the “Escrow Fund.”

 

(b)          The Escrow Agent hereby agrees to act as Escrow Agent and to hold, safeguard and disburse the Escrow Fund pursuant to the terms and conditions hereof. It shall treat the Escrow Fund as a trust fund in accordance with the terms of this Agreement and not as the property of Parent. The Escrow Agent’s duties hereunder shall terminate upon its distribution of the entire Escrow Fund in accordance with this Agreement.

 

(c)          The Escrow Fund hereunder is separate and distinct from the escrow fund created pursuant to the Escrow Agreement, and the parties acknowledge that the Escrow Agent shall act with respect to the Escrow Fund solely in accordance with the terms hereof. The Escrow Fund shall be held and distributed as provided herein and shall not be applied to satisfy any claims or obligations under the Escrow Agreement. Likewise, the escrow fund established pursuant to the Escrow Agreement shall be held and distributed as provided therein, and shall not be applied to satisfy any obligations under this Agreement, provided that any Released Escrow Shares with respect to the Company Derivative Securities shall be covered by this Agreement once released from the escrow fund under the Escrow Agreement and delivered to Escrow Agent as provided in Section 1(a).

 

(d)          The parties acknowledge that, as Company Warrants are exercised, (i) the Escrow Agent shall return to Parent the Seller Note and Parent shall cancel such Seller Note, (ii) Parent shall issue a new note (in the form of the Seller Note) to each holder of Company Warrants so exercised in a principal amount equal to the portion of the unpaid principal of the Seller Note allocable to such holder’s Company Warrants (in accordance with Section 1.5 of the Merger Agreement), and (iii) Parent shall deliver a replacement Seller Note for the remainder of the unpaid principal amount of the cancelled Seller Note to the Escrow Agent to hold as part of the Escrow Fund. At such time as Parent notifies the Escrow Agent that all Company Warrants have been exercised, forfeited or terminated in accordance with the terms thereof, the Escrow Agent shall release the Seller Note from escrow hereunder and deliver it to Representative to hold for the benefit of the other Stockholders.

 

(e)          During the period the Escrow Fund is held by the Escrow Agent (the “Escrow Period”), Representative shall have the right to vote the Merger Consideration Escrow Shares held in the Escrow Fund.

 

(f)          During the Escrow Period, all dividends payable in cash, stock or other non-cash property (the “Dividends”) with respect to the Closing Share Consideration, Released Escrow Shares and Issued EBITDA Shares, if any, shall be paid or delivered to the Escrow Agent to hold in accordance with the terms hereof. As used herein, the terms “Closing Share Consideration,” “Released Escrow Shares” and “Issued EBITDA Shares” shall be deemed to include the Dividends distributed thereon, if any.

 

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(g)          During the Escrow Period, no sale, transfer or other disposition may be made by Representative of any of the Merger Consideration Escrow Shares, except to a Replacement Representative as provided in Section 9 herein or as otherwise contemplated by this Agreement. In connection with and as a condition of such transfer, the Replacement Representative shall deliver to the Escrow Agent an assignment separate from the certificate for each certificate representing such shares, executed by the Representative, evidencing the transfer of such shares to the Replacement Representative, together with two (2) assignments (separate from the certificate) executed in blank by the Replacement Representative, with respect to the Merger Consideration Escrow Shares. Representative shall deliver to Escrow Agent, such additional assignments (separate from the certificate) executed in blank by Representative, as may be requested by Escrow Agent from time to time. Parent, Representative and the Replacement Representative shall cooperate in all respects with the Escrow Agent in documenting such transfer and in effectuating the result intended to be accomplished thereby. During the Escrow Period, Representative shall not pledge nor grant a security interest in the Merger Consideration Escrow Shares, nor grant a security interest in such Representative’s rights under this Agreement or with respect to the Escrow Fund.

 

2.           Distributions.

 

(a)          Upon any conversion of Company Exchangeable Shares in accordance with their terms, Parent shall deliver a written notice thereof to the Escrow Agent and Representative, which notice shall specify the amount of the Cash Consideration, Seller Note Cash and Merger Consideration Escrow Shares allocable to the holder(s) of such Company Exchangeable Shares so converted in accordance with Section 1.5(b) of the Merger Agreement (the “Exchangeable Share Merger Consideration”). Following receipt of such notice, the Escrow Agent shall deliver to Representative the specified Exchangeable Share Merger Consideration, and Representative shall cause such Exchangeable Share Merger Consideration to be distributed to the holder(s) of the Company Exchangeable Shares so converted.

 

(b)          Upon any exercise of Company Warrants in accordance with their terms, Parent shall deliver a written notice to the Escrow Agent and Representative, which notice shall specify the amount of the Cash Consideration, Seller Note Cash and Merger Consideration Escrow Shares allocable to the holder(s) of such Company Warrants so exercised in accordance with Section 1.5(b) of the Merger Agreement (the “Warrant Merger Consideration”). Following receipt of such notice, the Escrow Agent shall deliver to Parent the specified Warrant Merger Consideration, and Parent shall cause such Warrant Merger Consideration (along with the new note specified in Section 1(d)(ii)) to be distributed to the holder(s) of the Company Warrants so exercised.

 

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(c)          In the event any Company Derivative Securities are forfeited or otherwise terminate in accordance with their terms, Parent shall deliver a written notice thereof to the Escrow Agent and Representative, which notice shall allocate the Exchangeable Share Merger Consideration or Warrant Merger Consideration (collectively, the “Derivative Merger Consideration”), as applicable, otherwise allocable to such forfeited or terminated Company Derivative Securities among the other Stockholders. Following receipt of such notice, the Escrow Agent shall deliver to Representative the portion of such Derivative Merger Consideration allocable to the record holders of Company Common Stock immediately prior to the Merger and the holders of Company Exchangeable Shares that have been converted (collectively, the “Common Stockholders”), and Representative shall cause such Derivative Merger Consideration to be distributed to the Common Stockholders. The Escrow Agent shall return to Parent any amount of such Derivative Merger Consideration allocable to the holders of Company Warrants that have been exercised, and Parent shall cause such Derivative Merger Consideration to be issued to the holders of such Company Derivative Securities. The Escrow Agent shall hold the portion of such Derivative Merger Consideration allocable to the holders of Company Derivative Securities that have not been exercised or converted, and that have not otherwise terminated or been forfeited, and shall distribute such amounts as and when provided in Section 2(a) or Section 2(b), as applicable.

 

(d)          In connection with each payment of Seller Note Cash, Parent shall deliver a written notice to the Escrow Agent and Representative, which notice shall provide an allocation of the amount of such Seller Note Cash among the Common Stockholders and the holders of Company Derivative Securities that have not been exercised or converted, and that have not otherwise terminated or been forfeited, as of the date of such payment. Following receipt of such payment and notice, the Escrow Agent shall deliver to Representative the portion of the Seller Note Cash allocable to the Common Stockholders, and Representative shall cause such Seller Note Cash to be distributed to the Common Stockholders. The Escrow Agent shall hold the portion of the Seller Note Cash allocable to the holders of Company Derivative Securities that have not been exercised or converted, and that have not otherwise terminated or been forfeited, and shall distribute such amounts as and when provided in Section 2(a) or Section 2(b), as applicable.

 

3.           Notwithstanding anything to the contrary herein, the holders of Company Warrants shall not for any purposes (a) be treated as the owner of any portion of the Escrow Fund (it being understood that pursuant to this Agreement, Warrant Merger Consideration may be distributed to Parent for further distribution to the holders of Company Warrants), (b) be treated as the owner of any and all income that is earned on or derived from the Escrow Fund, or (c) have any obligation to report and pay any taxes attributable thereto until such time as the Company Warrants are exercised.

 

4.           The Escrow Agent, the Company, and the Representative shall cooperate in all respects with one another in the calculation of any amounts determined to be payable to the Representative or Parent in accordance with this Agreement and in implementing the procedures necessary to effect such payments.

 

5.           (a)          The Escrow Agent undertakes to perform only such duties as are expressly set forth herein. It is understood that the Escrow Agent is not a trustee or fiduciary and is acting hereunder merely in a ministerial capacity.

 

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(b)          The Escrow Agent shall not be liable for any action taken or omitted by it in good faith and in the exercise of its own best judgment, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons. The Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall have given its prior written consent thereto.

 

(c)          The Escrow Agent’s sole responsibility upon receipt of any notice requiring any payment to Representative or Parent pursuant to the terms of this Agreement or, if such notice is disputed by Parent or the Representative, the settlement with respect to any such dispute, whether by virtue of joint resolution, arbitration or determination of a court of competent jurisdiction, is to pay to Representative or Parent the amount specified in such notice, and the Escrow Agent shall have no duty to determine the validity, authenticity or enforceability of any specification or certification made in such notice.

 

(d)          The Escrow Agent shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the rights or powers conferred upon it by this Agreement, and may consult with counsel of its own choice and shall have full and complete authorization and indemnification under Section 5(g), below, for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel.

 

(e)          The Escrow Agent may resign at any time and be discharged from its duties as escrow agent hereunder by its giving the other parties hereto written notice and such resignation shall become effective as hereinafter provided. Such resignation shall become effective at such time that the Escrow Agent shall turn over the Escrow Fund to a successor escrow agent appointed jointly by the Parent and the Representative. If no new escrow agent is so appointed within the 60 day period following the giving of such notice of resignation, the Escrow Agent may deposit the Escrow Fund with any court it reasonably deems appropriate.

 

(f)          The Escrow Agent shall be indemnified and held harmless by Parent from and against any expenses, including counsel fees and disbursements, or loss suffered by the Escrow Agent in connection with any action, suit or other proceeding involving any claim which in any way, directly or indirectly, arises out of or relates to this Agreement, the services of the Escrow Agent hereunder, or the Escrow Fund held by it hereunder, other than expenses or losses arising from the gross negligence or willful misconduct of the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of any demand or claim or the commencement of any action, suit or proceeding, the Escrow Agent shall notify the other parties hereto in writing. In the event of the receipt of such notice, the Escrow Agent, in its sole discretion, may commence an action in the nature of interpleader in the any state or federal court located in New York County, State of New York.

 

(g)          The Escrow Agent shall be entitled to reasonable compensation from Parent for all services rendered by it hereunder. The Escrow Agent shall also be entitled to reimbursement from Parent for all expenses paid or incurred by it in the administration of its duties hereunder including, but not limited to, all counsel, advisors’ and agents’ fees and disbursements and all taxes or other governmental charges.

 

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(h)          From time to time on and after the date hereof, the Parent and the Representative shall deliver or cause to be delivered to the Escrow Agent such further documents and instruments and shall do or cause to be done such further acts as the Escrow Agent shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.

 

(i)          Notwithstanding anything herein to the contrary, the Escrow Agent shall not be relieved from liability hereunder for its own gross negligence or its own willful misconduct.

 

6.           This Agreement expressly sets forth all the duties of the Escrow Agent with respect to any and all matters pertinent hereto. No implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not be bound by the provisions of any agreement among the parties hereto except this Agreement and shall have no duty to inquire into the terms and conditions of any agreement made or entered into in connection with this Agreement, including, without limitation, the Merger Agreement.

 

7.           This Agreement shall inure to the benefit of and be binding upon the parties and their respective heirs, successors, assigns and legal representatives shall be governed by and construed in accordance with the law of New York applicable to contracts made and to be performed therein. This Agreement cannot be changed or terminated except by a writing signed by the Parent, the Representative and the Escrow Agent.

 

8.           All notices and other communications under this Agreement shall be in writing and shall be deemed given if given by hand or delivered by nationally recognized overnight carrier, or if given by telecopier and confirmed by mail (registered or certified mail, postage prepaid, return receipt requested), to the respective parties as follows:

 

A.           If to the Parent, to it at:

 

SAExploration Holdings, Inc.
3333 8 th Street SE

Calgary AB, T2G 3A4

Telecopier No.: 403-776-1951

 

with a copy to:

Strasburger & Price, LLP

909 Fannin Street, Suite 2300

Houston, TX 77010
Attention: W. Garney Griggs, Esq.
Telecopier No.: 832-397-3522

 

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B.           If to the Representative, to it at:

 

CLCH, LLC

1400 W. Benson Blvd. Ste. 370
Anchorage, AK 99503
Telecopier No.: 778-480-0516

 

C.           If to the Escrow Agent, to it at:

 

Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Attention: Mark Zimkind
Telecopier No.: 212-509-5150

 

or to such other person or address as any of the parties hereto shall specify by notice in writing to all the other parties hereto.

 

9.           Should the Representative resign or be unable to serve, a new Representative will be selected as provided in the Merger Agreement (the “Replacement Representative”). The appointment of the Replacement Representative shall be effective upon execution by Replacement Representative of a joinder agreement providing for such Replacement Representative to become a party to this Agreement and the Merger Agreement as the Representative, in which case such Replacement Representative shall for all purposes of this Agreement be the Representative (and the prior acts taken by the succeeded Representative shall remain valid for purposes of this Agreement).

 

10.          (a)          All notices delivered to the Escrow Agent shall refer to the provision of this Agreement under which such notice is being delivered and, if applicable, shall clearly specify the aggregate dollar or stock amounts to be delivered to Parent or Representative.

 

(b)          This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original instrument and all of which together shall constitute a single agreement.

 

[Signatures are on following page]

 

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IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement on the date first above written.

 

  PARENT:  
     
  SAEXPLORATION HOLDINGS, INC.  
       
  By: /s/ Brian Beatty  
  Name: Brian Beatty  
  Title: President/CEO  
       
  REPRESENTATIVE:  
       
  CLCH, LLC  
       
  By: /s/ Jeff Hastings  
  Name: Jeff Hastings  
  Title: Manager  
       
  ESCROW AGENT:  
     
  CONTINENTAL STOCK TRANSFER &  
  TRUST COMPANY  
       
  By: /s/ Margaret Villani  
  Name: Margaret Villani  
  Title: Vice President  

 

 

 

 

Exhibit 10.7

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”) is entered into as of the 24 th day of June, 2013, by and among SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.), a Delaware corporation (the “ Company ”) and CLCH, LLC, an Alaska limited liability company (the “ Stockholder ”).

 

WHEREAS, the Stockholder and the Company desire to enter into this Agreement to provide the Stockholder with certain rights relating to the registration of shares issued to Stockholder and that may be issued to Stockholder (“ Merger Shares ”) pursuant to that certain Agreement and Plan of Reorganization (“ Merger Agreement ”), dated December 10, 2012, as amended, by and among the Company, Trio Merger Sub, Inc., SAExploration Holdings, Inc. and the Stockholder;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. DEFINITIONS . The following capitalized terms used herein have the following meanings:

 

“ Agreement ” means this Agreement, as amended, restated, supplemented, or otherwise modified from time to time.

 

“ Commission ” means the Securities and Exchange Commission, or any other Federal agency then administering the Securities Act or the Exchange Act.

 

“ Common Stock ” means the common stock, par value $0.0001 per share, of the Company.

 

“ Company ” is defined in the preamble to this Agreement.

 

“ Closing Date ” is defined in the Merger Agreement.

 

“ Demand Registration ” is defined in Section 2.1.1.

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.

 

“ Existing Registrable Securities ” means (i) the “Registrable Securities” under the Existing Registration Rights Agreement and (ii) the Unit Purchase Options and the securities underlying the Unit Purchase Options.

 

“ Existing Registration Rights Agreement ” means that certain Registration Rights Agreement dated June 21, 2011, by and among the Company and the “Investors” identified therein.

 

 
 

 

“ Form S-3 ” is defined in Section 2.3.

 

“ Indemnified Party ” is defined in Section 4.3.

 

“ Indemnifying Party ” is defined in Section 4.3.

 

“ Stockholder ” is defined in the preamble to this Agreement.

 

“ Stockholder Indemnified Party ” is defined in Section 4.1.

 

“ Maximum Number of Shares ” is defined in Section 2.1.4.

 

“ Merger Agreement ” is defined in the preamble to this Agreement.

 

“ Merger Shares ” is defined in the preamble to this Agreement.

 

“ Notices ” is defined in Section 6.3.

 

“ Piggy-Back Registration ” is defined in Section 2.2.1.

 

“ Register ,” “ Registered ” and “ Registration ” mean a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.

 

“ Registrable Securities ” means all of the Merger Shares. Registrable Securities include any warrants, shares of capital stock or other securities of the Company issued as a dividend or other distribution with respect to or in exchange for or in replacement of such Merger Shares. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (a) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (b) such securities shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act; (c) such securities shall have ceased to be outstanding; or (d) the Registrable Securities are freely saleable under Rule 144 without volume limitations.

 

“ Registration Statement ” means a registration statement filed by the Company with the Commission in compliance with the Securities Act and the rules and regulations promulgated thereunder for a public offering and sale of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities (other than a registration statement on Form S-4 or Form S-8, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another entity).

 

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect at the time.

 

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“ Unit Purchase Options ” means the unit purchase options granted by the Company to the underwriters and their designees in the Company’s initial public offering.

 

2. REGISTRATION RIGHTS .

 

2.1 Demand Registration .

 

2.1.1 Request for Registration . At any time and from time to time after the Closing Date, the Stockholder may make a written demand for registration under the Securities Act of all or part of its Registrable Securities (a “ Demand Registration ”). Any demand for a Demand Registration shall specify the number of shares of Registrable Securities proposed to be sold and the intended method(s) of distribution thereof. The Company shall not be obligated to effect more than one (1) Demand Registration under this Section 2.1.1 in respect of all Registrable Securities.

 

2.1.2 Effective Registration . A registration will not count as a Demand Registration until the Registration Statement filed with the Commission with respect to such Demand Registration has been declared effective and the Company has complied with all of its obligations under this Agreement with respect thereto; provided, however, that if, after such Registration Statement has been declared effective, the offering of Registrable Securities pursuant to a Demand Registration is interfered with by any stop order or injunction of the Commission or any other governmental agency or court, the Registration Statement with respect to such Demand Registration will be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) the Stockholder thereafter elects to continue the offering.

 

2.1.3 Underwritten Offering . If the Stockholder so elects and advises the Company as part of its written demand for a Demand Registration, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering.

 

2.1.4 Reduction of Offering . If the managing Underwriter or Underwriters for a Demand Registration that is to be an underwritten offering advises the Company and the Stockholder in writing that the dollar amount or number of shares of Registrable Securities which the Stockholder desires to sell, taken together with all other shares of Common Stock or other securities which the Company desires to sell and the shares of Common Stock, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights held by other stockholders of the Company who desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of shares, as applicable, the “ Maximum Number of Shares ”), then the Company shall include in such registration: (i) first, the Registrable Securities as to which Demand Registration has been requested by the Stockholder that can be sold without exceeding the Maximum Number of Shares; (ii) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (i), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (iii) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (i) and (ii), the Existing Registrable Securities as to which registration has been requested pursuant to the applicable piggy-back rights contained in the Existing Registration Rights Agreement and the Unit Purchase Options as to which “piggy-back” registration has been requested by the holders thereof, (pro rata in accordance with the number of shares that each such Person has requested be included in such registration, regardless of the number of shares held by each such Person (such proportion is referred to herein as " Pro Rata ")), that can be sold without exceeding the Maximum Number of Shares; and (iv) fourth, to the extent that the Maximum Number of Shares have not been reached under the foregoing clauses (i), (ii), and (iii), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Shares, Pro Rata.

 

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2.1.5 Withdrawal . If the Stockholder disapproves of the terms of any underwriting, the Stockholder may elect to withdraw the request for the Demand Registration. If the Stockholder so withdraws the request for a Demand Registration in such event, then such registration shall not count as a Demand Registration provided for in Section 2.1.

 

2.2 Piggy-Back Registration .

 

2.2.1 Piggy-Back Rights . If at any time on or after the Closing Date, the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their account (or by the Company and by shareholders of the Company including, without limitation, pursuant to Section 2.1), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing shareholders, (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall (x) give written notice of such proposed filing to the Stockholder as soon as practicable before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, of the offering, and (y) offer to the Stockholder in such notice the opportunity to register the sale of such number of shares of Registrable Securities as such Stockholder may request in writing within five (5) days following receipt of such notice (a “ Piggy-Back Registration ”). The Company shall cause such Registrable Securities to be included in such registration and shall use its best efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. In the event a Piggy-Back Registration involves an Underwriter or Underwriters, the Stockholder shall enter into an underwriting agreement in customary form with the Underwriter or Underwriters selected for such Piggy-Back Registration.

 

2.2.2 Reduction of Offering . If the managing Underwriter or Underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company and the Stockholder in writing that the dollar amount or number of shares of Common Stock which the Company desires to sell, taken together with shares of Common Stock, if any, as to which registration has been demanded pursuant to written contractual arrangements with persons other than the holders of Registrable Securities hereunder, the Registrable Securities as to which registration has been requested under this Section 2.2, and the shares of Common Stock, if any, as to which registration has been requested pursuant to the written contractual piggy-back registration rights of other shareholders of the Company, exceeds the Maximum Number of Shares, then the Company shall include in any such registration:

 

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a) If the registration is undertaken for the Company’s account: (A) first, the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the Existing Registrable Securities as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights of such security holders, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the Registrable Securities as to which registration has been requested pursuant to this Agreement that can be sold without exceeding the Maximum Number of Shares; and (D) fourth, to the extent that the Maximum Number of shares has not been reached under the foregoing clauses (A), (B) and (C), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual piggy-back registration rights with such persons and that can be sold without exceeding the Maximum Number of Shares;

 

b) If the registration is a “demand” registration undertaken at the demand of holders of Existing Registrable Securities, (A) first, the shares of Common Stock or other securities for the account of the demanding persons, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the Existing Registrable Securities (whichever securities are not the subject of the demand), as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights of such security holders, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B) and (C), the Registrable Securities, as to which registration has been requested pursuant to the terms hereof that can be sold without exceeding the Maximum Number of Shares; and (E) fifth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B), (C) and (D), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding the Maximum Number of Shares; and

 

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c) If the registration is a “demand” registration undertaken at the demand of persons other than either the Stockholder or the holders of Existing Registrable Securities, (A) first, the shares of Common Stock or other securities for the account of the demanding persons that can be sold without exceeding the Maximum Number of Shares; (B) second, to the extent that the Maximum Number of Shares has not been reached under the foregoing clause (A), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares; (C) third, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A) and (B), the Existing Registrable Securities as to which registration has been requested pursuant to the applicable written contractual piggy-back registration rights of such security holders, Pro Rata, that can be sold without exceeding the Maximum Number of Shares; (D) fourth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B) and (C), the Registrable Securities, as to which registration has been requested pursuant to the terms hereof that can be sold without exceeding the Maximum Number of Shares; and (E) fifth, to the extent that the Maximum Number of Shares has not been reached under the foregoing clauses (A), (B), (C) and (D), the shares of Common Stock or other securities for the account of other persons that the Company is obligated to register pursuant to written contractual arrangements with such persons, that can be sold without exceeding the Maximum Number of Shares.

 

2.2.3 Withdrawal . The Stockholder may elect to withdraw such holder’s request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the Registration Statement. The Company (whether on its own determination or as the result of a withdrawal by persons making a demand pursuant to written contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness of such Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the Stockholder in connection with such Piggy-Back Registration as provided in Section 3.3.

 

2.3 Registrations on Form S-3 . The Stockholder may at any time and from time to time, request in writing that the Company register the resale of any or all of such Registrable Securities on Form S-3 or any similar short-form registration which may be available at such time (“ Form S-3 ”); provided, however, that the Company shall not be obligated to effect such request through an underwritten offering. Upon receipt of such written request, the Company will as soon as practicable thereafter, effect the registration of all or such portion of the Stockholder’s Registrable Securities as are specified in such request, together with all or such portion of other securities of the Company, if any, of any other holder or holders joining in such request as are specified in a written request given within fifteen (15) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration pursuant to this Section 2.3: (i) if Form S-3 is not available for such offering; or (ii) if the Stockholder, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at any aggregate price to the public of less than $500,000. Registrations effected pursuant to this Section 2.3 shall not be counted as Demand Registrations effected pursuant to Section 2.1.

 

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3. REGISTRATION PROCEDURES .

 

3.1 Filings; Information . Whenever the Company is required to effect the registration of any Registrable Securities pursuant to Section 2, the Company shall use its best efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method(s) of distribution thereof as expeditiously as practicable, and in connection with any such request:

 

3.1.1 Filing Registration Statement . The Company shall use its best efforts to, as expeditiously as possible after receipt of a request for a Demand Registration pursuant to Section 2.1, prepare and file with the Commission a Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of all Registrable Securities to be registered thereunder in accordance with the intended method(s) of distribution thereof, and shall use its best efforts to cause such Registration Statement to become effective and use its best efforts to keep it effective for the period required by Section 3.1.3; provided, however, that the Company shall have the right to defer any Demand Registration for up to thirty (30) days, and any Piggy-Back Registration for such period as may be applicable to deferment of any demand registration to which such Piggy-Back Registration relates, in each case if the Company shall furnish to the holders a certificate signed by the President or Chairman of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company and its shareholders for such Registration Statement to be effected at such time; provided further, however, that the Company shall not have the right to exercise the right set forth in the immediately preceding proviso more than once in any 365-day period in respect of a Demand Registration hereunder.

 

3.1.2 Copies . The Company shall, prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to the Stockholder, and such holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such Registration Statement (including each preliminary prospectus), and such other documents as the Stockholder or legal counsel for such holder may request in order to facilitate the disposition of the Registrable Securities owned by such holder.

 

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3.1.3 Amendments and Supplements . The Company shall prepare and file with the Commission such amendments, including post-effective amendments, and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and in compliance with the provisions of the Securities Act until all Registrable Securities and other securities covered by such Registration Statement have been disposed of in accordance with the intended method(s) of distribution set forth in such Registration Statement or such securities have been withdrawn.

 

3.1.4 Notification . After the filing of a Registration Statement, the Company shall promptly, and in no event more than two (2) business days after such filing, notify the Stockholder of such filing, and shall further notify such holder promptly and confirm such advice in writing in all events within two (2) business days of the occurrence of any of the following: (i) when such Registration Statement becomes effective; (ii) when any post-effective amendment to such Registration Statement becomes effective; (iii) the issuance or threatened issuance by the Commission of any stop order (and the Company shall take all actions required to prevent the entry of such stop order or to remove it if entered); and (iv) any request by the Commission for any amendment or supplement to such Registration Statement or any prospectus relating thereto or for additional information or of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of the securities covered by such Registration Statement, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and promptly make available to the Stockholder any such supplement or amendment; except that before filing with the Commission a Registration Statement or prospectus or any amendment or supplement thereto, including documents incorporated by reference, the Company shall furnish to the Stockholder and to the legal counsel for such Stockholder, copies of all such documents proposed to be filed sufficiently in advance of filing to provide Stockholder and legal counsel with a reasonable opportunity to review such documents and comment thereon, and the Company shall not file any Registration Statement or prospectus or amendment or supplement thereto, including documents incorporated by reference, to which such holders or their legal counsel shall object.

 

3.1.5 State Securities Laws Compliance . The Company shall use its best efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Stockholder (in light of its intended plan of distribution) may request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Stockholder to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph or subject itself to taxation in any such jurisdiction.

 

3.1.6 Agreements for Disposition . The Company shall enter into customary agreements (including, if applicable, an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities. The representations, warranties and covenants of the Company in any underwriting agreement which are made to or for the benefit of any Underwriters, to the extent applicable, shall also be made to and for the benefit of the Stockholder. The Stockholder shall not be required to make any representations or warranties in the underwriting agreement except, if applicable, with respect to such holder’s organization, good standing, authority, title to Registrable Securities, lack of conflict of such sale with such holder’s material agreements and organizational documents, and with respect to written information relating to such holder that such holder has furnished in writing expressly for inclusion in such Registration Statement.

 

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3.1.7 Cooperation . The principal executive officer of the Company, the principal financial officer of the Company, the principal accounting officer of the Company and all other officers and members of the management of the Company shall cooperate fully in any offering of Registrable Securities hereunder, which cooperation shall include, without limitation, the preparation of the Registration Statement with respect to such offering and all other offering materials and related documents, and participation in meetings with Underwriters, attorneys, accountants and potential investors.

 

3.1.8 Records . The Company shall make available for inspection by the Stockholder, any Underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other professional retained by any holder of Registrable Securities included in such Registration Statement or any Underwriter, all financial and other records, pertinent corporate documents and properties of the Company, as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information requested by any of them in connection with such Registration Statement.

 

3.1.9 Opinions and Comfort Letters . The Company shall furnish to the Stockholder a signed counterpart, addressed to such Stockholder, of (i) any opinion of counsel to the Company delivered to any Underwriter and (ii) any comfort letter from the Company’s independent public accountants delivered to any Underwriter. In the event no legal opinion is delivered to any Underwriter, the Company shall furnish to the Stockholder, at any time that such holder elects to use a prospectus, an opinion of counsel to the Company to the effect that the Registration Statement containing such prospectus has been declared effective and that no stop order is in effect.

 

3.1.10 Earnings Statement . The Company shall comply with all applicable rules and regulations of the Commission and the Securities Act, and make available to its shareholders, as soon as practicable, an earnings statement covering a period of twelve (12) months, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

 

3.1.11 Listing . The Company shall use its best efforts to cause all Registrable Securities included in any registration to be listed on such exchanges or otherwise designated for trading in the same manner as similar securities issued by the Company are then listed or designated or, if no such similar securities are then listed or designated, in a manner satisfactory to the Stockholder.

 

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3.2 Obligation to Suspend Distribution . Upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3.1.4(iv), or, in the case of a resale registration on Form S-3 pursuant to Section 2.3 hereof, upon any suspension by the Company, pursuant to a written insider trading compliance program adopted by the Company’s Board of Directors, of the ability of all “insiders” covered by such program to transact in the Company’s securities because of the existence of material non-public information, the Stockholder shall immediately discontinue disposition of such Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such holder receives the supplemented or amended prospectus contemplated by Section 3.1.4(iv) or the restriction on the ability of “insiders” to transact in the Company’s securities is removed, as applicable, and, if so directed by the Company, each such holder will deliver to the Company all copies, other than permanent file copies then in such holder’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice.

 

3.3 Registration Expenses . The Company shall bear all costs and expenses incurred in connection with any Demand Registration pursuant to Section 2.1, any Piggy-Back Registration pursuant to Section 2.2, and any registration on Form S-3 effected pursuant to Section 2.3, and all expenses incurred in performing or complying with its other obligations under this Agreement, whether or not the Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees; (ii) fees and expenses of compliance with securities or “blue sky” laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); (iii) printing expenses; (iv) the Company’s internal expenses (including, without limitation, all salaries and expenses of its officers and employees); (v) the fees and expenses incurred in connection with the listing of the Registrable Securities as required by Section 3.1.11; (vi) Financial Industry Regulatory Authority fees; (vii) fees and disbursements of counsel for the Company and fees and expenses for independent certified public accountants retained by the Company (including the expenses or costs associated with the delivery of any opinions or comfort letters requested pursuant to Section 3.1.9); (viii) the fees and expenses of any special experts retained by the Company in connection with such registration and (ix) the fees and expenses of one legal counsel selected by the Stockholder. The Company shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by the holders thereof, which underwriting discounts or selling commissions shall be borne by such holders. Additionally, in an underwritten offering, all selling shareholders and the Company shall bear the expenses of the Underwriter pro rata in proportion to the respective amount of shares each is selling in such offering.

 

3.4 Information . The Stockholder shall provide such information as may reasonably be requested by the Company, or the managing Underwriter, if any, in connection with the preparation of any Registration Statement, including amendments and supplements thereto, in order to effect the registration of any Registrable Securities under the Securities Act pursuant to Section 2 and in connection with the Company’s obligation to comply with Federal and applicable state securities laws.

 

4. INDEMNIFICATION AND CONTRIBUTION .

 

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4.1 Indemnification by the Company . The Company agrees to indemnify and hold harmless the Stockholder and each of its officers, employees, affiliates, directors, partners, members, attorneys and agents, and each person, if any, who controls the Stockholder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) (each, an “ Stockholder Indemnified Party ”), from and against any expenses, losses, judgments, claims, damages or liabilities, whether joint or several, arising out of or based upon any untrue statement (or allegedly untrue statement) of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to such Registration Statement, or arising out of or based upon any omission (or alleged omission) to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration; and the Company shall promptly reimburse the Stockholder Indemnified Party for any legal and any other expenses reasonably incurred by such Stockholder Indemnified Party in connection with investigating and defending any such expense, loss, judgment, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such expense, loss, claim, damage or liability arises out of or is based upon any untrue statement or allegedly untrue statement or omission or alleged omission made in such Registration Statement, preliminary prospectus, final prospectus, or summary prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by such selling holder expressly for use therein. The Company also shall indemnify any Underwriter of the Registrable Securities, their officers, affiliates, directors, partners, members and agents and each person who controls such Underwriter on substantially the same basis as that of the indemnification provided above in this Section 4.1.

 

4.2 Indemnification by Stockholder . The Stockholder will, in the event that any registration is being effected under the Securities Act pursuant to this Agreement of any Registrable Securities held by such holder, indemnify and hold harmless the Company, each of its directors and officers and each underwriter (if any), and each other selling holder and each other person, if any, who controls another selling holder or such underwriter within the meaning of the Securities Act, against any losses, claims, judgments, damages or liabilities, whether joint or several, insofar as such losses, claims, judgments, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or allegedly untrue statement of a material fact contained in any Registration Statement under which the sale of such Registrable Securities was registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained in the Registration Statement, or any amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or the alleged omission to state a material fact required to be stated therein or necessary to make the statement therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by such selling holder expressly for use therein, and shall reimburse the Company, its directors and officers, and each other selling holder or controlling person for any legal or other expenses reasonably incurred by any of them in connection with investigation or defending any such loss, claim, damage, liability or action. Each selling holder’s indemnification obligations hereunder shall be several and not joint and shall be limited to the amount of any net proceeds actually received by such selling holder.

 

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4.3 Conduct of Indemnification Proceedings . Promptly after receipt by any person of any notice of any loss, claim, damage or liability or any action in respect of which indemnity may be sought pursuant to Section 4.1 or 4.2, such person (the “ Indemnified Party ”) shall, if a claim in respect thereof is to be made against any other person for indemnification hereunder, notify such other person (the “ Indemnifying Party ”) in writing of the loss, claim, judgment, damage, liability or action; provided, however, that the failure by the Indemnified Party to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which the Indemnifying Party may have to such Indemnified Party hereunder, except and solely to the extent the Indemnifying Party is actually prejudiced by such failure. If the Indemnified Party is seeking indemnification with respect to any claim or action brought against the Indemnified Party, then the Indemnifying Party shall be entitled to participate in such claim or action, and, to the extent that it wishes, jointly with all other Indemnifying Parties, to assume control of the defense thereof with counsel satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of such claim or action, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that in any action in which both the Indemnified Party and the Indemnifying Party are named as defendants, the Indemnified Party shall have the right to employ separate counsel (but no more than one such separate counsel) to represent the Indemnified Party and its controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Indemnified Party against the Indemnifying Party, with the fees and expenses of such counsel to be paid by such Indemnifying Party if, based upon the written opinion of counsel of such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, consent to entry of judgment or effect any settlement of any claim or pending or threatened proceeding in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such judgment or settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding.

 

4.4 Contribution .

 

4.4.1 If the indemnification provided for in the foregoing Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect of any loss, claim, damage, liability or action referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties and the Indemnifying Parties in connection with the actions or omissions which resulted in such loss, claim, damage, liability or action, as well as any other relevant equitable considerations. The relative fault of any Indemnified Party and any Indemnifying Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such Indemnified Party or such Indemnifying Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

 

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4.4.2 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding Section 4.4.1. The amount paid or payable by an Indemnified Party as a result of any loss, claim, damage, liability or action referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4.4, the Stockholder shall not be required to contribute any amount in excess of the dollar amount of the net proceeds (after payment of any underwriting fees, discounts, commissions or taxes) actually received by such holder from the sale of Registrable Securities which gave rise to such contribution obligation. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

5. UNDERWRITING AND DISTRIBUTION .

 

5.1 Rule 144 . The Company covenants that it shall file any reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as the Stockholder may reasonably request, all to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.

 

6. MISCELLANEOUS .

 

6.1 Assignment; No Third Party Beneficiaries . This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part. This Agreement and the rights, duties and obligations of the Stockholder may be freely assigned or delegated by such holder in conjunction with and to the extent of any transfer of Registrable Securities by such holder. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties, to the permitted assigns of the Stockholder or of any assignee of the Stockholder. This Agreement is not intended to confer any rights or benefits on any persons that are not party hereto other than as expressly set forth in Article 4 and this Section 6.1.

 

6.2 Notices . All notices, demands, requests, consents, approvals or other communications (collectively, “ Notices ”) required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be personally served, delivered by reputable air courier service with charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile, addressed as set forth below, or to such other address as such party shall have specified most recently by written notice. Notice shall be deemed given on the date of service or transmission if personally served or transmitted by telegram, telex or facsimile; provided, that if such service or transmission is not on a business day or is after normal business hours, then such notice shall be deemed given on the next business day. Notice otherwise sent as provided herein shall be deemed given on the next business day following timely delivery of such notice to a reputable air courier service with an order for next-day delivery.

 

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To the Company:

 

SAExploration Holdings, Inc.
3333 8th Street SE, 3rd Floor
Calgary, Alberta, T2G 3A4
Telephone: 403-776-1950
Telecopy: 403-776-1951

 

with a copy to:

 

Strasburger & Price, LLP
909 Fannin Street, Suite 2300
Houston, Texas 77010
Telephone: 713-951-5613
Telecopy: 832-397-3522

 

To the Stockholder, to the address set forth below Stockholder’s name on Exhibit A hereto.

 

6.3 Severability . This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible that is valid and enforceable.

 

6.4 Counterparts . This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument.

 

6.5 Entire Agreement . This Agreement (including all agreements entered into pursuant hereto and all certificates and instruments delivered pursuant hereto and thereto) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written.

 

6.6 Modifications and Amendments . No amendment, modification or termination of this Agreement shall be binding upon any party unless executed in writing by such party.

 

6.7 Titles and Headings . Titles and headings of sections of this Agreement are for convenience only and shall not affect the construction of any provision of this Agreement.

 

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6.8 Waivers and Extensions . Any party to this Agreement may waive any right, breach or default which such party has the right to waive, provided that such waiver will not be effective against the waiving party unless it is in writing, is signed by such party, and specifically refers to this Agreement. Waivers may be made in advance or after the right waived has arisen or the breach or default waived has occurred. Any waiver may be conditional. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof nor of any other agreement or provision herein contained. No waiver or extension of time for performance of any obligations or acts shall be deemed a waiver or extension of the time for performance of any other obligations or acts.

 

6.9 Remedies Cumulative . In the event that the Company fails to observe or perform any covenant or agreement to be observed or performed under this Agreement, the Stockholder or any other holder of Registrable Securities may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in this Agreement or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Agreement or to enforce any other legal or equitable right, or to take any one or more of such actions, without being required to post a bond. None of the rights, powers or remedies conferred under this Agreement shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to any other right, power or remedy, whether conferred by this Agreement or now or hereafter available at law, in equity, by statute or otherwise.

 

6.10 Governing Law . This Agreement shall be governed by, interpreted under, and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed within the State of New York, without giving effect to any choice-of-law provisions thereof that would compel the application of the substantive laws of any other jurisdiction.

 

6.11 Waiver of Trial by Jury . Each party hereby irrevocably and unconditionally waives the right to a trial by jury in any action, suit, counterclaim or other proceeding (whether based on contract, tort or otherwise) arising out of, connected with or relating to this Agreement, the transactions contemplated hereby, or the actions of the Stockholder in the negotiation, administration, performance or enforcement hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be executed and delivered by their duly authorized representatives as of the date first written above.

 

  COMPANY:
     
  SAEXPLORATION HOLDINGS, INC.
     
     
  By: /s/ Brian Beatty
    Name: Brian Beatty
    Title: President/CEO
     
     
  STOCKHOLDER:
     
     
  CLCH, LLC
     
     
  By:   /s/ Jeff Hastings
    Name: Jeff Hastings
    Title: Manager

 

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EXHIBIT A

 

Name Address
   

CLCH, LLC

 

4721 Golden Spring Circle

Anchorage Alaska 99507

Telephone: 907-229-0150

Telecopy: 778-480-0516

   

 

 

 

Exhibit 10.8

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (the “ Agreement ”) is effective as of June 24, 2013, by and between SAExploration Holdings, Inc., a Delaware corporation (the “ Company ”), and [ NAME ] (the “ Indemnitee ”).

 

WHEREAS, the Indemnitee has been asked to serve on the Board of Directors of the Company (the “ Board ”) and/or as an officer of the Company, as the case may be;

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify persons serving as directors or officers of the Company to the fullest extent permitted by applicable law so that they will serve or continue to serve as directors or officers of the Company free from undue concern that they will not be so indemnified; and

 

WHEREAS, the Indemnitee is willing to serve and continue to serve on the Board or as an officer of the Company, as the case may be, on the condition that he be so indemnified;

 

NOW THEREFORE, in consideration of the premises and the covenants contained herein, the Company and the Indemnitee do hereby covenant and agree as follows:

 

Section 1.           Definitions . For purposes of this Agreement:

 

(a)         “ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For purposes hereof, “control” (including, with correlative meaning, the terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such Person, by contract or otherwise.

 

(b)         “ Another Enterprise ” means any corporation (other than the Company), partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise of which the Indemnitee is serving at the request of the Company or any of its Affiliates as an officer, director, employee, agent, fiduciary or trustee or in a similar capacity. In addition to any service at the actual request of the Company, for purposes of this Agreement, Indemnitee shall be deemed to be serving or to have served at the request of the Company as an officer, director, employee, agent, fiduciary or trustee or in a similar capacity of any such enterprise if Indemnitee is or was serving as an officer, director, employee, agent, fiduciary or trustee or in a similar capacity of such enterprise and (A) such enterprise is or at the time of such service was an Affiliate of the Company, (B) such enterprise is or at the time of such service was an employee benefit plan (or related trust) sponsored or maintained by the Company or an affiliate of the Company or (C) the Company or an Affiliate of the Company directly or indirectly caused Indemnitee to be nominated, elected, appointed, designated, employed, engaged or selected to serve in such capacity.

 

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(c)           “ Change of Control ” shall mean the occurrence of any of the following: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 30% of the total voting power represented by the Company’s then outstanding Voting Securities; (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office, who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 50% of the total voting power represented by the Voting Securities of the Company of such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of transactions) all or substantially all of the Company’s assets.

 

(d)           “ Corporate Status ” describes the status of an individual who is or was director or officer of the Company or any of the Company’s Affiliates, or is or was serving as an officer, director, employee, agent, fiduciary or trustee or in a similar capacity of Another Enterprise.

 

(e)           “ Disinterested Director ” means a director of the Company who is not and was not a party to, or otherwise involved in, the Proceeding for which indemnification is sought by the Indemnitee.

 

(f)           “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

(g)           “ Expenses ” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating or being or preparing to be a witness in a Proceeding, and federal, state, local, or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement.

 

(h)           “ Governing Documents ” means the Company’s amended and restated certificate of incorporation and bylaws as now or hereafter in effect.

 

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(i)         “ Independent Counsel ” means a law firm or a member of a law firm that is experienced in matters of corporation law and such law firm neither presently is, nor in the past five years has been, retained to represent: (i) the Company or the Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any Person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement.

 

(j)         “ Person ” means a natural person, firm, partnership, joint venture, association, corporation, company, limited liability company, trust, business trust, estate or other entity.

 

(k)         “ Proceeding ” includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative (including on appeal).

 

(l)         “ Securities Act ” means the Securities Act of 1933, as amended.

 

(m)        “ Voting Securities ” means any securities of the Company that vote generally in the election of directors.

 

Section 2.           Services by the Indemnitee . The Indemnitee agrees to continue to serve at the request of the Company as a director or officer of the Company (including, without limitation, service on one or more committees of the Board), as the case may be. Notwithstanding the foregoing, the Indemnitee may at any time and for any reason resign from any such position.

 

Section 3.           Indemnification – General . The Company shall indemnify, and advance Expenses to, the Indemnitee as provided in this Agreement and to the fullest extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit. The rights of the Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other Sections of this Agreement.

 

Section 4.           Proceedings Other Than Proceedings by or in the Right of the Company . The Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of his Corporate Status, he was, is, or is threatened to be made, a party to or participant in any threatened, pending or completed Proceeding, other than a Proceeding by or in the right of the Company. Pursuant to this Section 4 , the Company shall indemnify the Indemnitee against Expenses, judgments, penalties, fines (including any excise taxes assessed on the Indemnitee with respect to an employee benefit plan) and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, if he also had no reasonable cause to believe his conduct was unlawful.

 

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Section 5.           Proceedings by or in the Right of the Company . The Indemnitee shall be entitled to the rights of indemnification provided in this Section 5 if, by reason of his Corporate Status, he was, is, or is threatened to be made, a party to or participant in any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 5 , the Company shall indemnify the Indemnitee against Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Notwithstanding the foregoing, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which the Indemnitee shall have been adjudged to be liable to the Company or if applicable law prohibits such indemnification; provided , however , that, in such event, if applicable law so permits, indemnification against Expenses shall nevertheless be made by the Company if and to the extent that the court in which such Proceeding shall have been brought or is pending shall determine that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses.

 

Section 6.           Indemnification for Expenses of a Party Who is Wholly or Partly Successful .

 

(a)         To the extent that the Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If the Indemnitee is not wholly successful in defense of any Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each such claim, issue or matter as to which the Indemnitee is successful, on the merits or otherwise. For purposes of this Section 6(a) , the term “successful, on the merits or otherwise,” shall include, but shall not be limited to, (i) the termination of any claim, issue or matter in a Proceeding by withdrawal or dismissal, with or without prejudice, (ii) termination of any claim, issue or matter in a Proceeding by any other means without any express finding of liability or guilt against the Indemnitee, with or without prejudice, or (iii) the expiration of 120 days after the making of a claim or threat of a Proceeding without the institution of the same and without any promise or payment made to induce a settlement. The provisions of this Section 6(a) are subject to Section 6(b) below.

 

(b)         In no event shall the Indemnitee be entitled to indemnification under Section 6(a) above with respect to a claim, issue or matter to the extent (i) applicable law prohibits such indemnification or (ii) an admission is made by the Indemnitee in writing to the Company or in such Proceeding or a final, non-appealable determination is made in such Proceeding that the standard of conduct required for indemnification under this Agreement has not been met with respect to such claim, issue or matter.

 

Section 7.           Indemnification for Expenses as a Witness . Notwithstanding any provisions herein to the contrary, to the extent that the Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by or on behalf of the Indemnitee in connection therewith.

 

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Section 8.           Advancement of Expenses . The Company shall advance all reasonable Expenses incurred by or on behalf of the Indemnitee in connection with any Proceeding within 30 days after the receipt by the Company of a statement or statements from the Indemnitee requesting such advance or advances from time to time, whether prior to or after the final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by or on behalf of the Indemnitee; provided , however , that Indemnitee shall not be required to provide any documentation or information which is privileged or otherwise protected from disclosure. The Indemnitee hereby expressly undertakes to repay such amounts advanced, if, but only if, and then only to the extent that it shall ultimately be determined by a final, non-appealable adjudication or arbitration decision that the Indemnitee is not entitled to be indemnified against such Expenses. The Indemnitee further undertakes to return any such advance which remains unspent at the final, non-appealable conclusion of the Proceeding to which the advance related. All amounts advanced to the Indemnitee by the Company pursuant to this Section 8 and repaid shall be repaid without interest. The Company shall make all advances pursuant to this Section 8 without regard to the financial ability of the Indemnitee to make repayment, without bond or other security and without regard to the prospect of whether the Indemnitee may ultimately be found to be entitled to indemnification under the provisions of this Agreement. Any required reimbursement of Expenses by the Indemnitee shall be made by the Indemnitee to the Company within 30 days following the entry of the final, non-appealable adjudication or arbitration decision pursuant to which it is determined that the Indemnitee is not entitled to be indemnified against such Expenses.

 

Section 9.           Procedure for Determination of Entitlement to Indemnification .

 

(a)         To obtain indemnification under this Agreement, following final disposition of the applicable Proceeding, the Indemnitee shall submit to the Company in care of the Secretary of the Company a written request therefor, along with such documentation and information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification; provided , however , that no deficiency in any such request, documentation or information shall adversely affect the Indemnitee’s rights to indemnification or advancement of Expenses under this Agreement. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that the Indemnitee has requested indemnification.

 

(b)         Upon written request by the Indemnitee for indemnification pursuant to the first sentence of Section 9(a) hereof, a determination, if required by applicable law, with respect to the Indemnitee’s entitlement thereto shall be made in the specific case: (i) by the Board by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined); or (ii) if a quorum of the Board consisting Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel (as hereinafter defined), as selected pursuant to Section 9(d) , in a written opinion to the Board (which opinion may be a “should hold” or a “more likely than not” opinion), a copy of which shall be delivered to the Indemnitee. If it is so determined that the Indemnitee is entitled to indemnification, the Company shall make payment to the Indemnitee within 10 days after such determination. The Indemnitee shall cooperate with the Person or Persons making such determination with respect to the Indemnitee’s entitlement to indemnification, including providing to such Person or Persons upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination. Subject to the provisions of Section 11 hereof, any costs or expenses (including reasonable attorneys’ fees and disbursements) incurred by the Indemnitee in so cooperating with the Person or Persons making such determination shall be borne by the Company, and the Company hereby agrees to indemnify and hold the Indemnitee harmless therefrom.

 

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(c)         Notwithstanding the foregoing, if a Change of Control has occurred, the Indemnitee may require a determination with respect to the Indemnitee’s entitlement to indemnification to be made by Independent Counsel, as selected pursuant to Section 9(d) , in a written opinion to the Board (which opinion may be a “should hold” or a “more likely than not” opinion), a copy of which shall be delivered to the Indemnitee.

 

(d)         In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 9(b) or (c) hereof, the Independent Counsel shall be selected as provided in this Section 9(d). If a Change of Control shall not have occurred, the Independent Counsel shall be selected by the Board (including a vote of a majority of the Disinterested Directors if obtainable), and the Company shall give written notice to the Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change of Control shall have occurred, the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and approved by the Company (which approval shall not be unreasonably withheld, conditioned or delayed). If (i) an Independent Counsel is to make the determination of entitlement pursuant to Section 9(b) or (c) hereof, and (ii) within 20 days after submission by the Indemnitee of a written request for indemnification pursuant to Section 9(a) hereof, no Independent Counsel shall have been selected, either the Company or the Indemnitee may petition the Court of Chancery of the State of Delaware for the appointment as Independent Counsel of a Person selected by such court or by such other Person as such court shall designate. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 9(b) or (c) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 9(d) , regardless of the manner in which such Independent Counsel was selected or appointed. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 11(a)(iv) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

Section 10.          Presumptions and Effect of Certain Proceedings; Construction of Certain Phrases.

 

(a)         In making a determination with respect to whether the Indemnitee is entitled to indemnification hereunder, the Person(s) making such determination shall presume that the Indemnitee is entitled to indemnification under this Agreement if the Indemnitee has submitted a request for indemnification in accordance with Section 9(a) of this Agreement, and anyone seeking to overcome this presumption shall have the burden of proof.

 

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(b)           Subject to the terms of Section 17 hereof, the termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of the Indemnitee to indemnification or create a presumption that the Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

(c)           For purposes of any determination of the Indemnitee’s entitlement to indemnification under this Agreement or otherwise, the Indemnitee shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to a criminal Proceeding, to have also had no reasonable cause to believe his conduct was unlawful, if it is determined by the Board or by the Independent Counsel, as applicable, that the Indemnitee’s actions were based on reliance in good faith on the records or books of account of the Company or Another Enterprise, including financial statements, or on information supplied to the Indemnitee by the officers of the Company or Another Enterprise in the course of their duties, or on the advice of legal or financial counsel for the Company or the Board (or any committee thereof) or for Another Enterprise or its board of directors (or any committee thereof), or on information or records given or reports made by an independent certified public accountant or by an appraiser or other expert selected by the Company or the Board (or any committee thereof) or by Another Enterprise or its board of directors (or any committee thereof). In addition, (i) the knowledge and/or actions, or failure to act, of any other director, trustee, partner, managing member, fiduciary, officer, agent or employee of the Company or Another Enterprise shall not be imputed to the Indemnitee for purposes of determining the right to indemnification under this Agreement and (ii) if the Indemnitee has acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, he shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as used in this Agreement. The provisions of this Section 10(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.

 

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Section 11.          Remedies of the Indemnitee.

 

(a)         In the event that (i) a determination is made pursuant to Section 9 of this Agreement that the Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8 of this Agreement, (iii) the determination of entitlement to indemnification is to be made by the Board pursuant to Section 9(b) of this Agreement and such determination shall not have been made and delivered to the Indemnitee in writing within 20 days after receipt by the Company of the request for indemnification, (iv) the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 9(b) or (c) of this Agreement and such determination shall not have been made in a written opinion to the Board and a copy delivered to the Indemnitee within 20 days after receipt by the Company of the request for indemnification, (v) payment of indemnification is not made pursuant to Section 7 of this Agreement within 30 days after receipt by the Company of a written request therefor or (vi) payment of indemnification is not made within 10 days after a determination has been made that the Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 9 or Section 10 of this Agreement, the Indemnitee shall be entitled to an adjudication in the Court of Chancery of the State of Delaware of his entitlement to such indemnification or advancement of Expenses. Alternatively, the Indemnitee, at his sole option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association. The Indemnitee shall commence such Proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which the Indemnitee first has the right to commence such Proceeding pursuant to this Section 11(a) ; provided , however , that the foregoing clause shall not apply in respect of a Proceeding brought by the Indemnitee to enforce his rights under Section 6 of this Agreement.

 

(b)         In the event that a determination is made pursuant to Section 9 of this Agreement that the Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 11 shall be conducted in all respects as a de novo trial or a de novo arbitration (as applicable) on the merits, and the Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 11 , the Company shall have the burden of proving that the Indemnitee is not entitled to indemnification, and the Company shall be precluded from referring to or offering into evidence a determination made pursuant to Section 9 of this Agreement that is adverse to the Indemnitee’s right to indemnification. If the Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 11 , the Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 8 of this Agreement until a final determination is made with respect to the Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or have lapsed).

 

(c)         If a determination is made or deemed to have been made pursuant to Section 9 or Section 10 of this Agreement that the Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 11 , absent (i) an intentional misstatement by the Indemnitee of a material fact, or an intentional omission by the Indemnitee of a material fact necessary to make the Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d)         The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 11 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.

 

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(e)         In the event that the Indemnitee, pursuant to this Section 11 , seeks a judicial adjudication or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Agreement, the Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all Expenses actually and reasonably incurred by him in such judicial adjudication or arbitration to the fullest extent permitted by law; provided , however , that until such final determination is made, the Indemnitee shall be entitled under and as provided in Section 8 hereof to receive payment of Expenses hereunder with respect to such Proceeding. In the event that a Proceeding is commenced by or in the right of the Company against the Indemnitee to enforce or interpret any of the terms of this Agreement, the Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all Expenses actually and reasonably incurred by him in such Proceeding (including with respect to any counter-claims or cross-claims made by the Indemnitee against the Company in such Proceeding) to the fullest extent permitted by law; provided , however , that until such final determination is made, the Indemnitee shall be entitled under and as provided in Section 8 hereof to receive payment of Expenses hereunder with respect to such Proceeding.

 

(f)         Any judicial adjudication or arbitration determined under this Section 11 shall be final and binding on the parties.

 

Section 12.          Defense of Certain Proceedings . In the event the Company shall be obligated under this Agreement to pay the Expenses of any Proceeding against the Indemnitee in which the Company is a co-defendant with the Indemnitee, the Company shall be entitled to assume the defense of such Proceeding, with counsel approved by the Indemnitee, which approval shall not be unreasonably withheld, conditioned or delayed, upon the delivery to the Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Indemnitee shall nevertheless be entitled to employ or continue to employ his own counsel in such Proceeding. Employment of such counsel by the Indemnitee shall be at the cost and expense of the Company unless and until the Company shall have demonstrated to the reasonable satisfaction of the Indemnitee and the Indemnitee’s counsel that there is complete identity of issues and defenses and no conflict of interest between the Company and the Indemnitee in such Proceeding, after which time further employment of such counsel by the Indemnitee shall be at the cost and expense of the Indemnitee. In all events, if the Company shall not, in fact, have timely employed counsel to assume the defense of such Proceeding, then the fees and Expenses of the Indemnitee’s counsel shall be at the cost and expense of the Company.

 

Section 13.          Exception to Right of Indemnification or Advancement of Expenses.

 

(a)         Notwithstanding any other provision of this Agreement, the Indemnitee shall not be entitled to indemnification or advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein, brought or made by the Indemnitee against:

 

(i)           the Company, except for (x) any claim or Proceeding in respect of this Agreement and/or the Indemnitee’s rights hereunder, (y) any claim or Proceeding to establish or enforce a right to indemnification under (A) any statute or law, (B) any other agreement with the Company or (C) the Governing Documents, and (z) any counter-claim or cross-claim brought or made by him against the Company in any Proceeding brought by or in the right of the Company against him; or

 

(ii)          any other Person, except for Proceedings or claims approved by the Board and any counter-claim or cross-claim brought or made by such Person against Indemnitee.

 

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(b)         In the event that a claim for indemnification against liabilities arising under the Securities Act (other than the payment by the Company of Expenses incurred or paid by the Indemnitee in the successful defense of any Proceeding) is asserted by the Indemnitee in connection with securities being registered under the Securities Act, the Company shall, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of competent jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and the parties hereto shall be governed by the final adjudication of such issue.

 

Section 14.          Contribution .

 

(a)         If, with respect to any Proceeding, the indemnification provided for in this Agreement is held by a court of competent jurisdiction to be unavailable to the Indemnitee for any reason other than that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to a criminal Proceeding, that the Indemnitee had reasonable cause to believe his conduct was unlawful, the Company shall contribute to the amount of Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by the Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein in such proportion as is appropriate to reflect the relative benefits received by the Indemnitee and the relative fault of the Indemnitee versus the other defendants or participants in connection with the action or inaction which resulted in such Expenses, judgments, penalties, fines and amounts paid in settlement, as well as any other relevant equitable considerations.

 

(b)         The Company and the Indemnitee agree that it would not be just and equitable if contribution pursuant to this Section 14 were determined by pro rata or per capita allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 14(a) above.

 

(c)         No Person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not found guilty of such fraudulent misrepresentation.

 

Section 15.          Officer and Director Liability Insurance .

 

(a)         The Company shall use all commercially reasonable efforts to obtain and maintain in effect during the entire period for which the Company is obligated to indemnify the Indemnitee under this Agreement, one or more policies of insurance with reputable insurance companies to provide the directors and officers of the Company with coverage for losses from wrongful acts and omissions and to ensure the Company’s performance of its indemnification obligations under this Agreement. In all such insurance policies, the Indemnitee shall be named as an insured in such a manner as to provide the Indemnitee with the same rights and benefits as are accorded to the most favorably insured of the Company’s current or former directors and officers. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that the Indemnitee is covered by such insurance maintained by a subsidiary or parent of the Company.

 

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(b)         To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors or officers of Another Enterprise, the Indemnitee shall be named as an insured under and shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for the most favorably insured director or officer under such policy or policies.

 

(c)         In the event that the Company is a named insured under any policy or policies of insurance referenced in either Section 15(a) or (b) above, the Company hereby covenants and agrees that it will not settle any claims under such policy or policies with the relevant insurance company or companies in respect of any Proceeding that may be covered by such policy or policies of insurance and in which the Indemnitee has or may incur Expenses, judgments, penalties, fines or amounts paid in settlement without the prior written consent of the Indemnitee, which consent shall not be unreasonably withheld.

 

Section 16.          Security . The Company may, but shall not be required to, provide security to the Indemnitee for the Company’s obligations hereunder through an irrevocable bank letter of credit, funded trust or other similar collateral. Any such security, once provided to the Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee, which consent shall not be unreasonably withheld.

 

Section 17.          Settlement of Claims . The Company shall not be required to obtain the consent of the Indemnitee to the settlement of any Proceeding which the Company has undertaken to defend if such settlement solely involves the payment of money, the Company assumes full and sole responsibility for such settlement and the settlement grants the Indemnitee a complete and unqualified release in respect of the potential liability. The Company shall not be liable for any amount paid by an Indemnitee in settlement of any Proceeding unless the Company has consented to such settlement, which consent shall not be unreasonably withheld.

 

Section 18.          Duration of Agreement . This Agreement shall be unaffected by the termination of the Corporate Status of the Indemnitee and shall continue for so long as the Indemnitee may have any liability or potential liability by virtue of his Corporate Status, including, without limitation, the final termination of all pending Proceedings in respect of which the Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced by the Indemnitee pursuant to Section 11 of this Agreement relating thereto, whether or not he is acting or serving in such capacity at the time any liability or Expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

 

Section 19.          Remedies of the Company . The Company hereby covenants and agrees to submit any and all disputes relating to this Agreement that the parties are unable to resolve between themselves to binding arbitration pursuant to the rules of the American Arbitration Association, and waives all rights to judicial adjudication of any matter or dispute relating to this Agreement, except where judicial adjudication is requested or required by the Indemnitee.

 

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Section 20.          Limitation of Liability . Notwithstanding any other provision of this Agreement, neither party shall have any liability to the other for, and neither party shall be entitled to recover from the other, any consequential, special, punitive, multiple or exemplary damages as a result of a breach of this Agreement.

 

Section 21.          Subrogation . In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

Section 22.          Remedies Not Exclusive . The Indemnitee’s rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time be entitled under applicable law, the Governing Documents, any other agreement, a vote of stockholders, a resolution of directors or otherwise, and every other right or remedy shall be cumulative of and in addition to the rights and remedies given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy of the Indemnitee hereunder or otherwise shall not be deemed an election of remedies on the part of the Indemnitee and shall not prevent the concurrent assertion or employment of any other right or remedy by the Indemnitee.

 

Section 23.          Changes in Law . In the event that a change in applicable law after the date of this Agreement, whether by statute, rule or judicial decision, expands or otherwise increases the right or ability of a Delaware corporation to indemnify (or to otherwise pay or advance Expenses as to any Proceeding for the benefit of) a member of its board of directors or an officer, the Indemnitee shall, by this Agreement, enjoy the greater benefits so afforded by such change. In the event that a change in applicable law after the date of this Agreement, whether by statute, rule or judicial decision, narrows or otherwise reduces the right or ability of a Delaware corporation to indemnify (or to otherwise pay or advance Expenses as to any Proceeding for the benefit of) a member of its board of directors or an officer, such change shall have no effect on this Agreement or any of the Indemnitee’s rights hereunder, except and only to the extent required by law.

 

Section 24.          Interpretation of Agreement; Negligence . The Company and the Indemnitee acknowledge and agree that it is their intention that this Agreement be interpreted and enforced so as to provide indemnification to the Indemnitee to the fullest extent now or hereafter permitted by law. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE COMPANY AND THE INDEMNITEE EACH HEREBY EXPRESSLY ACKNOWLEDGES AND AGREES THAT (A) THE INDEMNIFICATION PROVIDED UNDER THIS AGREEMENT SHALL EXTEND TO AND INCLUDE, BUT SHALL NOT BE LIMITED TO, INDEMNIFICATION FOR EXPENSES, JUDGMENTS, PENALTIES, FINES AND AMOUNTS PAID IN SETTLEMENT ARISING, IN WHOLE OR IN PART, OUT OF THE SOLE OR CONCURRENT NEGLIGENCE OF THE INDEMNITEE AND (B) THIS SECTION 24 CONSTITUTES A CONSPICUOUS NOTICE OF SUCH AGREEMENT FOR ALL PURPOSES.

 

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Section 25.          Severability . If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; (b) such provision or provisions will be deemed reformed to the extent necessary to conform to applicable law and to give maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision or provisions held invalid, illegal or unenforceable.

 

Section 26.          Governing Law; Jurisdiction and Venue; Specific Performance.

 

(a)         The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

(b)         EXCEPT AS PROVIDED IN SECTION 11 AND SECTION 19 OF THIS AGREEMENT, ANY “ACTION OR PROCEEDING” (AS SUCH TERM IS DEFINED BELOW) ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE FILED IN AND LITIGATED SOLELY BEFORE THE COURT OF CHANCERY OF THE STATE OF DELAWARE, AND EACH PARTY TO THIS AGREEMENT: (i) EXCEPT AS PROVIDED IN SECTION 11 AND SECTION 19 OF THIS AGREEMENT, GENERALLY AND UNCONDITIONALLY ACCEPTS THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURT AND VENUE THEREIN, AND WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY DEFENSE OR OBJECTION TO SUCH JURISDICTION AND VENUE BASED UPON THE DOCTRINE OF “FORUM NON CONVENIENS;” AND (ii) GENERALLY AND UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING BY DELIVERY OF CERTIFIED OR REGISTERED MAILING OF THE SUMMONS AND COMPLAINT IN ACCORDANCE WITH THE NOTICE PROVISIONS OF THIS AGREEMENT. FOR PURPOSES OF THIS SECTION, THE TERM “ACTION OR PROCEEDING” IS DEFINED AS ANY AND ALL CLAIMS, SUITS, ACTIONS, HEARINGS, ARBITRATIONS OR OTHER SIMILAR PROCEEDINGS, INCLUDING APPEALS AND PETITIONS THEREFROM, WHETHER FORMAL OR INFORMAL, GOVERNMENTAL OR NON-GOVERNMENTAL, OR CIVIL OR CRIMINAL. THE FOREGOING CONSENT TO JURISDICTION SHALL NOT CONSTITUTE GENERAL CONSENT TO SERVICE OF PROCESS IN THE STATE OF DELAWARE FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE, AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES TO THIS AGREEMENT.

 

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(c)         The Company acknowledges that the Indemnitee may, as a result of the Company’s breach of its covenants and obligations under this Agreement, sustain immediate and long-term substantial and irreparable injury and damage which cannot be reasonably or adequately compensated by damages at law. Consequently, the Company agrees that the Indemnitee shall be entitled, in the event of the Company’s breach or threatened breach of its covenants and obligations hereunder, to obtain equitable relief from a court of competent jurisdiction, including enforcement of each provision of this Agreement by specific performance and/or temporary, preliminary and/or permanent injunctions enforcing any of the Indemnitee’s rights, requiring performance by the Company, or enjoining any breach by the Company, all without proof of any actual damages that have been or may be caused to the Indemnitee by such breach or threatened breach and without the posting of bond or other security in connection therewith. The Company waives the claim or defense therein that the Indemnitee has an adequate remedy at law, and the Company shall not allege or otherwise assert the legal position that any such remedy at law exists. The Company agrees and acknowledges that: (i) the terms of this Section 26(c) are fair, reasonable and necessary to protect the legitimate interests of the Indemnitee; (ii) this waiver is a material inducement to the Indemnitee to serve and continue to serve as a director or officer of the Company and in any other Corporate Status capacity; and (iii) the Indemnitee relied upon this waiver in entering into this Agreement and will continue to rely on this waiver in its future dealings with the represents and warrants that it has reviewed this provision with its legal counsel, and that it has knowingly and voluntarily waived its rights referenced in this Section 26 following consultation with such legal counsel.

 

Section 27.          Nondisclosure of Payments . Except as expressly required by Federal securities or tax laws, the Company shall not disclose any payments under this Agreement without the prior written consent of the Indemnitee. Any payments to the Indemnitee that must be disclosed shall, unless otherwise required by law, be described only in the Company proxy or information statements relating to special and/or annual meetings of the Company’s stockholders, and the Company shall afford the Indemnitee a reasonable opportunity to review all such disclosures and, if requested by the Indemnitee, to explain in such statement any mitigating circumstances regarding the events reported.

 

Section 28.          Notice by the Indemnitee; Notice to Insurers.

 

(a)         The Indemnitee agrees to promptly notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder; provided , however , that the failure of the Indemnitee to timely provide such notice shall not affect the Indemnitee’s right to be indemnified or to receive advancement of Expenses under this Agreement except if, and then only to the extent that, the Company is actually prejudiced by such failure.

 

(b)         If, at the time of the receipt by the Company of a notice of a Proceeding pursuant to Section 28(a) above, the Company has insurance in effect which may cover such Proceeding, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

 

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Section 29.          Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and received for by the party to whom said notice or other communication shall have been directed, (b) mailed by U.S. certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, or (c) sent via facsimile or electronic mail transmission (with electronic or telephonic confirmation of receipt): (i) If to the Company: SAExploration Holdings, Inc., 3333 8 th Street SE, Calgary AB, T2G3A4, attention: General Counsel or bwhiteley@saexploration.com ; and (ii) if to any other party hereto, including the Indemnitee, to the address of such party set forth on the signature page hereof; or to such other address as may have been furnished by any party to the other(s), in accordance with this Section 29 .

 

Section 30.          Modification and Waiver. No supplement, modification or amendment of any right of the Indemnitee under this Agreement will be effective with respect to any action taken or omitted by the Indemnitee in his Corporate Status prior to such supplement, modification or amendment. No supplement, modification or amendment of this Agreement or any provision hereof shall be binding unless executed in writing by both of the Company and the Indemnitee. No waiver of any provision of this Agreement shall be deemed or shall constitute a wavier of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

Section 31.          Entire Agreement . This Agreement embodies the final, entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any and all prior negotiations, commitments, agreements, representations and understandings, whether written or oral, relating to such subject matter and may not be contradicted or varied by evidence of prior, contemporaneous or subsequent oral agreements or discussions of the parties hereto.

 

Section 32.          Headings . The headings of the Sections or paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

Section 33.          Gender . Use of the masculine pronoun in this Agreement shall be deemed to include usage of the feminine pronoun where appropriate.

 

Section 34.          Identical Counterparts . This Agreement may be executed in one or more counterparts (whether by original, photocopy or facsimile signature), each of which shall for all purposes be deemed to be an original, but all of which together shall constitute one and the same Agreement. Only one such counterpart executed by the party against whom enforcement is sought must be produced to evidence the existence of this Agreement.

 

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Section 35.          Successors and Assigns.

 

(a)         The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance satisfactory to Indemnitee and his counsel, expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place.

 

(b)         This Agreement is personal in nature and neither of the parties hereto will, without the consent of the other, assign or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Section 35(a) . Without limiting the generality or effect of the foregoing, Indemnitee’s right to receive payments hereunder will not be assignable, whether by pledge, creation of a security interest or otherwise, other than by a transfer by Indemnitee’s will or by the laws of descent and distribution, and, in the event of any attempted assignment or transfer contrary to this Section 35(b) , the Company will have no liability to pay any amount so attempted to be assigned or transferred.

 

[Reminder of Page Intentionally Left Blank.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first above written.

 

  SAEXPLORATION HOLDINGS, INC.
     
  By:  
  Name:  
  Title:  
     

 

  [ NAME ]  
     
  Address:  
     

 

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Exhibit 10.9

 

THIS INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE, IN THE MANNER AND TO THE EXTENT SET FORTH IN SECTION 12 HEREOF, TO THE SENIOR DEBT (AS DEFINED HEREIN) AND THE REPRESENTATIVE AND EACH OTHER HOLDER OF THIS INSTRUMENT, BY ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF SECTION 12 HEREOF.

 

THIS PROMISSORY NOTE (THIS “ PROMISSORY NOTE ”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED ABSENT REGISTRATION THEREUNDER OR AN EXEMPTION THEREFROM.

 

UNSECURED PROMISSORY NOTE

 

$17,500,000.00 June 24, 2013

 

FOR VALUE RECEIVED, SAExploration Holdings, Inc. (formerly called Trio Merger Corp.), a Delaware corporation (“ Borrower ”), hereby promises to pay to the order of CLCH, LLC, an Alaska limited liability company, or its assigns (the “ Representative ”), in lawful money of the United States of America in immediately available funds, at the address for Representative maintained in the books and records of Borrower the principal sum of Seventeen Million Five Hundred Thousand DOLLARS ($17,500,000.00), together with interest in arrears on the unpaid principal balance in the manner provided below.

 

This Promissory Note has been executed and delivered pursuant to and in accordance with the terms and conditions of the Agreement and Plan of Reorganization, dated as of December 10, 2012, as amended, among Borrower, Representative and certain other parties (as amended from time to time, the “ Merger Agreement ”), and is subject to the terms and conditions of the Merger Agreement, which are, by this reference, incorporated herein and made a part hereof. Capitalized terms used in this Promissory Note without definition shall have the respective meanings set forth in the Merger Agreement. This Promissory Note has been issued pursuant to Section 1.5(a) of the Merger Agreement to Representative on behalf of former stockholders (each, a “ Holder ”) of SAExploration Holdings, Inc., a Delaware corporation that has been merged into a subsidiary of Borrower.

 

1.                   Principal and Interest . The then outstanding principal amount of this Note shall bear interest from the date hereof to the Maturity Date (as defined below) at a rate of ten percent (10%) per annum. Interest shall be paid in cash semi-annually on June 24 and December 24 of each year (each, an “ Interest Payment Date ”) during the term of this Promissory Note solely to the extent permitted under Section 12 hereof and shall otherwise be payable in kind and added to the unpaid principal amount of this Promissory Note on each Interest Payment Date. Subject to Section 12 hereof, the principal amount of this Promissory Note and all accrued and unpaid interest due on the unpaid principal balance of this Promissory Note shall be due and payable in full on June 24, 2023 (the “ Maturity Date ”).

 

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2.                   Manner of Payment . All cash payments of principal and interest on this Promissory Note shall be made by check at such other place in the United States of America as Representative shall designate to Borrower in writing or by wire transfer of immediately available funds to an account designated by Representative in writing. If any payment of principal or interest on this Promissory Note is due on a day that is not a Business Day, such payment shall be due on the next succeeding Business Day, and such extension of time shall not be taken into account in calculating the amount of interest payable under this Promissory Note.

 

3.                   Prepayment . Subject to Section 12 hereof, Borrower may, without premium or penalty, at any time and from time to time, prepay all or any portion of the outstanding principal balance due under this Promissory Note, provided that each such prepayment is accompanied by accrued interest on the amount of principal prepaid calculated to the date of such prepayment.

 

4.                   Events of Default . The occurrence of the following events shall constitute an event of default hereunder (each, a “ Note Event of Default ”): (a) Borrower shall fail to pay when due any payment of principal or interest on this Promissory Note and such failure continues for twenty (20) days after Representative notifies Borrower thereof in writing; or (b) Borrower or one of its subsidiaries shall commence a voluntary case concerning itself under Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto (the " Bankruptcy Code "); or an involuntary case is commenced against Borrower or any of its subsidiaries, and the petition is not controverted within 10 days, or is not dismissed within 45 days after the filing thereof, provided, however, that during the pendency of such period; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of Borrower or any of its subsidiaries, to operate all or any substantial portion of the business of Borrower or any of its subsidiaries, or Borrower or any of its subsidiaries commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to Borrower or any of its subsidiaries, or there is commenced against Borrower or any of its subsidiaries any such proceeding which remains undismissed for a period of 45 days after the filing thereof, or Borrower or any of its subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or Borrower or any of its subsidiaries makes a general assignment for the benefit of creditors; or any action is taken by Borrower or any of its subsidiaries for the purpose of effecting any of the foregoing.

 

5.                   Remedies . Subject to Section 12 hereof, upon the occurrence of a Note Event of Default hereunder (unless all Note Events of Default have been cured or waived by Representative), provided that all Blockage Events have been terminated and that the Senior Debt has been indefeasibly paid in full in cash, Representative may, at its option, (i) by written notice to Borrower, declare the entire unpaid principal balance of this Promissory Note, together with all accrued interest thereon, immediately due and payable regardless of any prior forbearance and (ii) exercise any and all rights and remedies available to it under applicable law, including, without limitation, the right to collect from Borrower all sums due under this Promissory Note or to foreclose any liens and security interests securing payment hereof.

 

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6.                   Waiver . The observance of any term of this Promissory Note may be waived (either generally or in a particular instance and either retroactively or prospectively) by Representative, but such waiver shall be effective only if it is in a writing signed by Representative. Unless otherwise expressly provided in this Promissory Note, no delay or omission on the part of Representative in exercising any right or privilege under this Promissory Note shall operate as a waiver thereof, nor shall any waiver on the part of Representative of any right or privilege under this Promissory Note operate as a waiver of any other right or privilege under this Promissory Note nor shall any single or partial exercise of any right or privilege preclude any other or further exercise thereof or the exercise of any other right or privilege under this Promissory Note. The rights and remedies of Representative under this Promissory Note shall be cumulative and not alternative. Borrower hereby waives presentment, demand, protest and notice of dishonor and protest.

 

7.                   Notices . Any notice required or permitted to be given hereunder shall be given in accordance with Section 10.1 of the Merger Agreement.

 

8.                   Governing Law . This Promissory Note shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to any principles of conflict of laws (whether of the State of Texas or any other jurisdiction) that would result in the application of the Laws of any jurisdiction other than the State of New York.

 

9.                   Successors and Assignment . This Promissory Note shall be binding upon and inure to the benefit of Representative and its respective successors and permitted assigns. Neither Borrower or Representative may assign either this Promissory Note or any of its rights or interests hereunder without (i) the prior written approval of the other and (ii) the prior written approval of the Senior Debt Agent.

 

10.               Construction . The headings of Sections and Subsections in this Promissory Note are provided for convenience only and will not affect its construction or interpretation. Unless the context clearly requires otherwise, all references to “Sections” refer to the corresponding Sections of this Promissory Note. All words used in this Promissory Note will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms and the word “or” is used in the inclusive sense. Borrower and Representative shall be deemed to have participated equally in the preparation of this Promissory Note, so that this Promissory Note shall not be construed more strictly against the one deemed primarily responsible for its preparation than against the other.

 

11.               Attorneys’ Fees . If this Promissory Note is not paid at maturity, regardless of how such maturity may be brought about, or is collected or attempted to be collected through the initiation or prosecution of any suit or through any probate, bankruptcy or any other judicial proceedings, or through any arbitration proceeding, or is placed in the hands of an attorney for collection, the Borrower shall pay, in addition to all other amounts owing hereunder, all actual expenses of collection, all court costs and reasonable attorney’s fees incurred by the holder hereof.

 

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12.               Subordination . This Note is one of the Shareholder Subordinated Notes referred to in the Senior Debt Agreement (as defined herein) and is subject to the terms and provisions thereof and to the subordination provisions set forth in this Section 12.

 

(a)                   (i) Notwithstanding anything to the contrary contained herein, the Representative and each Holder, by acceptance of this Promissory Note, agrees that to the extent and in the manner hereinafter set forth in this Section 12, the indebtedness, obligations and liabilities of the Borrower evidenced by this Promissory Note, including, without limitation, all principal, interest (including, without limitation, Post-Petition Interest), fees and costs (the “ Junior Subordinated Debt ”) are expressly made subordinate and subject in right of payment to the prior indefeasible payment in full in cash of all Senior Debt as set forth below, and the Representative and each Holder, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions.

 

(ii) Until all Senior Debt shall have been indefeasibly paid in full in cash and all commitments to lend have terminated, no payment or distribution of any kind with respect to the Junior Subordinated Debt whether for principal, interest or any other amounts hereunder, including but not limited to, any final payments of principal or interest due hereunder on the Maturity Date shall be made by Borrower or any other person; provided , however , that Borrower may make the following payments (the “ Permitted Payments ”): (i) payment of cash interest in accordance with the terms of Section 1 of this Promissory Note only if a Blockage Event has not occurred and would not occur as a result of such payment, (ii) payment of interest in accordance with the terms of Section 1 of this Promissory Note by accretion of the principal amount of this Promissory Note only (and not by payment in cash), and (iii) payment of the outstanding principal amount of this Promissory Note on the Maturity Date only if a Blockage Event has not occurred and would not occur as a result of such payment. Upon termination of a Blockage Event (so long as no other Blockage Event has occurred and is continuing), the Borrower shall resume making Permitted Payments to the extent not prohibited under the terms of any of the Senior Loan Documents. As used herein, a “ Blockage Event ” shall mean the occurrence of any of the following: (x) an Default or Event of Default has occurred or is continuing under the Senior Debt Agreement or (y) (i) if such payment date is on or prior to March 31, 2013, as of such payment date, the Total Leverage Ratio (as defined in the Senior Debt Agreement and as set forth in the officer’s certificate delivered pursuant to Section 7.01(f) of the Senior Debt Agreement for the fiscal quarter or fiscal year, as the case may be, of Borrower then last ended for which financial statements are available) is less than 2.50:1:00 or (ii) if such date is after March 31, 2013, Borrower is in compliance with the financial covenants contained in Sections 8.07 through 8.11, inclusive, of the Senior Debt Agreement, on a Pro Forma Basis (as defined in the Senior Debt Agreement).

 

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(b) In the event of (i) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to any Credit Party or any of its assets including, without limitation, an Event of Bankruptcy, (ii) any liquidation, dissolution or other winding up of any Credit Party, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (iii) any assignment for the benefit of creditors or any other marshalling of assets or liabilities of any Credit Party, then and in any such event specified in any of clauses (i), (ii) and (iii) (each such event hereinafter referred to as a “ Proceeding ”), then

 

(i) the Senior Debtholders shall be entitled to receive payment in full in cash of all principal, premium, cash pay or payment in kind interest, fees and charges then due on all Senior Debt (including, without limitation Post Petition Interest) before the Representative or any Holder is entitled to receive any payment on account of principal, interest or other amounts due (or past due) in respect of the Junior Subordinated Debt, and the Senior Debtholders shall be entitled to receive for application in payment thereof any payment or distribution of any kind or character, whether in cash, property or securities or by setoff or otherwise, which may be payable or deliverable in any such Proceeding in respect of the Junior Subordinated Debt; and

 

(ii) any payment or distribution of assets of any Credit Party of any kind or character, whether in cash, property or securities, to which the Representative or any Holder would be entitled except for the provisions of this Section 12(b) shall be paid or delivered by such Credit Party directly to the Senior Debt Agent in the manner provided in Section 12(g) below for application in payment thereof until all Senior Debt (including interest, fees and charges accrued thereon after the date of commencement of such proceedings) shall have been indefeasibly paid in full in cash.

 

(c) The Representative and each Holder acknowledges and agrees that the subordination provisions herein contained are, and are intended to be, an inducement and a consideration to the Senior Debtholders, whether the Senior Debt was created or acquired before or after the issuance of the Junior Subordinated Debt, to continue to hold or to acquire and continue to hold such Senior Debt and each such Senior Debtholder shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold such Senior Debt, and the provisions of this Section 12 shall be enforceable directly by the Senior Debtholders.

 

(d) For the avoidance of doubt, in no event shall this Promissory Note or the obligations hereunder be accelerated until, subject to Section 12(b), the Blockage Events have been terminated and the final maturity date has occurred.

 

(e) Prior to the indefeasible payment of all of the Senior Debt in full in cash and notwithstanding anything contained herein to the contrary, without the prior written consent of the Senior Debt Agent, neither Borrower nor Representative nor any Holder shall agree to any waiver, amendment, supplement, termination or other modification to the terms of this Promissory Note or to the terms of the Purchase Agreement governing the payment of this Promissory Note. Any such purported waiver, amendment, supplement, termination or other modification amendment or modification in violation of this Section 12(e) shall be void. ab initio .

 

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(f)     (i) No right of any Senior Debtholder to enforce the subordination provisions contained herein shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Credit Party or by any act or failure to act by any such Senior Debtholder, or by any noncompliance by any Credit Party with the terms, provisions and covenants of this Promissory Note, regardless of any knowledge thereof any such Senior Debtholder may have or be otherwise charged with.

 

(ii) Without in any way limiting the generality of the foregoing paragraph: The Senior Debtholders may, at any time, in their discretion, renew, amend, extend or otherwise modify the terms and provisions of any Senior Debt Document (including, without limitation, the terms and provisions relating to the principal amount outstanding thereunder, the rate of interest thereof, the payment term thereof and the provisions thereof regarding default or any other matter) or exercise any of their rights under the Senior Debt Documents, including, without limitation, the waiver of defaults thereunder, all without notice to or assent from the Representative or any Holder. No compromise, alteration, amendment, renewal or other change of, or waiver, consent or other action in respect of any liability or obligation under or in respect of, any terms, covenants or conditions of the Senior Debt Documents, whether or not such release is in accordance with the provisions of the Senior Debt Documents, shall in any way alter or affect any of the subordination provisions of this Promissory Note.

 

(g) If, notwithstanding the provisions of Section 12 of this Promissory Note, any payment or distribution of any character (whether in cash, securities or other property) or any security shall be received by the Representative or any Holder in contravention of this Section 12, and before all the Senior Debt shall have been indefeasibly paid in full in cash and all commitments to lend have terminated, such payment, distribution or security shall be held in trust for the benefit of, and shall be immediately paid over or delivered or transferred to, the Senior Debt Agent for the benefit of the Senior Debtholders. Such payments received by the Representative or Holder and delivered to the Senior Debt Agent shall be deemed not to be a payment on this Promissory Note for any reason whatsoever and the indebtedness under this Promissory Note shall remain as if such erroneous payment had never been paid by the Borrower or received by the Representative or such Holder. In the event of the failure of the Representative or any Holder to endorse or assign any such payment, distribution or security, the Senior Debtholder is hereby irrevocably authorized to endorse or assign the same.

 

(h) Until all Senior Debt shall have been indefeasibly paid in full in cash and all commitments to lend have terminated, (A) the Junior Subordinated Debt shall not be secured by any lien or other security interest and (B) the Representative and any Holder shall not take or continue any action, or exercise or continue to exercise any rights, remedies or powers under the terms of this Promissory Note, or exercise or continue to exercise any other right or remedy at law or equity that the Representative or such Holder might otherwise possess, to collect any amount due and payable in respect of this Promissory Note, including, without limitation, the acceleration of this Promissory Note, the filing of any petition in bankruptcy or the taking advantage of any other insolvency law of any jurisdiction. Notwithstanding the foregoing, the Borrower may file a proof of claim (on behalf of the Representative or Holders) in any bankruptcy or similar proceeding instituted by another entity. Notwithstanding the foregoing or any permissible action taken by the Representative or a Holder, the Representative or such Holder shall not be entitled to receive any payment in contravention of the other provisions of this Section 12, including, without limitation, Sections 12(a), 12(b), 12(d) and 12(g).

 

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(i) Representative and each Holder covenants and agrees that it shall not, and shall not encourage any other person to, at any time, contest the validity or enforceability of the provisions of Section 12 of this Promissory Note, the Senior Debt, or the validity, perfection, priority, or enforceability of the Senior Debt Documents or the liens or other Security Interests granted to the Senior Debt Agent and the Senior Debtholders pursuant thereto.

 

(j) As used in this Promissory Note:

 

(i)              “ Borrower ” shall mean SAExploration Holdings, Inc. (formerly called Trio Merger Corp.), a Delaware corporation.

 

(ii)             “ Credit Parties ” shall mean Borrower and its Subsidiaries.

 

(iii)            “ Event of Bankruptcy ” shall mean any event or occurrence, as a result of which any Credit Party shall:

 

(A) become insolvent or generally fail to pay, or admit in writing its inability to pay debts as they become due;

 

(B) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for it or any of its property, or make a general assignment for the benefit of its creditors;

 

(C) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for it or for all of its property thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 180 days; or

 

(D) file for or permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law (including, without limitation, the Federal Bankruptcy Code), or any dissolution, winding up or liquidation proceeding, in respect of it, and, if any such case or proceeding is not commenced by it, such case or proceeding shall be consented to or acquiesced in by it or shall result in the entry of an order for relief or shall remain for 180 days undismissed.

 

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(iv) “ Federal Bankruptcy Code ” shall mean Title 11, United States Code, as amended from time to time.

 

(v) “ Post-Petition Interest ” shall mean the aggregate amount of all post-petition interest, fees, costs or expenses or adequate protection payments accruing or allowed to be paid during the pendency of any Event of Bankruptcy and any other interest, fees, costs or expenses that would have accrued but for the commencement of such Event of Bankruptcy, to the date of payment, even if the claim for such interest, fees, costs or expenses is not an allowed claim of the type described in the Federal Bankruptcy Code.

 

(vi) “ Senior Debt ” shall mean the principal of, and premium (if any) and interest on loans and other extensions of credit under the Senior Debt Documents (including, without limitation, any Post Petition Interest) and all commitment, facility and other fees payable under the Senior Debt Documents and all expenses, reimbursements, indemnities and other amounts payable by any Credit Party under the Senior Debt Documents, as any such debt may be increased, amended, restated, refinanced, renewed, or otherwise modified from time to time. Senior Debt shall be considered outstanding whenever any loan commitment under any Senior Debt Document (or any agreement or instrument providing for a refinancing of the Senior Debt) is outstanding.

 

(vii) “ Senior Debt Agreement ” shall mean the Credit Agreement, dated as of November 28, 2012, among SAExploration Holdings, Inc., a Delaware corporation that merged into a subsidiary of Borrower on June 24, 2013, SAExploration Inc., a Delaware corporation, SAExploration Seismic Services (US), LLC, a Delaware limited liability company, and NES, LLC, an Alaska limited liability company, the lenders party thereto from time to time and CP Admin Co LLC, as Administrative Agent, as such agreement may be amended, modified, renewed, extended, restated, replaced, or otherwise supplemented from time to time.

 

(viii) “ Senior Debt Agent ” shall mean the agent for the Senior Debtholder under and pursuant to the terms of the Senior Debt Documents.

 

(ix) “ Senior Debt Documents ” shall mean the Senior Debt Agreement and the Credit Documents (as defined in the Senior Debt Agreement) as such agreement may be amended, modified, renewed, extended, restated, replaced, or otherwise supplemented from time to time.

 

(x) “ Senior Debtholders ” shall mean, at any time, the holders of Senior Debt.

 

(xi) “ Subsidiary ” shall have the meaning assigned to that term in the Senior Debt Agreement.

 

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13.               Third Party Beneficiary . The parties hereto agree that, although the Senior Debt Agent and the Senior Debtholders are not party to this Promissory Note, the provisions of Section 9 and Section 12 are intended to be for the benefit of the Senior Debt Agent and the Senior Debtholders, and therefore the parties hereto designate the Senior Debt Agent and the Senior Debtholders as third-party beneficiaries of Section 9 and Section 12 of this Agreement, having the right to enforce such Section 9 and Section 12.

 

[Signature Page Follows]

 

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  BORROWER:
   
  SAEXPLORATION HOLDINGS, INC. (formerly called TRIO MERGER CORP.)
   
   
  By:   /s/ Brian Beatty
    Name:   Brian Beatty
    Title: President/CEO

 

 

Acknowledged and Agreed:

 

REPRESENTATIVE:

 

CLCH, LLC

 

By:   /s/ Jeff Hastings  
  Name:   Jeff Hastings  
  Title: Manager  

10

 

Exhibit 10.10

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “ Agreement ”), effective as of June 24, 2013 (the “ Effective Date ”), is entered into by and between SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.) , a Delaware corporation (the “ Employer ” or the “ Company ”), and Jeff Hastings , an individual residing in Anchorage, Alaska (the “ Executive ”). The Employer and the Executive may be referred to singularly as “ Party ” or collectively as “ Parties. ”

 

RECITALS

 

WHEREAS, the Employer wishes to offer employment to Executive and Executive desires to be employed by Employer on the terms and conditions contained herein;

 

WHEREAS Employer acknowledges and rewards the value and loyalty of the Executive and seeks to build and protect the Company’s stability, growth, customer base, technology and other competitive advantages; and

 

WHEREAS, the Executive wishes to evidence his commitment to the Company and its objectives;

 

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements hereinafter set forth and the mutual benefits to be derived hereinafter, Employer and Executive hereby agree as follows:

 

AGREEMENTS

 

1.           Employment Term . The Employer hereby employs the Executive commencing on the Effective Date and ending on the third anniversary thereafter; provided, however , the Agreement shall automatically renew or extend for consecutive terms of one (1) year, unless either Party gives prior written notice to the other Party of its desire to terminate the Agreement at least 90 days prior to the expiration of the initial term or any renewal term (in any event, the “ Term ”). Notwithstanding the foregoing, the Parties shall have the termination rights as set forth in Section 5 of this Agreement. Termination of this Agreement for any reason whatsoever by any Party shall have no effect on the continued enforceability of any ancillary agreement, specifically including the Non-Disclosure Agreement executed by Executive in favor of Employer concurrently with this Agreement, (the “ Non-Disclosure Agreement ”). The obligations of the Parties under Sections 5 through 25 shall survive according to the terms of each provision. The Executive accepts such employment and agrees to perform the services specified herein, all upon the terms and conditions hereinafter stated.

 

Employment Agreement
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2.            Duties . The Executive shall serve in the position of Executive Chairman of the Board and shall report to and be subject to the general direction and control of the Board of Directors (“ Board ”) of the Company or its designee. In such capacity he shall be responsible for the supervision of the day to day operations of the Company and the implementation of its business plans and strategies, in each case, subject to the Board and in accordance with and subject to budgets approved from time to time by such Board. The Executive shall perform such duties consistent with the Executive’s position, as well as other related duties from time to time assigned to the Executive by the Board. The Executive further agrees to perform, without additional compensation, such other services for the Employer and for any of its affiliates as the Board shall from time to time specify, if such services are of the nature commonly associated with or similar to that of the Executive’s position with a company engaged in activities similar to the activities engaged in by the Employer at the time of execution of this Agreement. For purposes of the Non-Disclosure Agreement and Sections 5 through 25, the term “Employer” shall be deemed to include and refer to any and all affiliates of the Employer. The Executive acknowledges and agrees that the Non-Disclosure Agreement executed simultaneously herewith is hereby incorporated by reference herein and made a part hereof and that the Non-Disclosure Agreement constitutes a material part of this Agreement.

 

3.            Extent of Service . The Executive shall devote his full business time, attention, and energy to the business of the Employer, and shall not be engaged in any other business activity that competes with or detracts from the business of the Employer during the Term of this Agreement. The foregoing shall not be construed as preventing the Executive from making passive investments in other businesses or enterprises, if (i) such investments will not require services on the part of the Executive which would in any material way impair the performance of his duties under this Agreement, or (ii) such other businesses or enterprises are not engaged in any business competitive with the business of the Employer or any of its affiliates. The Executive shall be based in the vicinity of the Houston metropolitan area (or other area as may be agreed upon by the Parties) and, subject to travel requirements as reasonably necessary to support successful business development efforts and management of the business, shall perform his services from a mutually agreed location in that area.

 

4.            Compensation and Benefits . As payment for the services to be rendered by the Executive hereunder during the Term of this Agreement, the Executive shall be entitled to receive the following:

 

(a)          an annual base salary at the rate of $489,000.00 a year (the “ Base Salary ”), less deductions required by law, payable in accordance with the Employer’s standard payroll schedule;

 

(b)          a monthly automobile allowance of $2,750.00 per month payable in accordance with the Employer’s standard payroll schedule, and which shall be subject to customary deductions and withholding; and

 

Employment Agreement
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(c)          participation in the Company’s 2013 Long Term Incentive Plan, including performance cash awards at the rate of 50% to 150% (the “Target Percentage”). Executive will be entitled to a guaranteed 50% annual performance cash award and as much as 150% if certain executive goals are reached as identified and approved by the Company’s Compensation Committee (the “Executive Goals”), but not to exceed the maximum award permissible under the 2013 Long Term Incentive Plan. The Target Percentage will be applied to twelve (12) times the highest paid monthly base salary within the calendar year. The Executive Goals for years 2013 and 2014 will be set by the Company’s Compensation Committee under the 2013 Long Term Incentive Plan, and are anticipated to be consistent with the EBITDA or other goals established in the merger transaction with Trio Merger Corp. After 2014 the Executive Goals related to EBITDA may be increased by the Company’s Compensation Committee no more than 25% per year (which shall be adjusted proportionately in connection with any merger or acquisition) and the Executive Goals as related to the Performance Criteria set forth more fully in the 2013 Long Term Incentive Plan, including, but not limited to Quality, Health, Safety and Environmental (“QHSE”) objectives which will be set at the Oil & Gas Producers (“OGP”) level for each performance cash award year, but in any event shall not exceed the maximum award permissible under the 2013 Long Term Incentive Plan.

 

(d)          Executive will be entitled to participate, on the same basis generally as other similarly situated employees of the Company, in all benefits as may be offered by the Company from time to time;

 

(e)          reimbursement of reasonable expenses incurred by Executive in accordance with such expense reimbursement policies of the Company;

 

(f)          Executive will be entitled to a guaranteed 5% annual salary increase and as much as a 15% salary increase if the EBITDA objectives of the Executive Goals are reached or exceeded;

 

(g)          Paid vacation of eight (8) weeks per year; and

 

(h)          Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, governmental regulation or stock exchange listing requirement or policy of the Company adopted to comply with any such law, regulation, or listing requirement, will be subject to such deductions and requirements for repayment (“Clawback”) as may be required to be made pursuant to such law, governmental regulation, stock exchange listing requirement, or policy.

 

5.            Termination . Executive’s employment with Company under this Agreement may be terminated in accordance with this Section 5. The date upon which any such termination becomes effective shall be deemed the “Termination Date”.

 

(a)           Termination by Company for Cause . Company may terminate Executive’s employment with Company under this Agreement for Cause at any time without notice and without any payment to Executive whatsoever, save and except for the payment of any Base Salary and vacation accrued but unpaid up to the Termination Date, if Executive engages in any of the following conduct (termination for “ Cause ”):

 

Employment Agreement
Page 3
 

 

(i)           the breaching of any material provision of this Agreement after Company has given Executive not less than 30 days written notice of such breach and a period of not less than 30 days to correct, or cause to be corrected, such breach;

 

(ii)          knowing and intentional misappropriation of funds or property of Company or its affiliates;

 

(iii)         engaging in conduct, even if not in connection with the performance of the duties hereunder, which might be reasonably expected to result in any effect materially adverse to the interests of Company or any of its affiliates, such as fraud, dishonesty, conviction (or a judicial finding of evidence sufficient to convict) of any felony;

 

(iv)          failing to fulfill and perform the duties assigned to Executive in accordance with the terms herein after Company has given Executive period of not less than 15 days notice of such failure and a period of not less than 15 days to correct, or cause to be corrected, such failure; and

 

(v)           failing to comply with corporate policies of Company or any of its affiliates that are promulgated from time to time by Company, provided, however, that Company shall not be unreasonably arbitrary in its enforcement of corporate policies with respect to Executive.

 

(b)           Termination by Employee for Good Reason . Employee shall have good reason (“ Good Reason ”) as defined below to resign his employment within sixty (60) days following notice and receive the same payments as provided under Section 5(d)(i), provided Employee has first provided written notice to Employer of conduct warranting termination of Executive’s employment for Good Reason and provided Employer a period of not less than thirty (30) days to cure such conduct:

 

(i)           A material diminution in the nature and scope of the Employee’s authorities or duties, including but not limited to a change in the Employee’s reporting relationship, a required move of more than 50 miles, a reduction in pay or removal from the Company’s Board of Directors; or

 

(ii)          A material breach of this Agreement by the Employer.

 

(c)           Termination by Executive Without Good Reason . Executive may terminate his employment with Company at any time, for any reason, by providing 60 days’ advance written notice to Company, which may be waived in whole or in part by Company. If Company waives the notice period in whole or in part, Company shall pay the Base Salary for the portion of the notice period that has been waived. Executive shall be entitled to payment of any Base Salary, out of pocket expenses in accordance with Section 4(e) and vacation pay accrued up to the Termination Date. Executive shall not be entitled to any accrued annual bonus or other benefits.

 

Employment Agreement
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(d)           Termination by Company Without Cause . Company may terminate Executive’s employment, without Cause as defined in Sections 5(a) in which case Company shall pay Executive the following, less withholdings required by law:

 

(i)           all accrued but unpaid Base Salary to the Termination Date;

 

(ii)          all accrued but unpaid vacation pay to the Termination Date;

 

(iii)         payment equal to the previous 2 years’ bonuses paid to Executive, plus a prorated portion of any bonus for the year of Executive’s termination in an amount as provided under the Company’s Bonus Plan assuming a payment at the highest level of participation of the Target Percentage. If a bonus payment was not paid to Executive in any of those previous 2 years, this amount will be calculated on the assumption that the bonus paid for any unpaid year was paid in full based upon Executive’s participation level in the bonus plan;

 

(iv)          a severance amount equal to 24 months of Base Salary;

 

(v)           if the Executive timely and properly elects continuation coverage under the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”), the company shall reimburse Executive for the monthly premiums associated with continuation of Executive and his dependents’ insurance coverage. Such reimbursement shall be paid to the Executive on the 3 rd day of the month immediately following the month in which the Executive timely remits the premium payment. The Executive shall be eligible to receive such reimbursement until the earliest of (x) the 18 month anniversary of the Termination Date; (y) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (z) the date on which the Executive becomes eligible to receive substantially similar coverage from another employer; and

 

(vi)          Notwithstanding any provision of any restricted stock agreement that might otherwise be to the contrary, immediate acceleration of all restricted stock awards under the Company’s 2012 Stock Compensation Plan and 2013 Long-Term Incentive Plan, such that all restricted stock awards which have not already vested, shall immediately vest as of the Termination Date.

 

Prior to, and as a condition to, receiving the payments in this Section 5(d), Executive agrees to execute a full and final release in favor of Company, in a form satisfactory to Company.

 

The above amounts will be paid in a single lump sum not later than fifty two (52) days after the Termination Date subject to the fulfillment of the provision of a full and final release no later than the end of such 52-day period, and shall not be subject to the requirement of mitigation, nor reduced by any actual mitigation by Executive. The right to receive any of the above payments shall be forfeited if the required full and final release has not been received before the end of the 52-day period. The payments referred to in Section 5(d) are inclusive of any termination and/or severance payments that may be required under applicable law.

 

Employment Agreement
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(e)           Change of Control . Within six (6) months following a Change of Control of Company, should Company not renew or replace this Agreement with an Agreement containing substantially the same or better terms, Executive shall be entitled to receive termination payments as set out in Section 5(d), except that the 52-day period payment shall not apply, but instead the payment shall be made as a single lump immediately following the expiration of a six (6) month period from the date Executive elected to terminate his employment with the Company. For the purposes of this Section 5(d), “Change of Control” shall be defined as: (i) it is defined in Section 1.01 of the Cyan Credit Agreement and in Section One (a)(2) of the Amendment No. 1 to the Cyan Credit Agreement, provided such Cyan Credit Agreement and amendments are in effect at the time of the Change in Control; or (ii) if the Cyan Credit Agreement and all amendments thereto are not in effect, then Change of Control shall be defined as: (A) a tender offer or exchange offer is made and consummated for the ownership of at least fifty percent (50%) of the outstanding voting securities of the Company; (B) the Company is merged or consolidated with another entity and as a result of such merger or consolidation, at least fifty percent (50%) of the outstanding voting securities of the surviving or resulting entity is owned directly or indirectly in the aggregate by a person or persons other than a person or persons who owned at least fifty percent (50%) of the outstanding voting securities of the Company immediately prior to such merger or consolidation; (C) the Company is liquidated or otherwise sells or transfers all or substantially all of its assets to another entity which is not wholly owned, directly or indirectly, by a person or persons who own at least fifty percent (50%) or more of the outstanding voting securities of the Company; or (D) a person, within the meaning of Section 3(a)(9) or Section 13(d)(3) of the Securities Exchange Act of 1934, as amended and in effect from time to time, acquires over fifty percent (50%) or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially or of record). Provided however, that a merger with Trio Merger Corp. shall not be considered a Change of Control under this Section 5(e).

 

(i)           If any of the payments or benefits received or to be received by the Executive (including, without limitation, any payment or benefits received in connection with a Change in Control or the Executive’s termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement , or otherwise) (all such payments collectively referred to herein as the “280G Payments”) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Company shall pay to the Executive, no later than the time such Excise Tax is required to be paid by the Executive or withheld by the Company, an additional amount equal to the sum of the Excise Tax payable by the Executive, plus the amount necessary to put the Executive in the same after-tax position (taking into account any and all applicable federal, state and local excise, income or other taxes at the highest applicable rates on such 280G Payments and on any payments under this Section 5(e)(i) or otherwise) as if no Excise Tax had been imposed;

 

(ii)          All calculations and determinations under this Section 5(e) shall be made by an independent auditing firm or independent tax counsel appointed by the Company (the “Tax Counsel”) whose determinations shall be conclusive and binding on the Company and the Executive for all purposes. For purposes of making the calculations and determinations required by this Section 5(e), the Tax Counsel may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Company and the Executive shall furnish the Tax Counsel with such information and documents as the Tax Counsel may reasonably request in order to make its determinations under this Section 5(e). The Company shall bear all costs the Tax Counsel may reasonably incur in connection with its services.

 

Employment Agreement
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(f)           Death . Executive’s employment with Company under this Agreement shall automatically terminate upon the death of Executive. Upon termination for death, Executive or Executive’s estate shall only be entitled to (i) payment of any portion of the Base Salary due to owing up to such date; (ii) payment of any accrued but unused vacation pay; (iii) reimbursement of all out of pocket expenses in accordance with Section 4(e); and (iv) notwithstanding any provision of any restricted stock agreement that might otherwise be to the contrary, immediate acceleration of all restricted stock awards under the Company’s 2012 Stock Compensation Plan and/or the Company’s 2013 Long Term Incentive Plan, such that all restricted stock awards which have not already vested, shall immediately vest as of the Termination Date.

 

(g)           Permanent Disability . In the event that Executive suffers a Permanent Disability (as defined below), the employment of Executive may be terminated by Company upon 90 days' notice to Executive; except that if the termination of Executive’s employment would impair his ability to receive long term disability benefits in whole or in part, Executive shall, in lieu of termination, be placed on an unpaid leave of absence, it being understood, however, that Executive shall not be entitled to re-employment by Company after such leave of absence or when he ceases to be in receipt of such benefits. Upon termination of employment for Permanent Disability, Executive or Executive’s estate shall only be entitled to (i) payment of any portion of the Base Salary due and owing up to such date; (ii) reimbursement of all expenses in accordance with Section 4(e); (iii) payment for any accrued but unused vacation pay; and (iv) notwithstanding any provision of any restricted stock agreement that might otherwise be to the contrary, immediate acceleration of all restricted stock awards under the Company’s 2012 Stock Compensation Plan and/or the Company’s 2013 Long Term Incentive Plan, such that all restricted stock awards which have not already vested, shall immediately vest as of the Termination Date. For the purposes of this Section 5(g), “Permanent Disability” means a mental or physical disability whereby Executive:

 

(i)           is unable, due to illness, disease, mental or physical disability or similar cause, to fulfill his obligations as an employee or officer of the Company either for three consecutive months or for a cumulative period of 6 months out of 12 consecutive calendar months, or

 

(ii)          is declared by a court of competent jurisdiction to be mentally incompetent or incapable of managing his affairs.

 

(h)           Resignation as Officer or Director Upon Termination . Upon termination of his employment for any reason whatsoever, Executive shall thereupon be deemed to have immediately resigned any position Executive may have as an officer or director of Company together with any other office, position or directorship which Executive may hold with any of its Affiliates. In such event, Executive shall, at the request of Company, forthwith execute any and all documents appropriate to evidence such resignations. Executive shall not be entitled to any payments in respect of such resignations in addition to those provided for herein.

 

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(i)           Survival . Notwithstanding the termination of the Executive’s employment, or the manner of termination, the provisions of Sections 6 and 7 of this Agreement and the Nondisclosure Agreement executed concurrently with this Agreement shall survive such termination.

 

6.            Nondisclosure/Confidentiality Obligations . The parties contemplate Executive providing executive services to the Company in connection with its core business of providing effective acquisition of seismic data (the “Business”). To facilitate Executive’s ability to perform these services, Company agrees to provide Executive confidential, proprietary, trade secret information regarding Company’s business strategies, plans, techniques and processes, which are more fully set forth in certain Nondisclosure Agreements executed concurrently with this Agreement (“Confidential Information”) which the Company uses to compete in the marketplace, and Executive agrees not to use or disclose such Confidential Information for any purpose other than to advance the Company’s interests. Moreover, from time to time, subsidiary companies or affiliates of Company may provide that entity’s confidential, proprietary information which the Company uses to compete in the marketplace, to Executive to facilitate Executive’s ability to provide services to the subsidiary companies or affiliates, and Executive agrees not to use or disclose such Confidential Information for any purpose other than to advance the subsidiary companies or affiliate’s interests.

 

7.            One-Year Post-Employment Obligations .

 

At the option of Company, and in its sole discretion, Company may pay to Executive an amount equal to twelve (12) months Base Salary plus annual performance cash award under Section 4(c) of 100% in exchange for complying with the covenants set out in this Section for twelve (12) months following the Termination Date as follows:

 

(a)          Executive will not, as a competitor or on behalf of any competitor of Company, directly or indirectly solicit or accept Business from any Customer (as defined in the Non-Disclosure Agreement): (A) with whom Executive had contact as a result of his duties with Company or its affiliates, and/or (B) about whom Executive reviewed or obtained Confidential Information (as defined in the Non-Disclosure Agreement) while performing services for Company or its affiliates. The geographic limitation for this restriction is (1) any Company or its affiliates’ territory in which Executive had a customer or service assignment for Company or its affiliates in the twelve (12) month period immediately preceding Executive’s Termination Date; and/or (2) any territory in which Company or its affiliates, have customers or service assignments about which Executive obtained Confidential Information during the term of this Agreement.

 

(b)          Executive will not solicit, induce or attempt to induce any other employee, agent or contractor of Company or its affiliates with whom Executive worked or about whom Executive obtained Confidential Information in the twelve (12) month period immediately preceding Executive’s Termination Date, to leave the employ Company or its affiliates to work for a competitor of Company or its affiliates in the same or similar capacity as the other Executive worked for Company or its affiliates.

 

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If the Company does not choose to provide the consideration described in this Section, then the Executive will have no obligations under this Section 7.

 

8.            Insurance. Employer agrees to maintain throughout the term of this Agreement D&O coverage substantially similar in nature to its current D&O coverage, providing coverage to Executive for those claims and causes of action arising out the performance of Executive’s duties in the course and scope of his employment under this Agreement.

 

9.            Notices . All notices, requests, consents, demands, or other communications required or permitted to be given pursuant to this Agreement shall be deemed sufficiently given when delivered either (i) personally with a written receipt acknowledging delivery, (ii) by confirmed telefax, or (iii) within three (3) business days after the posting thereof by United States first class, registered or certified mail, return receipt requested, with postage fee prepaid and addressed to the following:

 

If to Employer :            SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.)
3333—8th St. SE
Calgary, Alberta T2G 3A
Canada
Attn: VP Human Resources

 

If to Executive :            Jeff Hastings

4701 Golden Springs Cr.

Anchorage, Alaska 99507

 

Any Party, at any time, may designate additional or different addresses for subsequent notices or communication by furnishing notice to the other Party in the manner described above.

 

10.          Specific Performance . The Executive and Employer acknowledges that a remedy at law for any breach or threatened breach of Section 6 or 7 of this Agreement will be inadequate and that each Party may be entitled to specific performance, injunctive relief, and any other remedies available to it for such breach or threatened breach. If a bond is required to be posted in order for either Party to secure an injunction, then the Parties stipulate that a bond in the amount of One Thousand and No/100 Dollars ($1,000) will be sufficient and reasonable in all circumstances to protect the rights of the Parties.

 

11.          Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provisions shall be ineffective to the extent of such provision or invalidity only, without invalidating the remainder of such provision or any remaining provisions of this Agreement.

 

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12.          Assignment . This Agreement may not be assigned by the Executive. Neither the Executive, his spouse, nor their estates shall have any right to encumber or dispose of any right to receive payments under this Agreement, it being understood that such payments and the right thereto are nonassignable and nontransferable.

 

13.          Binding Effect . Subject to the provisions of Section 12 above, this Agreement shall be binding upon and inure to the benefit of the Parties hereto, the Executive’s heirs and personal representatives, and the successors and assignees of the Employer.

 

14.          Prior Employment Agreements and Obligations . Executive represents and warrants to the Employer that he has fulfilled all of the terms and conditions of all prior employment agreements and employer policies to which he may be a party or have been a party, and that at the time of execution of this Agreement, the Executive is not a party to or otherwise restricted by any other employment agreement, non-solicitation agreement, non-competition covenant, confidentiality or nondisclosure agreement in any manner which would prevent Executive from performing the services contemplated by this Agreement. Executive represents and warrants that nothing contained in any agreement that he has with any parties shall preclude Executive from performing all of his duties, obligations and covenants as contained in this Agreement. Employer is entering into this Agreement solely for the expertise and experience of Executive, and Employer expressly forbids Executive from using or disclosing any confidential information or trade secrets of any prior employer or other third party in connection with Executive’s performance under this Agreement. Executive represents and warrants to Employer that he has not and will not in the future, take, use or disclose the confidential information or trade secrets of a third-party for the benefit of Employer.

 

15.          Parol Evidence . This Agreement (and any other agreements incorporated by reference herein) constitutes the sole and complete agreement between the Parties hereto as to the matters contained herein, and no verbal or other statements, inducements or representations have been made to or relied upon by either Party, and no modification hereof shall be effective unless in writing, signed, and executed in the same manner as this Agreement; provided, however , that the amount of compensation to be paid to the Executive for services to be performed for the Employer may be changed from time to time by the Parties hereto by written agreement without in any other way modifying, changing, or affecting this Agreement and the performance by the Executive of any of the duties of his employment with the Employer.

 

16.          Waiver . Any waiver to be enforceable must be in writing and executed by the Party against whom the waiver is sought to be enforced.

 

17.          Governing Law . All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the state of Texas, Alaska, or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

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18.          Mutual Waiver of Jury Trial . THE EMPLOYER AND EXECUTIVE EACH WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OR RELATED TO THIS AGREEMENT IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AFFILIATE OF ANY OTHER SUCH PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THE EMPLOYER AND THE EXECUTIVE EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

 

19.          Attorneys’ Fees . If any litigation is instituted to enforce or interpret the provisions of this Agreement or the transactions described herein, the prevailing Party in such action shall be entitled to recover its reasonable attorneys’ fees from the other Party or Parties hereto.

 

20.          Drafting . Each of the Parties hereto acknowledges that each Party was actively involved in the negotiation and drafting of this Agreement and that no law or rule of construction shall be raised or used in which the provisions of this Agreement shall be construed in favor or against any Party hereto because one is deemed to be the author thereof.

 

21.          Multiple Counterparts . This Agreement may be executed in multiple counterparts, including by facsimile transmission and email in portable document format, each of which shall have the force and effect of an original, and all of which shall constitute one and the same agreement.

 

22.          Acknowledgment of Enforceability . Executive acknowledges and agrees that this Agreement contains reasonable limitations as to time, geographical area, and scope of activity to be restrained that do not impose a greater restraint than is necessary to protect the goodwill or other business interest of Employer. Therefore, Executive agrees that all restrictions are fairly compensated for and that no unreasonable restrictions exist.

 

23.          Reconstruction of Agreement . Should a court of competent jurisdiction or an arbitrator having jurisdiction declare any of the provisions of this Agreement unenforceable due to any unreasonable restriction of time, geographical area, scope of activity, or otherwise, in lieu of declaring such provision unenforceable, the court, to the extent permissible by law, shall, at the Employer’s request, revise or reconstruct such provisions in a manner sufficient to cause them to be enforceable.

 

24.          Confidentiality . Executive acknowledges and agrees that the terms and conditions and the financial details of this Agreement are confidential and Executive agrees that he will not disclose the same to non-parties under any circumstances unless compelled by law.

 

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25.          Counsel . Executive acknowledges that he is executing a legal document that contains certain duties, obligations and restrictions as specified herein. Executive furthermore acknowledges that he has been advised of his right to retain legal counsel, and that he has either been represented by legal counsel prior to his execution hereof or has knowingly elected not to be so represented.

 

By signing below, the Executive acknowledges that he has received, read, and agrees to adhere to the terms and conditions contained within this Agreement.

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written.

  

  EMPLOYER :
   
  SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.)
     
  By: /s/ Brian Beatty
     
  Name: Brian Beatty
     
  Title: President/CEO
     
  EXECUTIVE :
     
  By: /s/ Jeff Hastings
  Name: Jeff Hastings

  

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Exhibit 10.11

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “ Agreement ”), effective as of June 24, 2013 (the “ Effective Date ”), is entered into by and between SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.) , a Delaware corporation (the “ Employer ” or the “ Company ”), and Brian Beatty , an individual residing in the Province of British Columbia (the “ Executive ”). The Employer and the Executive may be referred to singularly as “ Party ” or collectively as “ Parties. ”

 

RECITALS

 

WHEREAS, the Employer wishes to offer employment to Executive and Executive desires to be employed by Employer on the terms and conditions contained herein;

 

WHEREAS Employer acknowledges and rewards the value and loyalty of the Executive and seeks to build and protect the Company’s stability, growth, customer base, technology and other competitive advantages; and

 

WHEREAS, the Executive wishes to evidence his commitment to the Company and its objectives;

 

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements hereinafter set forth and the mutual benefits to be derived hereinafter, Employer and Executive hereby agree as follows:

 

AGREEMENTS

 

1.            Employment Term . The Employer hereby employs the Executive commencing on the Effective Date and ending on the third anniversary thereafter; provided, however , the Agreement shall automatically renew or extend for consecutive terms of one (1) year, unless either Party gives prior written notice to the other Party of its desire to terminate the Agreement at least 90 days prior to the expiration of the initial term or any renewal term (in any event, the “ Term ”). Notwithstanding the foregoing, the Parties shall have the termination rights as set forth in Section 5 of this Agreement. Termination of this Agreement for any reason whatsoever by any Party shall have no effect on the continued enforceability of any ancillary agreement, specifically including the Non-Disclosure Agreement executed by Executive in favor of Employer concurrently with this Agreement, (the “ Non-Disclosure Agreement ”). The obligations of the Parties under Sections 5 through 25 shall survive according to the terms of each provision. The Executive accepts such employment and agrees to perform the services specified herein, all upon the terms and conditions hereinafter stated.

 

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2.            Duties . The Executive shall serve in the position of Chief Executive Officer and President and shall report to and be subject to the general direction and control of the Board of Directors (“ Board ”) of the Company or its designee. In such capacity he shall be responsible for the supervision of the day to day operations of the Company and the implementation of its business plans and strategies, in each case, subject to the Board and in accordance with and subject to budgets approved from time to time by such Board. The Executive shall perform such duties consistent with the Executive’s position, as well as other related duties from time to time assigned to the Executive by the Board. The Executive further agrees to perform, without additional compensation, such other services for the Employer and for any of its affiliates as the Board shall from time to time specify, if such services are of the nature commonly associated with or similar to that of the Executive’s position with a company engaged in activities similar to the activities engaged in by the Employer at the time of execution of this Agreement. For purposes of the Non-Disclosure Agreement and Sections 5 through 25, the term “Employer” shall be deemed to include and refer to any and all affiliates of the Employer. The Executive acknowledges and agrees that the Non-Disclosure Agreement executed simultaneously herewith is hereby incorporated by reference herein and made a part hereof and that the Non-Disclosure Agreement constitutes a material part of this Agreement.

 

3.            Extent of Service . The Executive shall devote his full business time, attention, and energy to the business of the Employer, and shall not be engaged in any other business activity that competes with or detracts from the business of the Employer during the Term of this Agreement. The foregoing shall not be construed as preventing the Executive from making passive investments in other businesses or enterprises, if (i) such investments will not require services on the part of the Executive which would in any material way impair the performance of his duties under this Agreement, or (ii) such other businesses or enterprises are not engaged in any business competitive with the business of the Employer or any of its affiliates. The Executive shall be based in the vicinity of the Houston metropolitan area (or other area as may be agreed upon by the Parties) and, subject to travel requirements as reasonably necessary to support successful business development efforts and management of the business, shall perform his services from a mutually agreed location in that area.

 

4.            Compensation and Benefits . As payment for the services to be rendered by the Executive hereunder during the Term of this Agreement, the Executive shall be entitled to receive the following:

 

(a)           an annual base salary at the rate of $489,000.00 a year (the “ Base Salary ”), less deductions required by law, payable in accordance with the Employer’s standard payroll schedule;

 

(b)           a monthly automobile allowance of $2,750.00 per month payable in accordance with the Employer’s standard payroll schedule, and which shall be subject to customary deductions and withholding; and

 

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(c)           participation in the Company’s 2013 Long Term Incentive Plan, including performance cash awards at the rate of 50% to 150% (the “Target Percentage”). Executive will be entitled to a guaranteed 50% annual performance cash award and as much as 150% if certain executive goals are reached as identified and approved by the Company’s Compensation Committee (the “Executive Goals”), but not to exceed the maximum award permissible under the 2013 Long Term Incentive Plan. The Target Percentage will be applied to twelve (12) times the highest paid monthly base salary within the calendar year. The Executive Goals for years 2013 and 2014 will be set by the Company’s Compensation Committee under the 2013 Long Term Incentive Plan, and are anticipated to be consistent with the EBITDA or other goals established in the merger transaction with Trio Merger Corp. After 2014 the Executive Goals related to EBITDA may be increased by the Company’s Compensation Committee no more than 25% per year (which shall be adjusted proportionately in connection with any merger or acquisition) and the Executive Goals as related to the Performance Criteria set forth more fully in the 2013 Long Term Incentive Plan, including, but not limited to Quality, Health, Safety and Environmental (“QHSE”) objectives which will be set at the Oil & Gas Producers (“OGP”) level for each performance cash award year, but in any event shall not exceed the maximum award permissible under the 2013 Long Term Incentive Plan.

 

(d)           Executive will be entitled to participate, on the same basis generally as other similarly situated employees of the Company, in all benefits as may be offered by the Company from time to time;

 

(e)           reimbursement of reasonable expenses incurred by Executive in accordance with such expense reimbursement policies of the Company;

 

(f)            Executive will be entitled to a guaranteed 5% annual salary increase and as much as a 15% salary increase if the EBITDA objectives of the Executive Goals are reached or exceeded;

 

(g)           Paid vacation of eight (8) weeks per year; and

 

(h)           Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, governmental regulation or stock exchange listing requirement or policy of the Company adopted to comply with any such law, regulation, or listing requirement, will be subject to such deductions and requirements for repayment (“Clawback”) as may be required to be made pursuant to such law, governmental regulation, stock exchange listing requirement, or policy.

 

5.            Termination . Executive’s employment with Company under this Agreement may be terminated in accordance with this Section 5. The date upon which any such termination becomes effective shall be deemed the “Termination Date”.

 

(a)            Termination by Company for Cause . Company may terminate Executive’s employment with Company under this Agreement for Cause at any time without notice and without any payment to Executive whatsoever, save and except for the payment of any Base Salary and vacation accrued but unpaid up to the Termination Date, if Executive engages in any of the following conduct (termination for “ Cause ”):

 

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(i)             the breaching of any material provision of this Agreement after Company has given Executive not less than 30 days written notice of such breach and a period of not less than 30 days to correct, or cause to be corrected, such breach;

 

(ii)            knowing and intentional misappropriation of funds or property of Company or its affiliates;

 

(iii)           engaging in conduct, even if not in connection with the performance of the duties hereunder, which might be reasonably expected to result in any effect materially adverse to the interests of Company or any of its affiliates, such as fraud, dishonesty, conviction (or a judicial finding of evidence sufficient to convict) of any felony;

 

(iv)           failing to fulfill and perform the duties assigned to Executive in accordance with the terms herein after Company has given Executive period of not less than 15 days notice of such failure and a period of not less than 15 days to correct, or cause to be corrected, such failure; and

 

(v)            failing to comply with corporate policies of Company or any of its affiliates that are promulgated from time to time by Company, provided, however, that Company shall not be unreasonably arbitrary in its enforcement of corporate policies with respect to Executive.

 

(b)            Termination by Employee for Good Reason . Employee shall have good reason (“ Good Reason ”) as defined below to resign his employment within sixty (60) days following notice and receive the same payments as provided under Section 5(d)(i), provided Employee has first provided written notice to Employer of conduct warranting termination of Executive’s employment for Good Reason and provided Employer a period of not less than thirty (30) days to cure such conduct:

 

(i)            A material diminution in the nature and scope of the Employee’s authorities or duties, including but not limited to a change in the Employee’s reporting relationship, a required move of more than 50 miles, a reduction in pay or removal from the Company’s Board of Directors; or

 

(ii)            A material breach of this Agreement by the Employer.

 

(c)            Termination by Executive Without Good Reason . Executive may terminate his employment with Company at any time, for any reason, by providing 60 days’ advance written notice to Company, which may be waived in whole or in part by Company. If Company waives the notice period in whole or in part, Company shall pay the Base Salary for the portion of the notice period that has been waived. Executive shall be entitled to payment of any Base Salary, out of pocket expenses in accordance with Section 4(e) and vacation pay accrued up to the Termination Date. Executive shall not be entitled to any accrued annual bonus or other benefits.

 

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(d)          Termination by Company Without Cause . Company may terminate Executive’s employment, without Cause as defined in Sections 5(a) in which case Company shall pay Executive the following, less withholdings required by law:

 

(i)            all accrued but unpaid Base Salary to the Termination Date;

 

(ii)           all accrued but unpaid vacation pay to the Termination Date;

 

(iii)          payment equal to the previous 2 years’ bonuses paid to Executive, plus a prorated portion of any bonus for the year of Executive’s termination in an amount as provided under the Company’s Bonus Plan assuming a payment at the highest level of participation of the Target Percentage. If a bonus payment was not paid to Executive in any of those previous 2 years, this amount will be calculated on the assumption that the bonus paid for any unpaid year was paid in full based upon Executive’s participation level in the bonus plan;

 

(iv)           a severance amount equal to 24 months of Base Salary;

 

(v)            if the Executive timely and properly elects continuation coverage under the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”), the company shall reimburse Executive for the monthly premiums associated with continuation of Executive and his dependents’ insurance coverage. Such reimbursement shall be paid to the Executive on the 3 rd day of the month immediately following the month in which the Executive timely remits the premium payment. The Executive shall be eligible to receive such reimbursement until the earliest of (x) the 18 month anniversary of the Termination Date; (y) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (z) the date on which the Executive becomes eligible to receive substantially similar coverage from another employer; and

 

(vi)           Notwithstanding any provision of any restricted stock agreement that might otherwise be to the contrary, immediate acceleration of all restricted stock awards under the Company’s 2012 Stock Compensation Plan and 2013 Long-Term Incentive Plan, such that all restricted stock awards which have not already vested, shall immediately vest as of the Termination Date.

 

Prior to, and as a condition to, receiving the payments in this Section 5(d), Executive agrees to execute a full and final release in favor of Company, in a form satisfactory to Company.

 

The above amounts will be paid in a single lump sum not later than fifty two (52) days after the Termination Date subject to the fulfillment of the provision of a full and final release no later than the end of such 52-day period, and shall not be subject to the requirement of mitigation, nor reduced by any actual mitigation by Executive. The right to receive any of the above payments shall be forfeited if the required full and final release has not been received before the end of the 52-day period. The payments referred to in Section 5(d) are inclusive of any termination and/or severance payments that may be required under applicable law.

 

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(e)            Change of Control . Within six (6) months following a Change of Control of Company, should Company not renew or replace this Agreement with an Agreement containing substantially the same or better terms, Executive shall be entitled to receive termination payments as set out in Section 5(d), except that the 52-day period payment shall not apply, but instead the payment shall be made as a single lump immediately following the expiration of a six (6) month period from the date Executive elected to terminate his employment with the Company. For the purposes of this Section 5(d), “Change of Control” shall be defined as: (i) it is defined in Section 1.01 of the Cyan Credit Agreement and in Section One (a)(2) of the Amendment No. 1 to the Cyan Credit Agreement, provided such Cyan Credit Agreement and amendments are in effect at the time of the Change in Control; or (ii) if the Cyan Credit Agreement and all amendments thereto are not in effect, then Change of Control shall be defined as: (A) a tender offer or exchange offer is made and consummated for the ownership of at least fifty percent (50%) of the outstanding voting securities of the Company; (B) the Company is merged or consolidated with another entity and as a result of such merger or consolidation, at least fifty percent (50%) of the outstanding voting securities of the surviving or resulting entity is owned directly or indirectly in the aggregate by a person or persons other than a person or persons who owned at least fifty percent (50%) of the outstanding voting securities of the Company immediately prior to such merger or consolidation; (C) the Company is liquidated or otherwise sells or transfers all or substantially all of its assets to another entity which is not wholly owned, directly or indirectly, by a person or persons who own at least fifty percent (50%) or more of the outstanding voting securities of the Company; or (D) a person, within the meaning of Section 3(a)(9) or Section 13(d)(3) of the Securities Exchange Act of 1934, as amended and in effect from time to time, acquires over fifty percent (50%) or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially or of record). Provided however, that a merger with Trio Merger Corp. shall not be considered a Change of Control under this Section 5(e).

 

(i)            If any of the payments or benefits received or to be received by the Executive (including, without limitation, any payment or benefits received in connection with a Change in Control or the Executive’s termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement , or otherwise) (all such payments collectively referred to herein as the “280G Payments”) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Company shall pay to the Executive, no later than the time such Excise Tax is required to be paid by the Executive or withheld by the Company, an additional amount equal to the sum of the Excise Tax payable by the Executive, plus the amount necessary to put the Executive in the same after-tax position (taking into account any and all applicable federal, state and local excise, income or other taxes at the highest applicable rates on such 280G Payments and on any payments under this Section 5(e)(i) or otherwise) as if no Excise Tax had been imposed;

 

(ii)            All calculations and determinations under this Section 5(e) shall be made by an independent auditing firm or independent tax counsel appointed by the Company (the “Tax Counsel”) whose determinations shall be conclusive and binding on the Company and the Executive for all purposes. For purposes of making the calculations and determinations required by this Section 5(e), the Tax Counsel may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Company and the Executive shall furnish the Tax Counsel with such information and documents as the Tax Counsel may reasonably request in order to make its determinations under this Section 5(e). The Company shall bear all costs the Tax Counsel may reasonably incur in connection with its services.

 

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(f)            Death . Executive’s employment with Company under this Agreement shall automatically terminate upon the death of Executive. Upon termination for death, Executive or Executive’s estate shall only be entitled to (i) payment of any portion of the Base Salary due to owing up to such date; (ii) payment of any accrued but unused vacation pay; (iii) reimbursement of all out of pocket expenses in accordance with Section 4(e); and (iv) notwithstanding any provision of any restricted stock agreement that might otherwise be to the contrary, immediate acceleration of all restricted stock awards under the Company’s 2012 Stock Compensation Plan and/or the Company’s 2013 Long Term Incentive Plan, such that all restricted stock awards which have not already vested, shall immediately vest as of the Termination Date.

 

(g)            Permanent Disability . In the event that Executive suffers a Permanent Disability (as defined below), the employment of Executive may be terminated by Company upon 90 days' notice to Executive; except that if the termination of Executive’s employment would impair his ability to receive long term disability benefits in whole or in part, Executive shall, in lieu of termination, be placed on an unpaid leave of absence, it being understood, however, that Executive shall not be entitled to re-employment by Company after such leave of absence or when he ceases to be in receipt of such benefits. Upon termination of employment for Permanent Disability, Executive or Executive’s estate shall only be entitled to (i) payment of any portion of the Base Salary due and owing up to such date; (ii) reimbursement of all expenses in accordance with Section 4(e); (iii) payment for any accrued but unused vacation pay; and (iv) notwithstanding any provision of any restricted stock agreement that might otherwise be to the contrary, immediate acceleration of all restricted stock awards under the Company’s 2012 Stock Compensation Plan and/or the Company’s 2013 Long Term Incentive Plan, such that all restricted stock awards which have not already vested, shall immediately vest as of the Termination Date. For the purposes of this Section 5(g), “Permanent Disability” means a mental or physical disability whereby Executive:

 

(i)            is unable, due to illness, disease, mental or physical disability or similar cause, to fulfill his obligations as an employee or officer of the Company either for three consecutive months or for a cumulative period of 6 months out of 12 consecutive calendar months, or

 

(ii)            is declared by a court of competent jurisdiction to be mentally incompetent or incapable of managing his affairs.

 

(h)           Resignation as Officer or Director Upon Termination . Upon termination of his employment for any reason whatsoever, Executive shall thereupon be deemed to have immediately resigned any position Executive may have as an officer or director of Company together with any other office, position or directorship which Executive may hold with any of its Affiliates. In such event, Executive shall, at the request of Company, forthwith execute any and all documents appropriate to evidence such resignations. Executive shall not be entitled to any payments in respect of such resignations in addition to those provided for herein.

 

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(i)            Survival . Notwithstanding the termination of the Executive’s employment, or the manner of termination, the provisions of Sections 6 and 7 of this Agreement and the Nondisclosure Agreement executed concurrently with this Agreement shall survive such termination.

 

6.            Nondisclosure/Confidentiality Obligations . The parties contemplate Executive providing executive services to the Company in connection with its core business of providing effective acquisition of seismic data (the “Business”). To facilitate Executive’s ability to perform these services, Company agrees to provide Executive confidential, proprietary, trade secret information regarding Company’s business strategies, plans, techniques and processes, which are more fully set forth in certain Nondisclosure Agreements executed concurrently with this Agreement (“Confidential Information”) which the Company uses to compete in the marketplace, and Executive agrees not to use or disclose such Confidential Information for any purpose other than to advance the Company’s interests. Moreover, from time to time, subsidiary companies or affiliates of Company may provide that entity’s confidential, proprietary information which the Company uses to compete in the marketplace, to Executive to facilitate Executive’s ability to provide services to the subsidiary companies or affiliates, and Executive agrees not to use or disclose such Confidential Information for any purpose other than to advance the subsidiary companies or affiliate’s interests.

 

7.            One-Year Post-Employment Obligations .

 

At the option of Company, and in its sole discretion, Company may pay to Executive an amount equal to twelve (12) months Base Salary plus annual performance cash award under Section 4(c) of 100% in exchange for complying with the covenants set out in this Section for twelve (12) months following the Termination Date as follows:

 

(a)           Executive will not, as a competitor or on behalf of any competitor of Company, directly or indirectly solicit or accept Business from any Customer (as defined in the Non-Disclosure Agreement): (A) with whom Executive had contact as a result of his duties with Company or its affiliates, and/or (B) about whom Executive reviewed or obtained Confidential Information (as defined in the Non-Disclosure Agreement) while performing services for Company or its affiliates. The geographic limitation for this restriction is (1) any Company or its affiliates’ territory in which Executive had a customer or service assignment for Company or its affiliates in the twelve (12) month period immediately preceding Executive’s Termination Date; and/or (2) any territory in which Company or its affiliates, have customers or service assignments about which Executive obtained Confidential Information during the term of this Agreement.

 

(b)           Executive will not solicit, induce or attempt to induce any other employee, agent or contractor of Company or its affiliates with whom Executive worked or about whom Executive obtained Confidential Information in the twelve (12) month period immediately preceding Executive’s Termination Date, to leave the employ Company or its affiliates to work for a competitor of Company or its affiliates in the same or similar capacity as the other Executive worked for Company or its affiliates.

 

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If the Company does not choose to provide the consideration described in this Section, then the Executive will have no obligations under this Section 7.

 

8.            Insurance . Employer agrees to maintain throughout the term of this Agreement D&O coverage substantially similar in nature to its current D&O coverage, providing coverage to Executive for those claims and causes of action arising out the performance of Executive’s duties in the course and scope of his employment under this Agreement.

 

9.            Notices . All notices, requests, consents, demands, or other communications required or permitted to be given pursuant to this Agreement shall be deemed sufficiently given when delivered either (i) personally with a written receipt acknowledging delivery, (ii) by confirmed telefax, or (iii) within three (3) business days after the posting thereof by United States first class, registered or certified mail, return receipt requested, with postage fee prepaid and addressed to the following:

 

If to Employer : SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.)
  3333—8 th St. SE
  Calgary, Alberta T2G 3A
  Canada
  Attn:  VP Human Resources
   
If to Executive : Brian Beatty
  59 Westpoint Crt. S.W.
  Calgary, AB T3H 4M7

 

Any Party, at any time, may designate additional or different addresses for subsequent notices or communication by furnishing notice to the other Party in the manner described above.

 

10.           Specific Performance . The Executive and Employer acknowledges that a remedy at law for any breach or threatened breach of Section 6 or 7 of this Agreement will be inadequate and that each Party may be entitled to specific performance, injunctive relief, and any other remedies available to it for such breach or threatened breach. If a bond is required to be posted in order for either Party to secure an injunction, then the Parties stipulate that a bond in the amount of One Thousand and No/100 Dollars ($1,000) will be sufficient and reasonable in all circumstances to protect the rights of the Parties.

 

11.           Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provisions shall be ineffective to the extent of such provision or invalidity only, without invalidating the remainder of such provision or any remaining provisions of this Agreement.

 

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12.            Assignment . This Agreement may not be assigned by the Executive. Neither the Executive, his spouse, nor their estates shall have any right to encumber or dispose of any right to receive payments under this Agreement, it being understood that such payments and the right thereto are nonassignable and nontransferable.

 

13.            Binding Effect . Subject to the provisions of Section 12 above, this Agreement shall be binding upon and inure to the benefit of the Parties hereto, the Executive’s heirs and personal representatives, and the successors and assignees of the Employer.

 

14.            Prior Employment Agreements and Obligations . Executive represents and warrants to the Employer that he has fulfilled all of the terms and conditions of all prior employment agreements and employer policies to which he may be a party or have been a party, and that at the time of execution of this Agreement, the Executive is not a party to or otherwise restricted by any other employment agreement, non-solicitation agreement, non-competition covenant, confidentiality or nondisclosure agreement in any manner which would prevent Executive from performing the services contemplated by this Agreement. Executive represents and warrants that nothing contained in any agreement that he has with any parties shall preclude Executive from performing all of his duties, obligations and covenants as contained in this Agreement. Employer is entering into this Agreement solely for the expertise and experience of Executive, and Employer expressly forbids Executive from using or disclosing any confidential information or trade secrets of any prior employer or other third party in connection with Executive’s performance under this Agreement. Executive represents and warrants to Employer that he has not and will not in the future, take, use or disclose the confidential information or trade secrets of a third-party for the benefit of Employer.

 

15.            Parol Evidence . This Agreement (and any other agreements incorporated by reference herein) constitutes the sole and complete agreement between the Parties hereto as to the matters contained herein, and no verbal or other statements, inducements or representations have been made to or relied upon by either Party, and no modification hereof shall be effective unless in writing, signed, and executed in the same manner as this Agreement; provided, however , that the amount of compensation to be paid to the Executive for services to be performed for the Employer may be changed from time to time by the Parties hereto by written agreement without in any other way modifying, changing, or affecting this Agreement and the performance by the Executive of any of the duties of his employment with the Employer.

 

16.            Waiver . Any waiver to be enforceable must be in writing and executed by the Party against whom the waiver is sought to be enforced.

 

17.            Governing Law . All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the state of Texas, Alaska, or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

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18.            Mutual Waiver of Jury Trial . THE EMPLOYER AND EXECUTIVE EACH WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OR RELATED TO THIS AGREEMENT IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AFFILIATE OF ANY OTHER SUCH PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THE EMPLOYER AND THE EXECUTIVE EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

 

19.            Attorneys’ Fees . If any litigation is instituted to enforce or interpret the provisions of this Agreement or the transactions described herein, the prevailing Party in such action shall be entitled to recover its reasonable attorneys’ fees from the other Party or Parties hereto.

 

20.            Drafting . Each of the Parties hereto acknowledges that each Party was actively involved in the negotiation and drafting of this Agreement and that no law or rule of construction shall be raised or used in which the provisions of this Agreement shall be construed in favor or against any Party hereto because one is deemed to be the author thereof.

 

21.            Multiple Counterparts . This Agreement may be executed in multiple counterparts, including by facsimile transmission and email in portable document format, each of which shall have the force and effect of an original, and all of which shall constitute one and the same agreement.

 

22.            Acknowledgment of Enforceability . Executive acknowledges and agrees that this Agreement contains reasonable limitations as to time, geographical area, and scope of activity to be restrained that do not impose a greater restraint than is necessary to protect the goodwill or other business interest of Employer. Therefore, Executive agrees that all restrictions are fairly compensated for and that no unreasonable restrictions exist.

 

23.            Reconstruction of Agreement . Should a court of competent jurisdiction or an arbitrator having jurisdiction declare any of the provisions of this Agreement unenforceable due to any unreasonable restriction of time, geographical area, scope of activity, or otherwise, in lieu of declaring such provision unenforceable, the court, to the extent permissible by law, shall, at the Employer’s request, revise or reconstruct such provisions in a manner sufficient to cause them to be enforceable.

 

24.            Confidentiality . Executive acknowledges and agrees that the terms and conditions and the financial details of this Agreement are confidential and Executive agrees that he will not disclose the same to non-parties under any circumstances unless compelled by law.

 

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25.            Counsel . Executive acknowledges that he is executing a legal document that contains certain duties, obligations and restrictions as specified herein. Executive furthermore acknowledges that he has been advised of his right to retain legal counsel, and that he has either been represented by legal counsel prior to his execution hereof or has knowingly elected not to be so represented.

 

By signing below, the Executive acknowledges that he has received, read, and agrees to adhere to the terms and conditions contained within this Agreement.

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written.

 

  EMPLOYER:
   
  SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.)
   
  By: /s/ Jeff Hastings
  Name:   Jeff Hastings
  Title: Executive Chairman
   
   
  EXECUTIVE:
   
  By: /s/ Brian Beatty
  Name: Brian Beatty

 

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Exhibit 10.12

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the “ Agreement ”), effective as of June 24, 2013 (the “ Effective Date ”), is entered into by and between SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.) , a Delaware corporation (the “ Employer ” or the “ Company ”), and Brent Whiteley , an individual residing in Houston, Texas (the “ Executive ”). The Employer and the Executive may be referred to singularly as “ Party ” or collectively as “ Parties . ”

 

RECITALS

 

WHEREAS, the Employer wishes to offer employment to Executive and Executive desires to be employed by Employer on the terms and conditions contained herein;

 

WHEREAS Employer acknowledges and rewards the value and loyalty of the Executive and seeks to build and protect the Company’s stability, growth, customer base, technology and other competitive advantages; and

 

WHEREAS, the Executive wishes to evidence his commitment to the Company and its objectives;

 

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements hereinafter set forth and the mutual benefits to be derived hereinafter, Employer and Executive hereby agree as follows:

 

AGREEMENTS

 

1.           Employment Term . The Employer hereby employs the Executive commencing on the Effective Date and ending on the third anniversary thereafter; provided, however , the Agreement shall automatically renew or extend for consecutive terms of one (1) year, unless either Party gives prior written notice to the other Party of its desire to terminate the Agreement at least 90 days prior to the expiration of the initial term or any renewal term (in any event, the “ Term ”). Notwithstanding the foregoing, the Parties shall have the termination rights as set forth in Section 5 of this Agreement. Termination of this Agreement for any reason whatsoever by any Party shall have no effect on the continued enforceability of any ancillary agreement, specifically including the Non-Disclosure Agreement executed by Executive in favor of Employer concurrently with this Agreement, (the “ Non-Disclosure Agreement ”). The obligations of the Parties under Sections 5 through 25 shall survive according to the terms of each provision. The Executive accepts such employment and agrees to perform the services specified herein, all upon the terms and conditions hereinafter stated.

 

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2.           Duties . The Executive shall serve in the position of Chief Financial Officer, General Counsel and Secretary and shall report to and be subject to the general direction and control of the Board of Directors (“ Board ”) of the Company or its designee. In such capacity he shall be responsible for the supervision of the day to day operations of the Company and the implementation of its business plans and strategies, in each case, subject to the Board and in accordance with and subject to budgets approved from time to time by such Board. The Executive shall perform such duties consistent with the Executive’s position, as well as other related duties from time to time assigned to the Executive by the Board. The Executive further agrees to perform, without additional compensation, such other services for the Employer and for any of its affiliates as the Board shall from time to time specify, if such services are of the nature commonly associated with or similar to that of the Executive’s position with a company engaged in activities similar to the activities engaged in by the Employer at the time of execution of this Agreement. For purposes of the Non-Disclosure Agreement and Sections 5 through 25, the term “Employer” shall be deemed to include and refer to any and all affiliates of the Employer. The Executive acknowledges and agrees that the Non-Disclosure Agreement executed simultaneously herewith is hereby incorporated by reference herein and made a part hereof and that the Non-Disclosure Agreement constitutes a material part of this Agreement.

 

3.           Extent of Service . The Executive shall devote his full business time, attention, and energy to the business of the Employer, and shall not be engaged in any other business activity that competes with or detracts from the business of the Employer during the Term of this Agreement. The foregoing shall not be construed as preventing the Executive from making passive investments in other businesses or enterprises, if (i) such investments will not require services on the part of the Executive which would in any material way impair the performance of his duties under this Agreement, or (ii) such other businesses or enterprises are not engaged in any business competitive with the business of the Employer or any of its affiliates. The Executive shall be based in the vicinity of the Houston metropolitan area (or other area as may be agreed upon by the Parties) and, subject to travel requirements as reasonably necessary to support successful business development efforts and management of the business, shall perform his services from a mutually agreed location in that area.

 

4.           Compensation and Benefits . As payment for the services to be rendered by the Executive hereunder during the Term of this Agreement, the Executive shall be entitled to receive the following:

 

(a)          an annual base salary at the rate of $330,000.00 a year (the “ Base Salary ”), less deductions required by law, payable in accordance with the Employer’s standard payroll schedule;

 

(b)          a monthly automobile allowance of $1,750.00 per month payable in accordance with the Employer’s standard payroll schedule, and which shall be subject to customary deductions and withholding; and

 

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(c)          participation in the Company’s 2013 Long Term Incentive Plan, including performance cash awards at the rate of 40% to 120% (the “Target Percentage”). Executive will be entitled to a guaranteed 40% annual performance cash award and as much as 120% if certain executive goals are reached as identified and approved by the Company’s Compensation Committee (the “Executive Goals”), but not to exceed the maximum award permissible under the 2013 Long Term Incentive Plan. The Target Percentage will be applied to twelve (12) times the highest paid monthly base salary within the calendar year. The Executive Goals for years 2013 and 2014 will be set by the Company’s Compensation Committee under the 2013 Long Term Incentive Plan, and are anticipated to be consistent with the EBITDA or other goals established in the merger transaction with Trio Merger Corp. After 2014 the Executive Goals related to EBITDA may be increased by the Company’s Compensation Committee no more than 25% per year (which shall be adjusted proportionately in connection with any merger or acquisition) and the Executive Goals as related to the Performance Criteria set forth more fully in the 2013 Long Term Incentive Plan, including, but not limited to Quality, Health, Safety and Environmental (“QHSE”) objectives which will be set at the Oil & Gas Producers (“OGP”) level for each performance cash award year, but in any event shall not exceed the maximum award permissible under the 2013 Long Term Incentive Plan.

 

(d)          Executive will be entitled to participate, on the same basis generally as other similarly situated employees of the Company, in all benefits as may be offered by the Company from time to time;

 

(e)          reimbursement of reasonable expenses incurred by Executive in accordance with such expense reimbursement policies of the Company;

 

(f)          Executive will be entitled to a guaranteed 5% annual salary increase and as much as a 15% salary increase if the EBITDA objectives of the Executive Goals are reached or exceeded;

 

(g)          Paid vacation of six (6) weeks per year; and

 

(h)          Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, governmental regulation or stock exchange listing requirement or policy of the Company adopted to comply with any such law, regulation, or listing requirement, will be subject to such deductions and requirements for repayment (“Clawback”) as may be required to be made pursuant to such law, governmental regulation, stock exchange listing requirement, or policy.

 

5.           Termination . Executive’s employment with Company under this Agreement may be terminated in accordance with this Section 5. The date upon which any such termination becomes effective shall be deemed the “Termination Date.”

 

(a)           Termination by Company for Cause . Company may terminate Executive’s employment with Company under this Agreement for Cause at any time without notice and without any payment to Executive whatsoever, save and except for the payment of any Base Salary and vacation accrued but unpaid up to the Termination Date, if Executive engages in any of the following conduct (termination for “ Cause ”):

 

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(i)           the breaching of any material provision of this Agreement after Company has given Executive not less than 30 days written notice of such breach and a period of not less than 30 days to correct, or cause to be corrected, such breach;

 

(ii)          knowing and intentional misappropriation of funds or property of Company or its affiliates;

 

(iii)         engaging in conduct, even if not in connection with the performance of the duties hereunder, which might be reasonably expected to result in any effect materially adverse to the interests of Company or any of its affiliates, such as fraud, dishonesty, conviction (or a judicial finding of evidence sufficient to convict) of any felony;

 

(iv)         failing to fulfill and perform the duties assigned to Executive in accordance with the terms herein after Company has given Executive period of not less than 15 days notice of such failure and a period of not less than 15 days to correct, or cause to be corrected, such failure; and

 

(v)          failing to comply with corporate policies of Company or any of its affiliates that are promulgated from time to time by Company, provided, however, that Company shall not be unreasonably arbitrary in its enforcement of corporate policies with respect to Executive.

 

(b)           Termination by Employee for Good Reason . Employee shall have good reason (“ Good Reason ”) as defined below to resign his employment within sixty (60) days following notice and receive the same payments as provided under Section 5(d)(i), provided Employee has first provided written notice to Employer of conduct warranting termination of Executive’s employment for Good Reason and provided Employer a period of not less than thirty (30) days to cure such conduct:

 

(i)           A material diminution in the nature and scope of the Employee’s authorities or duties, including but not limited to a change in the Employee’s reporting relationship, a required move of more than 50 miles, a reduction in pay or removal from the Company’s Board of Directors; or

 

(ii)          A material breach of this Agreement by the Employer.

 

(c)           Termination by Executive Without Good Reason . Executive may terminate his employment with Company at any time, for any reason, by providing 60 days’ advance written notice to Company, which may be waived in whole or in part by Company. If Company waives the notice period in whole or in part, Company shall pay the Base Salary for the portion of the notice period that has been waived. Executive shall be entitled to payment of any Base Salary, out of pocket expenses in accordance with Section 4(e) and vacation pay accrued up to the Termination Date. Executive shall not be entitled to any accrued annual bonus or other benefits.

 

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(d)           Termination by Company Without Cause . Company may terminate Executive’s employment, without Cause as defined in Sections 5(a) in which case Company shall pay Executive the following, less withholdings required by law:

 

(i)           all accrued but unpaid Base Salary to the Termination Date;

 

(ii)          all accrued but unpaid vacation pay to the Termination Date;

 

(iii)         payment equal to the previous 2 years’ bonuses paid to Executive, plus a prorated portion of any bonus for the year of Executive’s termination in an amount as provided under the Company’s Bonus Plan assuming a payment at the highest level of participation of the Target Percentage. If a bonus payment was not paid to Executive in any of those previous 2 years, this amount will be calculated on the assumption that the bonus paid for any unpaid year was paid in full based upon Executive’s participation level in the bonus plan;

 

(iv)         a severance amount equal to 24 months of Base Salary;

 

(v)          if the Executive timely and properly elects continuation coverage under the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”), the company shall reimburse Executive for the monthly premiums associated with continuation of Executive and his dependents’ insurance coverage. Such reimbursement shall be paid to the Executive on the 3 rd day of the month immediately following the month in which the Executive timely remits the premium payment. The Executive shall be eligible to receive such reimbursement until the earliest of (x) the 18 month anniversary of the Termination Date; (y) the date the Executive is no longer eligible to receive COBRA continuation coverage; and (z) the date on which the Executive becomes eligible to receive substantially similar coverage from another employer; and

 

(vi)         Notwithstanding any provision of any restricted stock agreement that might otherwise be to the contrary, immediate acceleration of all restricted stock awards under the Company’s 2012 Stock Compensation Plan and 2013 Long-Term Incentive Plan, such that all restricted stock awards which have not already vested, shall immediately vest as of the Termination Date.

 

Prior to, and as a condition to, receiving the payments in this Section 5(d), Executive agrees to execute a full and final release in favor of Company, in a form satisfactory to Company.

 

The above amounts will be paid in a single lump sum not later than fifty two (52) days after the Termination Date subject to the fulfillment of the provision of a full and final release no later than the end of such 52-day period, and shall not be subject to the requirement of mitigation, nor reduced by any actual mitigation by Executive. The right to receive any of the above payments shall be forfeited if the required full and final release has not been received before the end of the 52-day period. The payments referred to in Section 5(d) are inclusive of any termination and/or severance payments that may be required under applicable law.

 

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(e)           Change of Control . Within six (6) months following a Change of Control of Company, should Company not renew or replace this Agreement with an Agreement containing substantially the same or better terms, Executive shall be entitled to receive termination payments as set out in Section 5(d), except that the 52-day period payment shall not apply, but instead the payment shall be made as a single lump immediately following the expiration of a six (6) month period from the date Executive elected to terminate his employment with the Company. For the purposes of this Section 5(d), “Change of Control” shall be defined as: (i) it is defined in Section 1.01 of the Cyan Credit Agreement and in Section One (a)(2) of the Amendment No. 1 to the Cyan Credit Agreement, provided such Cyan Credit Agreement and amendments are in effect at the time of the Change in Control; or (ii) if the Cyan Credit Agreement and all amendments thereto are not in effect, then Change of Control shall be defined as: (A) a tender offer or exchange offer is made and consummated for the ownership of at least fifty percent (50%) of the outstanding voting securities of the Company; (B) the Company is merged or consolidated with another entity and as a result of such merger or consolidation, at least fifty percent (50%) of the outstanding voting securities of the surviving or resulting entity is owned directly or indirectly in the aggregate by a person or persons other than a person or persons who owned at least fifty percent (50%) of the outstanding voting securities of the Company immediately prior to such merger or consolidation; (C) the Company is liquidated or otherwise sells or transfers all or substantially all of its assets to another entity which is not wholly owned, directly or indirectly, by a person or persons who own at least fifty percent (50%) or more of the outstanding voting securities of the Company; or (D) a person, within the meaning of Section 3(a)(9) or Section 13(d)(3) of the Securities Exchange Act of 1934, as amended and in effect from time to time, acquires over fifty percent (50%) or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially or of record). Provided however, that a merger with Trio Merger Corp. shall not be considered a Change of Control under this Section 5(e).

 

(i)           If any of the payments or benefits received or to be received by the Executive (including, without limitation, any payment or benefits received in connection with a Change in Control or the Executive’s termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement , or otherwise) (all such payments collectively referred to herein as the “280G Payments”) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Company shall pay to the Executive, no later than the time such Excise Tax is required to be paid by the Executive or withheld by the Company, an additional amount equal to the sum of the Excise Tax payable by the Executive, plus the amount necessary to put the Executive in the same after-tax position (taking into account any and all applicable federal, state and local excise, income or other taxes at the highest applicable rates on such 280G Payments and on any payments under this Section 5(e)(i) or otherwise) as if no Excise Tax had been imposed;

 

(ii)          All calculations and determinations under this Section 5(e) shall be made by an independent auditing firm or independent tax counsel appointed by the Company (the “Tax Counsel”) whose determinations shall be conclusive and binding on the Company and the Executive for all purposes. For purposes of making the calculations and determinations required by this Section 5(e), the Tax Counsel may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Company and the Executive shall furnish the Tax Counsel with such information and documents as the Tax Counsel may reasonably request in order to make its determinations under this Section 5(e). The Company shall bear all costs the Tax Counsel may reasonably incur in connection with its services.

 

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(f)            Death . Executive’s employment with Company under this Agreement shall automatically terminate upon the death of Executive. Upon termination for death, Executive or Executive’s estate shall only be entitled to (i) payment of any portion of the Base Salary due to owing up to such date; (ii) payment of any accrued but unused vacation pay; (iii) reimbursement of all out of pocket expenses in accordance with Section 4(e); and (iv) notwithstanding any provision of any restricted stock agreement that might otherwise be to the contrary, immediate acceleration of all restricted stock awards under the Company’s 2012 Stock Compensation Plan and/or the Company’s 2013 Long Term Incentive Plan, such that all restricted stock awards which have not already vested, shall immediately vest as of the Termination Date.

 

(g)            Permanent Disability . In the event that Executive suffers a Permanent Disability (as defined below), the employment of Executive may be terminated by Company upon 90 days' notice to Executive; except that if the termination of Executive’s employment would impair his ability to receive long term disability benefits in whole or in part, Executive shall, in lieu of termination, be placed on an unpaid leave of absence, it being understood, however, that Executive shall not be entitled to re-employment by Company after such leave of absence or when he ceases to be in receipt of such benefits. Upon termination of employment for Permanent Disability, Executive or Executive’s estate shall only be entitled to (i) payment of any portion of the Base Salary due and owing up to such date; (ii) reimbursement of all expenses in accordance with Section 4(e); (iii) payment for any accrued but unused vacation pay; and (iv) notwithstanding any provision of any restricted stock agreement that might otherwise be to the contrary, immediate acceleration of all restricted stock awards under the Company’s 2012 Stock Compensation Plan and/or the Company’s 2013 Long Term Incentive Plan, such that all restricted stock awards which have not already vested, shall immediately vest as of the Termination Date. For the purposes of this Section 5(g), “Permanent Disability” means a mental or physical disability whereby Executive:

 

(i)           is unable, due to illness, disease, mental or physical disability or similar cause, to fulfill his obligations as an employee or officer of the Company either for three consecutive months or for a cumulative period of 6 months out of 12 consecutive calendar months, or

 

(ii)          is declared by a court of competent jurisdiction to be mentally incompetent or incapable of managing his affairs.

 

(h)            Resignation as Officer or Director Upon Termination . Upon termination of his employment for any reason whatsoever, Executive shall thereupon be deemed to have immediately resigned any position Executive may have as an officer or director of Company together with any other office, position or directorship which Executive may hold with any of its Affiliates. In such event, Executive shall, at the request of Company, forthwith execute any and all documents appropriate to evidence such resignations. Executive shall not be entitled to any payments in respect of such resignations in addition to those provided for herein.

 

Employment Agreement
Page 7
 

 

(i)           Survival . Notwithstanding the termination of the Executive’s employment, or the manner of termination, the provisions of Sections 6 and 7 of this Agreement and the Nondisclosure Agreement executed concurrently with this Agreement shall survive such termination.

 

6.           Nondisclosure/Confidentiality Obligations . The parties contemplate Executive providing executive services to the Company in connection with its core business of providing effective acquisition of seismic data (the “Business”). To facilitate Executive’s ability to perform these services, Company agrees to provide Executive confidential, proprietary, trade secret information regarding Company’s business strategies, plans, techniques and processes, which are more fully set forth in certain Nondisclosure Agreements executed concurrently with this Agreement (“Confidential Information”) which the Company uses to compete in the marketplace, and Executive agrees not to use or disclose such Confidential Information for any purpose other than to advance the Company’s interests. Moreover, from time to time, subsidiary companies or affiliates of Company may provide that entity’s confidential, proprietary information which the Company uses to compete in the marketplace, to Executive to facilitate Executive’s ability to provide services to the subsidiary companies or affiliates, and Executive agrees not to use or disclose such Confidential Information for any purpose other than to advance the subsidiary companies or affiliate’s interests.

 

7.           One-Year Post-Employment Obligations .

 

At the option of Company, and in its sole discretion, Company may pay to Executive an amount equal to twelve (12) months Base Salary plus annual performance cash award under Section 4(c) of 100% in exchange for complying with the covenants set out in this Section for twelve (12) months following the Termination Date as follows:

 

(a)          Executive will not, as a competitor or on behalf of any competitor of Company, directly or indirectly solicit or accept Business from any Customer (as defined in the Non-Disclosure Agreement): (A) with whom Executive had contact as a result of his duties with Company or its affiliates, and/or (B) about whom Executive reviewed or obtained Confidential Information (as defined in the Non-Disclosure Agreement) while performing services for Company or its affiliates. The geographic limitation for this restriction is (1) any Company or its affiliates’ territory in which Executive had a customer or service assignment for Company or its affiliates in the twelve (12) month period immediately preceding Executive’s Termination Date; and/or (2) any territory in which Company or its affiliates, have customers or service assignments about which Executive obtained Confidential Information during the term of this Agreement.

 

(b)          Executive will not solicit, induce or attempt to induce any other employee, agent or contractor of Company or its affiliates with whom Executive worked or about whom Executive obtained Confidential Information in the twelve (12) month period immediately preceding Executive’s Termination Date, to leave the employ Company or its affiliates to work for a competitor of Company or its affiliates in the same or similar capacity as the other Executive worked for Company or its affiliates.

 

Employment Agreement
Page 8
 

 

If the Company does not choose to provide the consideration described in this Section, then the Executive will have no obligations under this Section 7.

 

8.           Insurance . Employer agrees to maintain throughout the term of this Agreement D&O coverage substantially similar in nature to its current D&O coverage, providing coverage to Executive for those claims and causes of action arising out the performance of Executive’s duties in the course and scope of his employment under this Agreement.

 

9.           Notices . All notices, requests, consents, demands, or other communications required or permitted to be given pursuant to this Agreement shall be deemed sufficiently given when delivered either (i) personally with a written receipt acknowledging delivery, (ii) by confirmed telefax, or (iii) within three (3) business days after the posting thereof by United States first class, registered or certified mail, return receipt requested, with postage fee prepaid and addressed to the following:

 

If to Employer : SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.)

3333—8th St. SE

Calgary, Alberta T2G 3A

Canada

Attn: VP Human Resources

 

If to Executive : Brent Whiteley

5234 Blossom

Houston, TX 77007

 

Any Party, at any time, may designate additional or different addresses for subsequent notices or communication by furnishing notice to the other Party in the manner described above.

 

10.          Specific Performance . The Executive and Employer acknowledges that a remedy at law for any breach or threatened breach of Section 6 or 7 of this Agreement will be inadequate and that each Party may be entitled to specific performance, injunctive relief, and any other remedies available to it for such breach or threatened breach. If a bond is required to be posted in order for either Party to secure an injunction, then the Parties stipulate that a bond in the amount of One Thousand and No/100 Dollars ($1,000) will be sufficient and reasonable in all circumstances to protect the rights of the Parties.

 

11.          Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provisions shall be ineffective to the extent of such provision or invalidity only, without invalidating the remainder of such provision or any remaining provisions of this Agreement.

 

Employment Agreement
Page 9
 

 

12.          Assignment . This Agreement may not be assigned by the Executive. Neither the Executive, his spouse, nor their estates shall have any right to encumber or dispose of any right to receive payments under this Agreement, it being understood that such payments and the right thereto are nonassignable and nontransferable.

 

13.          Binding Effect . Subject to the provisions of Section 12 above, this Agreement shall be binding upon and inure to the benefit of the Parties hereto, the Executive’s heirs and personal representatives, and the successors and assignees of the Employer.

 

14.          Prior Employment Agreements and Obligations . Executive represents and warrants to the Employer that he has fulfilled all of the terms and conditions of all prior employment agreements and employer policies to which he may be a party or have been a party, and that at the time of execution of this Agreement, the Executive is not a party to or otherwise restricted by any other employment agreement, non-solicitation agreement, non-competition covenant, confidentiality or nondisclosure agreement in any manner which would prevent Executive from performing the services contemplated by this Agreement. Executive represents and warrants that nothing contained in any agreement that he has with any parties shall preclude Executive from performing all of his duties, obligations and covenants as contained in this Agreement. Employer is entering into this Agreement solely for the expertise and experience of Executive, and Employer expressly forbids Executive from using or disclosing any confidential information or trade secrets of any prior employer or other third party in connection with Executive’s performance under this Agreement. Executive represents and warrants to Employer that he has not and will not in the future, take, use or disclose the confidential information or trade secrets of a third-party for the benefit of Employer.

 

15.          Parol Evidence . This Agreement (and any other agreements incorporated by reference herein) constitutes the sole and complete agreement between the Parties hereto as to the matters contained herein, and no verbal or other statements, inducements or representations have been made to or relied upon by either Party, and no modification hereof shall be effective unless in writing, signed, and executed in the same manner as this Agreement; provided, however , that the amount of compensation to be paid to the Executive for services to be performed for the Employer may be changed from time to time by the Parties hereto by written agreement without in any other way modifying, changing, or affecting this Agreement and the performance by the Executive of any of the duties of his employment with the Employer.

 

16.          Waiver . Any waiver to be enforceable must be in writing and executed by the Party against whom the waiver is sought to be enforced.

 

17.          Governing Law . All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the state of Texas, Alaska, or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

Employment Agreement
Page 10
 

 

18.          Mutual Waiver of Jury Trial . THE EMPLOYER AND EXECUTIVE EACH WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OR RELATED TO THIS AGREEMENT IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AFFILIATE OF ANY OTHER SUCH PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THE EMPLOYER AND THE EXECUTIVE EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

 

19.          Attorneys’ Fees . If any litigation is instituted to enforce or interpret the provisions of this Agreement or the transactions described herein, the prevailing Party in such action shall be entitled to recover its reasonable attorneys’ fees from the other Party or Parties hereto.

 

20.          Drafting . Each of the Parties hereto acknowledges that each Party was actively involved in the negotiation and drafting of this Agreement and that no law or rule of construction shall be raised or used in which the provisions of this Agreement shall be construed in favor or against any Party hereto because one is deemed to be the author thereof.

 

21.          Multiple Counterparts . This Agreement may be executed in multiple counterparts, including by facsimile transmission and email in portable document format, each of which shall have the force and effect of an original, and all of which shall constitute one and the same agreement.

 

22.          Acknowledgment of Enforceability . Executive acknowledges and agrees that this Agreement contains reasonable limitations as to time, geographical area, and scope of activity to be restrained that do not impose a greater restraint than is necessary to protect the goodwill or other business interest of Employer. Therefore, Executive agrees that all restrictions are fairly compensated for and that no unreasonable restrictions exist.

 

23.          Reconstruction of Agreement . Should a court of competent jurisdiction or an arbitrator having jurisdiction declare any of the provisions of this Agreement unenforceable due to any unreasonable restriction of time, geographical area, scope of activity, or otherwise, in lieu of declaring such provision unenforceable, the court, to the extent permissible by law, shall, at the Employer’s request, revise or reconstruct such provisions in a manner sufficient to cause them to be enforceable.

 

24.          Confidentiality . Executive acknowledges and agrees that the terms and conditions and the financial details of this Agreement are confidential and Executive agrees that he will not disclose the same to non-parties under any circumstances unless compelled by law.

 

Employment Agreement
Page 11
 

 

25.          Counsel . Executive acknowledges that he is executing a legal document that contains certain duties, obligations and restrictions as specified herein. Executive furthermore acknowledges that he has been advised of his right to retain legal counsel, and that he has either been represented by legal counsel prior to his execution hereof or has knowingly elected not to be so represented.

 

By signing below, the Executive acknowledges that he has received, read, and agrees to adhere to the terms and conditions contained within this Agreement.

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first above written.

 

  EMPLOYER :
     
  SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.)
     
  By: /s/ Brian Beatty
  Name: Brian Beatty
  Title: President/CEO
     
  EXECUTIVE :
     
  By: /s/ Brent Whiteley
  Name : Brent Whiteley

 

Employment Agreement
Page 12

 

 

Exhibit 10.13

 

NONDISCLOSURE AGREEMENT

 

This Nondisclosure Agreement is made and entered into effective this ____ day of June, 2013 by and between SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.), (collectively “Company” or “Employer”) and _______________ (“Executive”), in exchange for the consideration set forth herein, as well as Executive’s employment and/or continuation of employment.

 

1. Definitions .

 

Confidential Information . “Confidential Information,” as used in this Nondisclosure Agreement, includes any information relating to the Company’s core business of providing effective acquisition of seismic data, including seismic data acquisition, 2D & 3D design, field processing, data processing and logistical services (the “Business”), as well as any technical, economic, financial, marketing, customer/potential customer or other information which is not common knowledge outside the Company and which provides the Company with a business advantage and/or would provide a business advantage to the Company’s competitors. Some examples of the Company’s Confidential Information include, but are not limited to, specialized training received by Executive, research and development materials, methods and results, scientific studies and analysis; product and pricing knowledge; methods of manufacturing; customer and supplier lists and information; contracts and licenses; personnel information, including the performance, skills, abilities and payment of employees; purchasing, accounting, business systems and computer programs; long range planning; financial information, plans and results; trade secrets, business policies, methods of operation, implementation strategies, promotional information and techniques, marketing presentations, programs and strategies, price lists, files or other information, pricing strategies, computer files, samples, customer originals, or any other confidential information concerning the business and affairs of the Company. The Company’s Confidential Information also includes all Confidential Information which was received from or concerns third parties such as the Company’s customers or prospective customers, suppliers and its parent, affiliate or subsidiary companies. Confidential Information, as defined in this Nondisclosure Agreement, includes any such information that Executive may originate, learn, have access to or obtain, whether in tangible form or memorized. Additionally, Executive recognizes that the Confidential Information is dynamic and ever-changing and that, with each day of employment, Employer has agreed to provide Executive with access to Confidential Information in a greater quantity and/or expanded nature than any such Confidential Information that may have already been provided to Executive. 

 

Nondisclosure Agreement
Page 1
 

 

Customer . “Customer,” as used in this Nondisclosure Agreement, means: (i) any entity to which the Company sold and/or provided, or proposed, formally or informally, to sell and/or provide products and services at any time during Executive’s employment tenure performing services for the Company in the twelve (12) month period immediately preceding Executive’s Termination Date and with whom Executive had business dealings or learned Confidential Information about during Executive’s employment tenure; (ii) employees or former employees of such an entity, with whom Executive had contact as a result of performing his duties for the Company in the twelve (12) month period immediately preceding Executive’s Termination Date; and (iii) any entity that would not, by itself, satisfy the definition of “Customer” under this Nondisclosure Agreement, but that employs an individual who satisfies the “Customer” definition in section (ii) of this Paragraph.

 

Termination Date . “Termination Date,” as used in this Agreement, means Executive’s last day of active employment with Employer.

 

Employer’s Promises . Employer makes the following promises to Executive:

 

Contemporaneously with the execution of this Agreement and prior to Executive’s Termination Date, Employer agrees to provide Executive with Confidential Information, in a greater quantity and/or expanded nature than any such Confidential Information which may have already been provided to Executive; and

 

Contemporaneously with the execution of this Agreement and prior to Executive’s Termination Date, Employer agrees to provide Executive with the opportunity to develop goodwill and establish rapport with Employer’s Customers for the benefit of Employer in a greater quantity and/or expanded nature than any such opportunities that may have already been provided to Executive.

 

Executive’s Promises . Employer and Executive recognize that Executive’s use or disclosure of Employer’s Confidential Information, on behalf of a competitor of Employer or otherwise, would be injurious to Employer. To the extent that Executive has signed any previous employment, non-competition or confidentiality agreements with Employer, Executive agrees that the restrictions included in this Agreement are narrower than those included in any such previous agreements and, therefore, constitute an additional benefit to Executive. Therefore, in exchange for Employer’s promises listed above and all other consideration provided pursuant to this Agreement, to which these promises are ancillary, Executive promises as follows:

 

Obligations During Employment . During Executive’s employment with Employer:

 

Executive will perform his/her assigned duties faithfully and efficiently;

 

Executive will use on his/her job all the information which is generally known and used by persons of his/her training and experience, and all information which is common knowledge in Employer’s industry, but Executive shall not use or disclose any confidential information belonging to any former employer and/or company that Executive is legally or ethically bound not to use and/or disclose;

 

Executive will not use, copy, remove, disclose or disseminate to any person or entity, Employer’s Confidential Information, except as required in the course of performing Executive’s duties with Employer, for the benefit of Employer;

 

Nondisclosure Agreement
Page 2
 

 

Executive gives up the right to pursue any other substantial business activity while employed with Employer which would conflict with or materially interfere with the performance of his duties to Employer; and

 

Post-Employment Obligations . After Executive’s separation from employment with Employer:

 

Executive will immediately (within twenty-four (24) hours) return to Employer all materials created, received or utilized in any way in conjunction with Executive’s work performed with Employer including, but not limited to, materials that in any way incorporate, reflect or constitute Employer’s Confidential Information including, but not limited to, documents, cards, notes, handouts, training materials, notebooks, diskettes, compact discs, computer software, hard drives, data, reference materials, sketches, drawings, memoranda, documentation, correspondence, client company lists, leads and records;

 

Executive will not use or disclose, directly or indirectly, Employer’s Confidential Information; and

 

Executive will not, directly or indirectly, make any false, disparaging, negative, unflattering or accusatory remarks or references, whether in written or oral form, regarding Employer, its officers, directors or employees, in any dealings with third parties, including Employer’s Customers, vendors, suppliers, contractors and employees (it being understood that nothing herein shall be deemed to prohibit Executive from giving truthful testimony in any court proceeding or governmental investigation or otherwise complying with law).

 

Assignment of Invention .

 

During Executive’s employment with Employer, Executive shall promptly and fully inform and disclose to Employer and does hereby assign to Employer all Executive’s right, title and interest in and to any and all ideas, inventions, engineering plans, original works of authorship, developments, concepts, improvements, designs, trademarks, trade secrets, computer programs and discoveries, whether or not patentable or registrable under copyright or similar laws, which Executive may solely or jointly conceive or develop or reduce to practice or cause to be conceived or developed or reduced to practice (collectively, the “Inventions”), during Executive’s employment with Employer (whether during business hours or otherwise whether outside the premises of Employer or otherwise) and which directly or indirectly are related to the business or Confidential Information of Employer.

 

Executive recognizes that all Inventions, conceived or made by Executive, either alone or jointly with others within the twenty-four months after termination of employment with Employer (voluntary or otherwise), are likely to have been conceived in significant part either while employed by Employer or as a result of knowledge Executive had of the Confidential Information. Accordingly, Executive agrees that such Inventions shall be presumed to have been conceived during Executive’s employment.

 

Nondisclosure Agreement
Page 3
 

 

Executive acknowledges that all original works of authorship which are made by Executive (solely or jointly with others) within the scope of such employment with Employer or related to the business of Employer and which are protectable by copyright are “works made for hire,” pursuant to the United States Copyright Act (17 U.S.C., Section 101) and are consequently owned by and hereby assigned to Employer.

 

Executive agrees that he will (A) execute and deliver to Employer such applications, assignments, patent applications, copyright registrations and other documents as Employer may request in order to apply for and obtain patents or other registrations with respect to any Invention in the United States and foreign jurisdictions, (B) sign all other papers necessary to carry out the obligations in clause (A); (C) give testimony and render any other assistance in support of Employer’s rights to any Invention; and (D) keep and maintain current written records of all of those Inventions during Executive’s employment with Employer.

 

Injunction . Executive acknowledges that Employer has agreed to provide Executive with Confidential Information during Executive’s employment with Employer. Executive further acknowledges that, if Executive was to leave the employ of Employer for any reason and use or disclose, directly or indirectly, Employer’s Confidential Information (whether in tangible form or memorized), that such use and/or disclosure would cause Employer irreparable harm and injury for which no adequate remedy at law exists. Therefore, in the event of the breach or threatened breach of the provisions of this Agreement by Executive, Employer shall be entitled to obtain injunctive relief to enjoin such breach or threatened breach, in addition to all other remedies and alternatives which may be available at law or in equity. Executive acknowledges that the remedies contained in the Agreement for violation of this Agreement are not the exclusive remedies which Employer may pursue.

 

Governing Law/Venue . This Agreement shall be exclusively governed by and be construed and enforced in accordance with the laws of the Province of Alberta without regard to conflict of law principles. Venue for any disputes arising from or related to this Agreement shall lie solely, and is convenient, in Calgary, Alberta.

 

Entire Agreement . This instrument contains the entire Agreement of the Parties and supersedes any existing or prior agreement. Any modification, alternation or amendment to this Agreement must be in writing and executed by the Chairman or his designee.

 

Nondisclosure Agreement
Page 4
 

 

I HAVE READ THE TERMS LISTED ABOVE AND ACKNOWLEDGE MY UNDERSTANDING OF AND AGREEMENT WITH THOSE TERMS, AS EVIDENCED BY MY SIGNATURE BELOW.

 

  EMPLOYER :
     
  SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.)
     
  By:  
  Name:  
  Title:  

 

Nondisclosure Agreement
Page 5
 

 

  EXECUTIVE :
     
  By:  
  Name:  

 

Nondisclosure Agreement
Page 6

 

 

Exhibit 10.14

 

LOCK-UP AGREEMENT

 

__________, 20__

 

Trio Merger Corp.

777 Third Avenue, 37th Floor

New York, New York 10017

 

Ladies and Gentlemen:

 

In connection with the Agreement and Plan of Reorganization (the “Merger Agreement”), dated as of December 10, 2012, by and among Trio Merger Corp. (“Trio”), Trio Merger Sub, Inc., SAExploration Holdings, Inc. and CLCH, LLC, to induce the parties to consummate the transactions contemplated by the Merger Agreement, the undersigned agrees not to, either directly or indirectly, during the “Restricted Period” (as hereinafter defined):

 

(1) sell or offer or contract to sell or offer, grant any option or warrant for the sale of, assign, transfer, pledge, hypothecate, or otherwise encumber or dispose of (all being referred to as a “Transfer”) any legal or beneficial interest in any shares of Parent Common Stock (as defined in the Merger Agreement), issued or to be issued to the undersigned or to any other person or entity of which the undersigned is an affiliate in connection with the transactions contemplated by the Merger Agreement, including without limitation the EBITDA Shares (as defined in the Merger Agreement) (the “Restricted Securities”),

 

(2) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of any of the Restricted Securities, whether such swap transaction is to be settled by delivery of any Restricted Securities or other securities of any person, in cash or otherwise, or

 

(3) publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement relating to any of the Restricted Securities.

 

As used herein, “Restricted Period” means the period commencing on the Closing Date (as defined in the Merger Agreement) and ending on the day preceding the day that is twelve months after the Closing Date.

 

Notwithstanding the foregoing limitations, this Lock-Up Agreement will not prevent any Transfer of any or all of the Restricted Securities, either during the undersigned’s lifetime or on the undersigned’s death, (i) in a transaction that does not involve a public offering (as such term is used in the Federal securities laws) and is not made through a securities exchange or an over-the-counter securities market, or (ii) by gift, will or intestate succession, or by judicial decree, to the undersigned’s “family members” (as defined below) or to trusts, family limited partnerships and similar entities primarily for the benefit of the undersigned or the undersigned’s “family members”; provided, however, that in each and any such event it shall be a condition to the Transfer that the transferee execute an agreement stating that the transferee is receiving and holding the Restricted Securities subject to the provisions of this Lock-Up Agreement. For purposes of this sub-paragraph, “family member” shall mean spouse, lineal descendants, stepchildren, father, mother, brother or sister of the transferor or of the transferor’s spouse.

 

 
 

 

Also notwithstanding the foregoing limitations, in the event the undersigned is an entity rather than an individual, this Lock-Up Agreement will not prevent any Transfer of any or all of the Restricted Securities to the shareholders, members or partners of such entity; provided, however, that in each and any such event it shall be a condition to the Transfer that the transferee execute an agreement stating that the transferee is receiving and holding the Restricted Securities subject to the provisions of this Lock-Up Agreement.

 

Any of the Restricted Securities subject to this Lock-Up Agreement may be released in whole or part from the terms hereof only upon the approval of the Committee (as defined in the Merger Agreement).

 

The undersigned hereby authorizes Trio’s transfer agent to apply to any certificates representing Restricted Securities issued to the undersigned the appropriate legend to reflect the existence and general terms of this Lock-up Agreement.

 

This Lock-up Agreement will be legally binding on the undersigned and on the undersigned’s successors and permitted assigns, and is executed as an instrument governed by the law of Delaware.

 

[Signature page follows]

 

2
 

 

SIGNATURE PAGE TO THE LOCK-UP AGREEMENT

 

   
Signature  
   
Name:    

 

Address:    
   
   

 

 

 

 

Exhibit 10.15

 

EMPLOYMENT AGREEMENT

 

This Agreement is made this 1st day of July, 2011.

 

Between

  

MIKE SCOTT

 

(the “Executive”)

 

and

 

SOUTH AMERICAN EXPLORATION LLC

 

(the “Corporation”)

 

WHEREAS the Corporation wishes to engage the services of the Executive and the Executive wishes to provide such services to the Corporation.

 

AND WHEREAS the Corporation and the Executive have agreed that the employment of the Executive by the Corporation will be in accordance with the terms of this Agreement;

 

NOW THEREFORE this Agreement witnesseth that in consideration of the payments and mutual covenants contained herein, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

 

Article 1

Definitions

 

1.1 Definitions

 

In this Agreement, unless there is something in the subject matter or context inconsistent therewith:  

 

(a) " Base Salary " has the meaning given to such term in Section 4.1;
   
(b) “ Business ” means the business carried on by the Corporation;
   
(c) “ Cause ” has the meaning given to such term in Section 7.5;
   
(d) “ Change of Control ” means:
   
  (1) The sale of the Corporation; or the sale, lease or transfer of all or removal
     
  (2) substantially all of the assets of the Corporation; or the resignation or
     
  (3) of the majority of the Board of Directors for any reason within a 6-month time period; or

 

 
 

 

(4) any determination by the majority of incumbent directors of the Corporation that a Change of Control has occurred or is about to occur and any such determination shall be binding and conclusive for all;

 

(e) “ Compensation ” means the salary and all benefits which the Executive is receiving or entitled to, including but not limited to salary, variable pay, professional membership or association fees, pension and/or retirement benefits, car allowances, business related expenses, medical plan benefits, vacation pay and any insurance premiums paid by the Corporation for the Executive as contemplated by Article 4 of the Agreement.

 

(f) “ Constructive Dismissal ” means any circumstance that would amount to constructive dismissal at common law and includes, without limiting the generality of the foregoing, one or more of the following changes in the circumstances of the Executive’s employment:

 

(i) A material reduction or diminution of the position or level of authority, responsibility or reporting relationship of the Executive; or

 

(ii) A material reduction in the scope of operations of the Corporation or any other circumstance that results in a material negative change to the role and responsibilities of the Executive; or

 

(iii) A reduction in the Executive’s year-over-year total annual compensation including base salary, variable pay plan target level, benefits, plans and vacation; or

 

(iv) A unilateral elimination by the Corporation of the Corporation’s variable pay or other incentive plans; or

 

(v) A requirement to relocate to another city.

 

Article 2

Term

 

2.1 Term

 

The term of this Agreement shall be effective upon signing and the Executive’s employment shall continue until terminated in accordance with Article 7 of this Agreement.

 

Article 3

Scope of Work

 

3.1 Title and Offices

 

The Corporation agrees to employ the Executive as Executive Vice President of Operations of the Corporation and the Executive accepts such employment on and subject to the terms of this Agreement. The Executive shall, in carrying out his obligations under this Agreement, report directly to the Corporation’s Board Chair or designate. This position is based in Calgary, Alberta.

 

2
 

 

The Executive further acknowledges that he is bound to follow the policies and procedures established by the Corporation, from time to time.

 

3.2 Duties of the Executive

 

The Executive agrees that he will loyally and conscientiously perform his duties and obligations to the best of his ability.

 

The Executive agrees to devote all of his work time, attention and energy to his duties as EVP of Operations of the Corporation and in addition shall do such other duties as may be assigned to him from time to time. The Corporation shall have the power to direct, control and supervise the Executive’s duties and the manner of and time for performing said duties.

 

The Executive specifically agrees to place the duties imposed by this Agreement above all other activities, and will abandon or curtail outside activities if so directed by the Corporation if, in its opinion, there exists a conflict or other reasonable grounds for abandoning or curtailing such activities.

 

The Executive agrees that during the term of his employment with the Corporation he will promptly and fully disclose to the Corporation any business opportunity coming to the Executive’s attention or conceived or developed in whole or in part by the Executive, which relates to the Corporation’s business and will not exploit such business opportunities for his own gain or that of any person or entity other than the Corporation.

 

3.4 Hours of Work

 

The Executive acknowledges and agrees that he may, from time to time, work hours and days outside of normal business hours and at locations other than the Corporation’s offices, as determined by the Corporation’s needs.

 

3.5 Injunctive Relief

 

The Executive hereby represents that the services to be performed by him under the terms of this Agreement are of special value, loss of which cannot be reasonably or adequately compensated in damages in an action at law. The Executive, therefore expressly agrees that the Corporation, in addition to any other rights or remedies which the Corporation may possess, shall be entitled to injunctive and other equitable relief to prevent a breach of this Agreement by the Executive.

 

3.6 Prior Employment

 

The Executive represents and warrants to the Corporation that he is not a party to any employment contract, non-competition agreement, or any other agreement which would prevent him from entering into and fulfilling his duties under this Agreement. The execution of this Agreement does not, the fulfillment of or compliance with the terms and provisions hereof will not, and the consummation of the employment relationship contemplated hereby will not result in a breach, default or event of default under any contract to which the Executive is subject. The Executive represents and warrants to the Corporation that he will not, in any case, use trade secrets or confidential information of his prior employers in carrying out his duties to the Corporation.

 

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It is the Corporation’s expectation that its goals pertaining to business strategies, reputation, methods, policies and procedure are unique to the Corporation. To insure the integrity of these goals, the Corporation and the Executive agree that any trade secrets or confidential information that has been provided to the Executive by a previous employer will not be used for the Company’s benefit during the execution of the Executive’s duties during the term of his employment.

 

The Corporation agrees to indemnify, hold harmless and defend the Executive against any and all claims by the Executive’s prior employers provided that the Executive has not knowingly created any breach of an agreement which he may be bound by as a result of the prior employment.

 

Article 4

Compensation

 

4.1 Commencement of Compensation

 

This agreement and the terms and conditions set out herein, with the exception of 4.2, 4.3 and 4.7 of Article 4 will commence July 17, 2011. Conditions 4.2, 4.3 and 4.7 will commence on September 15 th , 2011.

 

4.2 Base Salary

 

The Corporation shall pay the Executive a Base Salary of $250,000.00 per year, less applicable deductions. The Executive’s salary shall be payable in monthly instalments in a manner consistent with the Corporation’s accounting practices, or at such other times as the Corporation and the Executive may from time to time agree. Annual range adjustments to management salaries will be applied to the Executive’s salary. The Board of Directors of the Corporation may choose at any time, in their sole discretion, to grant an additional increase in base salary based on merit.

 

4.3 Variable Pay

 

The Executive shall be entitled to receive variable pay of 40% of Base Salary in accordance with the Corporation’s performance and the Executive’s individual goals as agreed to by the Corporation and the Executive from time to time. Presently, the Executive’s variable pay will be tied to the following criteria:

 

a) The Executive’s individual goals, as defined by the Corporation, will comprise 20% of the bonus;

 

b) Corporate HSE goals will comprise 30% of the bonus;

 

c) Corporate fiscal performance will comprise 50% of the bonus. The fiscal performance will be based on the Corporation’s annual forecast targets.

 

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4.4 Preferred Profit Sharing Plan

 

The Executive shall be entitled to participate in the Corporation’s preferred profit sharing plan which will include a SAE “Phantom” shares distribution equal to $475,000.00 upon joining the Corporation. The per share value is based on the current valuation of the Corporation as of 12/31/2010. These shares carry a 4% annual coupon (additional PSU’s) and will convert to the share value equal to the most recent valuation in the event of a purchase or public offering. In the event of termination the Corporation will retain the first right of refusal to purchase the Executive’s shares. The PSU plan will be available for review prior to June 30, 2011.

 

4.5 Vacation

 

The Executive shall be entitled to 5 weeks of paid vacation per year.

 

4.6 Expenses

 

The Corporation shall pay or reimburse the Executive for all reasonable, approved and documented business expenses incurred on behalf of the Corporation or in carrying out the Executive’s duties in accordance with Corporation policies in effect from time to time.

 

4.7 Vehicle Allowance

 

The Corporation shall provide the Executive with an annual vehicle allowance of $1,000.00 per month.

 

4.8 Benefits

 

The Executive shall be entitled to participate in the Corporation’s supported group insurance and benefit plan. The Corporation reserves the right to modify the plan, including adjustments in coverage, from time to time.

 

4.9 Retirement Plan

 

The Corporation shall contribute an additional 10% of the Executive’s base annual salary set forth in section 4.1 above to the Corporation’s retirement plan.

 

4.10 Signing Compensation

 

The Corporation shall provide the Executive with additional compensation of $75,000.00 as a signing bonus with the Corporation. This compensation is payable under the following terms:

 

a) $25,000.00 at the date the Executive joins the company.

 

b) $25,000.00 due 30 days from the Executive joins the company.

 

c) $25,000.00 due 60 days from the Executive joins the company.

 

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Article 5

Change of Control

 

5.1 Change of Control

 

In the event a Change of Control occurs and in the further event that:

 

(a) the Executive’s employment with the Corporation is subsequently or contemporaneously terminated by the Corporation without just cause within twelve months of the date of a Change of Control; or

 

(b) the Executive elects in a written notice to the Corporation within twelve months of the date of a Change in Control, to terminate the Executive’s employment effective as at the date of the said written notice;

 

then the Corporation agrees to pay to the Executive a settlement payment in accordance with the terms set out in Section 7.3.

 

Article 6

Confidential Information, Trade Secrets and Non-solicitation

 

6.1 Confidentiality

 

The Executive, during the term of this Agreement, will have access to and become acquainted with various trade secrets and confidential information of the Company, including but not limited to trade lists, customer lists, agreements, procedures, bargaining techniques, processes and compilations of information, records and specifications which are owned by the Corporation and which are regularly used in the operation of the business of the Corporation. The Executive shall not disclose any of the aforesaid trade secrets or confidential information directly or indirectly, or use them in any way, either during the term of this Agreement or at any time thereafter, except as required in the course of his employment. All files, records, documents, agreements, trade lists, customer lists, and similar items relating to the business of the Corporation, whether prepared by the Executive or otherwise coming into his possession, shall remain the exclusive property of the Corporation and shall not be employed for purposes other than promoting the Corporation’s services and products under any circumstances whatsoever without the prior written consent of the Corporation. This obligation continues for as long as the Confidential Information remains confidential and is not publicly disclosed and in the public domain.

 

The Executive acknowledges and agrees that upon the termination of this Agreement by either party or upon demand, the Executive will return or supply to the Corporation all confidential information in his possession and any analysis or derivative work relating to the confidential information. The Executive agrees that he shall not retain any copies of the confidential information.

 

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6.2 Non-solicitation

 

 The Executive agrees that during the course of this agreement neither he nor any employee or agent of the Executive shall:

 

(a) solicit, entice or attempt to solicit or entice, either directly or indirectly, any customer or prospective customer of the Corporation to become a customer of any business or enterprise which competes with the Corporation; or

 

(b) solicit, entice, hire or attempt to solicit, entice or hire, either directly or indirectly, any employee of the Corporation to become employed by or connected with any business or enterprise which competes with the Corporation.

 

6.3 Non-competition

 

The Executive agrees that during the course of this agreement neither he nor any employee or agent of the Executive shall be engaged, either directly or indirectly, in any business competitive with the business activities of the Corporation or its affiliates including the offering of geophysical data acquisition, processing or interpretation services or the provision of equipment or products designed for the acquisition, processing and/or interpretation of geophysical data (the “Business”); or render advice or services to, or otherwise assist, any other person, association, or entity who is engaged, directly or indirectly, in any business competitive with the Business.

 

The Corporation acknowledges that the Executive has individual interests which include (NONE). Those interests will not be regarded as competitive under the terms of this Agreement.

 

Article 7

Termination

 

7.1 Termination

 

This Agreement shall continue and remain in full force until terminated by either the Corporation or the Executive in accordance with the provisions outlined below.

 

7.2 Termination by Executive

 

The Executive may resign, other than as a result of Constructive Dismissal from the Executive’s employment, and terminate this Agreement by providing four (4) weeks’ notice in writing to the Corporation. Upon receipt of such notice, the Corporation, in its sole discretion, may, by notice in writing, specify an earlier termination date, however, regardless of the termination date the Executive shall be paid the outstanding Compensation equal to four (4) weeks’ notice and four

(4) weeks average variable pay.

 

7.3 Termination by Corporation without Cause

 

In the event the employment of the Executive and this Agreement is terminated by the Corporation without cause, or by the Executive for Constructive Dismissal or for any other reason other than Cause, the Corporation shall pay to the Executive, without a duty to mitigate:

 

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(a) a lump sum equivalent to 6 months of his Compensation, less applicable statutory deductions,

 

(b) in addition to 7.3(a), the Executive shall be entitled to a lump sum payment equivalent to an additional 1 month of Compensation to a maximum of 18 months notice for each completed year of employment with the Corporation beginning with the anniversary of the Executive’s first day of employment with the Corporation;

 

(c) in addition to 7.3(a) and 7.3 (b), the Executive shall be entitled to a lump sum payment in lieu of variable pay for service in the partial year preceding termination, pro-rated based on the partial year to the termination date, less applicable statutory deductions.

 

The Executive acknowledges and agrees that full payment by the Corporation of the amounts above shall be in full and final settlement of any and all claims, demands, actions and suits whatsoever which the Executive has or may have against the Corporation, its Affiliates and any of their directors, officers, employees and their successors and assigns, including without limitation, claims for notice pursuant to applicable statutory and common law. The Executive further agrees that he will sign a release in favour of the Corporation.

 

7.4 Termination Upon Sale of Business

 

The Corporation may terminate this Agreement, upon payment to the Executive in accordance with the same terms as on termination without Cause, if any of the following events occur:

 

(a) the Corporation sells substantially all of its assets to a single purchaser or to a group of associated purchasers or the majority of the membership of the Corporation elects to sell the Corporation to a single purchaser, or to a group of associated purchasers. In the latter event, the Employee agrees to be bound by the decision of the majority of the members to sell the Company and shall be obligated to transfer any membership interest owned by the Employee to the new purchasers in exchange for the consideration received for the membership interest as part of the sale of the Corporation;

 

(b) the Corporation elects to terminate its business or liquidate its assets;

 

(c) there is a merger or consolidation of the Corporation in a transaction in which the Corporation’s members receive less than fifty percent (50%) of the outstanding voting interest of the new or continuing Corporation.

 

7.5 Termination by Corporation with Cause

 

Notwithstanding anything contained in this Agreement, the Corporation may terminate this Agreement and the Executive’s employment for cause. “Cause” shall mean:

 

(a) The wilful and continued failure of the Executive to substantially perform his obligations under this Agreement, after a demand for substantial performance has been delivered to him and he has been provided with not less than 30 days to improve his performance, or

 

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(b) The Executive wilfully engaging in conduct materially and demonstrably injurious to the property or business of the Corporation.

 

In the case of termination for Cause, the Corporation shall have no further obligation to the Executive except for payment of all amounts due and owing up to the date of termination.

 

The Corporation’s right to terminate the Executive’s employment for cause shall be in addition to any other right the Corporation may have for a breach by the Executive of the terms of this Agreement, including a right to injunctive relief or specific performance, as well as other legal or equitable remedies to which the Corporation may be entitled.

 

7.6 Termination on Death or Disability

 

The employment of the Executive and this Agreement shall terminate upon the death of the Executive, without liability to the Corporation beyond amounts due and owing through the date of death, provided that nothing hereunder shall disentitle the Executive’s estate or beneficiaries to any entitlements that would properly arise as a result of the death of the Executive under the terms of any applicable benefits plan upon the happening of the death of the Executive.

 

In the event that the Executive shall suffer a permanent disability, the Corporation may terminate this Agreement and the Executive's employment without liability by providing at least 30 days' prior written Notice to the Executive that the Corporation recognizes that the performance of this Agreement has been frustrated by the permanent disability, provided that nothing hereunder shall disentitle the Executive from any entitlements that would properly arise as a result of the disability of the Executive under the terms of any applicable benefits plan upon the happening of the disability of the Executive.

 

7.7 Payment

 

Any statutorily required payments due to the Executive shall be payable as per the applicable legislation. All other payments due to the Executive shall be payable as prescribed within this Agreement or within 5 business days of the termination of the Executive’s employment.

 

7.8 Return of Corporation’s Property

 

On the termination of the Executive’s employment or on request of the Corporation, the Executive shall immediately deliver to the Corporation all property and information in his possession or under his control belonging to the Corporation in good condition, ordinary wear and tear and damage by any cause beyond the reasonable control of the Executive excepted.

 

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Article 8

Notice Provisions

 

8.1 Address for Service

 

Except as otherwise expressly provided herein, all notice shall be in writing and either delivered personally, or sent by email or facsimile and addressed as follows:

 

(a) to the Corporation at:

 

  Address: 9525 King Street Anchorage
Alaska, 99516
     
  Attention: Jeff Hastings
  Telephone: 907 229 0150
  Facsimile: 907 346 3505

 

(b) to the Executive at:

 

  Address: 104 Crystalridge Drive,
    Okotoks Alberta T1s1p4
  Attention: Mike Scott
  Telephone: 403-938-5058
  Facsimile: mscs@shaw.ca

 

8.2 Change of Address

 

Any address referred to in Article 9, Section 9.1 may be changed by notice given in accordance with the provisions of this Article.

 

Article 9

General

 

9.1 Entire Agreement

 

This Agreement constitutes the entire agreement between the parties pertaining to the employment of the Executive by the Corporation and supersedes all prior agreements, negotiations, discussions and understandings, written or oral, between the parties. There are no representations, warranties, conditions, other agreements or acknowledgements, whether direct or collateral, express or implied, that form part of or affect this Agreement, or which induced any party to enter into this Agreement or on which reliance is placed by any party, except as specifically set forth in this Agreement.

 

9.2 Amendment

 

This Agreement may be amended or supplemented only by a written agreement signed by each party.

 

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9.3 Waiver of Rights

 

Any waiver of, or consent to depart from, the requirements of any provision of this Agreement shall be effective only if it is in writing and signed by the party giving it, and only in the specific instance and for the specific purpose for which it has been given. No failure on the part of any party to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver of such right. No single or partial exercise of any such right shall preclude any other or further exercise of such right or the exercise of any other right.

 

9.4 Further Assurances

 

Each party shall do such acts and shall execute such further documents, conveyances, deeds, assignments, transfers and the like, and will cause the doing of such acts and will cause the execution of such further documents as are within its power as any other party may in writing at any time and from time to time reasonably request be done and or executed, in order to give full effect to the provisions of this Agreement.

 

9.5 Number and Gender

 

In this Agreement, words in the singular include the plural and vice-versa and words in one gender include all genders.

 

9.6 Laws

 

This Agreement shall be governed by and interpreted in accordance with the laws of the State of Alaska. The Corporation and the Executive agree that if there is any dispute between them with respect of the rights of either party under this Agreement, such dispute will be submitted to adjudication before the Courts of the Third Judicial District, Anchorage, Alaska and the Corporation and the Executive attorn to the jurisdiction of the Courts of the State of Alaska.

 

9.7 Successors and Assigns

 

This Agreement shall not be assignable by either party unless the written consent of the other party has been obtained, provided, however, that the Corporation may assign this Agreement to any entity to which the Corporation transfers all or substantially all of its assets.

 

9.8 Enurement

 

This Agreement shall enure to the benefit and be binding upon the parties hereto, their respective heirs, executors, administrators, successors and permitted assigns.

 

9.9 Severability

 

In the event that any provision or any part of any provision hereof is deemed to be invalid by reason of the operation of any law or by reason of the interpretation placed thereon by a court, this Agreement shall be construed as not containing such provision or part of such provision and the invalidity of such provision or such part shall not affect the validity of any other provision or the remainder of such provision hereof. All other provision hereof which are otherwise lawful and valid shall remain in full force and effect.

 

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9.10 Opportunity to Seek Advice

 

The Executive understand that by executing this Agreement, he accepts and agrees to be bound by its terms and conditions. The Executive acknowledges that he is signing this Agreement freely and voluntarily having had an opportunity to review, understand and seek legal and other advice as to the meaning of the above provision. The Executive acknowledges that the Corporation has not given the Executive any legal or tax advice relating to this Agreement.

 

IN WITNESS WHEREOF the parties have executed this Agreement

 

    SOUTHERN AMERICAN EXPLORATION LLC
     
  By:   /s/ Jeff Hastings
    Full Name:   Jeff Hastings
    Title: Executive Director
    /s/ Mike Scott
Witness Full Name, Witness   Mike Scott
     
July 1, 2011    
Date    

 

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Exhibit 10.16

 

EMPLOYMENT AGREEMENT

 

This Agreement is made this 15th day of July, 2011.

 

Between

  

DARIN SILVERNAGLE

 

(the “Executive”)

and

  

SOUTH AMERICAN EXPLORATION LLC

 

(the “Corporation”)

 

WHEREAS the Corporation wishes to engage the services of the Executive and the Executive wishes to provide such services to the Corporation.

 

AND WHEREAS the Corporation and the Executive have agreed that the employment of the Executive by the Corporation will be in accordance with the terms of this Agreement;

 

NOW THEREFORE this Agreement witnesseth that in consideration of the payments and mutual covenants contained herein, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

 

Article 1

Definitions

 

1.1 Definitions

 

In this Agreement, unless there is something in the subject matter or context inconsistent therewith:

 

(a) " Base Salary " has the meaning given to such term in Section 4.1;
   
(b) “ Business ” means the business carried on by the Corporation;
   
(c) “ Cause ” has the meaning given to such term in Section 7.5;
   
(d) “ Change of Control ” means:
   
  (1) The sale of the Corporation; or the sale, lease or transfer of all or
     
  (2) substantially all of the assets of the Corporation; or the resignation or or
     
  (3) removal of the majority of the Board of Directors for any reason within a 6-month time period;
 

 
 

 

(4) any determination by the majority of incumbent directors of the Corporation that a Change of Control has occurred or is about to occur and any such determination shall be binding and conclusive for all;

 

(e) “ Compensation ” means the salary and all benefits which the Executive is receiving or entitled to, including but not limited to salary, variable pay, professional membership or association fees, pension and/or retirement benefits, car allowances, business related expenses, medical plan benefits, vacation pay and any insurance premiums paid by the Corporation for the Executive as contemplated by Article 4 of the Agreement.

 

(f) “ Constructive Dismissal ” means any circumstance that would amount to constructive dismissal at common law and includes, without limiting the generality of the foregoing, one or more of the following changes in the circumstances of the Executive’s employment:

 

(i) A material reduction or diminution of the position or level of authority, responsibility or reporting relationship of the Executive; or

 

(ii) A material reduction in the scope of operations of the Corporation or any other circumstance that results in a material negative change to the role and responsibilities of the Executive; or

 

(iii) A reduction in the Executive’s year-over-year total annual compensation including base salary, variable pay plan target level, benefits, plans and vacation; or

 

(iv) A unilateral elimination by the Corporation of the Corporation’s variable pay or other incentive plans; or

 

(v) A requirement to relocate to another city.

 

Article 2

Term

2.1 Term

 

The term of this Agreement shall be effective upon signing and the Executive’s employment shall continue until terminated in accordance with Article 7 of this Agreement.

 

Article 3

Scope of Work

3.1 Title and Offices

 

The Corporation agrees to employ the Executive as Executive Vice President of Technology of the Corporation and the Executive accepts such employment on and subject to the terms of this Agreement. The Executive shall, in carrying out his obligations under this Agreement, report directly to the Corporation’s Board Chair or designate. This position is based in Calgary, Alberta.

 

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The Executive further acknowledges that he is bound to follow the policies and procedures established by the Corporation, from time to time.

 

3.2 Duties of the Executive

 

The Executive agrees that he will loyally and conscientiously perform his duties and obligations to the best of his ability.

 

The Executive agrees to devote all of his work time, attention and energy to his duties as EVP of Technology of the Corporation and in addition shall do such other duties as may be assigned to him from time to time. The Corporation shall have the power to direct, control and supervise the Executive’s duties and the manner of and time for performing said duties.

 

The Executive specifically agrees to place the duties imposed by this Agreement above all other activities, and will abandon or curtail outside activities if so directed by the Corporation if, in its opinion, there exists a conflict or other reasonable grounds for abandoning or curtailing such activities.

 

The Executive agrees that during the term of his employment with the Corporation he will promptly and fully disclose to the Corporation any business opportunity coming to the Executive’s attention or conceived or developed in whole or in part by the Executive, which relates to the Corporation’s business and will not exploit such business opportunities for his own gain or that of any person or entity other than the Corporation.

 

3.4 Hours of Work

 

The Executive acknowledges and agrees that he may, from time to time, work hours and days outside of normal business hours and at locations other than the Corporation’s offices, as determined by the Corporation’s needs.

 

3.5 Injunctive Relief

 

The Executive hereby represents that the services to be performed by him under the terms of this Agreement are of special value, loss of which cannot be reasonably or adequately compensated in damages in an action at law. The Executive, therefore expressly agrees that the Corporation, in addition to any other rights or remedies which the Corporation may possess, shall be entitled to injunctive and other equitable relief to prevent a breach of this Agreement by the Executive.

 

3.6 Prior Employment

 

The Executive represents and warrants to the Corporation that he is not a party to any employment contract, non-competition agreement, or any other agreement which would prevent him from entering into and fulfilling his duties under this Agreement. The execution of this Agreement does not, the fulfillment of or compliance with the terms and provisions hereof will not, and the consummation of the employment relationship contemplated hereby will not result in a breach, default or event of default under any contract to which the Executive is subject. The Executive represents and warrants to the Corporation that he will not, in any case, use trade secrets or confidential information of his prior employers in carrying out his duties to the Corporation.

 

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It is the Corporation’s expectation that its goals pertaining to business strategies, reputation, methods, policies and procedure are unique to the Corporation. To insure the integrity of these goals, the Corporation and the Executive agree that any trade secrets or confidential information that has been provided to the Executive by a previous employer will not be used for the Company’s benefit during the execution of the Executive’s duties during the term of his employment.

 

The Corporation agrees to indemnify, hold harmless and defend the Executive against any and all claims by the Executive’s prior employers provided that the Executive has not knowingly created any breach of an agreement which he may be bound by as a result of the prior employment.

 

Article 4

Compensation

 

4.1 Base Salary

 

The Corporation shall pay the Executive a Base Salary of $237,750.00 per year, less applicable deductions. The Executive’s salary shall be payable in monthly instalments in a manner consistent with the Corporation’s accounting practices, or at such other times as the Corporation and the Executive may from time to time agree. Annual range adjustments to management salaries will be applied to the Executive’s salary. The Board of Directors of the Corporation may choose at any time, in their sole discretion, to grant an additional increase in base salary based on merit.

 

4.2 Variable Pay

 

The Executive shall be entitled to receive variable pay of 40% of Base Salary in accordance with the Corporation’s performance and the Executive’s individual goals as agreed to by the Corporation and the Executive from time to time. Presently, the Executive’s variable pay will be tied to the following criteria:

 

a) The Executive’s individual goals, as defined by the Corporation, will comprise 20% of the bonus;

 

b) Corporate HSE goals will comprise 30% of the bonus;

 

c) Corporate fiscal performance will comprise 50% of the bonus. The fiscal performance will be based on the Corporation’s annual forecast targets.

 

4.3 Preferred Profit Sharing Plan

 

The Executive shall be entitled to participate in the Corporation’s preferred profit sharing plan which will include a SAE “Phantom” shares distribution equal to $400,000.00 upon joining the Corporation. The per share value is based on the current valuation of the Corporation as of 12/31/2010. These shares carry a 4% annual coupon (additional PSU’s) and will convert to the share value equal to the most recent valuation in the event of a purchase or public offering. In the event of termination the Corporation will retain the first right of refusal to purchase the Executive’s shares. The PSU plan will be available for review prior to June 30, 2011.

 

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4.4 Vacation

 

The Executive shall be entitled to 5 weeks of paid vacation per year.

 

4.5 Expenses

 

The Corporation shall pay or reimburse the Executive for all reasonable, approved and documented business expenses incurred on behalf of the Corporation or in carrying out the Executive’s duties in accordance with Corporation policies in effect from time to time.

 

4.6 Vehicle Allowance

 

The Corporation shall provide the Executive with an annual vehicle allowance of $700.00 per month and a fuel allowance of $300.00 per month.

 

4.7 Benefits

 

The Executive shall be entitled to participate in the Corporation’s supported group insurance and benefit plan. The Corporation reserves the right to modify the plan, including adjustments in coverage, from time to time.

 

4.8 Retirement Plan

 

The Corporation shall contribute an additional 10% of the Executive’s base annual salary set forth in section 4.1 above to the Corporation’s retirement plan.

 

4.9 Signing Compensation

 

The Corporation shall provide the Executive with additional compensation of $75,000.00 as a signing bonus with the Corporation. This compensation is payable under the following terms:

 

a) $25,000.00 due at dated execution of this contract.

 

b) $25,000.00 due 30 days from dated execution of this contract.

 

c) $25,000.00 due 60 days from dated execution of this contract.

 

 

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Article 5

Change of Control

 

5.1 Change of Control

 

In the event a Change of Control occurs and in the further event that:

 

(a) the Executive’s employment with the Corporation is subsequently or contemporaneously terminated by the Corporation without just cause within twelve months of the date of a Change of Control; or

 

(b) the Executive elects in a written notice to the Corporation within twelve months of the date of a Change in Control, to terminate the Executive’s employment effective as at the date of the said written notice;

 

then the Corporation agrees to pay to the Executive a settlement payment in accordance with the terms set out in Section 7.3.

 

Article 6

Confidential Information, Trade Secrets and Non-solicitation

 

6.1 Confidentiality

 

The Executive, during the term of this Agreement, will have access to and become acquainted with various trade secrets and confidential information of the Company, including but not limited to trade lists, customer lists, agreements, procedures, bargaining techniques, processes and compilations of information, records and specifications which are owned by the Corporation and which are regularly used in the operation of the business of the Corporation. The Executive shall not disclose any of the aforesaid trade secrets or confidential information directly or indirectly, or use them in any way, either during the term of this Agreement or at any time thereafter, except as required in the course of his employment. All files, records, documents, agreements, trade lists, customer lists, and similar items relating to the business of the Corporation, whether prepared by the Executive or otherwise coming into his possession, shall remain the exclusive property of the Corporation and shall not be employed for purposes other than promoting the Corporation’s services and products under any circumstances whatsoever without the prior written consent of the Corporation. This obligation continues for as long as the Confidential Information remains confidential and is not publicly disclosed and in the public domain.

 

The Executive acknowledges and agrees that upon the termination of this Agreement by either party or upon demand, the Executive will return or supply to the Corporation all confidential information in his possession and any analysis or derivative work relating to the confidential information. The Executive agrees that he shall not retain any copies of the confidential information.

 

6.2 Non-solicitation

 

The Executive agrees that during the course of this agreement neither he nor any employee or agent of the Executive shall:

 

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(a) solicit, entice or attempt to solicit or entice, either directly or indirectly, any customer or prospective customer of the Corporation to become a customer of any business or enterprise which competes with the Corporation; or

 

(b) solicit, entice, hire or attempt to solicit, entice or hire, either directly or indirectly, any employee of the Corporation to become employed by or connected with any business or enterprise which competes with the Corporation.

 

6.3 Non-competition

 

The Executive agrees that during the course of this agreement neither he nor any employee or agent of the Executive shall be engaged, either directly or indirectly, in any business competitive with the business activities of the Corporation or its affiliates including the offering of geophysical data acquisition, processing or interpretation services or the provision of equipment or products designed for the acquisition, processing and/or interpretation of geophysicial data (the “Business”); or render advice or services to, or otherwise assist, any other person, association, or entity who is engaged, directly or indirectly, in any business competitive with the Business.

 

The Corporation acknowledges that the Executive has individual interests which include _____________. Those interests will not be regarded as competitive under the terms of this Agreement.

 

Article 7

Termination

 

7.1 Termination

 

This Agreement shall continue and remain in full force until terminated by either the Corporation or the Executive in accordance with the provisions outlined below.

 

7.2 Termination by Executive

 

The Executive may resign, other than as a result of Constructive Dismissal from the Executive’s employment, and terminate this Agreement by providing four (4) weeks’ notice in writing to the Corporation. Upon receipt of such notice, the Corporation, in its sole discretion, may, by notice in writing, specify an earlier termination date, however, regardless of the termination date the Executive shall be paid the outstanding Compensation equal to four (4) weeks’ notice and four

(4) weeks average variable pay.

 

7.3 Termination by Corporation without Cause

 

In the event the employment of the Executive and this Agreement is terminated by the Corporation without cause, or by the Executive for Constructive Dismissal or for any other reason other than Cause, the Corporation shall pay to the Executive, without a duty to mitigate:

 

(a) a lump sum equivalent to 6 months of his Compensation, less applicable statutory deductions,

 

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(b) in addition to 7.3(a), the Executive shall be entitled to a lump sum payment equivalent to an additional 1 month of Compensation to a maximum of 18 months notice for each completed year of employment with the Corporation beginning with the anniversary of the Executive’s first day of employment with the Corporation;

 

(c) in addition to 7.3(a) and 7.3 (b), the Executive shall be entitled to a lump sum payment in lieu of variable pay for service in the partial year preceding termination, pro-rated based on the partial year to the termination date, less applicable statutory deductions.

 

The Executive acknowledges and agrees that full payment by the Corporation of the amounts above shall be in full and final settlement of any and all claims, demands, actions and suits whatsoever which the Executive has or may have against the Corporation, its Affiliates and any of their directors, officers, employees and their successors and assigns, including without limitation, claims for notice pursuant to applicable statutory and common law. The Executive further agrees that he will sign a release in favour of the Corporation.

 

7.4 Termination Upon Sale of Business

 

The Corporation may terminate this Agreement, upon payment to the Executive in accordance with the same terms as on termination without Cause, if any of the following events occur:

 

(a) the Corporation sells substantially all of its assets to a single purchaser or to a group of associated purchasers or the majority of the membership of the Corporation elects to sell the Corporation to a single purchaser, or to a group of associated purchasers. In the latter event, the Employee agrees to be bound by the decision of the majority of the members to sell the Company and shall be obligated to transfer any membership interest owned by the Employee to the new purchasers in exchange for the consideration received for the membership interest as part of the sale of the Corporation;

 

(b) the Corporation elects to terminate its business or liquidate its assets;

 

(c) there is a merger or consolidation of the Corporation in a transaction in which the Corporation’s members receive less than fifty percent (50%) of the outstanding voting interest of the new or continuing Corporation.

 

7.5 Termination by Corporation with Cause

 

Notwithstanding anything contained in this Agreement, the Corporation may terminate this Agreement and the Executive’s employment for cause. “Cause” shall mean:

 

(a) The wilful and continued failure of the Executive to substantially perform his obligations under this Agreement, after a demand for substantial performance has been delivered to him and he has been provided with not less than 30 days to improve his performance, or

 

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(b) The Executive wilfully engaging in conduct materially and demonstrably injurious to the property or business of the Corporation.

 

In the case of termination for Cause, the Corporation shall have no further obligation to the Executive except for payment of all amounts due and owing up to the date of termination.

 

The Corporation’s right to terminate the Executive’s employment for cause shall be in addition to any other right the Corporation may have for a breach by the Executive of the terms of this Agreement, including a right to injunctive relief or specific performance, as well as other legal or equitable remedies to which the Corporation may be entitled.

 

7.6 Termination on Death or Disability

 

The employment of the Executive and this Agreement shall terminate upon the death of the Executive, without liability to the Corporation beyond amounts due and owing through the date of death, provided that nothing hereunder shall disentitle the Executive’s estate or beneficiaries to any entitlements that would properly arise as a result of the death of the Executive under the terms of any applicable benefits plan upon the happening of the death of the Executive.

 

In the event that the Executive shall suffer a permanent disability, the Corporation may terminate this Agreement and the Executive's employment without liability by providing at least 30 days' prior written Notice to the Executive that the Corporation recognizes that the performance of this Agreement has been frustrated by the permanent disability, provided that nothing hereunder shall disentitle the Executive from any entitlements that would properly arise as a result of the disability of the Executive under the terms of any applicable benefits plan upon the happening of the disability of the Executive.

 

7.7 Payment

 

Any statutorily required payments due to the Executive shall be payable as per the applicable legislation. All other payments due to the Executive shall be payable as prescribed within this Agreement or within 5 business days of the termination of the Executive’s employment.

 

7.8 Return of Corporation’s Property

 

On the termination of the Executive’s employment or on request of the Corporation, the Executive shall immediately deliver to the Corporation all property and information in his possession or under his control belonging to the Corporation in good condition, ordinary wear and tear and damage by any cause beyond the reasonable control of the Executive excepted.

 

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Article 8

Notice Provisions

 

8.1 Address for Service

 

Except as otherwise expressly provided herein, all notice shall be in writing and either delivered personally, or sent by email or facsimile and addressed as follows:

 

(a) to the Corporation at:

 

    Address: 0525 King Street Anchorage
Alaska, 99516
       
    Attention: Jeff Hastings
    Telephone: 907 229 0150
    Facsimile: 907 346 3505

  

(b) to the Executive at:

 

    Address:
    Attention:
    Telephone:
    Facsimile:

 

8.2 Change of Address

 

Any address referred to in Article 9, Section 9.1 may be changed by notice given in accordance with the provisions of this Article.

 

Article 9

General

 

9.1 Entire Agreement

 

This Agreement constitutes the entire agreement between the parties pertaining to the employment of the Executive by the Corporation and supersedes all prior agreements, negotiations, discussions and understandings, written or oral, between the parties. There are no representations, warranties, conditions, other agreements or acknowledgements, whether direct or collateral, express or implied, that form part of or affect this Agreement, or which induced any party to enter into this Agreement or on which reliance is placed by any party, except as specifically set forth in this Agreement.

 

9.2 Amendment

 

This Agreement may be amended or supplemented only by a written agreement signed by each party.

 

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9.3 Waiver of Rights

 

Any waiver of, or consent to depart from, the requirements of any provision of this Agreement shall be effective only if it is in writing and signed by the party giving it, and only in the specific instance and for the specific purpose for which it has been given. No failure on the part of any party to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver of such right. No single or partial exercise of any such right shall preclude any other or further exercise of such right or the exercise of any other right.

 

9.4 Further Assurances

 

Each party shall do such acts and shall execute such further documents, conveyances, deeds, assignments, transfers and the like, and will cause the doing of such acts and will cause the execution of such further documents as are within its power as any other party may in writing at any time and from time to time reasonably request be done and or executed, in order to give full effect to the provisions of this Agreement.

 

9.5 Number and Gender

 

In this Agreement, words in the singular include the plural and vice-versa and words in one gender include all genders.

 

9.6 Laws

 

This Agreement shall be governed by and interpreted in accordance with the laws of the State of Alaska. The Corporation and the Executive agree that if there is any dispute between them with respect of the rights of either party under this Agreement, such dispute will be submitted to adjudication before the Courts of the Third Judicial District, Anchorage, Alaska and the Corporation and the Executive attorn to the jurisdiction of the Courts of the State of Alaska.

 

9.7 Successors and Assigns

 

This Agreement shall not be assignable by either party unless the written consent of the other party has been obtained, provided, however, that the Corporation may assign this Agreement to any entity to which the Corporation transfers all or substantially all of its assets.

 

9.8 Enurement

 

This Agreement shall enure to the benefit and be binding upon the parties hereto, their respective heirs, executors, administrators, successors and permitted assigns.

 

9.9 Severability

 

In the event that any provision or any part of any provision hereof is deemed to be invalid by reason of the operation of any law or by reason of the interpretation placed thereon by a court, this Agreement shall be construed as not containing such provision or part of such provision and the invalidity of such provision or such part shall not affect the validity of any other provision or the remainder of such provision hereof. All other provisions hereof which are otherwise lawful and valid shall remain in full force of effect.

 

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9.10 Opportunity to Seek Advice

 

The Executive understands that by executing this Agreement, he accepts and agrees to be bound by its terms and conditions. The Executive acknowledges that he is signing this Agreement freely and voluntarily having had an opportunity to review, understand and seek legal and other advice as to the meaning of the above provisions. The Executive acknowledges that the Corporation has not given the Executive any legal and tax advice relating to this Agreement.

 

IN WITNESS WHEREOF the parties have executed this Agreement.

 

 

  SOUTH AMERICAN EXPLORATION LLC
  By:   /s/ Jeff Hastings
    Full Name:   Jeff Hastings
    Title: Executive Director
    /s/ Darin Silvernagle
Witness Full Name, Witness   Darin Silvernagle
       
July 3, 2011      
Date      

 

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Exhibit 10.17

 

SAEXPLORATION HOLDINGS, INC.

 

2013 Long-Term Incentive Plan

 

(As Adopted Effective June 24, 2013)

 

 

ARTICLE 1. INTRODUCTION.

 

The Plan was adopted by the Board on December 9, 2012, subject to approval by the Company’s stockholders at the Company’s special meeting of stockholders held on June 21, 2013, to be effective upon consummation of the merger considered at such meeting. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees to focus on long-range objectives, (b) encouraging the attraction and retention of Employees with exceptional qualifications, and (c) linking Employees directly to stockholder interests through increased stock ownership. The Plan seeks to achieve these purposes by providing for Awards in the form of Restricted Shares, Stock Units, Options (which may be ISOs or NSOs), Performance Cash Awards, and SARs.

 

The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware (except its choice-of-law provisions).

 

ARTICLE 2. ADMINISTRATION.

 

2.1               Committee Composition . The Committee shall administer the Plan. Except as otherwise determined by the Board, the Committee shall consist solely of two or more Non-Employee Directors who are also Outside Directors. The Board shall have discretion to determine whether or not it intends to comply with the exemption requirements of Rule 16b-3 of the Exchange Act and/or Section 162(m) of the Code. However, if the Board intends to satisfy such exemption requirements, the Committee shall be a committee of the Board that at all times consists solely of two or more Non-Employee Directors who are also Outside Directors. Within the scope of such authority, the Board or the Committee may (a) delegate to a committee of one or more members of the Board who are not Outside Directors the authority to grant Awards to eligible persons who are either (i) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income resulting from such Award or (ii) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code or (b) delegate to a committee of one or more members of the Board who are not Non-Employee Directors the authority to grant Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. Nothing herein shall create an inference that an Award is not validly granted under the Plan in the event Awards are granted under the Plan by a compensation committee of the Board that does not at all times consist solely of two or more Non-Employee Directors who are also Outside Directors.

 

2.2               Committee Responsibilities . The Committee shall: (a) select the Employees who are to receive Awards under the Plan; (b) determine the type, number, vesting requirements, and other features and conditions of such Awards; (c) interpret the Plan; (d) make all other decisions relating to the operation of the Plan; and (e) carry out any other duties delegated to it by the Board under the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee’s determinations under the Plan shall be final and binding on all persons.

 

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2.3               Non-Executive Officer Grants . The Board may appoint a single Director, an additional committee of Directors and/or the Company’s Chief Executive Officer to determine Awards for Employees who are not Executive Officers of the Company. The single Director, the members of the additional committee, and/or the Company’s Chief Executive Officer need not satisfy the requirements of Section 2.1. Such Director, committee, or the Company’s Chief Executive Officer may grant Awards under the Plan to such Employees. However, the Committee shall nevertheless prescribe the terms, features, and conditions of such Awards and the aggregate number of Company shares subject to such Awards. Within the limitations of this Section 2.3, any reference in the Plan to the Committee shall include any such single Director, additional committee, and/or the Company’s Chief Executive Officer to whom the Board has delegated the required authority under this Section 2.3.

 

2.4               Compliance with Section 409A . Awards shall be designed, granted and administered in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A of the Code (“Section 409A”). If the Committee determines that an Award, payment, distribution, deferral election, transaction, or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken or implemented, cause a holder to become subject to additional taxes under Section 409A, then unless the Committee specifically provides otherwise, such Award, payment, distribution, deferral election, transaction or other action or arrangement shall not be given effect to the extent it causes such result and the related provisions of the Plan and/or Award agreement will be deemed modified or, if necessary, suspended in order to comply with the requirements of Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the holder. The exercisability of an Option shall not be extended to the extent that such extension would subject the holder to additional taxes under Section 409A.

 

2.5               Foreign Awardees . Without amending this Plan, the Committee may grant Awards to eligible persons who are foreign nationals on such terms and conditions different from those specified in this Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes, the Committee may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with the provisions of laws and regulations in other countries or jurisdictions in which the Company or its Subsidiaries operate.

 

ARTICLE 3. SHARES AVAILABLE FOR GRANTS.

 

3.1               Basic Limitation; Sublimit for Aggregate Number of Restricted Shares. Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares. The aggregate number of Common Shares issued under the Plan shall not exceed 792,513 Common Shares, subject to Section 3.2. The number of Common Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Common Shares that then remain available for issuance under the Plan. All Common Shares available under the Plan may be issued with respect to Options and SARs, including upon the exercise of ISOs. The aggregate number of Common Shares and Restricted Shares issued to all Participants pursuant to all Awards of Restricted Shares and Stock Units made under the Plan over its life shall not exceed 396,256 Common Shares, subject to Section 3.2. The limitations of this Section 3.1 shall be subject to adjustment pursuant to Article 10.

 

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3.2               Shares Returned to Reserve . If Options, SARs, Restricted Shares, or Stock Units are forfeited or terminate for any other reason before being exercised or settled, then the Common Shares subject to such Options, SARs, Restricted Shares, or Stock Units shall again become available for issuance under the Plan and shall not be considered for purposes of determining any limitations on the issuance of Options, SARs, Restricted Shares, or Stock Units. If Restricted Shares or Common Shares issued upon the exercise of Options are reacquired by the Company pursuant to a forfeiture provision, then such Common Shares shall again become available for issuance under the Plan. Performance Cash Awards shall not affect the aggregate number of Common Shares remaining available for issuance under the Plan.

 

3.3               Uncertificated Shares. To the extent that the Plan provides for issuance of stock certificates to reflect the issuance of Common Shares, the issuance may be effected on an un-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange on which the Company’s equity securities are traded.

 

3.4               Limited Transferability. Awards shall generally be nontransferable except in the case of the Participant’s death, and the Stock Option Agreement, SAR Agreement, Restricted Stock Agreement, Stock Unit Agreement or Performance Cash Award Agreement entered into with respect to any Award shall generally provide for such nontransferability. The Committee may, however, in its discretion, authorize all or a portion of any Award (other than of ISOs) to be granted on terms that permit transfer by the Participant to (i) the spouse, parents, children, stepchildren, adoptive relationships, sisters, brothers, or grandchildren of the Participant, (ii) a trust or trusts for the exclusive benefit of the spouse, parents, children, stepchildren, adoptive relationships, sisters, brothers, or grandchildren of the Participant, or (iii) a partnership or limited liability company in which the spouse, parents, children, stepchildren, adoptive relationships, sisters, brothers, or grandchildren of the Participant are the only partners or members, as applicable; provided in each case that (x) there may be no consideration for any such transfer (other than in the case of Clause (iii), units in the partnership or membership interests in the limited liability company), and (y) the agreement pursuant to which such Awards are granted must be approved by the Committee, and must expressly provide for transferability in a manner consistent with this Section 3.4. Following any such transfer, any such Awards shall continue to be subject to the same terms and conditions as were applicable immediately prior to the transfer. The provisions of the Award with respect to expiration, termination or vesting shall continue to apply with respect to the original Participant, and the Award shall be exercisable by the transferee only to the extent and for the periods specified herein with respect to the Participant. The original Participant will remain subject to withholding taxes upon exercise of any such Awards by the transferee. The Company shall have no obligation whatsoever to provide notice to any transferee of any matter, including early expiration or termination of an Award.

 

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ARTICLE 4. ELIGIBILITY.

 

4.1               Incentive Stock Options . Only Employees of the Company, a Parent, or a Subsidiary shall be eligible for the grant of ISOs. In addition, an Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company or of any of its Parents or Subsidiaries shall not be eligible for the grant of an ISO unless the additional requirements set forth in Section 422(c)(5) of the Code are satisfied.

 

4.2               Other Grants . Employees shall be eligible for the grant of Restricted Shares, Stock Units, NSOs, SARs or Cash Performance Awards under this Plan. No Employee of an Affiliate will be eligible for the grant of an NSO or SAR if the Company is not an eligible issuer of service recipient stock with respect to such Employee under Treas. reg. § 1.409A-1(b)(5)(iii)(E). No person shall be eligible for an Award unless Common Shares that might be transferred in connection with the Award can be registered using Form S-8 under the Securities Act of 1933, as amended.

 

ARTICLE 5. OPTIONS.

 

5.1               Stock Option Agreement . Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.

 

5.2               Number of Shares . Each Stock Option Agreement shall specify the number of Common Shares subject to the Option and shall provide for the adjustment of such number in accordance with Article 10. The total number of Options granted to any single Optionee in any single calendar year shall not cover more than 150,000 Common Shares. The limitations set forth in the preceding sentence shall be subject to adjustment in accordance with Article 10.

 

5.3               Exercise Price . Each Stock Option Agreement shall specify the Exercise Price, which shall not be less than 100% of the Fair Market Value of a Common Share on the date of grant. The preceding sentence shall not apply to Options granted pursuant to an assumption of, or substitution for, another option in a manner that would satisfy the requirements of Section 424(a) of the Code, whether or not such section is applicable.

 

5.4               Exercisability and Term . Each Stock Option Agreement shall specify the date or event when all or any installment of the Option is to become exercisable. The Stock Option Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant. A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability, or retirement, or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service.

 

5.5               Effect of Change in Control . The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Common Shares subject to such Option in the event that a Change in Control occurs with respect to the Company or in the event that the Optionee’s employment is terminated after a Change in Control. However, in the case of an ISO, the acceleration of exercisability shall not occur without the Optionee’s written consent. In addition, acceleration of exercisability may be required under Section 10.3.

 

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5.6               Buyout Provisions . The Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish; provided that cash payments shall not exceed the Fair Market Value less the Exercise Price.

 

ARTICLE 6. PAYMENT FOR OPTION SHARES.

 

6.1               General Rule . The Exercise Price of Common Shares issued upon exercise of Options shall be payable in full entirely in cash or cash equivalents at the time when such Common Shares are purchased, except that the Committee at its sole discretion may accept payment of the Exercise Price in any other form(s) described in this Article 6. However, if the Optionee is an Executive Officer or Director of the Company, he or she may pay the Exercise Price in a form other than cash or cash equivalents only to the extent permitted by Section 13(k) of the Exchange Act.

 

6.2               Surrender of Stock . With the Committee’s consent, provided that the Company has an effective registration statement on Form S-8 (or its successor) covering the issuance of the Common Shares, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Common Shares that are already owned by the Optionee. Such Common Shares shall be valued at their Fair Market Value on the date when the new Common Shares are purchased under the Plan.

 

6.3               Exercise/Sale . With the Committee’s consent, all or any part of the Exercise Price, and any withholding taxes, may be paid by delivering (on a form prescribed by the Company) an irrevocable direction to a securities broker approved by the Company to sell all or part of the Common Shares being purchased under the Plan and to deliver all or part of the sales proceeds to the Company.

 

6.4               Promissory Note . With the Committee’s consent, all or any part of the Exercise Price and any withholding taxes may, except in the case of an Executive Officer of the Company, be paid by delivering (on a form prescribed by the Company) a full-recourse promissory note.

 

6.5               Other Forms of Payment . With the Committee’s consent, all or any part of the Exercise Price and any withholding taxes may be paid in any other form that is consistent with applicable laws and rules and regulations.

 

ARTICLE 7. STOCK APPRECIATION RIGHTS.

 

7.1               SAR Agreement . Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical.

 

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7.2               Number of Shares . Each SAR Agreement shall specify the number of Common Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Article 10. The total number of SARs granted to any single Participant in any single calendar year shall not cover more than 20,000 Common Shares.

 

7.3               Exercise Price . Each SAR Agreement shall specify the Exercise Price, which shall in no event be less than 100% of the Fair Market Value of a Common Share on the date of grant. The preceding sentence shall not apply to SARs granted pursuant to an assumption of, or substitution for, another SAR in a manner that would satisfy the requirements of Section 424(a) of the Code if such section were applicable.

 

7.4               Exercisability and Term . Each SAR Agreement shall specify the date or event when all or any installment of the SAR is to become exercisable. The SAR Agreement shall also specify the term of the SAR. A SAR Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability, or retirement, or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service. SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR granted in combination with an ISO: (i) must be granted at the same time as the ISO to which it relates; (ii) must be exercisable only when the current Fair Market Value of Common Shares exceeds the ISO’s exercise price and the ISO is otherwise exercisable; (iii) may not be transferrable except when and to the extent that the ISO is transferrable under Section 3.4 of the Plan; and (iv) must have economic and tax consequences upon exercise that are no more favorable than those upon the exercise of the ISO in combination with which it was granted followed by an immediate sale of the Common Shares that would be received upon such ISO’s exercise. A SAR granted under the Plan not in combination with an ISO may provide that it will be exercisable only in the event of a Change in Control.

 

7.5               Effect of Change in Control . The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become exercisable as to all or part of the Common Shares subject to such SAR in the event that the Company is subject to a Change in Control or in the event that the Optionee’s employment is terminated after a Change in Control. In addition, acceleration of exercisability may be required under Section 10.3.

 

7.6               Exercise of SARs . Upon exercise of a SAR, the Optionee (or any person having the right to exercise the SAR after his or her death or under Section 3.4 of this Plan) shall receive from the Company: (a) Common Shares; (b) cash; or (c) a combination of Common Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Common Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Common Shares subject to the SARs exceeds the Exercise Price.

 

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ARTICLE 8. RESTRICTED SHARES.

 

8.1               Restricted Stock Agreement . Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical.

 

8.2               Consideration for Awards . Restricted Shares shall be granted to Participants at no additional cost to them; provided, however, that the value of the services performed by any Participant receiving Restricted Shares must, in the opinion of the Committee, equal or exceed the par value of the Restricted Shares to be granted to such Participant.

 

8.3               Performance and/or Vesting Conditions . Each Award of Restricted Shares may or may not be contingent on the satisfaction of performance targets, or subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement. The Committee may include as vesting conditions or as conditions for making an Award of Restricted Shares the requirement that the performance of the Company or a business unit of the Company for a specified period equal or exceed a target determined in advance by the Committee. The Committee shall determine such performance. If the Award is intended to satisfy the requirements of Section 162(m) of the Code, such target shall be based on one or more of the criteria set forth in Appendix A. In no event shall the number of Restricted Shares the award and/or vesting of which is or are subject to performance-based conditions intended to satisfy the requirements of Section 162(m) of the Code that are granted to any single Participant in a single calendar year exceed 100,000 Common Shares. The satisfaction of any performance target and/or vesting may be waived in the case of a Change in Control or the Participant’s death or disability. The Company may retain the certificates representing shares of Restricted Stock in the Company’s possession until such time as all conditions or restrictions applicable to such shares, including any conditions or restrictions not constituting a substantial risk of forfeiture under Section 83 of the Code, are satisfied or have lapsed, and the Participant shall execute in favor of the Company a blank stock power with respect to such shares of Restricted Stock. Alternatively or additionally, the Company may cause such Restricted Shares to bear an appropriate legend indicating their nontransferability, forfeitability, and any additional restrictions placed on them.

 

8.4               Voting and Dividend Rights . The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend, and other rights as the Company's other stockholders. Any dividends or other distributions paid on Restricted Shares may, as specified by the Committee in the applicable Award, be (a) accumulated and paid when such Restricted Shares vest, (b) invested in additional Restricted Shares, or (c) paid currently to the holder. Any dividends not paid currently shall be subject to the same conditions and restrictions, including risks of forfeiture, as the Award with which they relate.

 

ARTICLE 9. STOCK UNITS AND PERFORMANCE CASH AWARDS.

 

9.1               Stock Unit or Performance Cash Award Agreement . Each grant of Stock Units or of a Performance Cash Award shall be evidenced by a Stock Unit or Performance Cash Award Agreement between the recipient and the Company. Awards of Stock Units or Performance Cash Awards shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit and Performance Cash Award Agreements entered into under the Plan need not be identical.

 

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9.2               Payment for Awards . To the extent that an Award is granted in the form of Stock Units or a Performance Cash Award, no cash consideration shall be required of the Award recipients.

 

9.3               Performance and/or Vesting Conditions . Each Award of Stock Units may or may not be contingent on the satisfaction of performance targets, or subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement. Each Performance Cash Award shall be contingent on the satisfaction of a performance target intended to satisfy the requirements of Section 162(m) of the Code. The Committee may include as vesting conditions or as conditions for any Award of Stock Units, and shall include as a condition for a Performance Cash Award, the requirement that the performance of the Company or a business unit of the Company for a specified period equal or exceed a target determined in advance by the Committee. The Committee shall determine such performance. If the Award is intended to satisfy the requirements of Section 162(m) of the Code, such target shall be based on one or more of the criteria set forth in Appendix A. In no event shall the number of Stock Units the award and/or vesting of which is or are subject to performance-based conditions intended to satisfy the requirements of Section 162(m) of the Code that are granted to any single Participant in a single calendar year exceed 20,000 Common Shares. In no event shall the total amount of all Performance Cash Awards that are intended to satisfy the requirements of Section 162(m) of the Code that are granted to any single Participant in a single calendar year exceed $1,200,000. The satisfaction of any performance target and/or vesting condition may be waived in the case of a Change in Control or the Participant’s death or disability.

 

9.4               Voting and Dividend Rights . The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee's discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to the dividends or other distributions paid on an equal number of Common Shares while the Stock Units are outstanding. As specified by the Committee in the applicable Award, any cash dividend equivalents may be either (a) paid currently, free of any vesting condition, or (b) accumulated and paid at the same time and in the same form as the Stock Units to which they relate, but only if such Stock Units become vested.

 

9.5               Form and Time of Settlement of Stock Units and Performance Cash Awards . Settlement of vested Stock Units may be made in the form of (a) cash, (b) Common Shares, or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Common Shares over a series of trading days. Vested Stock Units may be settled in a lump sum or in installments, and the distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date; provided, however, that the form and timing of payment of Stock Units and Performance Cash Awards shall satisfy the requirements of Section 409A of the Code in form and operation. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Article 10. Performance Cash Awards shall be settled in cash in accordance with the terms of the applicable Performance Cash Award Agreement.

 

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9.6               Creditors’ Rights . A holder of Stock Units or of an unpaid Performance Cash Award shall have no rights other than those of a general creditor of the Company. Stock Units and unpaid Performance Cash Awards represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit or Performance Cash Award Agreement.

 

ARTICLE 10. PROTECTION AGAINST DILUTION.

 

10.1           Adjustments . In the event of a subdivision of the outstanding Common Shares, a declaration of a dividend payable in Common Shares, or a combination or consolidation of the outstanding Common Shares (by reclassification or otherwise) into a lesser number of Common Shares, corresponding adjustments shall automatically be made in each of the following:

 

(a)                 The number of Options, SARs, Restricted Shares, and Stock Units available for future Awards under Article 3;

 

(b)                The limitations set forth in Sections 5.2, 7.2, 8.3, and 9.3;

 

(c)                 The number of Common Shares covered by each outstanding Option and SAR;

 

(d)                The Exercise Price under each outstanding Option and SAR;

 

(e)                 The number of Stock Units included in any prior Award that has not yet been settled; and

 

(f)                 The number of Restricted Shares subject to any unvested Award.

 

In the event of a declaration of an extraordinary dividend payable in a form other than Common Shares in an amount that has a material effect on the price of Common Shares, a recapitalization, a spin-off, or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of the foregoing. Except as provided in this Article 10, a Participant shall have no rights by reason of any issuance by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend, or any other increase or decrease in the number of shares of stock of any class.

 

10.2           Dissolution or Liquidation . To the extent not previously exercised or settled, Options, SARs, Stock Units and Performance Cash Awards shall terminate immediately before the dissolution or liquidation of the Company.

 

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10.3           Reorganizations . In the event that the Company is a party to a merger, consolidation, or sale of fifty percent (50%) of more of the Company’s stock or assets, all outstanding Awards shall be subject to the agreement of merger or consolidation. Such agreement shall provide for one or more of the following:

 

(a)                 The continuation of such outstanding Awards by the Company (if the Company is the surviving corporation).

 

(b)                The assumption of such outstanding Awards by the surviving corporation or its parent, provided that the assumption of Options or SARs shall comply with Section 424(a) of the Code (whether or not the Options are ISOs).

 

(c)                 The substitution by the surviving corporation or its parent of new awards for such outstanding Awards, provided that the substitution of Options or SARs shall comply with Section 424(a) of the Code (whether or not the Options are ISOs).

 

(d)                Full exercisability of outstanding Options and SARs and full vesting of the Common Shares subject to such Options and SARs, followed by the cancellation of such Options and SARs to the extent not exercised before the closing of the merger or consolidation. The full exercisability of such Options and SARs and full vesting of such Common Shares shall be contingent on the closing of such merger or consolidation. In this case, the Optionees shall be able to exercise such Options and SARs during a period of not less than five full business days preceding the closing date of such merger or consolidation, unless (i) a shorter period is required to permit a timely closing of such merger or consolidation and (ii) such shorter period still offers the Optionees a reasonable opportunity to exercise such Options and SARs. Any exercise of such Options and SARs during such period shall be contingent on the closing of such merger or consolidation.

 

(e)                 The cancellation of outstanding Options and SARs and a payment to the Optionees equal to the excess of (i) the Fair Market Value of the Common Shares subject to such Options and SARs (whether or not such Options and SARs are then exercisable or such Common Shares are then vested) as of the closing date of such merger or consolidation over (ii) their Exercise Price. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. Such payment may be made in installments and may be deferred until the date or dates when such Options and SARs would have become exercisable or such Common Shares would have vested. Such payment may be subject to vesting based on the Optionee’s continuing Service, provided that the vesting schedule shall not be less favorable to the Optionee than the schedule under which such Options and SARs would have become exercisable or such Common Shares would have vested. If the Exercise Price of the Common Shares subject to such Options and SARs exceeds the Fair Market Value of such Common Shares, then such Options and SARs may be cancelled without making a payment to the Optionees. For purposes of this Subsection (e), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.

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(f)                 The cancellation of outstanding Stock Units and a payment to the Participants equal to the Fair Market Value of the Common Shares subject to such Stock Units (whether or not such Stock Units are then vested) as of the closing date of such merger or consolidation. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. Such payment may be made in installments and may be deferred until the date or dates when such Stock Units would have vested. Such payment may be subject to vesting based on the Participant’s continuing Service, provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which such Stock Units would have vested. For purposes of this Subsection (f), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.

 

(g)                Full vesting of the Common Shares subject to Restricted Stock Agreements. The full vesting of the Restricted Shares shall be contingent on the closing of such merger or consolidation.

 

The provisions of this Section 10.3, as well as the provisions of Sections 8.3 and 9.3 and of any Stock Option Agreement, SAR Agreement, Restricted Stock Agreement, or Stock Unit Agreement providing for exercisability, transfer or accelerated vesting of any Option, SAR, Restricted Shares, or Stock Units shall be inapplicable to an Award granted within six months before the occurrence of a merger, acquisition, or other Change in Control if the holder of such Option, SAR, Restricted Shares, or Stock Units is subject to the reporting requirements of Section 16(a) of the Exchange Act and no exception from liability under Section 16(b) of the Exchange Act is available to such holder.

 

ARTICLE 11. AWARDS UNDER OTHER PLANS.

 

The Company may grant awards under other plans or programs. Such awards may be settled in the form of Common Shares issued under this Plan. Such Common Shares shall be treated for all purposes under the Plan like Common Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Common Shares available under Article 3.

 

ARTICLE 12. LIMITATION ON RIGHTS.

 

12.1           Retention Rights . Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an Employee or otherwise in the Company’s service. The Company and its Parents, Subsidiaries and Affiliates reserve the right to terminate the Service of any Participant at any time, with or without cause, subject to applicable laws, the Company’s certificate of incorporation and by-laws, and a written employment agreement (if any).

 

12.2           Stockholder Rights . Except as the Committee may provide in the applicable Award Agreement, a Participant shall have no dividend rights, voting rights, or other rights as a stockholder with respect to any Common Shares covered by his or her Award prior to the time when a stock certificate for such Common Shares is issued or ownership of such Common Shares is noted on the transfer records of the Company or, if applicable, the time when he or she becomes entitled to receive such Common Shares by filing any required notice of exercise and paying any required Exercise Price. No adjustment shall be made for cash dividends or other rights for which the record date is prior to such time, except as expressly provided in the Plan or Award.

 

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12.3           Regulatory Requirements . Any other provision of the Plan notwithstanding, the obligation of the Company to issue Common Shares under the Plan shall be subject to all applicable laws, rules and regulations, and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Common Shares pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Common Shares, to their registration, qualification, or listing, or to an exemption from registration, qualification, or listing.

 

12.4           No Fractional Shares . No fractional shares shall be issued or delivered pursuant to the Plan. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

 

12.5           Clawback . Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

 

12.6           Investment Representations; Company Policy . The Committee may require each person acquiring shares of Common Stock pursuant to a Stock Option or other award under the Plan to represent to and agree with the Company in writing that the Participant is acquiring the shares for investment without a view to distribution thereof. Each person acquiring shares of Common Stock pursuant to a Stock Option or other award under the Plan shall be required to abide by all policies of the Company in effect at the time of such acquisition and thereafter with respect to the ownership and trading of the Company’s securities.

 

12.7           Non-Registered Stock . The shares of Common Stock to be distributed under this Plan have not been, as of the date the Plan was adopted by the Board, registered under the Securities Act of 1933, as amended, or any applicable state or foreign securities laws and the Company has no obligation to any Participant to register the Common Shares or to assist the Participant in obtaining an exemption from the various registration requirements, or to list the Common Shares on a national securities exchange or any other trading or quotation system.

 

 

ARTICLE 13. WITHHOLDING TAXES.

 

13.1           General . To the extent required by applicable federal, state, local, or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Common Shares or make any cash payment under the Plan until such obligations are satisfied.

 

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13.2           Share Withholding . To the extent that applicable law subjects a Participant to tax withholding obligations, the Committee may, in its discretion, permit such Participant to satisfy all or part of such obligations by having the Company withhold all or a portion of any Common Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Common Shares that he or she previously acquired. Such Common Shares shall be valued at their Fair Market Value on the date when they are withheld or surrendered. This Section 13.2 shall apply only to the minimum extent required by applicable tax laws.

 

ARTICLE 14. FUTURE OF THE PLAN.

 

14.1           Term of the Plan . The Plan, as set forth herein, shall become effective on the date on which it is approved by the Company’s stockholders at the special meeting of the Company’s stockholders to be held prior to June 24, 2013, provided that it is adopted by the Board before or concurrently with such special meeting. The Plan shall remain in effect until the date when the Plan is terminated under Section 14.2; provided, however, that no ISO may be granted under the Plan after the date that is 10 years after the date when the Plan was approved by the Company’s stockholders, whichever occurs first.

 

14.2           Amendment or Termination . The Board may, at any time and for any reason, amend or terminate the Plan. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan, or any amendment thereof, shall not affect any Award previously granted under the Plan.

 

14.3           Stockholder Approval . An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws and rules and regulations. Among such applicable laws and rules and regulations, Section 162(m) of the Code requires that the Company’s stockholders reapprove the list of available performance criteria set forth in Appendix A not later than the first meeting of stockholders that occurs in the fifth year following the year in which the Company’s stockholders previously approved such criteria.

 

ARTICLE 15. DEFINITIONS.

 

15.1           “ Affiliate ” means any entity other than the Company, a Parent, or a Subsidiary, if the Company and/or one or more Parents and/or one or more Subsidiaries own, in the aggregate, not less than 50% of such entity.

 

15.2           “ Award ” means any award of an Option, a SAR, a Restricted Share, a Performance Cash Award, or a Stock Unit under the Plan.

 

15.3           “ Board ” means the Company’s Board of Directors, as constituted from time to time.

 

15.4           “ Change in Control ” shall mean the occurrence of one or more of the following events:

 

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(a)                 Change in Board Composition. Individuals who constitute the members of the Board as of the date hereof (the “Incumbent Directors”), cease for any reason to constitute at least a majority of members of the Board; provided that any individual becoming a director of the Company subsequent to the date hereof shall be considered an Incumbent Director if such individual’s appointment, election or nomination was approved by a vote of at least 50% of the Incumbent Directors; provided further that any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board or other actual or threatened solicitation of proxies or contests by or on behalf of a “person” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director;

 

(b)                Business Combination. Consummation of (i) a reorganization, merger, consolidation, share exchange or other business combination involving the Company or any of its subsidiaries or the disposition of all or substantially all the assets of the Company, whether in one or a series of related transactions, or (ii) the acquisition of assets or stock of another entity by the Company (either, a “Business Combination”), excluding, however, any Business Combination pursuant to which: (A) individuals who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act), respectively, of the then outstanding shares of common stock of the Company (the “Outstanding Stock”) and the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of the Company (the “Outstanding Company Voting Securities”) immediately prior to such Business Combination beneficially own, upon consummation of such Business Combination, directly or indirectly, more than 50% of the then outstanding shares of common stock (or similar securities or interests in the case of an entity other than a corporation) and more than 50% of the combined voting power of the then outstanding securities (or interests) entitled to vote generally in the election of directors (or in the selection of any other similar governing body in the case of an entity other than a corporation) of the Surviving Corporation (as defined below) in substantially the same proportions as their ownership of the Outstanding Stock and Outstanding Company Voting Securities, immediately prior to the consummation of such Business Combination (that is, excluding any outstanding voting securities of the Surviving Corporation that such beneficial owners hold immediately following the consummation of the Business Combination as a result of their ownership prior to such consummation of voting securities of any company or other entity involved in or forming part of such Business Combination other than the Company); (B) no person (other than the Company, any subsidiary of the Company, any employee benefit plan of the Company or any of its subsidiaries or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company) or group (as such term is defined in Rule 13d-3 under the Exchange Act) becomes the beneficial owner of 50% or more of either (x) the then outstanding shares of common stock (or similar securities or interests in the case of an entity other than a corporation) of the Surviving Corporation, or (y) the combined voting power of the then outstanding securities (or interests) entitled to vote generally in the election of directors (or in the selection of any other similar governing body in the case of an entity other than a corporation); and (C) individuals who were Incumbent Directors at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination constitute at least a majority of the members of the board of directors (or of any similar governing body in the case of an entity other than a corporation) of the Surviving Corporation; where for purposes of this subsection (b), the term “Surviving Corporation” means the entity resulting from a Business Combination or, if such entity is a direct or indirect subsidiary of another entity, the entity that is the ultimate parent of the entity resulting from such Business Combination;

 

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(c)                 Stock Acquisition. Any person (other than the Company, any subsidiary of the Company, any employee benefit plan of the Company or any of its subsidiaries or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company) or group becomes the beneficial owner of 50% or more of either (x) the Outstanding Stock or (y) the Outstanding Company Voting Securities; provided, however, that for purposes of this subsection (c) no Change of Control shall be deemed to have occurred as a result of any acquisition directly from the Company; or

 

(d)                Liquidation. Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company (or, if no such approval is required, the consummation of such a liquidation or dissolution).

 

A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

 

15.5           “ Code ” means the Internal Revenue Code of 1986, as amended.

 

15.6           “ Committee ” means the a committee of the Board, as further described in Article 2.

 

15.7           “ Common Share ” means one share of the common stock of the Company.

 

15.8           “ Company ” means SAExploration Holdings, Inc., a Delaware corporation.

 

15.9           “Covered Employee”  means an Employee who is a "covered employee" within the meaning of Section 162(m)(3) of the Code or any successor to such statute and regulation.

 

15.10       “ Director ” means a member of the Company’s Board.

 

15.11       “ Employee ” means a common-law employee of the Company, a Parent, a Subsidiary, or an Affiliate.

 

15.12       “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

15.13       “ Executive Officer ” means an officer of the Company who is considered an executive officer under Section 16 of the Exchange Act.

 

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15.14       “ Exercise Price ,” in the case of an Option, means the amount for which one Common Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Common Share in determining the amount payable upon exercise of such SAR.

 

15.15       “ Fair Market Value ” means the price at which Common Shares were last sold in the principal U.S. market for Common Shares on the applicable date or, if the applicable date was not a trading day, on the last trading day prior to the applicable date. If Common Shares are no longer traded on a public U.S. Securities market, Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate. The Committee’s determination shall be conclusive and binding on all persons.

 

15.16       “ ISO ” means an incentive stock option described in Section 422(b) of the Code.

 

15.17       "Non-Employee Director"  means a Director who is a "non-employee director" within the meaning of Rule 16b-3 of the Exchange Act or any successor to such regulation.

 

15.18       “ NSO ” means a stock option not described in Sections 422 or 423 of the Code.

 

15.19       “ Option ” means an ISO or NSO granted under the Plan and entitling the holder to purchase Common Shares.

 

15.20       “ Optionee ” means an individual or estate holding an Option or SAR.

 

15.21       “Outside Director”  means a Director who is an "outside director" within the meaning of Section 162(m) of the Code and Treasury Regulations Section 1.162-27(e)(3) or any successor to such statute and regulation.

 

15.22       “ Parent ” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

 

15.23       “ Participant ” means an individual or estate holding an Award.

 

15.24       “ Performance Cash Award ” means an Award of an amount of cash under the Plan, subject to the provisions of Article 9.

 

15.25       “ Performance Cash Award Agreement ” means the agreement between the Company and the recipient of a Performance Cash Award that contains the terms, conditions and restrictions pertaining to such Performance Cash Award.

 

15.26       “ Plan ” means this SAExploration Holdings, Inc. 2013 Long-Term Incentive Plan, as amended from time to time.

 

15.27       “ Restricted Share ” means a Common Share awarded under the Plan.

 

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15.28       “ Restricted Stock Agreement ” means the agreement between the Company and the recipient of a Restricted Share that contains the terms, conditions, and restrictions pertaining to such Restricted Share.

 

15.29       “ SAR ” means a stock appreciation right granted under the Plan.

 

15.30       “ SAR Agreement ” means the agreement between the Company and an Optionee that contains the terms, conditions, and restrictions pertaining to his or her SAR.

 

15.31       “ Service ” means service as an Employee, provided that the Committee may, in determining a Participant’s satisfaction of any vesting or similar requirement, in its discretion as it may choose to exercise from time to time with respect to any Participant or Participants, aggregate with an Employee’s service as an employee his or her service as an independent contractor (including as a Company director).

 

15.32       “ Stock Option Agreement ” means the agreement between the Company and an Optionee that contains the terms, conditions, and restrictions pertaining to his or her Option.

 

15.33       “ Stock Unit ” means a bookkeeping entry representing the equivalent of one Common Share, as awarded under the Plan, and representing the right, upon the satisfaction of certain conditions, to receive a Common Share, or cash equal to the value of a Common Share.

 

15.34       “ Stock Unit Agreement ” means the agreement between the Company and the recipient of a Stock Unit that contains the terms, conditions, and restrictions pertaining to such Stock Unit.

 

15.35       “ Subsidiary ” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

ARTICLE 16. EXECUTION.

 

To record the adoption of the Plan effective June 24, 2013, the Company has caused its duly authorized officer to execute this document in the name of the Company.

 

SAEXPLORATION HOLDINGS, INC.

 


By : /s/ Brent Whiteley

Name : Brent Whiteley


Title : Secretary

 

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APPENDIX A

 


Performance Criteria for Restricted Shares, Stock Units,
and Performance Cash Awards

 

 

 

The Committee may establish award and/or vesting targets derived from all or any of the following criteria, in any combination, when it makes Awards of Restricted Shares, Stock Units, or Performance Cash Awards on the basis of performance:

 

(a) Revenue (or any sub-component thereof);

 

(b) Revenue growth;

 

(c) Operating costs;

 

(d) Operating margin as a percentage of revenue;

 

(e) Earnings before interest, taxes, depreciation, and amortization;

 

(f) Earnings before income taxes;

 

(g) Net operating profit after taxes;

 

(h) Net income;

 

(i) Net income as a percentage of revenue;

 

(j) Free cash flow;

 

(k) Earnings per Common Share;

 

(l) Net operating profit after taxes per Common Share;

 

(m) Free cash flow per Common Share;

 

(n) Return on net assets employed before interest and taxes;

 

(o) Return on equity, investment, invested capital, net capital employed, assets, or net assets;

 

(p) Total stockholder return or relative total stockholder return (as compared with a peer group of the Company);

 

(q) Safety performance metrics, including relative to industry standards; or

 

(r) Strategic team goals.

 

 
 

To the extent not inconsistent with Section 162(m) of the Code, the Committee shall adjust the results under any performance criteria to exclude any of the following events, or any similar that occurs during a performance measurement period: (a) asset write-downs; (b) litigation, claims, judgments or settlements; (c) the effect of changes in tax law, accounting principles or periods, or other such laws or provisions affecting reported results; (d) accruals for reorganization and restructuring programs; (e) fluctuations in foreign exchange rates; and (f) any extraordinary, unusual, or nonrecurring items.

 

 

 

 

 

 

 

 

 

Exhibit 16.1

June 28, 2013

 

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

 

Commissioners:

 

We have read the statements made by SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.) under Item 4.01 of its Form 8-K dated June 24, 2013. We agree with the statements concerning our Firm in such Form 8-K; we are not in a position to agree or disagree with other statements of SAExploration Holdings, Inc. (formerly known as Trio Merger Corp.) contained therein.

 

Very truly yours,

 

/s/ Marcum llp

 

Marcum llp

 

 

 

Exhibit 21.1

 

SUBSIDIARIES OF THE COMPANY

 

SUBSIDIARIES OF SAEXPLORATION, HOLDINGS, INC.

 

Name of Subsidiary or Organization   State or County of Incorporation
     
SAExploration Sub, Inc.   Delaware
SAExploration, Inc.   Delaware
SAExploration Seismic Services (US), LLC   Delaware
NES, LLC   Alaska
1623739 Alberta Ltd.   Alberta, CA
Southeast Asian Exploration Pte., Ltd.   Singapore
South American Exploration (Australia) PTY Limited   Australia
SAExploration (Brasil) Servicos  Sismicos Ltda.   Brazil
1623753 Alberta Ltd.   Alberta, CA
SAExploration (Canada) Ltd.   Alberta, CA
1 Kuukpik/SAExploration, LLC (49%)   Alaska
*South American Exploration, LLC   Alaska
**Malaysian entity – new   Malaysia
**Canadian entity   CA

 

*Confirm status and operations

**Need to confirm formation and name

 

 

1 SAExploration, Inc. owns 49% Kuukpik Corporation owns 51%

 

 

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

TRIO MERGER CORP. COMPLETES MERGER WITH SAEXPLORATION HOLDINGS INC.

 

New York, NY and Calgary, AB – June 24, 2013 - Trio Merger Corp. (NASDAQ: TRIO; OTCBB: TMRGW)(“Trio”) today announced the completion of its merger with SAExploration Holdings, Inc. (“SAE” or the “Company”) , following the receipt of stockholder approval on June 21, 2013.

 

In connection with the consummation of the merger, Trio changed its name to SAExploration Holdings, Inc. As previously disclosed in the Company’s filings with the Securities and Exchange Commission, the Company intends to commence an exchange offer for its outstanding warrants as soon as practicable.

 

Brian Beatty, President and CEO of SAE, commented, “We appreciate the support of Trio’s stockholders and look forward to SAE’s future as a public company. Since our founding in 2006, we have grown to become one of the largest international seismic data acquisition companies in the world. We are excited about our growth opportunities, and will use the elevated profile we expect from our NASDAQ listing and public currency to further expand our industry presence and enhance long-term value for our stockholders.”

 

Eric Rosenfeld, Chairman and CEO of Trio and a board member of SAE following the consummation of the merger, said, “We are pleased and excited to have completed a merger with such a high-quality company. I believe that SAE is uniquely-positioned in the seismic data industry, given its expertise in and reputation for operating in logistically complex and challenging environments, its strong quality, health, safety and environmental record and its competencies in transportation, lodging and community relations. I look forward to serving as a Director of the Company to support its growth objectives.”

 

About SAExploration Holdings, Inc.

 

SAE is a holding company of various subsidiaries which cumulatively form a geographically diversified seismic data acquisition company. SAE provides a full range of 2D, 3D and 4D seismic data services to its clients, including surveying, program design, logistical support, data acquisition, processing, camp services, catering, environmental assessment and community relations. The Company services its multinational client base from offices in Canada, Alaska, Peru, Colombia, Bolivia, Papua New Guinea, New Zealand and Brazil. SAE’s website is www.saexploration.com.

 

 

 

 

 

 
 

 

 

Forward Looking Statements

 

This press release includes certain forward-looking statements, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on management’s current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of SAE’s business. These risks, uncertainties and contingencies include: fluctuations in the levels of exploration and development activity in the oil and gas industry; business conditions; weather and natural disasters; changing interpretations of GAAP; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments; requirements or changes adversely affecting the business in which SAE is engaged; fluctuations in customer demand; changes in scope or schedule of customer projects; termination of contracts at the convenience of clients; management of rapid growth; intensity of competition from other providers of seismic acquisition services; general economic conditions; geopolitical events and regulatory changes; and other factors set forth in the Company’s filings with the Securities and Exchange Commission. The information set forth herein should be read in light of such risks. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

 

 

 

CONTACT: -OR- INVESTOR RELATIONS:
SAExploration Holdings, Inc.   The Equity Group Inc.
Jeff Hastings   Devin Sullivan
Chairman   Senior Vice President
(403) 776-1950   (212) 836-9608 / dsullivan@equityny.com 
     
 Brian Beatty   Thomas Mei
 Chief Executive Officer and President   Associate
 (403) 776-1950   (212) 836-9614 / tmei@equityny.com 

 

 

 

 

 

Exhibit 99.2

 

Contacts:    
SAExploration Holdings, Inc.   The Equity Group Inc.
Brent Whiteley   Devin Sullivan
Chief Financial Officer and General Counsel   Sr. Vice President
713-816-6392   212-836-9608
bwhiteley@saexploration.com   dsullivan@equityny.com
     
    Thomas Mei
    Associate
    212-836-9614
    tmei@equityny.com

 

 

FOR IMMEDIATE RELEASE

 

SAEXPLORATION HOLDINGS, INC. ANNOUNCES $62.6 MILLION IN

 

NEW CONTRACT AWARDS IN SOUTH AMERICA

 

CALGARY, AB – June 24, 2013 - SAExploration Holdings, Inc. (NASDAQ:TRIO, OTCBB:TMRGW)(“SAE” or the “Company”) today announced that the Company has been awarded seismic data acquisition contracts totaling $62.6 million for new projects in South America during the last week.

 

Brian Beatty, President and CEO of SAE, commented, “These new contracts demonstrate the continued strength of the oil & gas exploration market in South America. These projects are expected to commence in the third quarter of 2013 and extend into the fourth quarter of 2013. SAE has a long-standing reputation for operating in these logistically complex and challenging areas. We have an industry leading quality, health, safety and environmental record and combined with our expertise in equipment transportation, lodging and community relations, we truly feel that our customers will receive an environmentally sustainable and culturally sensitive groundwork for years of oil and gas exploration.”

 

About SAExploration Holdings, Inc.

 

SAE is a holding company of various subsidiaries which cumulatively form a geographically diversified seismic data acquisition company. SAE provides a full range of 2D, 3D and 4D seismic data services to its clients, including surveying, program design, logistical support, data acquisition, processing, camp services, catering, environmental assessment and community relations. The Company services its multinational client base from offices in Canada, Alaska, Peru, Columbia, Bolivia, Papua New Guinea, New Zealand and Brazil. SAE’s website is www.saexploration.com.

 

 

 
 

 

Forward Looking Statements

 

This press release includes certain forward-looking statements, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on SAE managements’ current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of SAE’s business. These risks, uncertainties and contingencies include: fluctuations in the levels of exploration and development activity in the oil and gas industry; business conditions; weather and natural disasters; changing interpretations of GAAP; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments; requirements or changes adversely affecting the business in which SAE is engaged; fluctuations in customer demand; changes in scope or schedule of customer projects; termination of contracts at the convenience of clients; management of rapid growth; intensity of competition from other providers of seismic acquisition services; general economic conditions; geopolitical events and regulatory changes; and other factors set forth in SAE’s filings with the Securities and Exchange Commission. The information set forth herein should be read in light of such risks. SAE is not under any obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

 

 

 

 

 

 

 

Exhibit 99.3

 

Contacts:    
SAExploration Holdings, Inc.   The Equity Group Inc.
Brent Whiteley   Devin Sullivan
Chief Financial Officer and General Counsel   Sr. Vice President
713-816-6392   212-836-9608
bwhiteley@saexploration.com   dsullivan@equityny.com
     
    Thomas Mei
    Associate
    212-836-9614
    tmei@equityny.com

 

FOR IMMEDIATE RELEASE

 

SAEXPLORATION HOLDINGS, INC. TO COMMENCE TRADING UNDER

NEW STOCK SYMBOL

 

CALGARY, AB – June 25, 2013 - SAExploration Holdings, Inc. (NASDAQ: SAEX, OTCBB:TMRGW)(“SAE” or the “Company”) today announced that, effective with the commencement of trading on June 25, 2013, the Company’s common stock will begin trading on the NASDAQ Capital Market under the new symbol SAEX. The common stock had previously traded on the NASDAQ Capital Market under the symbol TRIO. The change in the stock symbol follows the completion of the merger between SAE and Trio Merger Corp. on June 24, 2013.

 

The Company’s warrants will continue trading on the OTCBB under the current symbol TMRGW. The Company expects the warrant symbol to be changed shortly and will announce the new symbol as soon as practicable.

 

About SAExploration Holdings, Inc.

 

SAE is a holding company of various subsidiaries which cumulatively form a geographically diversified seismic data acquisition company. SAE provides a full range of 2D, 3D and 4D seismic data services to its clients, including surveying, program design, logistical support, data acquisition, processing, camp services, catering, environmental assessment and community relations. The Company services its multinational client base from offices in Canada, Alaska, Peru, Columbia, Bolivia, Papua New Guinea, New Zealand and Brazil. SAE’s website is www.saexploration.com.

 

 

 
 

 

 

Forward Looking Statements

 

This press release includes certain forward-looking statements, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on SAE managements’ current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of SAE’s business. These risks, uncertainties and contingencies include: fluctuations in the levels of exploration and development activity in the oil and gas industry; business conditions; weather and natural disasters; changing interpretations of GAAP; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments; requirements or changes adversely affecting the business in which SAE is engaged; fluctuations in customer demand; changes in scope or schedule of customer projects; termination of contracts at the convenience of clients; management of rapid growth; intensity of competition from other providers of seismic acquisition services; general economic conditions; geopolitical events and regulatory changes; and other factors set forth in SAE’s filings with the Securities and Exchange Commission. The information set forth herein should be read in light of such risks. SAE is not under any obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

 

 

 

 

 

 

 

 

 

 

Exhibit 99.4

 

Contacts:    
SAExploration Holdings, Inc.   The Equity Group Inc.
Brent Whiteley   Devin Sullivan
Chief Financial Officer and General Counsel   Sr. Vice President
713-816-6392   212-836-9608
bwhiteley@saexploration.com   dsullivan@equityny.com
     
    Thomas Mei
    Associate
    212-836-9614
    tmei@equityny.com

 

 

FOR IMMEDIATE RELEASE

 

SAEXPLORATION HOLDING’S WARRANTS TO COMMENCE TRADING UNDER

NEW SYMBOL

 

CALGARY, AB – June 25, 2013 - SAExploration Holdings, Inc. (NASDAQ: SAEX, OTCBB:SAEXW)(“SAE” or the “Company”) today announced that, effective with the commencement of trading on June 26, 2013, the Company’s warrants will begin trading on the OTCBB under the new symbol SAEXW. The warrants had previously traded on the OTCBB under the symbol TMRGW. The change in the warrant symbol follows the completion of the merger between SAE and Trio Merger Corp. on June 24, 2013.

 

About SAExploration Holdings, Inc.

 

SAE is a holding company of various subsidiaries which cumulatively form a geographically diversified seismic data acquisition company. SAE provides a full range of 2D, 3D and 4D seismic data services to its clients, including surveying, program design, logistical support, data acquisition, processing, camp services, catering, environmental assessment and community relations. The Company services its multinational client base from offices in Canada, Alaska, Peru, Columbia, Bolivia, Papua New Guinea, New Zealand and Brazil. SAE’s website is www.saexploration.com.

 

 
 

 

 

Forward Looking Statements

 

This press release includes certain forward-looking statements, including statements regarding future financial performance, future growth and future acquisitions. These statements are based on SAE managements’ current expectations or beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of SAE’s business. These risks, uncertainties and contingencies include: fluctuations in the levels of exploration and development activity in the oil and gas industry; business conditions; weather and natural disasters; changing interpretations of GAAP; outcomes of government reviews; inquiries and investigations and related litigation; continued compliance with government regulations; legislation or regulatory environments; requirements or changes adversely affecting the business in which SAE is engaged; fluctuations in customer demand; changes in scope or schedule of customer projects; termination of contracts at the convenience of clients; management of rapid growth; intensity of competition from other providers of seismic acquisition services; general economic conditions; geopolitical events and regulatory changes; and other factors set forth in SAE’s filings with the Securities and Exchange Commission. The information set forth herein should be read in light of such risks. SAE is not under any obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise.

 

 

 

 

 

 

 

 

 

Exhibit 99.6

 

CHARTER OF THE COMPENSATION COMMITTEE OF

THE BOARD OF DIRECTORS OF

SAEXPLORATION HOLDINGS, INC.

 

I. PURPOSES

 

The Compensation Committee (the “ Committee ”) is appointed by the Board of Directors (the “ Board ”) of SAExploration Holdings, Inc. (the “ Company ”) for the purposes of, among other things, (a) discharging the Board’s responsibilities relating to the compensation of the Company’s chief executive officer (the “ CEO ”) and other executive officers of the Company, (b) administering or delegating the power to administer the Company’s incentive compensation and equity-based compensation plans and (c) if required by applicable rules and regulations, issuing a “Compensation Committee Report” to be included in the Company's annual report on Form 10-K or proxy statement, as applicable.

 

II. RESPONSIBILITIES

 

In addition to such other duties as the Board may from time to time assign, the Committee shall:

 

·             Establish, review and approve the overall executive compensation philosophy and policies of the Company, including the establishment, if deemed appropriate, of performance-based incentives that support and reinforce the Company's long-term strategic goals, organizational objectives and stockholder interests.

 

·             Review and approve the Company’s goals and objectives relevant to the compensation of the CEO, annually evaluate the CEO’s performance in light of those goals and objectives and, based on this evaluation, determine the CEO’s compensation level, including, but not limited to, salary, bonus or bonus target levels, long and short-term incentive and equity compensation, retirement plans, and deferred compensation plans as the Committee deems appropriate. In determining the long-term incentive component of the CEO’s compensation, the Committee shall consider, among other factors, the Company’s performance and relative stockholder return, the value of similar incentive awards to CEO’s at comparable companies, and the awards given to the Company’s CEO in past years. The CEO shall not be present during voting and deliberations relating to CEO compensation.

 

·             Determine the compensation of all other executive officers, including, but not limited to, salary, bonus or bonus target levels, long and short-term incentive and equity compensation, retirement plans, and deferred compensation plans, as the Committee deems appropriate. Members of senior management may report on the performance of the other executive officers of the Company and make compensation recommendations to the Committee, which will review and, as appropriate, approve the compensation recommendations.

 

 
 

 

·             Receive and evaluate performance target goals for the senior officers and employees (other than executive officers) and review periodic reports from the CEO as to the performance and compensation of such senior officers and employees.

 

·             Administer or delegate the power to administer the Company’s incentive and equity-based compensation plans, including the grant of stock options, restricted stock and other equity awards under such plans.

 

·             Review and make recommendations to the Board with respect to the adoption of, and amendments to, incentive compensation and equity-based plans and approve for submission to the stockholders all new equity compensation plans that must be approved by stockholders pursuant to applicable law.

 

·             Review and approve any annual or long-term cash bonus or incentive plans in which the executive officers of the Company may participate.

 

·             Review and approve for the CEO and the other executive officers of the Company any employment agreements, severance arrangements, and change in control agreements or provisions.

 

·             Review and discuss with the Company’s management the Compensation Discussion and Analysis set forth in Securities and Exchange Commission Regulation S-K, Item 402, if required, and, based on such review and discussion, determine whether to recommend to the Board of Directors of the Company that the Compensation Discussion and Analysis be included in the Company’s annual report or proxy statement for the annual meeting of stockholders.

 

·             Provide, over the names of the members of the Committee, the Compensation Committee Report for the Company’s annual report or proxy statement for the annual meeting of stockholders, if required.

 

·             Conduct an annual performance evaluation of the Committee. In conducting such review, the Committee shall evaluate and address all matters that the Committee considers relevant to its performance, including at least the following: (a) the adequacy, appropriateness and quality of the information received from management or others; (b) the manner in which the Committees recommendations were discussed or debated; (c) whether the number and length of meetings of the Committee were adequate for the Committee to complete its work in a thorough and thoughtful manner; and (d) whether this Charter appropriately addresses the matters that are or should be within its scope.

 

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III. COMPOSITION

 

The Committee shall be comprised of two or more members (including a chairperson), all of whom shall be “independent directors,” as such term is defined in the rules and regulations of the Nasdaq Stock Market. Notwithstanding the foregoing, so long as the Company is a “controlled company” as such term is defined in Rule 5615(c)(1) of the Nasdaq Stock Market, the Committee may have as one of its members a “non-independent director” pursuant to the exemption under Rule 5615(c)(2) of the Nasdaq Stock Market for controlled companies. In addition, the Committee may have as one of its members a “non-independent director” under exceptional and limited circumstances pursuant to the exemption under Rule 5605(d)(3) of the Nasdaq Stock Market. At least two of the Committee members shall be “non-employee directors” as defined by Rule 16b-3 under the Securities Exchange Act of 1934 and “outside directors” as defined by Section 162(m) of the Internal Revenue Code. The members of the Committee and the chairperson shall be selected not less frequently than annually by the Board and serve at the pleasure of the Board. A Committee member (including the chairperson) may be removed at any time, with or without cause, by the Board.

 

The Committee shall have authority to delegate any of its responsibilities to one or more subcommittees as the Committee may from time to time deem appropriate. If at any time the Committee includes a member who is not a “non employee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), then a subcommittee comprised entirely of individuals who are “non-employee directors” may be formed by the Committee for the purpose of ratifying any grants of awards under any incentive or equity-based compensation plan for the purposes of complying with the exemption requirements of Rule 16b-3 of the Exchange Act or Section 162(m) of the Internal Revenue Code of 1986, as amended; provided that any such grants shall not be contingent on such ratification.

 

IV. MEETINGS AND OPERATIONS

 

The Committee shall meet as often as necessary, but at least two times each year, to enable it to fulfill its responsibilities. The Committee shall meet at the call of its chairperson or a majority of its members. The Committee may meet by telephone conference call or by any other means permitted by law or the Company’s Bylaws. A majority of the members of the Committee shall constitute a quorum. The Committee shall act on the affirmative vote of a majority of members present at a meeting at which a quorum is present. Subject to the Company’s Bylaws, the Committee may act by unanimous written consent of all members in lieu of a meeting. The Committee shall determine its own rules and procedures, including designation of a chairperson pro tempore in the absence of the chairperson, and designation of a secretary. The secretary need not be a member of the Committee and shall attend Committee meetings and prepare minutes. The Secretary of the Company shall be the Secretary of the Compensation Committee unless the Committee designates otherwise. The Committee shall keep written minutes of its meetings, which shall be recorded or filed with the books and records of the Company. Any member of the Board shall be provided with copies of such Committee minutes if requested.

 

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The Committee may ask members of management, employees, outside counsel, or others whose advice and counsel are relevant to the issues then being considered by the Committee to attend any meetings (or a portion thereof) and to provide such pertinent information as the Committee may request.

 

The chairperson of the Committee shall be responsible for leadership of the Committee, including preparing the agenda which shall be circulated to the members prior to the meeting date, presiding over Committee meetings, making Committee assignments and reporting the Committee’s actions to the Board. Following each of its meetings, the Committee shall deliver a report on the meeting to the Board, including a description of all actions taken by the Committee at the meeting.

 

If at any time during the exercise of his or her duties on behalf of the Committee, a Committee member has a direct conflict of interest with respect to an issue subject to determination or recommendation by the Committee, such Committee member shall abstain from participation, discussion and resolution of the instant issue, and the remaining members of the Committee shall advise the Board of their recommendation on such issue. The Committee shall be able to make determinations and recommendations even if only one Committee member is free from conflicts of interest on a particular issue.

 

V. AUTHORITY

 

The Committee has the authority, to the extent it deems appropriate, to conduct or authorize investigations into or studies of matters within the Committee's scope of responsibilities and to retain one or more compensation consultants to assist in the evaluation of CEO or executive compensation or other matters. The Committee shall have the sole authority to retain and terminate any such consulting firm, and to approve the firm’s fees and other retention terms. The Committee shall evaluate whether any compensation consultant retained or to be retained by it has any conflict of interest in accordance with Item 407(e)(3)(iv) of Regulation S-K. The Committee shall also have the authority, to the extent it deems necessary or appropriate, to retain legal counsel or other advisors. In retaining compensation consultants, outside counsel and other advisors, the Committee must take into consideration factors specified in the NASDAQ listing rules. The Company will provide for appropriate funding, as determined by the Committee, for payment of any such investigations or studies and the compensation to any consulting firm, legal counsel or other advisors retained by the Committee.

 

Adopted on June 24, 2013.

 

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