Exhibit 10.1

AMENDED AND RESTATED

STOCKHOLDERS’ AGREEMENT

OF

INDEPENDENCE CONTRACT DRILLING, INC.

Dated as of October 1, 2018

 

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TABLE OF CONTENTS

 

						Page
Article I   GOVERNANCE MATTERS							1
		1.1		Board Composition; Representation			1
		1.2		Vacancies			3
		1.3		Selection of MSD Representatives; Committees			3
		1.4		Compensation			3
		1.5		Election			3
Article II  RESTRICTED ACTIVITIES; PREEMPTIVE RIGHTS; VOTING; WAIVER OF CORPORATE OPPORTUNITY; INDEMNIFICATION							3
		2.1		Transfer Restrictions			4
		2.2		Restricted Activities			5
		2.3		Voting			6
		2.4		Taxes			7
		2.5		Disclaimer of Corporate Opportunity Doctrine			7
		2.6		Indemnification			8
		2.7		Permitted Disclosure			9
Article III   REGISTRATION RIGHTS							9
		3.1		Registration			9
		3.2		Expenses of Registration			12
		3.3		Obligations of the Company			12
		3.4		Termination of Registration Rights			14
		3.5		Furnishing Information			14
		3.6		Indemnification			15
		3.7		Assignment of Registration Rights			16
		3.8		Holdback; Lockup; Other Restrictions			16
		3.9		Rule 144			17
		3.10		Opt-Out Notice			17
Article IV   DEFINITIONS							17
		4.1		Defined Terms			17
		4.2		Terms Generally			22
Article V  MISCELLANEOUS							22
		5.1		Term			22
		5.2		Representations and Warranties			22
		5.3		Legends; Securities Act Compliance			22
		5.4		No Inconsistent Agreements			23
		5.5		Amendments and Waivers			23
		5.6		Successors and Assigns			24
		5.7		Severability			24
		5.8		Counterparts			24
		5.9		Entire Agreement			24
		5.10		Governing Law; Jurisdiction			24
		5.11		WAIVER OF JURY TRIAL			24
		5.12		Specific Performance			24
		5.13		No Third-Party Beneficiaries			24
		5.14		Notices			25
		5.15		Legal Representation			25
Exhibit A				Initial Company Directors
Exhibit B				Company Competitors
Schedule I				Member Parties

 

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AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT

This Amended and Restated Stockholders’ Agreement, dated as of October 1, 2018 (as it may be amended from time to time, this “ Agreement ”), is made by and between Independence Contract Drilling, Inc., a Delaware corporation (the “ Company ”), and each of the Persons named on Schedule I (the “ Member Parties ”).

R E C I T A L S

WHEREAS, the Company, Patriot Saratoga Merger Sub, LLC, a Delaware limited liability company (“ Merger Sub ”), Sidewinder Drilling LLC, a Delaware limited liability company (“ Sidewinder ”), and the Members Representative have entered into that certain Agreement and Plan of Merger dated as of July 18, 2018 (as it may be amended from time to time, the “ Merger Agreement ”), pursuant to which, upon the terms and subject to the conditions set forth in the Merger Agreement, on the Closing Date, Merger Sub will merge with and into Sidewinder (the “ Merger ”), and the surviving entity will become a wholly owned subsidiary of the Company;

WHEREAS, assuming the closing of the Merger in accordance with the Merger Agreement, on the Closing Date, each of the Member Parties will receive shares of common stock, par value $0.01 per share, of the Company (“ Common Stock ”) in accordance with the terms of the Merger Agreement (the shares of Common Stock received by the Member Parties on the Closing Date, the “ Shares ”);

WHEREAS, each of the parties hereto desires to amend and restate the original Stockholders’ Agreement, dated as of July 18, 2018 in order to reflect certain transfers made in accordance with Section 4.04 of the Contribution, Exchange and Restructuring Agreement, dated as of July 18, 2018 (the “ Note Conversion Agreement ”), between certain Member Parties and their Affiliates (as defined in the Note Conversion Agreement) occurring between the Execution Date (as defined in the Merger Agreement) and the date hereof; and

WHEREAS, each of the parties hereto wishes to set forth in this Agreement certain terms and conditions regarding the Member Parties’ ownership of the Shares and certain rights and obligations related thereto.

NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

Article I

GOVERNANCE MATTERS

1.1     Board Composition; Representation .

(a)    Immediately following the Effective Time, the Company shall take any and all necessary action to cause the Board of Directors of the Company (the “ Board ”) to be comprised of a total of seven (7) authorized directorships. At the Effective Time, the Company will cause to be appointed to the Board: (i) the two (2) MSD Representatives listed in Exhibit A hereto, at least one (1) of which must be, in the good faith determination of the Board or the Governance Committee, an Independent Director, (ii) the Chief Executive Officer of the Company immediately following the Effective Time, and (iii) the four (4) other directors to be continued on the Board, in each case as listed in Exhibit A.

(b)    From and after the date of the Closing, the manner for selecting nominees for election to the Board will be as follows:

(i)    In connection with each annual or special meeting of stockholders of the Company at which directors are to be elected (each such annual or special meeting, an “ Election Meeting ”), MSD Credit Opportunity Master Fund, L.P. (“ MSD COF Master Fund ”) shall have the right to designate for nomination a number of MSD Representatives as follows: (A) for so long as the MSD Percentage Interest is greater than or equal to 20%, two (2) MSD Representatives; provided , that at least one (1) of such MSD Representatives must be, in the good faith determination of the Governance Committee, an Independent Director; (B) for so long as the MSD Percentage Interest is less than 20% but greater than or equal to 10%, one (1) MSD Representative; and (C) if the MSD Percentage Interest is less than 10%, no MSD Representatives.

 

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(ii)    MSD COF Master Fund shall give written notice to the Governance Committee (as defined below) identifying each such MSD Representative within a reasonable amount of time prior to date on which the proxy is to be filed (and in any event at least 60 days prior to the later of (i) a date provided by the Company as the expected date on which a proxy statement is expected to be filed and (ii) the first anniversary of the mailing date of the proxy statement for the annual meeting of the Company’s stockholders for the prior year) in connection with the applicable Election Meeting. Following provision such notice, MSD COF Master Fund shall provide, or cause such individual(s) to provide, to the Company such information about such individuals at such times as the Company may reasonably request in order to ensure compliance with the Exchange Rules and the applicable securities Laws and to enable the Board of any committee thereof to make determinations with respect to the qualifications of the individual(s) to be MSD Representative(s) (the “ Required Information ”); provided , however , that if MSD COF Master Fund fails to give such notice or the Required Information in a timely manner, MSD COF Master Fund shall be deemed to have nominated the incumbent MSD Representative or MSD Representatives, as applicable, in a timely manner; provided , further , that if the number of incumbent MSD Representatives is less than the number of MSD Representatives MSD COF Master Fund is entitled to designate pursuant to Section  1.1   (b)   (i) , the Company and MSD COF Master Fund shall use their respective reasonable best efforts to mutually agree on the MSD Representative or MSD Representatives, as applicable, for such Election Meeting. If for any reason the Board or any committee thereof determines that an individual identified by MSD COF Master Fund is not qualified to be an MSD Representative, it shall promptly notify MSD COF Master Fund and MSD COF Master Fund may identify a replacement for such individual.

(iii)    In the event that the Company amends its certificate of incorporation to provide that the Board shall be classified into separate classes of directors, then proper provision shall be made such that the designees of the MSD Parties shall be distributed as evenly as possible among such classes of directors in order to preserve the designation rights of the MSD Parties in accordance with this Section  1.1.

(iv)    In the event that the Board increases or decreases the size of the Board in accordance with the Company’s certificate of incorporation, the number of MSD Representatives applicable under Section  1.1(b) shall be increased or decreased based on (A) the percentage of the number of MSD Representatives as applicable under Section  1.1(b)(i) divided by seven, multiplied by (B) the total number of directors on the Board, rounding up to the nearest whole number; provided , at any time MSD COF Master Fund has the right to designate two (2) MSD Representatives to the Board pursuant to Section  1.1(b)(i) , the Board shall not decrease the size of the Board below seven (7) without the prior written consent of MSD COF Master Fund.

(c)    From and after the date of the Closing until the Board Designation Expiration Date, the Company shall take all actions necessary (to the extent such actions are permitted by Law) to cause the Board to include the MSD Representative(s) entitled to be designated by MSD COF Master Fund pursuant to Section  1.1(b ) and otherwise to reflect the Board composition contemplated by Section  1.1 , including the following: (i) at each Election Meeting, include for election to the Board the MSD Representative(s) entitled to be designated by MSD COF Master Fund pursuant to Section  1.1(b) , (ii) to solicit proxies in order to obtain stockholder approval of the election of the MSD Representative(s), including causing officers of the Company who hold proxies (unless otherwise directed by the Company stockholder submitting such proxy) to vote such proxies in favor of the election of such MSD Representative(s), and (iii) to cause the MSD Representative(s) to be elected to the Board, including recommending that the Company’s stockholders vote in favor of the MSD Representative(s) in any proxy statement used by the Company to solicit the vote of its stockholders in connection with each Election Meeting.

(d)    If at any time the number of MSD Representatives serving on the Board exceeds the allowed number provided under this Section  1.1 , then unless otherwise requested by the Board, the MSD Parties shall use commercially reasonable efforts to cause such MSD Representative to offer to resign from the Board within 90 days or if such offer of resignation is not given within such period, the Board shall be entitled to remove such director such that, following such resignation(s) or removal(s), the number of MSD Representatives serving on the Board does not exceed such allowed number following such period. If at any time the Board or the Governance Committee determines in good faith that an MSD Representative that was required pursuant to Section  1.1(b)(i)(A) to be an Independent Director ceases to be an Independent Director and, as a result, there is no Independent Director among the MSD Representatives, then unless otherwise requested by the Board, the MSD Parties shall use commercially reasonable efforts to cause such MSD Representative to resign from the Board, or if such resignation is not given promptly, the Board shall be entitled to remove such director, it being understood that MSD COF Master Fund shall be entitled to fill the vacancy resulting therefrom in accordance with Section  1.2 .

 

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(e)    On the date that the MSD Parties Beneficially Own less than ten percent (10%), or at such earlier time that the MSD Parties deliver an irrevocable written termination of its rights under Article 1 to the Company pursuant to Section  1.4 , the MSD Parties will have no further rights to nominate any directors to the Board.

(f)    Following such time as the MSD Parties have no further rights to nominate any directors to the Board based on the MSD Parties Beneficially Owning less than 10% of the Company’s outstanding common stock, if and so long as the MSD Parties continue to hold at least fifty percent (50%) of the number of the Voting Securities held by the MSD Parties as of immediately following the Closing (without regard to any additional issuances of Voting Securities following the date hereof, whether during the period beginning on the date hereof and ending immediately prior to the Closing or after the Closing), the MSD Parties shall be entitled to designate, and the Company shall permit one representative of the MSD Parties (which shall be any individual as the MSD COF Master Fund shall select from time to time by written notice to the Company who is reasonably acceptable to the Company (the “ Board Observer ”) to attend all meetings of the Board of Directors (whether in person, telephonic or other) in a non-voting, observer capacity and shall provide to such Board Observer, concurrently with the members of the Board of Directors, and in the same manner, notice of such meeting and a copy of all materials provided to such members (subject to confidentiality by such Board Observer).

1.2     Vacancies .

(a)    Subject to Sections 1.1 and 1.4 , if at any time the number of MSD Representatives serving on the Board is less than the total number of MSD Representatives that the MSD Parties are entitled to designate pursuant to Section  1.1(b) , whether due to the death, resignation, retirement, disqualification or removal from office as a member of the Board of a MSD Representative or otherwise, the Board shall take all action (to the extent permitted by Law) required to fill the vacancy resulting therefrom with such replacement designated by the MSD Parties as promptly as practicable. In furtherance thereof, the Board shall use its reasonable best efforts, if requested by the MSD Parties, to fill such vacancy prior to the time the Board next takes action on any other matter.

(b)    In the event of any vacancy on the Board occurring due to the death, resignation, retirement, disqualification or removal from office as a member of the Board of any director of the Company other than the MSD Representatives, the Board shall take all action (to the extent permitted by Law) required to fill the vacancy resulting therefrom with such replacement selected by the Company as promptly as practicable.

1.3     Selection of MSD Representatives; Committees . For purposes of this Agreement, “ MSD Representative ” means any person designated by the MSD Parties to be elected or appointed to the Board, or his or her replacement designated in accordance with Section  1.2 , provided, that such person’s service as a director must not be prohibited by Law. The parties hereto agree that the persons listed on Exhibit A to this Agreement are qualified for service pursuant to the foregoing sentence. Subject to applicable Law and stock exchange rules, until the Board Designation Expiration Date, each committee of the Board shall include a pro rata number of MSD Representatives in proportion to the Board, in each case, subject to applicable NYSE/SEC rules and regulations and individual director expertise, as reasonably determined by the Board.

1.4     Compensation . Each MSD Representative shall be entitled to the same expense reimbursement and advancement, exculpation, indemnification and insurance in connection with his or her role as a director as the other members of the Board (which shall be primary over any other indemnification or insurance available to such MSD Representative), as well as reimbursement for documented, reasonable out-of-pocket expenses incurred in attending meetings of the Board or any committee of the Board of which such MSD Representative is a member, if any, in each case to the same extent as the other members of the Board. Each MSD Representative shall be also entitled to any retainer, equity compensation or other fees or compensation paid to the non-employee directors of the Company for their services as a director, including any service on any committee of the Board. Notwithstanding the foregoing, (x) the compensation payable to any such MSD Representative that is an employee of any of the MSD Parties or their respective Affiliates shall be paid to MSD COF Master Fund and not to such MSD Representative, (y) the Company shall not issue a IRS Form-1099 to any such MSD Representative and (z) in lieu of compensation otherwise payable to such MSD Representative that is payable to non-employee directors in the form of equity, the Company shall pay to MSD COF Master Fund in cash in an amount equal to $20,000 per quarter, payable in arrears within ten (10) Business Days after the end of each calendar quarter.

1.5     Election . The MSD Parties may elect upon written notice to the Company to irrevocably terminate any or all of their rights under this Article 1 at any time.

 

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Article II

RESTRICTED ACTIVITIES; PREEMPTIVE RIGHTS; VOTING; WAIVER OF CORPORATE OPPORTUNITY; INDEMNIFICATION

2.1     Transfer Restrictions .

(a)    Prior to the date that is the earlier of one hundred eighty (180) days after the Closing or 10 days after the filing of the Company’s annual report on Form 10-K for the year ended December 31, 2018 (assuming the Shelf Registration Statement is effective at such time) (such period, the “ Restricted Period ”), without the consent of the Company, no Member Party shall Transfer (i) any shares of Common Stock, (ii) any other equity securities issued by the Company or any of its Subsidiaries that derive their value from any Company voting securities, or (iii) any rights, options or other derivative securities or contracts or instruments to acquire such ownership that derive their value from such equity securities, except for Transfers (A) in connection with any merger or other consolidation or reorganization, tender or exchange offer, or any other similar transaction generally available to all holders of outstanding Common Stock, (B) in connection with any offering pursuant to Section  3.1(e)(i) in which the Member Party exercises its Piggyback Registration (as defined below) right, (C) to an Affiliate of the Transferring Member Party (provided that such Affiliate remains an Affiliate of the Transferring Member Party throughout the Restricted Period) or to a Permitted Transferee, (D) by means of distributions to the partners, employees or members of a Member Party or its Affiliates, (E) (x) as a bona fide gift or gifts or (y) to any trust for the direct or indirect benefit of the undersigned or the immediate family thereof (which shall be any relationship by blood, marriage or adoption, not more remote than first cousin of the Transferee) or (F) to any other Member Party; provided , however , that in the case of clauses (C), (D) and (E), (x) a direct Transfer shall only be permissible if the applicable Member Parties and the Transferee enter into a written agreement pursuant to which the Transferee agrees, effective as of the consummation of such transfer, to be bound by the terms of this Agreement as it if were a Member Party (it being understand that such agreement shall not affect the Member Parties’ obligations and liabilities under this Agreement) and (y) any such Transfer shall not involve a disposition for value. In addition, notwithstanding the foregoing in this Section  2.1(a) , a Member Party may sell Shares for cash in an amount not to exceed the amount of income taxes due as a result of the receipt of such Shares by the Member Party in the Merger, and in any event not more than 5% of the Shares owned by such Member Party.

(b)    Following the Restricted Period, without limiting the right of any Holder to Transfer Registrable Securities to any Permitted Transferee or the Company, no Holder may, without the Company’s consent, Transfer any Registrable Securities, other than (i) Transfers by the MSD Parties in accordance with Sections 3.1(a) , 3.1(b) and 3.1(c) , (ii) Transfers by any of the Holders (including the MSD Parties) in accordance with Section  3.1(e) , or (iii) other Transfers by any member of a Holder Group of up to 5% of the number of Registrable Securities owned by such Holder Group as of immediately following the Closing (which Transfers may be effected through use of the Registration Statement, pursuant to Rule 144, or otherwise, excluding for the purposes of calculating the number of Registrable Securities that may be sold pursuant to this clause (iii) any Registrable Securities sold pursuant to clause (ii) of this Section  2.1(b) ; provided , that this Section  2.1(b) shall cease to apply from and after the earlier of (x) the first anniversary of Closing and (y) the date on which each of the Member Parties (together with their respective Affiliates) Beneficially Owns less than 66-2/3% of the number of Registrable Securities owned as of immediately following the Closing.

(c)    Until the Sunset Date, without Board Approval, the MSD Parties (or any other Member Party that, together with its Affiliates, Beneficially Owns 10% or more of the outstanding Common Stock) shall not (x) Transfer any shares of Common Stock to any Person or Group who, to the Transferring Member Party’s knowledge, is a Company Competitor or (y) Transfer any shares of Common Stock to any Person or Group who, after giving effect to such Transfer and to the Transferring Member Party’s knowledge, would own 20% or more of the outstanding shares of Common Stock. Notwithstanding anything in this Agreement to the contrary, this clause (c) shall not apply to any Transfer effected under a Registration Statement filed pursuant to Article III (other than a registered direct offering not involving a broker or placement agent and that is intended to circumvent the foregoing prohibitions), any Transfer in accordance with Rule 144 under the Securities Act, or any Transfer to the Company or any Permitted Transferee. For the purposes of determining “knowledge”, (i) in the case of clause (x), the Transferring Member Party shall have no obligation to make an inquiry or investigation and in no event shall the knowledge of any broker used by the Transferring Member Party be imputed to such party, and (ii) in the case of clause (y), the Transferring Member shall have no obligation to make an inquiry or investigation and shall only be required to reviewing filings made by the prospective purchaser on the SEC’s EDGAR system in order to determine whether or not such purchaser beneficially owns 20% or more of the outstanding shares of Common Stock.

(d)    In connection with any Transfer of Common Stock pursuant to this Agreement to the MSD Parties or any MSD Direct Transferee or MSD Indirect Transferee, the Company shall grant such approvals and take all other actions as are necessary to exempt such transaction from Section 203 of the DGCL.

 

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2.2     Restricted Activities .

(a)    Subject to Section  2.2(b) , prior to the Sunset Date, the MSD Parties shall not and shall cause their respective Controlled Affiliates not to, directly or indirectly, without the Board’s prior written consent:

(i)    make any public announcement, proposal or offer (including any “solicitation” of “proxies” as such terms are defined or used in Regulation 14A of the Exchange Act) with respect to, or otherwise solicit, seek or offer to effect (including, for the avoidance of doubt, indirectly by means of communication with the press or media) any of the following: (1) any acquisition of, additional beneficial ownership of Voting Security (including in derivative form) or any tender or exchange offer, merger, consolidation, business combination or other similar transaction involving the Company or any of its subsidiaries that would result in the acquisition by the MSD Parties of Beneficial Ownership of an amount of Voting Securities (including in derivative form) that is greater than MSD Parties’ Beneficial Ownership of Voting Securities as of immediately following the Closing, (2) any restructuring, recapitalization, liquidation or similar transaction involving the Company or any of its Subsidiaries, (3) the election of the directors of the Company other than the MSD Representatives or the removal of any directors of the Company other than the MSD Representatives, or publicly becoming a “participant” in a “solicitation” (as such terms are defined in Regulation 14A of the Exchange Act) with respect to the election of directors of the Company other than the MSD Representatives or the removal of any directors of the Company other than the MSD Representatives, or (4) any acquisition of any of the Company’s loans, debt securities, equity securities or assets, or rights or options to acquire interests in any of the Company’s loans, debt securities, equity securities or assets; provided , however , that nothing in this Section  2.2(a)(i) shall prohibit the MSD Parties from privately communicating any such statement or proposal to the directors or Chief Executive Officer of the Company so long as such private communications do not, and would not reasonably be expected to, trigger public disclosure obligations of or for any Person (including, without limitation, the filing of a Schedule 13D or Schedule 13G or any amendment thereof);

(ii)    publicly seek a change in the composition or size of the Company Board, except in furtherance of the provisions of this Agreement;

(iii)    deposit any Voting Security (other than in connection with Transfers to Affiliates) into a voting trust or subject any Voting Security to any proxy, arrangement or agreement with respect to the voting of such securities or other agreement having a similar effect, in any such case which conflicts with the MSD Parties’ obligations in Section  2.2(a)(ii) above;

(iv)    acquire any Voting Security (including in derivative form) or Beneficial Ownership of any Voting Securities that is greater than the MSD Parties’ Beneficial Ownership of Voting Securities as of immediately following the Closing;

(v)    call for, or initiate, propose or requisition a call for, any general or special meeting of the Company’s stockholders in furtherance of the actions described in Section  2.2(a)(i) ;

(vi)    publicly disclose any intention, plan or arrangement to either (1) obtain any waiver or consent under, or any amendment of, any provision of this Section  2.2 or (2) take any action challenging the validity or enforceability of any provision of this Section  2.2 ; or

(vii)    intentionally and knowingly instigate, facilitate, encourage, or assist any third party to do any of the foregoing.

(b)    Notwithstanding anything to the contrary set forth in this Section  2.2 , nothing in this Agreement shall in any way limit, restrict or impair, directly or indirectly, (1) the activities of any director of the Company, so long as such activities are undertaken solely in his or her capacity as a director of the Company, (2) the activities of the MSD Parties and/ or their Affiliates in any capacity (including exercising, protecting, preserving or enforcing any rights, interests or remedies and/or taking any other actions, in each case, as a lender to the Company or the holder of any interests received in exchange for or in respect of such indebtedness) other than as a stockholder of the Company, or (3) the MSD Parties’ or any of its Affiliates’ ability to:

(i)    acquire Common Stock by way of stock splits or stock dividends paid by the Company to all holders of Common Stock on a pro rata basis;

(ii)    acquire Common Stock by Affiliates pursuant to Permitted Transfers;

 

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(iii)    acquire Common Stock which would increase the percentage ownership of the Member Parties to not more than the percentage of the outstanding shares of Common Stock owned by the MSD Parties as of immediately after giving effect to the Closing;

(iv)    acquire Common Stock in transactions with the Company;

(v)    acquire Common Stock or take any other actions in connection with lending to the Company;

(vi)    propose, commit to, participate in and/or make a loan or other debt financing to the Company or any of its subsidiaries;

(vii)    propose, commit to, participate in and/or provide debt financing to a prospective buyer regarding the Company or any of its subsidiaries or assets in a negotiated transaction with the Company (excluding any unsolicited offer made to the Company, other than in the context of a bankruptcy or insolvency proceeding), or finance a third party’s effort to make a loan or other debt financing to the Company or any of its subsidiaries in a negotiated transaction (excluding any unsolicited offer made to the Company, other than in the context of a bankruptcy or insolvency proceeding) with the Company or any of its subsidiaries;

(viii)    participate in any auction or sale process approved, conducted or initiated by the Company pursuant to which the Company proposes to sell or otherwise dispose of any of the businesses or assets of the Company or any of its Subsidiaries are proposed to be sold or otherwise disposed of (but excluding any strategic combination of the Company that is not a process intended, per se, to obtain the greatest value for the Company’s Common Stock, other than in the context of a bankruptcy or insolvency proceeding);

(ix)    submit a proposal to the Board relating to the acquisition of all of the equity of the Company or all or substantially all of the assets of the Company and its Subsidiaries if the Company has entered into a definitive agreement with respect to the sale of all of the equity of the Company (including by merger) or all or substantially all of the assets of the Company and its subsidiaries; or

(x)    purchase debt of the Company or its subsidiaries in secondary market transactions.

(c)    The MSD Parties further agree not to, and to cause their Controlled Affiliates not to, without the prior written consent of the Company, publicly request the Company to amend or waive any provision of this Section  2.2 (including this sentence) or do so in a manner that would require the Company to publicly disclose such request.

(d)    Notwithstanding the foregoing, this Section  2.2 shall not apply in respect of any Common Stock that is issued as compensation for any MSD Representative serving as a director of the Company.

For purposes of this Section  2.2 , (x) the term “Voting Securities” shall be deemed to include any security of the company that is convertible into a Voting Security at any time and (y) the term “debt” shall be deemed to include, institutional debt (bank or otherwise), commercial paper, notes, debentures, bonds, other evidences of indebtedness, and debt securities, but shall not include any debt convertible or exchangeable for equity. Notwithstanding the foregoing, this Section  2.2 shall not limit the MSD Parties or their Controlled Affiliates from providing any financing in the context of any bankruptcy or insolvency proceeding.

2.3     Voting . From and after the date of this Agreement, until the Sunset Date, the MSD Parties agree (i) to cause all Voting Securities held by the MSD Parties or over which the MSD Parties or any of their respective subsidiaries otherwise has voting discretion or control to be present at any Election Meeting either in person or by proxy, (ii) to vote such Voting Securities Beneficially Owned by the MSD Parties or any of their respective subsidiaries or over which the MSD Parties or any of their respective subsidiaries otherwise has voting discretion or control (A) either (at the election of the MSD Parties) (1) as recommended by the Board or (2) in the same proportion as the votes cast by other holders of Voting Securities, (x) with respect to director nominees nominated by the Company’s Board or Nominating and Corporate Governance Committee (the “Governance Committee”) (including any directors nominated to the Board pursuant to Section  1.2 , but excluding the MSD Representatives nominated to the Board pursuant to Section  1.1 ), and (y) with respect to any other nominees (excluding the MSD Representatives nominated to the Board pursuant to Section  1.1 ), and (B) in favor of the MSD Representatives nominated to the Board pursuant to Section  1.1 , (iii) to not vote such Voting Securities in favor of any Change of Control Transaction submitted to the Company’s stockholders for approval or adoption pursuant to which the per-share consideration to be received by the MSD Parties or any of their respective Affiliates in respect of their shares of Common Stock in such Change of Control Transaction is different in amount or form from the per-share consideration to be received by other

 

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holders of Common Stock who are not Affiliates of the MSD Parties or the Company in respect of their shares of Common Stock in such Change of Control Transaction, disregarding any right to select cash and/or securities as consideration in such Change of Control Transaction that is offered generally to holders of Common Stock in such Change of Control Transaction, unless such Change of Control Transaction is approved by the Board, and (iv) not to take, alone or in concert with any other Persons, any action to remove or oppose any director of the Company other than the MSD Representatives or to seek to change the size or composition of the Board or otherwise seek to expand the MSD Parties’ representation on the Board in each case in a manner inconsistent with Section  1.1(b) . For the avoidance of doubt, nothing in this Section  2.3 shall require the MSD Parties to vote any Voting Securities or cause any such Voting Securities to be voted in accordance with the Board’s recommendation with respect to any other matter requiring stockholder approval under Law that is not expressly addressed above.

2.4     Taxes .

(a)    The Company will prepare or cause to be prepared and file or cause to be filed all federal, state and local income Tax Returns (as defined in the Merger Agreement) for Sidewinder for all taxable periods ending on or prior to the Closing Date. All such Tax Returns will be prepared in a manner consistent with Sidewinder’s past practices to the extent consistent with applicable law and relevant facts. The Company will make available to the MSD COF Master Fund (or such other entity as the MSD Parties may designate for this purpose by notice to the Company in writing) (the “ Tax Representative ”) drafts of such Tax Returns for review and comment not less than thirty (30) days before the filing date, and the Company will accept all reasonable comments to such Tax Returns provided by the Tax Representative within twenty (20) days after its receipt of each of any such Tax Return and financial statements (or a trial balance) in respect of the applicable period for review, provided that such comments are consistent with applicable law and relevant facts. In the event of a dispute with respect to any item to be reflected in any such Tax Return for a tax period ending on or prior to the Closing Date, the Company and the Tax Representative shall act in good faith to resolve any such dispute prior to the date on which such Tax Return is required to be filed. If the Company and the Tax Representative cannot resolve any disputed item, the item or items in question shall be resolved by a third-party accounting firm jointly selected by the Company and the Tax Representative; provided, however, that any such disputes shall not prevent the timely filing of any such Tax Return. The Company shall deliver to each Person who was a member of Sidewinder at any time during the taxable year of Sidewinder ending on the Closing Date (i) no later than forty-five (45) days from the Closing Date, estimated Schedule K-1’s, and (ii) no later than ninety (90) days from the Closing Date, final Schedule K-1s and any other information regarding Sidewinder as shall be reasonably necessary for the preparation by such Person of such Person’s federal, state and local income Tax Returns.

(b)    Each Member Party shall timely pay all Taxes (as defined in the Merger Agreement) required to be paid by such Member Party as a result of its pre-Closing ownership of membership interests in Sidewinder. Each Member Party that is a partnership or other flow-through entity for U.S. federal income tax purposes shall timely report to its partners or other beneficial owners their distributive shares of such Member Party’s income, gain, loss, expense and deduction from such Member Party’s pre-Closing ownership of membership interests in Sidewinder.

(c)    Each of the Company and the Member Parties agree, for U.S. federal income tax purposes, to treat the Company’s acquisition of Sidewinder pursuant to the Merger Agreement in a manner consistent with the holding in Situation 2 of Revenue Ruling 99-6, 1999-1 C.B. 432. Specifically, such acquisition will be treated (i) by the Members as if they had sold their limited liability company units of Sidewinder to the Company and (ii) by the Company as if it had purchased the assets of Sidewinder. None of the Parties nor their Affiliates will take any position inconsistent with such treatment in notices to or filings with Tax authorities, in audit or other proceedings with respect to Taxes (as defined in the Merger Agreement), or in other documents or notices relating to the transactions contemplated by this Agreement unless required to do so by a final determination as defined in Section 1313 of the Code.

2.5     Disclaimer of Corporate Opportunity Doctrin e .

(a)    In recognition and anticipation that (i) certain directors, principals, members, officers, associated funds, employees and/or other representatives of the MSD Group may serve as directors, officers or agents of the Company, (ii) any member of the MSD Group may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Company, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Company, directly or indirectly, may engage, and (iii) the MSD Representatives and their respective Affiliates may now engage and may continue to engage in the same or similar activities or related lines of business as those in which the Company, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Company, directly or indirectly, may engage, the provisions of this Section  2.5 are set forth

 

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to regulate and define the conduct of certain affairs of the Company with respect to certain classes or categories of business opportunities as they may involve any (A) member of the MSD Group and any Affiliate thereof or (B) the MSD Representatives (including any MSD Representative who serves as an officer of the Company in both his or her director and officer capacities) or his or her Affiliates (the Persons identified in clauses (A) and (B) above being referred to, collectively, as “ Identified Persons ” and, individually, as an “ Identified Person ”) and the powers, rights, duties and liabilities of the Company and its directors, officers and stockholders in connection therewith.

(b)    To the fullest extent permitted by Law, no Identified Person shall, have any duty to refrain from directly or indirectly (i) engaging in the same or similar business activities or lines of business in which the Company or any of its Affiliates now engages or proposes to engage or (ii) otherwise competing with the Company or any of its Affiliates. To the fullest extent permitted by Law and subject to Section  2.5(c) , (1) the Company hereby renounces any interest or expectancy in, or right to be offered an opportunity to participate in, any business opportunity which may be presented to from time to time to any Identified Person, even if the opportunity is one that the Company might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, (2) no Identified Person who acquires knowledge of a potential transaction or other matter or business opportunity which may be a corporate opportunity for itself, herself or himself and the Company or any of its Affiliates shall have any fiduciary duty or other duty (contractual or otherwise) to communicate, present or offer such transaction or other business opportunity to the Company or any of its Affiliates and (3) no Identified Person shall be liable to the Company or its stockholders or to any Affiliate of the Company for breach of any fiduciary duty or other duty (contractual or otherwise) as a stockholder, director or officer of the Company solely by reason of the fact that such Identified Person pursues or acquires such corporate opportunity for itself, herself or himself, offers or directs such corporate opportunity to another Person, or does not present such corporate opportunity to the Company or any of its Affiliates.

(c)    In addition to, and without limitation of, Section  2.5(b) , each of the parties acknowledges and agrees that:

(i)    a corporate opportunity shall not be deemed to be a potential corporate opportunity for the Company if it is a business opportunity that (1) the Company is neither financially or legally able, nor contractually permitted to undertake, (2) from its nature, is not in the line of the Company’s business or is of no practical advantage to the Company or (3) is one in which the Company has no interest or reasonable expectancy;

(ii)    To the fullest extent permitted by law and subject to Section  2.5(c)(iii) , the Company and its Affiliates do not have any rights in or to the business ventures of any Identified Person, or the income or profits derived therefrom, and to the fullest extent permitted by Law, each of the Identified Persons may conduct business with or otherwise transact with any potential or actual customer, supplier or other commercial counterparty; and

(iii)    the Company does not renounce its interest in any corporate opportunity offered to any MSD Representative if such opportunity is expressly offered or presented to such person solely in his or her capacity as a director or officer of the Company, and the provisions of Section  2.5(b) shall not apply to any such corporate opportunities.

(d)    In the event of any conflict between any policies or manuals of the Board to which an MSD Representative may be subject and the provisions of this Section  2.5 , the provisions of this Section  2.5 shall govern.

(e)    Neither the alteration, amendment, addition to or repeal of this Section  2.5 , nor the adoption of any provision of this Agreement inconsistent with this Section  2.5 , shall eliminate or reduce the effect of this Section  2.5 in respect of any business opportunity first identified or any other matter occurring, or any cause of action, suit or claim against any Identified Person that, but for this Section  2.5 , would accrue or arise, prior to such alteration, amendment, addition, repeal or adoption. This Section  2.5 shall not limit any protections or defenses available to, or indemnification or advancement rights of, any MSD Representative under this Agreement or any other document, instrument or policy.

(f)    Neither the Board nor the Company shall take any action, or omit take any action, inconsistent with the foregoing provisions of this Section  2.5 .

2.6     Indemnification . The Company agrees to indemnify and hold harmless each Identified Person from and against Losses incurred by such Identified Person on or after the date of the closing of the Merger arising from any litigation or proceeding brought by a current or former shareholder of the Company as of the date of the closing of the Merger to the extent arising out of, resulting from, or relating solely due to their status as a stockholder of the Company as of the date of the closing of the Merger (“ Applicable Losses ”); provided , that the foregoing indemnification rights in this Section  2.6 shall not be available to the extent that (1) any such Losses are incurred as a result of such Identified Person’s action or inaction,

 

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including any willful misconduct or gross negligence; (2) any such Losses are incurred as a result of non-compliance by such Identified Person with any Laws or regulations applicable to any of them; (3) subject to the rights of contribution provided for below, to the extent indemnification for any Losses would violate any applicable Law or public policy; or (4) any such Losses are incurred as a result of any actions or inaction by the Company or such Indemnified Person prior to the closing of the Merger, or any Losses relating to the Merger or the Merger Agreement. The rights of any Identified Person to indemnification hereunder will be in addition to any other rights any such party may have under any other agreement or instrument to which such Identified Person is or becomes a party or is or otherwise becomes a beneficiary or under law or regulation. In the event of any payment of indemnification pursuant to this Section  2.6 , to the extent that any Identified Person is indemnified for Losses, the Company will be subrogated to the extent of such payment to all of the related rights of recovery of the Identified Person to which such payment is made against all other persons. Such Identified Person shall execute all papers reasonably required to evidence such rights. The Company will be entitled at its election to participate in the defense of any third party claim upon which indemnification is due pursuant to this Section  2.6 or to assume the defense thereof, with counsel reasonably satisfactory to such Identified Person unless, in the reasonable judgment of the Identified Person, a conflict of interest between the Company and such Identified Person may exist, in which case such Identified Person shall have the right to assume its own defense and the Company shall be liable for all reasonable expenses therefor. Except as set forth above, should the Company assume such defense all further defense costs of the Identified Person in respect of such third party claim shall be for the sole account of such party and not subject to indemnification hereunder. The Company will not without the prior written consent of the Identified Person (which consent shall not be unreasonably withheld) effect any settlement of any threatened or pending third party claim in which such Identified Person is or could have been a party and be entitled to indemnification hereunder unless such settlement solely involves the payment of money and includes an unconditional release of such Identified Person from all liability and claims that are the subject matter of such claim. If the indemnification provided for above is unavailable in respect of any Losses, then the Company, in lieu of indemnifying an Identified Person, shall, if and to the extent permitted by Law, contribute to the amount paid or payable by such Identified Person in such proportion as is appropriate to reflect the relative fault of the Company and such Identified Person in connection with the actions which resulted in such Losses, as well as any other equitable considerations. For purposes of this Section  2.6 , Losses shall include all reasonable costs and expenses (including reasonable attorneys’ fees, charges, disbursement and expenses) incurred in connection with the enforcement or exercise by an MSD Party of any right granted to it or provided for hereunder. For the avoidance of doubt, no Identified Person shall be obligated to pursue recovery for any Applicable Losses under any other agreement, policy or other instrument to which such Identified Person is or becomes a party or is or otherwise becomes a beneficiary and the Company shall have no right to pursue recovery in any manner for any Losses under any such agreement, policy or other instrument.

2.7     Permitted Disclosure . Each MSD Representative and Board Observer shall be permitted to disclose to the MSD Parties, their respective Affiliates and their and their Affiliates’ Representatives information about the Company that he or she receives as a result of being a director or Board Observer of the Company; provided, any Confidential Information provided to such Persons by any MSD Representative or Board Observer shall be maintained in confidence by the MSD Parties and such other Persons, shall not be divulged by such recipient to any other party who is not obligated to such party to maintain the confidentiality of such information, and shall not be used by the MSD Parties or such other Persons for purposes in violation of applicable Law.

Article III

REGISTRATION RIGHTS

3.1     Registration .

(a)    The Company shall use its commercially reasonable best efforts to file, as soon as practicable after the Closing Date, and no later than the later of (i) 30 days after the Closing Date and (ii) fifteen (15) Business Days after Sidewinder delivers the financial statements and information required to be delivered by Sidewinder pursuant to Sections 7.15(b) and (c)  of the Merger Agreement, a shelf registration statement under the Securities Act to permit the public resale of all the Registrable Securities held by the Member Parties from time to time as permitted by Rule 415 under the Securities Act (or any successor or similar provision adopted by the SEC then in effect) (a “ Shelf Registration Statement ”) and use its reasonable best efforts to cause such Shelf Registration Statement to be declared effective as promptly as practicable (but in any event, no later than 180 days after the Closing Date or, if earlier, the end of the Restricted Period (or the end of any then-applicable Permitted Black-Out Period) (the “ Effectiveness Deadline ”)). If the Shelf Registration Statement is not declared effective by the SEC prior to the Effectiveness Deadline (other than as a result of matters solely related to any material inaccuracy included in the Sidewinder financial statements and information required to be delivered by Sidewinder pursuant to Sections 7.15(b) and (c)  of the Merger Agreement), then each Holder shall be entitled to payment, as liquidated damages

 

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and not as a penalty, in an amount equal to 0.25% of the aggregate Fair Market Value of the Registrable Securities held by such Holder for the first 60-day period immediately following the Effectiveness Deadline, with such payment amount increasing by an additional 0.25% of the Fair Market Value per 30-day period, that shall accrue daily, for each subsequent 60-day period, up to a maximum of 1.00% of the Fair Market Value per 30-day period or pro rata for any portion thereof following the date by which such Shelf Registration Statement should have been effective. Such liquidated damages shall be paid by the Company within ten (10) Business Days of the end of each 60-day period, as applicable. Such payments shall constitute the Holders’ exclusive monetary remedy for such events unless the circumstances above are a result of a willful breach by the Company, but shall not affect the right of the Holders to seek injunctive relief. Subject to Section  3.4 , the Company shall use reasonable best efforts to keep such Shelf Registration Statement continuously effective, to be supplemented and amended to the extent necessary to ensure that such Shelf Registration Statement is available or, if not available, that one or more other registration statements is available, for the resale of all the Registrable Securities held by the Member Parties and other Holders and in compliance with the Securities Act and usable for resale of such Registrable Securities (such registration statement, together with the Registration Statement, the “ Registration Statement ”) for a period from the date of its initial effectiveness until the earlier of (i) the date on which all Registrable Securities covered by the Shelf Registration Statement have been sold thereunder in accordance with the plan and method of distribution disclosed in the prospectus included in the Shelf Registration Statement, or otherwise cease to be Registrable Securities, and (ii) the date on which this Agreement terminates pursuant to Section  5.1 .

(b)    To the extent that the Company is eligible to use a registration statement on Form S-3 (a “ Form S-3 ”), any registration pursuant to this Section  3.1 shall be effected by means of a Form S-3 providing for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act in accordance with the methods and distribution set forth in the Shelf Registration Statement and Rule 415; provided , that if the Company is not eligible to use a Form S-3, it shall be required to us such other form of registration statement as it is at any such time eligible to use.

(c)    If the MSD Parties intend to distribute any Registrable Securities included by the MSD Parties on the Registration Statement by means of an underwritten offering, including a take-down off of the Shelf Registration Statement (such take-down an “ Underwritten Shelf Take-Down ,” and any such offering, an “ Underwritten Offering ”), it shall promptly so notify the Company and the Company shall promptly take all reasonable steps to facilitate such distribution, including, if applicable, amending or supplementing the Shelf Registration Statement as necessary in order to enable such Registrable Securities to be distributed pursuant to the Underwritten Shelf Take-Down and the actions required pursuant to Section  3.3 ; provided , that, the Company shall not be required to effect (i) more than one (1) Underwritten Offering pursuant to this Section  3.1(c) in any calendar quarter (but in any event no more than one (1) Underwritten Offering in any sixty (60)-day period), and no more than three (3) Underwritten Offerings pursuant to this Section  3.1(c) in any 12-month period or (ii) any Underwritten Offering pursuant to this Section  3.1(c) the proceeds of which are reasonably anticipated to be less than $15 million (unless such offering would include at least five percent (5%) of the outstanding shares of Common Stock); provided , further , that if any MSD Party advises the Company pursuant to this Section  3.1(c) that it intends to undertake an Underwritten Offering, and prior to the consummation of such Underwritten Offering it is terminated or abandoned for any reason or no reason, then such Underwritten Offering shall not be deemed to have occurred for purposes of the foregoing limitation. The lead underwriters in any such distribution shall be selected by the MSD Parties; provided that such selections are reasonably acceptable to the Company.

(d)    The Company (i) may delay the filing or a request for effectiveness, or suspend the use of the Shelf Registration Statement and (ii) shall not be required to effect an Underwritten Offering during any Permitted Black-Out Period; provided that (1) such right to suspend the use of the Shelf Registration Statement or delay an Underwritten Offering shall be exercised by the Company only if the Company has generally exercised (or is concurrently exercising) similar black-out rights against holders of similar securities that have registration rights, (2) the Company shall not issue and sell any registered securities for its own account during such Permitted Black-Out Period, (3) without the prior written consent of the MSD Parties, a Permitted Black-Out Period may not occur more than twice in any period of 365 consecutive days, the duration of any Permitted Black-Out Period shall not exceed sixty (60) consecutive days, and the number of days in Permitted Black-Out Periods during any period of 365 consecutive days shall not exceed ninety (90) days and (4) a Permitted Black-Out Period shall terminate automatically upon the cessation of the conditions that gave rise to such Permitted Black-Out Period, and the Company shall notify all Holders within one Business Day following such termination.

(e)    If:

(i)    the Company proposes to file a Registration Statement or prospectus supplement with respect to any underwritten offering of its equity securities, other than a registration or offering pursuant to Section  3.1(a), (b) or (c) , and the registration form or prospectus supplement to be filed may be used for the registration or qualification

 

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for distribution of Registrable Securities, the Company will give prompt written notice to the MSD Parties and all other Holders of its intention to effect such underwritten offering (but in no event less than ten (10) Business Days prior to the anticipated filing date) (or, with respect to any overnight or bought offering, three (3) Business Days) and (subject to clause (g)  below) will include in such registration and offering all Registrable Securities with respect to which the Company has received written requests for inclusion therein within five (5) Business Days (or, with respect to any overnight or bought offering, one (1) Business Day) after the date of the Company’s notice (a “ Piggyback Registration ”). Any such person that has made such a written request may withdraw its Registrable Securities from such Piggyback Registration by giving written notice to the Company and the managing underwriter, if any, on or before the pricing date of such Piggyback Registration. The Company may terminate or withdraw any registration under this Section  3.1(e) prior to the effectiveness of such registration, whether or not the MSD Parties or any other Holders have elected to include Registrable Securities in such registration; or

(ii)    In the case of any Underwritten Offering initiated by the MSD Parties pursuant to Section  3.1(c) involving more than 48 hours of road show or other substantial marketing efforts (whether in person or remotely) by any underwriter of such offering with the participation of Company management (a “ Marketed Underwritten Offering ”), promptly after the MSD Parties deliver notice of such Marketed Underwritten Offering to the Company, the Company shall promptly deliver a written notice thereof to all Holders, and the Company shall include in such Marketed Underwritten Offering all Registrable Securities of such Holders for which the Company receives written requests within three (3) Business Days of such notice from the Company, which requests must specify the aggregate amount of such Registrable Securities of such Holder to be offered and sold pursuant to such Marketed Underwritten Offering; provided , that the number of Registrable Shares of any Holder to be included shall not exceed such Holder’s pro rata share of the total number of Registrable Securities owned by all such requesting Holders and the MSD Parties in the aggregate.

(f)    With respect to any offering contemplated by Section  3.1(e) , the right of any MSD Parties and all other Holders to registration or participation therein will be conditioned upon such persons’ participation in such underwriting and the inclusion of such persons’ Registrable Securities in the underwriting, and each such participating person will (together with the Company and the other persons distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company (in the case of Section  3.1(e)(i) ) or the MSD Parties (in the case of Section  3.1(e)(ii) ). Any Holder so participating shall not be required to make any representations or warranties to or agreements with the Company or the underwriters in connection with such underwriting agreement other than representations, warranties or agreements regarding such Holder, such Holder’s title to the Registrable Securities, such Holder’s authority to sell the Registrable Securities, such Holder’s intended method of distribution, absence of liens with respect to the Registrable Securities, enforceability of the applicable underwriting agreement as against such Holder, receipt of all consents and approvals with respect to the entry into such underwriting agreement and the sale of such Registrable Securities by such Holder and any other representations required to be made by such Holder under applicable law, rule or regulation, and the aggregate amount of the liability of such Holder in connection with such underwriting agreement shall not exceed such Holder’s net proceeds from such underwritten offering (i.e., less underwriting discounts and commissions). If any participating person disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company and the managing underwriter prior to the execution of the underwriting agreement with respect thereto.

(g)    If, in connection with a Piggyback Registration or Marketed Underwritten Offering under Section  3.1(e) , the managing underwriters advise the Company that in their reasonable opinion the number of securities requested to be included in such offering exceeds the number which can be sold without adversely affecting the marketability of such offering (including an adverse effect on the per share offering price), the Company will include in such registration or prospectus only such number of securities that in the reasonable opinion of such underwriters can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority:

(i)    With respect to any offering contemplated by Section  3.1(e)(i) , (A) first , the securities the Company proposes to sell, (B)  second , Registrable Securities of the MSD Parties and all other Holders who have requested registration of Registrable Securities pursuant to Section  3.1   (e)   (i) , as applicable, pro rata on the basis of the aggregate number of such securities or shares owned by each such person, and (C)  third , any other securities of the Company that have been requested to be so included, subject to the terms of this Agreement; or

(ii)    With respect to any offering contemplated by Section  3.1(e)(ii) , (A) first , all Registrable Securities of the MSD Parties and all other Holders who have requested registration or inclusion of Registrable Securities pursuant to Section  3.1(e)(ii) , pro rata on the basis of the aggregate number of such securities or shares owned by each such person, and (B)  second , the securities the Company proposes to sell.

 

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(h)    From and after the date of this Agreement, the Company shall not, without the prior written consent of the MSD Parties, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder (a) to include such securities in any registration filed, or any Underwritten Offering conducted, under Section  3.1 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration or take-down only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders which are included or (b) to demand registration of their securities.

3.2     Expenses of Registration . All Registration Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the holders of the securities so registered pro rata on the basis of the aggregate offering or sale price of the securities so registered.

3.3     Obligations of the Company . The Company shall use its reasonable best efforts for so long as there are Registrable Securities outstanding, to take such actions as are under its control to remain a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) if it becomes eligible for such status in the future (and not become an ineligible issuer (as defined in Rule 405 under the Securities Act)). In addition, whenever required to effect the registration of any Registrable Securities or facilitate the distribution of Registrable Securities pursuant to an effective Registration Statement (including pursuant to an Underwritten Offering), the Company shall, as expeditiously as reasonably practicable, take all such customary actions as may be reasonably necessary, or reasonably requested by any Holder, in order to expedite or facilitate the registration or distribution of such Registrable Securities, including:

(a)    Prepare and file with the SEC a prospectus supplement with respect to a proposed offering of Registrable Securities pursuant to an effective Registration Statement, subject to this Section  3.3 , keep such Registration Statement effective or such prospectus supplement current until the securities described therein are no longer Registrable Securities.

(b)    Prepare and file with the SEC such amendments and supplements to the applicable Registration Statement and the prospectus or prospectus supplement used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement.

(c)    Furnish to the Holders and any underwriters such number of copies of the applicable Registration Statement and each such amendment and supplement thereto (including in each case all exhibits) and of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned or to be distributed by them.

(d)    Use its reasonable best efforts to register and qualify the securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holders or any managing underwriter(s), to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such Holder; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(e)    Notify promptly each Holder of Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the applicable prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing.

(f)    Give prompt written notice to the Holders:

(i)    when any Registration Statement filed pursuant to Section  3.1 or any amendment or supplement thereto has been filed with the SEC (except for any amendment effected by the filing of a document with the SEC pursuant to the Exchange Act) and when such Registration Statement or any post-effective amendment thereto has become effective;

 

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(ii)    of any request by the SEC for amendments or supplements to any Registration Statement or the prospectus included therein or for additional information;

(iii)    of the issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose;

(iv)    of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

(v)    of the happening of any event that requires the Company to make changes in any effective Registration Statement or the prospectus related to the Registration Statement in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made); and

(vi)    if at any time the representations and warranties of the Company contained in any underwriting agreement contemplated by Section  3.3(j) cease to be true and correct.

(g)    Use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any Registration Statement referred to in Section  3.3(f)(iii) at the earliest practicable time.

(h)    Upon the occurrence of any event contemplated by Section  3.3(e) or 3.3(f)(v) , promptly prepare a post-effective amendment to such Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to the Holders and any underwriters, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(i)    Use reasonable best efforts to procure the cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities.

(j)    If an Underwritten Offering is requested pursuant to Section  3.1(c) , enter into an underwriting agreement in customary form, scope and substance and take all such other actions reasonably requested by the MSD Parties or the Holders of a majority of the Registrable Securities being sold in connection therewith or by the managing underwriter(s), if any, to expedite or facilitate the underwritten disposition of such Registrable Securities, and in connection therewith in any underwritten offering (including making members of management and executives of the Company reasonably available to participate in “road shows,” similar sales events and other marketing activities), (i) make such representations and warranties to the Holders that are selling stockholders and the managing underwriter(s), if any, with respect to the business of the Company and its subsidiaries, and the Registration Statement, prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in customary form, substance and scope, and, if true, confirm the same if and when requested, (ii) use its reasonable best efforts to furnish the underwriters with opinions of counsel to the Company, addressed to the managing underwriter(s), if any, covering the matters customarily covered in such opinions requested in underwritten offerings, (iii) use its reasonable best efforts to obtain “cold comfort” letters from the independent certified public accountants and reserve engineers of the Company (and, if necessary, any other independent certified public accountants of any business acquired by the Company for which financial statements and financial data are included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each of the managing underwriter(s), if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters, (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures customary in underwritten offerings, and (v) deliver such documents and certificates as may be reasonably requested by the MSD Parties or the Holders of a majority of the Registrable Securities being sold in connection therewith, their counsel and the managing underwriter(s), if any, to evidence the continued validity of the representations and warranties made pursuant to clause (i)  above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. Notwithstanding anything contained herein to the contrary, the Company shall not be required to enter into any underwriting agreement or permit any underwritten offering absent an agreement by the applicable underwriter(s) to indemnify the Company in form, scope and substance as is customary in underwritten offerings by the Company.

(k)    (A) make available for inspection by a representative of Holders that are selling stockholders, the managing underwriter(s), if any, and any attorneys or accountants retained by such Holders or managing underwriter(s), at the offices where normally kept, upon reasonable advance notice and during reasonable business hours, financial and other records,

 

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pertinent corporate documents and properties of the Company, and cause the officers, directors and employees of the Company to supply all information in each case reasonably requested (and of the type customarily provided in connection with due diligence conducted in connection with a registered public offering of securities) by any such representative, managing underwriter(s), attorney or accountant in connection with such Registration Statement and (B) use reasonable best efforts to procure customary legal opinions and auditor and reserve engineer “comfort” letters in connection with the sale of Registrable Securities the MSD Parties or any other Holder utilizing the Registration Statement.

(l)    Cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed or, if no similar securities issued by the Company are then listed on any securities exchange, use its reasonable best efforts to cause all such Registrable Securities to be listed on the NYSE or the NASDAQ Stock Market, as determined by the Company.

(m)    If requested by the MSD Parties or the Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith, or the managing underwriter(s), if any, promptly include in a prospectus supplement or amendment such information as the MSD Parties or the Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith or managing underwriter(s), if any, may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such amendment as soon as practicable after the Company has received such request.

(n)    Timely provide to its security holders earning statements satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

(o)     To the extent required, in connection with the initial filing of a Registration Statement for an Underwritten Offering of the Registrable Securities and each amendment thereto with the SEC, cooperate with the managing underwriter in connection with the filing with FINRA of all forms and information required or requested by FINRA in order to obtain written confirmation from FINRA that FINRA does not object to the fairness and reasonableness of the underwriting terms and arrangements (or any deemed underwriting terms and arrangements) (each such written confirmation, a “ No Objections Letter ”) relating to the resale of Registrable Securities pursuant to the Registration Statement, including, without limitation, information provided to FINRA through its COBRADesk system, and pay all costs, fees and expenses incident to FINRA’s review of the Registration Statement and the related underwriting terms and arrangements, including, without limitation, all filing fees associated with any filings or submissions to FINRA and the legal expenses, filing fees and other disbursements of the managing underwriter and any other FINRA member that is the Holder of, or is affiliated or associated with an owner of, Registrable Securities included in the Registration Statement (including in connection with any initial or subsequent member filing).

(p)    In the case of an Underwritten Offering, use its commercially reasonable efforts to cooperate and assist in any filings required to be made with FINRA and in the performance of any due diligence investigation by any underwriter and its counsel (including any “qualified independent underwriter,” if applicable) that is required to be retained in accordance with the rules and regulations of FINRA.

3.4     Termination of Registration Rights . A Holder’s registration rights as to any securities held by such Holder shall terminate on the date (i) such securities cease to qualify as Registrable Securities, or (ii) at such time that (A) such Registrable Securities may be sold by the Holder thereof pursuant to Rule 144 without limitation thereunder on volume or manner of sale or information requirements thereunder and (B) with respect to the MSD Parties only, the number of Registrable Securities held by such Holder constitutes less than five percent (5%) of the shares of Common Stock outstanding.

3.5     Furnishing Information .

(a)    No Holder shall use any free writing prospectus (as defined in Rule 405) in connection with the sale of Registrable Securities without the prior written consent of the Company.

(b)    It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section  3.3 that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be reasonably required to effect the registered offering of their Registrable Securities.

 

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3.6     Indemnification .

(a)    The Company agrees to indemnify each Holder and, if a Holder is a person other than an individual, such Holder’s direct or indirect partners, direct and indirect owners, members or stockholders and each of such owner’s partner’s, member’s or stockholder’s partners, members or stockholders and, with respect to all of the foregoing Persons, each of their respective Affiliates, employees, directors, officers, trustees or agents and controlling Persons within the meaning of the Securities Act and each of their respective representatives (each, an “ Indemnitee ”), against any and all Losses, joint or several, arising out of or based upon (i) any untrue statement or alleged untrue statement of material fact contained in any Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or any documents incorporated therein by reference or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto) or any omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided , that the Company shall not be liable to such Indemnitee in any such case to the extent that any such Loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon (A) an untrue statement or omission made in such Registration Statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), in reliance upon and in conformity with information regarding such Indemnitee or its plan of distribution or ownership interests which was furnished in writing to the Company by such Indemnitee expressly for use in connection with such Registration Statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto or (B) offers or sales effected by or on behalf such Indemnitee “by means of” (as defined in Rule 159A) a “free writing prospectus” (as such term is defined in Rule 405) that was not authorized in writing by the Company; (ii) any violation or alleged violation by the Company of any federal, state or common law rule or regulation applicable to the Company or any of its subsidiaries in connection with any such registration, qualification, compliance or sale of Registrable Securities; (iii) any failure to register or qualify Registrable Securities in any state where the Company or its agents have affirmatively undertaken or agreed in writing that the Company (the undertaking of any underwriter being attributed to the Company) will undertake such registration or qualification on behalf of the Holders of such Registrable Securities ( provided that in such instance the Company shall not be so liable if it has undertaken its reasonable best efforts to so register or qualify such Registrable Securities); or (iv) any actions or inactions or proceedings in respect of the foregoing whether or not an Indemnitee is a party thereto, whether such Registration Statement, final prospectus, preliminary prospectus, free writing prospectus (as defined in Rule 405) or other document is issued pursuant to this Agreement or otherwise.

(b)    In connection with any Registration Statement in which a Holder is participating, each such Holder shall, severally and not jointly, indemnify the Company, its directors and officers, and each Person, if any, who controls the Company within the meaning of the Securities Act to the same extent as the exception to the Company’s indemnification obligations provided for in clause (i) of Section  3.6(a) from the Company to the Holders applies, but only to the extent that such statement or omission is made in reliance upon and in conformity with information regarding such Indemnitee or its plan of distribution or ownership interests which was furnished in writing to the Company by such Indemnitee, expressly for use in any Registration Statement or any prospectus, including any amendment or supplement thereto. In no event shall the liability of such Holder hereunder be greater in amount than the dollar amount of the net proceeds (less underwriting discounts and commissions) received by such Holder under the sale of Registrable Securities giving rise to such indemnification obligation.

(c)    Any Person entitled to indemnification pursuant to this Section  3.6 (the “ Indemnified Party ”) shall give prompt written notice to the Person against whom such indemnity may be sought pursuant to this Section  3.6 (the “ Indemnifying Party ”) of any claim with respect to which it seeks indemnification; provided , however , the failure to give such notice shall not release the Indemnifying Party from its obligation, except to the extent that the Indemnifying Party has been actually and materially prejudiced by such failure to provide such notice on a timely basis.

(d)    In any case in which any such action is brought against any Indemnified Party, and it notifies an Indemnifying Party of the commencement thereof, the Indemnifying Party will be entitled to participate therein, and, to the extent that it may wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the Indemnifying Party to such Indemnified Party of its election so to assume the defense thereof and acknowledging the obligations of the Indemnifying Party with respect to such proceeding, the Indemnifying Party will not (so long as it shall continue to have the right to defend, contest, litigate and settle the matter in question in accordance with this paragraph) be liable to such Indemnified Party hereunder for any legal or other expense subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation, supervision and

 

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monitoring (unless (i) such indemnified party reasonably objects to such assumption on the grounds that there may be defenses available to it which are different from or in addition to the defenses available to such Indemnifying Party and, as a result, a conflict of interest exists or (ii) the Indemnifying Party shall have failed within a reasonable period of time to assume such defense and the Indemnified Party is or would reasonably be expected to be materially prejudiced by such delay, in either event the indemnified party shall be promptly reimbursed by the Indemnifying Party for the reasonable expenses incurred in connection with retaining one separate legal counsel (for the avoidance of doubt, for all indemnified parties in connection therewith)). For the avoidance of doubt, notwithstanding any such assumption by an Indemnifying Party, the indemnified party shall have the right to employ separate counsel in any such matter and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party except as provided in the previous sentence. An Indemnifying Party shall not be liable for any settlement of an action or claim effected without its consent (which consent shall not be unreasonably withheld, conditioned or delayed). No matter shall be settled by an Indemnifying Party without the consent of the indemnified party (which consent shall not be unreasonably withheld, conditioned or delayed), unless such settlement (x) includes as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation, (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any indemnified party, and (z) does not involve any injunctive or equitable relief that would be binding on the indemnified party or any payment that is not covered by the indemnification hereunder.

(e)    The indemnification provided for under this Agreement shall survive the Transfer of the Registrable Securities and the termination of this Agreement.

(f)    If the indemnification provided for in this Section  3.6 is unavailable to a Indemnified Party from the Person against the Indemnifying Party with respect to any Losses or is insufficient to hold the Indemnified Party harmless as contemplated therein, then the 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 Losses in such proportion as is appropriate to reflect the relative fault of the Indemnified Party, on the one hand, and the Indemnifying Party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party, on the one hand, and of the Indemnified Party, on the other hand, shall be determined by reference to, among other factors, whether the untrue statement of a material fact or omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; the Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section  3.6(f) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section  3.6 . No Indemnified Party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Indemnifying Party if the Indemnifying Party was not guilty of such fraudulent misrepresentation.

3.7     Assignment of Registration Rights . The rights of the MSD Parties to registration of Registrable Securities pursuant to Article 3 may be assigned to any permitted transferee or assignee of Registrable Securities; provided , however , that the transferor shall, within ten (10) days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the number of Registrable Securities that are being assigned.

3.8     Company Holdback . With respect to any Underwritten Offering pursuant to Section  3.1(c) , (i) the Company agrees not to effect (other than pursuant to such registration or pursuant to a Special Registration) any public sale or distribution, or to file any Registration Statement (other than such registration or a Special Registration) covering any of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the sixty (60) days following the date of execution of the underwriting agreement with respect to such Underwritten Offering (or such longer period not to exceed ninety (90) days as may be requested by the managing underwriter and as shall be applicable to Holders participating in such Underwritten Offering) and (ii) the Company agrees to cause each of its directors and senior executive officers to execute and deliver customary lock-up agreements not to exceed the lock-up period as requested from the Company and the Holders participating in such offering. With respect to any Underwritten Offering by the Company in which any Holders participate in accordance with Section  3.1(e)(i) or any Marketed Underwritten Offering initiated by the MSD Parties in which any Holders participate in accordance with Section  3.1(e)(ii) , each participating Holder agrees to execute and deliver customary lock-up agreements in such form and for such time period up to ninety (90) days as may be requested by the managing underwriter; provided that such Holder shall not be required to execute and deliver any lock-up agreement different in form or substance as any lock-up executed by the Company’s directors and senior executive officers.

 

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3.9     Rule 144 . With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to:

(a)    make and keep public information available, as those terms are understood and defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of this Agreement;

(b)    file with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act;

(c)    so long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon request: a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act, and of the Exchange Act; a copy of the most recent annual or quarterly report of the Company; and such other reports and documents as the Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration; and

(d)    take such further action as any Holder may reasonably request (including, without limitation (i) making its Chief Executive Officer and Chief Financial Officer reasonably available to potential purchasers in a reasonable manner (by telephone where feasible) and except during periods when the Company has restricted access to investors in accordance with its Regulation FD procedures and other policies and procedures required by applicable law; and (ii) executing a customary engagement letter that will provide for customary indemnification of a placement agent with respect to such placement), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act, and provided that the commission and fees for such placement shall be at the expense of the requesting Holder

3.10     Opt-Out Notice . At any time, any Holder may deliver written notice (an “ Opt-Out Notice ”) to the Company requesting that such Holder not receive notice from the Company of any proposed underwritten offering; provided , however , that such Holder may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from a Holder (unless subsequently revoked), the Company shall not, and shall not be required to, deliver any notice to such Holder pursuant to Section  3.1 .

Article IV

DEFINITIONS

4.1     Defined Terms . Capitalized terms when used in this Agreement have the following meanings:

“ Action ” means any claim, action, suit, arbitration, litigation or proceeding.

“ Affiliate ” means, with respect to any Person, any other Person who directly or indirectly Controls, is Controlled by, or is under common Control with the specified Person. Notwithstanding the foregoing, the Company shall be deemed to not be an Affiliate of the MSD Parties for purposes of this Agreement.

“ Agreement ” has the meaning set forth in the preamble.

“ Applicable Losses ” has the meaning set forth in Section  2.7 .

“ Beneficially Own or Beneficial Ownership ” with respect to any securities shall mean having “beneficial ownership” of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act without giving effect to the sixty (60)-day limitation on determining beneficial ownership contained in Rule 13d-3(d)), including pursuant to any agreement, arrangement or understanding, whether or not in writing.

“ Board ” has the meaning set forth in Section  1.1 .

“ Board Approval ” means approval by a majority of the members of the Board.

“ Board Designation Expiration Date ” means the earlier of (i) the date on which the MSD Percentage Interest is less than 10% and (ii) the date on which this Agreement is validly terminated pursuant to Section  5.1 .

“ Board Observer ” has the meaning set forth in Section  1.1(f) .

 

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“ Business Day ” means any day on which banks are not required or authorized to close in the City of New York.

“ Change of Control Transaction ” means the existence or occurrence of any of the following: (i) the sale, conveyance or disposition of all or substantially all of the assets of the Company and its subsidiaries in one transaction or a series of related transactions; (ii) the consolidation, merger or other business combination of the Company with or into any other entity, immediately following which the then current stockholders of the Company fail to own, directly or indirectly, at least Majority Voting Power; (iii) a transaction or series of transactions in which any person or “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) acquires Majority Voting Power (other than (A) a reincorporation or similar corporate transaction in which the Company’s stockholders own, immediately thereafter, interests in the new parent company in essentially the same percentage as they owned in the Company immediately prior to such transaction, or (B) a transaction described in clause (ii) (such as a triangular merger) in which the threshold in clause (ii) is not passed) or (iv) the replacement of a majority of the Board of Directors with individuals who were not nominated or elected by at least a majority of the directors at the time of such replacement.

“ Closing ” has the meaning set forth in the Merger Agreement.

“ Closing Date ” has the meaning set forth in the Merger Agreement.

“ Company ” has the meaning set forth in the preamble.

“ Company Competitor ” means (a) any Person listed on Exhibit B hereto, and any Controlled Affiliate of such Person, or (b) any Person whose primary business is the business of providing land-based contract drilling services for oil and natural gas producers in the United States (which, for the avoidance of doubt, shall not include any private equity or other investment firm that Controls any such Person described or any such firm’s Affiliates, other than such Person).

“ Common Stock ” has the meaning set forth in the recitals.

“ Confidential Information ” means any non-public business or financial information concerning the Company and its subsidiaries, including (a) financial and operating results, (b) proposed or pending strategic transactions, including refinancings and mergers and acquisitions and sales, and (c) backlog, contract status and pricing; provided, “Confidential Information” shall not, with respect to the MSD Parties, their respective Affiliates and their and their Affiliates’ Representatives, include information that: (i) is or becomes generally available to the public other than as a result of disclosure in violation of Section  2.7 ; (ii) is or becomes available to such parties from a source other than the Company, any of its Affiliates or subsidiaries or any of their respective representatives, provided that, such source is not known by such party, after reasonable inquiry, to be bound by a confidentiality agreement or obligation with the Company or any such Affiliate or subsidiary; or (iii) is information that such Person can reasonably demonstrate was independently developed by such Person (other than in such Person’s capacity as a director, employee, consultant or other service provider to the Company or its Affiliates or subsidiaries) without the use of any such information received under this Agreement.

“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ DGCL ” means the General Corporation Law of the State of Delaware, as amended.

“ Effective Time ” has the meaning set forth in the Merger Agreement.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Fair Market Value ” of a share of Common Stock means the volume-weighted average price of the Common Stock on the Principal Trading Market during the ten (10) trading days immediately prior to the date on which the Shelf Registration Statement should have been effective.

“ FINRA ” means the Financial Industry Regulatory Authority and any successor entity.

“ Form S-3 ” has the meaning set forth in Section  3.1(b) .

“ Group ” has the meaning assigned to such term in Section 13(d)(3) of the Exchange Act.

 

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“ Holder ” means any Member Party holding Registrable Securities or other holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with Section  3.8 .

“ Holder Group ” means, with respect to each Holder, such Holder and each other Holder that is under common Control with such Holder.

“ Holders’ Counsel ” means one counsel for the selling Holders chosen by Holders holding a majority interest in the Registrable Securities being registered.

“ Identified Person ” has the meaning set forth in Section  2.5(a) .

“ Indemnified Party ” has the meaning set forth in Section  3.6(c) .

“ Indemnifying Party ” has the meaning set forth in Section  3.6(c) .

“ Indemnitee ” has the meaning set forth in Section  3.6(a) .

“ Independent Director ” means a director who (i) is not an officer, director, principal, managing partner or employee of the MSD Parties or any of their Affiliates or any spouse, parent, child or sibling of any of the foregoing, (ii) would qualify as an “Independent Director” pursuant to the listing standards of the NYSE, or, if the Common Stock is not then listed for trading on the NYSE, pursuant to the rules of the national securities exchange on which the Common Stock is then listed or trading, with respect to the Company, and (iii) receives no compensation the MSD Parties or any Affiliate thereof for or related to his or her service as a director of the Company.

“ Law ” means any applicable federal, state, local, foreign or international law, statute, code, ordinance, order, rule, rule of common law, regulation, judgment, decree, injunction or treaty.

“ Merger Sub ” has the meaning set forth in the recitals.

“ Losses ” means all losses, costs, interest, charges, expenses (including reasonable attorneys’ fees), obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, assessments or deficiencies.

“ Majority Voting Power ” of the Company means a majority of the ordinary voting power in the election of directors of all the outstanding Voting Securities of the Company.

“ Mergers ” has the meaning set forth in the recitals.

“ Merger Agreement ” has the meaning set forth in the recitals.

“ MSD COF Master Fund ” has the meaning set forth in Section  1.1(b)(i) .

“ MSD Direct Transferee ” means any person that acquires (other than in a registered public offering or through a broker’s transaction executed on any securities exchange or other over-the-counter market) directly from the MSD Parties or any of their respective affiliates or successors or any “group,” or any member of any such group, of which such persons are a party under Rule 13d-5 of the Exchange Act beneficial ownership of 5% or more of the then-outstanding voting stock of the Company.

“ MSD Group ” means the MSD Parties, MSD Partners, L.P., MSD Capital, L.P., and any Person that directly or indirectly is controlled by, controls, or is under common control with MSD Partners, L.P. or MSD Capital, L.P., and shall include any principal, member, director, partner, stockholder, officer, employee, manager, direct or indirect owner or other representative of any of the foregoing.

“ MSD Indirect Transferee ” means any person that acquires (other than in a registered public offering or through a broker’s transaction executed on any securities exchange or other over-the-counter market) directly from any MSD Direct Transferee or any other MSD Indirect Transferee beneficial ownership of 5% or more of the then-outstanding voting stock of the Company.

 

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“ MSD Parties ” means, collectively, MSD COF Master Fund, MSD Credit Opportunity Fund X, LLC and MSD Energy Investments, L.P., provided , that each such Person shall no longer be deemed to be an MSD Party following such time as it no longer holds any Shares.

“ MSD Percentage Interest ” means, as of any date of determination, the percentage represented by the quotient of (i) the number of Voting Securities that are then-Beneficially Owned by the MSD Parties and their respective Affiliates and (ii) the number of all then-outstanding Voting Securities.

“ MSD Representative ” has the meaning set forth in Section  1.3 .

“ NYSE ” means the New York Stock Exchange.

“ Permitted Black-Out Period ” means a period in respect of which the Company has furnished to the MSD Parties a certificate signed by a senior executive officer of the Company that, in the good faith judgment of the Company’s board of directors, (x) the registration or Underwritten Offering, as the case may be, would reasonably be expected to materially adversely affect or materially interfere with any bona fide material financing of the Company or any material transaction under consideration by the Company, (y) the registration or Underwritten Offering, as the case may be, would require disclosure of material information that the Company has a bona fide business purpose for not disclosing and that has not been, and is not otherwise required to be, disclosed to the public, or (z) a Registration Statement, prospectus or prospectus supplement contains or may contain an untrue statement of a material fact or omits or may omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that that continued use of such Registration Statement, prospectus or prospectus supplement would be in violation of the Securities Act or the Exchange Act.

“ Permitted Transferee ” means (i) any Specified Permitted Transferee and (ii) any other Transferee permitted pursuant to Section  2.1 .

“ Person ” means an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization or a government or department or agency thereof.

“ Piggyback Registration ” has the meaning set forth in Section  3.1(e)(i) .

“ Principal Trading Market ” means the Trading Market on which the Common Stock is primarily listed on and quoted for trading.

“ Register ,” “ registered ,” and “ registration ” shall refer to a registration effected by preparing and (a) filing a Registration Statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of such Registration Statement or (b) filing a prospectus and/or prospectus supplement in respect of an appropriate effective Registration Statement on Form S-3.

“ Registrable Securities ” means (A) all Common Stock held by the Holders from time to time and (B) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in the foregoing clause (A) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, reclassification, merger, amalgamation, arrangement, consolidation or other reorganization, provided that, once issued, such securities will cease to constitute Registrable Securities upon the earliest to occur of (i) when they are sold pursuant to an effective Registration Statement under the Securities Act, (ii) when they are sold pursuant to Rule 144 and the transferee thereof does not receive “restricted securities” as defined in Rule 144, (iii) when they shall have ceased to be outstanding or (iv) when they have been sold in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of the securities. No Registrable Securities may be registered under more than one Registration Statement at one time.

“ Registration Expenses ” means all expenses incurred by the Company in effecting any registration pursuant to this Agreement (whether or not any registration or prospectus becomes effective or final) or otherwise complying with its obligations under this Article III, including all registration, filing and listing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, expenses incurred by the Company in connection with any “road show,” the reasonable fees and expenses of one counsel for the Holders, and expenses of the Company’s independent accountants in connection with any regular or special reviews or audits incident to or required by any such registration, but shall not include Selling Expenses and the compensation of regular employees of the Company, which shall be paid in any event by the Company.

 

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“ Registration Statement ” means the prospectus and other documents filed with the SEC to effect a registration under the Securities Act.

“ Rule 144 ,” “ Rule 144A ,” “ Rule 158 ,” “ Rule 159A ,” “ Rule 405 ” and “ Rule 415 ” mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

“ Representatives ” means any principal, director, officer, employee, manager or other representative of an applicable Person.

“ SEC ” means the U.S. Securities and Exchange Commission.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Selling Expenses ” means all discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder.

“ Shares ” has the meaning set forth in the recitals.

“ Shelf Registration Statement ” has the meaning set forth in Section  3.1(b) .

“ Sidewinder ” has the meaning set forth in the recitals.

“ Special Registration ” means the registration of (A) equity securities and/or options or other rights in respect thereof solely registered on Form S-4 or Form S-8 (or successor form) or (B) shares of equity securities and/or options or other rights in respect thereof to be offered to directors, members of management, employees, consultants, customers, lenders or vendors of the Company or its subsidiaries or in connection with dividend reinvestment plans.

“ Specified Permitted Transferee ” means (i) any Affiliate of the Member Party, (ii) any holder of equity interests in the Member Party and each of such holders’ direct and indirect equity holders and (iii) any other Member Party or any Affiliate thereof.

“ Subsidiary ” means, with respect to any Person, another Person, (i) an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing Person or body or (ii) more than fifty (50%) percent of the equity interests of which is owned directly or indirectly by such first Person.

“ Sunset Date ” means the earlier of: (i) the third anniversary of the Closing Date, (ii) the date on which the MSD Percentage Interest is less than 10% (or such other applicable Member Party Beneficially Owns less than 10%), (iii) the occurrence of a Change of Control Transaction, and (iii) a material breach of this Agreement by the Company (including any removal of any MSD Representative from the Board in violation of this Agreement and any failure of the Company to include in any proxy statement the nomination of the MSD Representatives (other than a failure attributable to a breach by the MSD Parties or the failure of such individual to meet the applicable independence criteria)) that is not cured by the Company promptly and within 30 days after notice of such breach.

“ Tax Representative ” has the meaning set forth in Section  2.4(a) .

“ Trading Market ” means whichever of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market or the OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

“ Transfer ” means (i) any direct or indirect offer, sale, lease, assignment, encumbrance, pledge, hypothecation, disposition or other transfer (by operation of law or otherwise), either voluntary or involuntary, or entry into any contract, option or other arrangement or understanding with respect to any offer, sale, lease, assignment, encumbrance, pledge, hypothecation, disposition or other transfer (by operation of law or otherwise), of any capital stock or interest in any capital stock or (ii) in respect of any capital stock or interest in any capital stock, to enter into any swap or any other agreement, transaction or series of transactions that hedges or transfers, in whole or in part, directly or indirectly, the economic consequence of such ownership of such capital stock or interest in capital stock, whether any such transaction, swap or series of transactions is to be settled by delivery of securities, in cash or otherwise. Notwithstanding anything to the contrary in this Agreement, a sale,

 

21

transfer or other change in the ownership of any equity interests in a Person shall not be deemed to result in the Transfer of capital stock or any interest in capital stock held by such Person unless such sale, transfer or other change in ownership results in a change of Control of such Person.

“ Underwritten Shelf Take-Down ” has the meaning set forth in Section  3.1(c) .

“ Voting Securities ” means shares of Common Stock and any other securities of the Company entitled to vote generally at any annual or special meeting of the Company’s stockholders.

4.2     Terms Generally . The words “hereby,” “herein,” “hereof,” “hereunder” and words of similar import refer to this Agreement as a whole and not merely to the specific section, paragraph or clause in which such word appears. All references herein to Articles and Sections shall be deemed references to Articles and Sections of this Agreement unless the context shall otherwise require. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” References to “$” or “dollars” means United States dollars. The definitions given for terms in this Article IV and elsewhere in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. References herein to any agreement or letter (including the Merger Agreement) shall be deemed references to such agreement or letter as it may be amended, restated or otherwise revised from time to time. If, and as often as, there is any change in the outstanding shares of Common Stock by reason of a share dividend or distribution, or stock split or other subdivision, or in connection with a combination of stock, recapitalization, reclassification, merger, amalgamation, arrangement, consolidation or other reorganization or other similar capital transaction, appropriate anti-dilution adjustments will be made in the provisions of this Agreement so as to fairly and equitably preserve the rights and obligations set forth herein.

Article V

MISCELLANEOUS

5.1     Term . This Agreement is binding on the parties as of the date hereof, but will be effective as of the Closing Date and, except as otherwise set forth herein will continue in effect thereafter until the earlier of (a) the time when no shares of Common Stock are held by the MSD Parties or any other Holder and (b) its termination by the consent of all parties hereto or their respective successors in interest. This Agreement shall terminate immediately in all respects in the event of a termination of the Merger Agreement.

5.2     Representations and Warranties . Each party hereto hereby represents and warrants to each other party to this Agreement that as of the date such party executes this Agreement: (a) it is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization; (b) this Agreement has been duly and validly executed and delivered by such party and this Agreement constitutes a legal and binding obligation of such party , enforceable against the such party in accordance with its terms; (c) the execution, delivery and performance by such party of this Agreement and the consummation by such party of the transactions contemplated hereby will not, with or without the giving of notice or lapse of time, or both (i) violate any Law applicable to it, or (ii) conflict with, or result in a breach or default under, any term or condition of any agreement or other instrument to which such party is a party or by which such party is bound, except for such violations, conflicts, breaches or defaults that would not, in the aggregate, materially affect such party’s ability to perform its obligations hereunder. Each Member Party hereby represents and warrants to the Company that: (i) it is acquiring its shares of Common Stock in accordance with and pursuant to the Merger Agreement, for its own account, solely for investment and not with a view toward, or for sale in connection with, any distribution thereof in violation of any federal or state securities or “blue sky” laws, or with any present intention of distributing or selling such shares of Common Stock in violation of any such laws, (ii) it has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the shares of Common Stock and of making an informed investment decision, (iii) it is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act, and (iv) it acknowledges the shares of Common Stock issued to it pursuant to the Merger Agreement may not be Transferred unless such Transfer is registered under applicable federal and state securities Laws or is made pursuant to an exemption from registration under any federal or state securities Laws, and in each case in accordance with this Agreement.

 

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5.3     Legends; Securities Act Compliance .

(a)    A copy of this Agreement shall be filed with the Secretary of the Company and kept with the records of the Company. Each Holder agrees that all certificates, book-entry shares or other instruments representing such Shares will bear a legend substantially to the following effect:

THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENTS FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT THE SECURITIES MAY BE SOLD PURSUANT TO RULE 144 OR ANOTHER AVAILABLE EXEMPTION UNDER THE SECURITIES ACT AND THE RULES AND REGULATIONS THEREUNDER. THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS’ AGREEMENT WITH CERTAIN RESTRICTIONS ON TRANSFER, COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY OR FROM THE HOLDER OF THIS CERTIFICATE. ANY ATTEMPTED TRANSFER OR DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN VIOLATION OF THE STOCKHOLDERS’ AGREEMENT SHALL BE NULL, VOID AND OF NO EFFECT.

(b)    Notwithstanding Section  5.3(a) , at the request of the Member Parties or other applicable Holder, (i) at such time as the restrictions described in the foregoing are no longer applicable to the Member Parties or such other Holder and (ii) with respect to restrictions that refer to the Securities Act or other Laws, upon receipt by the Company of an opinion of counsel to the effect that the first sentence of the foregoing legend is no longer required under the Securities Act or other Laws, as the case may be, the Company will promptly cause such legend to be removed from any certificate or book entry share for any Shares held by the Member Parties or such other Holder.

5.4     No Inconsistent Agreements . The Company will not hereafter enter into any agreement with respect to its securities that violates or is inconsistent or conflicts with the rights granted to the holders of Registrable Securities in this Agreement.

5.5     Amendments and Waivers; etc .

(a)    Subject to Section  5.5(b) , the provisions of this Agreement may be amended or waived only upon the prior written consent of (a) the Company and (b) the MSD Parties; provided that (i) the Company may amend Schedule I hereto to add any Persons who are entitled to receive any Shares in accordance with the Merger Agreement who are not Member Parties as of the date of this Agreement and (ii) any provision of this Agreement applicable to all Member Parties (and, for the avoidance of doubt, not just the MSD Parties) shall only be amended or waived upon the prior written consent of (x) other than with respect to Article III , the Member Parties holding more than 50% of the Shares still held by the Member Parties or a Permitted Transferee thereof, or (y) with respect to Article III, Member Parties holding more than 50% of the Registrable Shares as of the time of such amendment or waiver.

(b)    Notwithstanding anything to the contrary in Section  5.5(a) , (i) any amendment or waiver that materially and disproportionately affects a Member Party or group of Member Parties shall require the consent of such Member Party or Member Parties, (ii) any amendment to or waiver under Section  2.1(a) that is adverse to the Member Parties shall require approval of the Member Parties holding all of the Shares still held by the Member Parties or the Permitted Transferees thereof as of the time of such amendment or waiver, (iii) any amendment to or waiver under (x)  Section  2.1(b) that is adverse to the Member Parties or (y)  Section  2.3 that further restricts the MSD Parties’ voting rights thereunder, shall require approval of the Member Parties holding 85% of the Shares still held by the Member Parties or the Permitted Transferees thereof as of the time of such amendment or waiver, (iv) any amendment to or waiver under Sections 3.1(a) , (e) , (f) and (g)  and Section  3.4 shall require approval of the Member Parties holding 85% of the Registrable Shares still held by the Member Parties or the Permitted Transferees thereof as of the time of such amendment or waiver and (v) any amendment to or waiver under this Section  5.5(b) shall require the approval that would have been required in respect of an amendment or waiver to the underlying provision to which such amendment or waiver of this Section  5.5(b) relates.

(c)    No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by applicable law. Any reference in this Agreement to the consent of the MSD Parties shall mean the consent of the MSD Parties in their sole discretion.

 

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5.6     Successors and Assigns . Except as set forth in Section  3.7 , neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by merger, consolidation, operation of law or otherwise), without the prior written consent of the other party; provided , however , that the Member Parties may assign its rights hereunder to any Affiliate of such Member Party; provided that such Affiliate (x) has executed a customary joinder to this Agreement, in form and substance reasonably acceptable to the Company, in which such Affiliate agrees to be subject to the terms and conditions of this Agreement applicable to the Member Party and (y) remains an Affiliate of the Member Party for so long as Article I remains in effect. This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective permitted successors and assigns. Any attempted assignment in violation of this Section  5.6 shall be void.

5.7     Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under Law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

5.8     Counterparts . This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other parties, it being understood that each party need not sign the same counterpart.

5.9     Entire Agreement . This Agreement (including the documents and the instruments referred to in this Agreement), together with the Merger Agreement, constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter of this Agreement.

5.10     Governing Law; Jurisdiction . This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware applicable to contracts executed and to be performed wholly within such State and without reference to the choice or conflict of law principles (whether of the state of Delaware or any other jurisdiction) that would result in the application of the Laws of a different jurisdiction. Each party hereto irrevocably submits to the jurisdiction of the Court of Chancery of the state of Delaware (or solely if such courts decline jurisdiction in any federal court located in the state of Delaware) any Action arising out of or relating to this Agreement, and hereby irrevocably agrees that all claims in respect of such Action may be heard and determined in such court. Each party hereto hereby irrevocably waives, and agrees not to assert by way of motion, defense, counterclaim, or otherwise, the defense of an inconvenient forum to the maintenance of such Action. The parties hereto further agree, (i) to the extent permitted by Law, that final and nonappealable judgment against any of them in any Action contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified copy of which shall be conclusive evidence of the fact and amount of such judgment and (ii) that service of process upon such party in any such action or proceeding shall be effective if notice is given in accordance with Section  5.14 .

5.11     WAIVER OF JURY TRIAL . Each party hereto knowingly, intentionally, and voluntarily waives to the fullest extent permitted by applicable Law trial by jury in any action, proceeding or counterclaim brought by any of them against the other arising out of or in any way connected with this Agreement, or any other agreements executed in connection herewith or the administration thereof or any of the transactions contemplated herein or therein. No party hereto shall seek a jury trial in any lawsuit, proceeding, counterclaim or any other litigation procedure based upon, or arising out of, this Agreement or any related instruments or the relationship between the parties hereto. No party hereto will seek to consolidate any such action in which a jury trial has been waived with any other action in which a jury trial cannot be or has not been waived. Each party hereto certifies that it has been induced to enter into this agreement or instrument by, among other things, the mutual waivers and certifications set forth above in this Section  5.11 . No party hereto has in any way agreed with or represented to any other party that the provisions of this Section  5.11 will not be fully enforced in all instances.

5.12     Specific Performance . The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that, except as otherwise provided in Section  5.10 , the parties shall be entitled to an injunction or injunctions or other equitable relief to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any court set forth in Section  5.10 , in addition to any other remedy to which they are entitled at law or in equity.

5.13     No Third-Party Beneficiaries . Nothing in this Agreement shall confer any rights upon any Person other than the parties hereto and each such party’s respective heirs, successors and permitted assigns, all of whom shall be third-party beneficiaries of this Agreement; provided that (i) any Person (other than the Member Parties) that becomes a Holder shall be

 

24

an intended third-party beneficiary hereof, (ii) the Identified Persons are intended third-party beneficiaries of Section  2.6 , (iii) each member of the MSD Group is an intended third-party beneficiary of Section  2.5 , and (iv) the Persons indemnified under Article III are intended third-party beneficiaries of Article III .

5.14     Notices . Any notice, demand or other communication required or permitted under this Agreement shall be in writing, and shall be deemed duly given: (a) on the date of delivery, if delivered personally to the intended recipient; (b) on the date receipt is acknowledged, if delivered by certified mail, return receipt requested; (c) one Business Day after being sent by overnight delivery via national courier service (providing proof of delivery); and (d) on the date sent by e-mail of a PDF document if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, and shall be directed to the address or e-mail set forth below (or at such other address or e-mail as such party shall designate by like notice):

 

(i)

If to the Company, to:

 

Independence Contract Drilling, Inc.

11601 Galayda St.

Houston, Texas 77086

Attention: Philip A. Choyce, Executive Vice President and Chief Financial Officer

E-mail: pchoyce@icdrilling.com

 

with a copy (which shall not constitute notice) to:

 

Sidley Austin LLP

1000 Louisiana, Suite 600

Houston, Texas 77002

Attention: David C. Buck

E-mail: dbuck@sidley.com

 

(ii)

If to any MSD Party, to its address set forth on Schedule I

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, New York 10178-0060

Attention:

Jonathan D. Morris

Andrew L. Milano

Email:

Jonathan.Morris@morganlewis.com

Andrew.milano@morganlewis.com

 

(iii)

If to any Member Party, to its address set forth on Schedule I

 

with a copy (which shall not constitute notice) to:

 

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, New York 10178-0060

Attention:

Jonathan D. Morris

Andrew L. Milano

Email:

Jonathan.Morris@morganlewis.com

Andrew.milano@morganlewis.com

5.15     Legal Representation . Each of the parties to this Agreement hereby agrees, on its own behalf and on behalf of its directors, members, partners, officers, employees and Affiliates, that Morgan, Lewis & Bockius LLP may serve as counsel to each and any Member and their respective Affiliates (individually and collectively, the “ Member Group ”), on the one hand, and Sidewinder, on the other hand, in connection with the negotiation, preparation, execution and delivery of this Agreement and the consummation of the Transactions, and that, following consummation of the Transactions, Morgan, Lewis & Bockius LLP (or any successor) may serve as counsel to the Member Group or any director, member, partner, officer, employee or

 

25

Affiliate of the Member Group, in connection with any litigation, claim, right, obligation or other matter arising out of or relating to this Agreement or the Transactions notwithstanding such representation of the Member Group and Sidewinder prior to the Closing and each of the Parties hereto hereby consents thereto and waives any conflict of interest arising therefrom, and each of such parties shall cause any Affiliate thereof to consent to waive any such conflict of interest arising from such representation.

[ The remainder of this page left intentionally blank .]

 

26

IN WITNESS WHEREOF, the parties hereto have duly executed this Amended and Restated Agreement by their authorized representatives as of the date first above written.

 

[ Signature Page to Stockholders Agreement ]

 

27

IN WITNESS WHEREOF, the parties hereto have duly executed this Amended and Restated Stockholders’ Agreement by their authorized representatives as of the date first above written.

 

Signature Page to Amended and Restated Stockholders’ Agreement

Signature Page to Amended and Restated Stockholders’ Agreement

IN WITNESS WHEREOF, each of the parties has duly executed this Agreement as of the date first above written.

 

Signature Page to Amended and Restated Stockholders’ Agreement

IN WITNESS WHEREOF, each of the parties has duly executed this Agreement as of the date first above written.

 

Signature Page to Amended and Restated Stockholders’ Agreement

Signature Page to Amended and Restated Stockholders’ Agreement

Exhibit A

Initial Company Directors

MSD Representatives

 

•

Adam Piekarski

 

•

James Minmier

Other Directors

 

•

J. Anthony Gallegos, Jr.

 

•

Thomas R. Bates, Jr.

 

•

James D. Crandell

 

•

Matthew D. Fitzgerald

 

•

Daniel F. McNeese

 

33

Exhibit B

Company Competitors

Basic Energy Services, Inc.

C&J Energy Services, Inc.

Helmerich & Payne

Nabors Industries, Ltd.

Patterson-UTI, Inc.

Pioneer Energy Services, Inc.

Precision Drilling Company

Superior Energy Service, Inc.

Trinidad Drilling Company

 

34

Schedule I

 

Member Party		Notice Address
MSD Energy Investments, L.P.		c/o MSD Capital, L.P. 645 Fifth Avenue, 21st Floor New York, NY 10022 Attention: Marcello Liguori, Kenneth Gerold mliguori@msdpartners.com; kgerold@msdpartners.com
MSD Credit Opportunity Master Fund, L.P.		c/o MSD Partners, L.P. 645 Fifth Avenue, 21st Floor New York, NY 10022 Attention: Marcello Liguori, Kenneth Gerold mliguori@msdpartners.com; kgerold@msdpartners.com
MSD Credit Opportunity Fund X, LLC		c/o MSD Partners, L.P. 645 Fifth Avenue, 21st Floor New York, NY 10022 Attention: Marcello Liguori, Kenneth Gerold mliguori@msdpartners.com; kgerold@msdpartners.com
BGCSMF-01 LLC		c/o Birch Grove Capital LP 660 Madison Avenue New York, NY 10065
OCSOMF-01 LLC		c/o Birch Grove Capital LP 660 Madison Avenue New York, NY 10065
Saratoga Foreign Series A Sellers LLC		c/o Credit Suisse Asset Management, LLC One Madison Avenue New York, NY 10010 Attn: Davis Meiering davis.meiering@credit-suisse.com
Policemen and Firemen Retirement System of the City of Detroit		c/o Credit Suisse Asset Management, LLC One Madison Avenue New York, NY 10010 Attn: Davis Meiering davis.meiering@credit-suisse.com
BA/CSCredit 1 LLC		c/o Credit Suisse Asset Management, LLC One Madison Avenue New York, NY 10010 Attn: Davis Meiering davis.meiering@credit-suisse.com
Credit Suisse Asset Management Income Fund, Inc.		c/o Credit Suisse Asset Management, LLC One Madison Avenue New York, NY 10010 Attn: Davis Meiering davis.meiering@credit-suisse.com
Credit Suisse High Yield Bond Fund		c/o Credit Suisse Asset Management, LLC One Madison Avenue New York, NY 10010 Attn: Davis Meiering davis.meiering@credit-suisse.com
Credit Suisse Strategic Income Fund		c/o Credit Suisse Asset Management, LLC One Madison Avenue New York, NY 10010 Attn: Davis Meiering davis.meiering@credit-suisse.com
Axar Master Fund FH SPV LLC		1330 Ave of the Americas, 30th FL New York, NY 10019 Attention to: Joshua Sigmon, Ricardo Mosquera jsigmon@axarcapital.com rmosquera@axarcapital.com

 

35

Member Party		Notice Address
Star V Partners LLC		1330 Ave of the Americas, 30th FL New York, NY 10019 Attention to: Joshua Sigmon, Ricardo Mosquera jsigmon@axarcapital.com rmosquera@axarcapital.com
Anthem, Inc.		410 Park Ave, Suite 1510 New York, NY 10022 212-468-5320 operations@logenam.com
LAM I LLC		410 Park Ave, Suite 1510 New York, NY 10022 212-468-5320 operations@logenam.com

 

36

Exhibit 10.2

 

 

 

CREDIT AGREEMENT

by and among

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Agent and Issuing Bank,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Sole Lead Arranger and Bookrunner,

THE LENDERS PARTY HERETO,

as Lenders,

INDEPENDENCE CONTRACT DRILLING, INC.

ICD OPERATING LLC

PATRIOT SARATOGA MERGER SUB, LLC,

as Borrower

THE OTHER PARTIES HERETO,

as Guarantors,

Dated as of October 1, 2018

 

 

 

TABLE OF CONTENTS

 

				Page
1.  DEFINITIONS AND CONSTRUCTION					1
1.1		Definitions			1
1.2		Accounting Terms			44
1.3		UCC			44
1.4		Construction			44
1.5		Time References			45
1.6		Schedules and Exhibits			45
2.  LOANS AND TERMS OF PAYMENT					46
2.1		Revolving Loans			46
2.2		Reserved			46
2.3		Borrowing Procedures and Settlements			46
2.4		Payments; Reductions of Commitments; Prepayments			52
2.5		Promise to Pay; Promissory Notes			56
2.6		Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations			56
2.7		Crediting Payments			58
2.8		Designated Account			58
2.9		Maintenance of Loan Account; Statements of Obligations			58
2.10		Fees			58
2.11		Letters of Credit			59
2.12		LIBOR Option			67
2.13		Capital Requirements			69
2.14		Reserved			70
2.15		Reserved			70
2.16		Joint and Several Liabilities of Borrowers			71
3.  CONDITIONS; TERM OF AGREEMENT					73
3.1		Conditions Precedent to the Initial Extension of Credit			73
3.2		Conditions Precedent to all Extensions of Credit			73
3.3		Maturity			74
3.4		Effect of Maturity			74
3.5		Early Termination by Borrowers			74
3.6		Conditions Subsequent			74
4.  REPRESENTATIONS AND WARRANTIES					74
4.1		Due Organization and Qualification; Subsidiaries			75
4.2		Due Authorization; No Conflict			75
4.3		Governmental Consents			76
4.4		Binding Obligations; Perfected Liens			76
4.5		Title to Assets; No Encumbrances			76
4.6		Litigation			77

 

i

4.7		Compliance with Laws			77
4.8		No Material Adverse Effect			77
4.9		Solvency			77
4.10		Employee Benefits			77
4.11		Environmental Condition			78
4.12		Complete Disclosure			78
4.13		Patriot Act			78
4.14		Indebtedness			79
4.15		Payment of Taxes			79
4.16		Margin Stock			79
4.17		Governmental Regulation			79
4.18		OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws			79
4.19		Employee and Labor Matters			80
4.20		[Reserved]			80
4.21		Leases			80
4.22		Eligible Accounts			80
4.23		Hedge Agreements			80
4.24		Closing Date Merger Documents; Term Loan Documents			80
5.  AFFIRMATIVE COVENANTS					81
5.1		Financial Statements, Reports, Certificates			81
5.2		Reporting			82
5.3		Existence			82
5.4		Maintenance of Properties			82
5.5		Taxes			82
5.6		Insurance			82
5.7		Inspection			83
5.8		Compliance with Laws			83
5.9		Environmental			83
5.10		Disclosure Updates			84
5.11		Formation or Acquisition of Subsidiaries			84
5.12		Further Assurances			84
5.13		Location of Chief Executive Office			85
5.14		OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws			85
6.  NEGATIVE COVENANTS					85
6.1		Indebtedness			85
6.2		Liens			85
6.3		Restrictions on Fundamental Changes			85
6.4		Disposal of Assets			86
6.5		Nature of Business			86
6.6		Prepayments and Amendments			86
6.7		Restricted Payments; Management Fees			86
6.8		Accounting Methods			87
6.9		Investments			87
6.10		Transactions with Affiliates			87
6.11		Use of Proceeds			88
6.12		Limitation on Issuance of Equity Interests			88

 

ii

7.  FINANCIAL COVENANT					88
7.1		Fixed Charge Coverage Ratio			88
7.2		Right to Cure			88
8.  EVENTS OF DEFAULT					89
8.1		Payments			89
8.2		Covenants			89
8.4		Voluntary Bankruptcy, Etc.			90
8.5		Involuntary Bankruptcy, Etc.			90
8.6		Default under Other Agreements			90
8.7		Representations, Etc.			91
8.8		Guaranty			91
8.9		Security Documents			91
8.10		Loan Documents			91
8.11		Change of Control			91
8.12		ERISA			91
8.13		Subordination; Intercreditor Agreement			91
9.  RIGHTS AND REMEDIES					92
9.1		Rights and Remedies			92
9.2		Remedies Cumulative			92
10.  WAIVERS; INDEMNIFICATION					92
10.1		Demand; Protest; etc.			92
10.2		The Lender Group’s Liability for Collateral			92
10.3		Indemnification			93
11.  NOTICES					94
12.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER					95
13.  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS					96
13.1		Assignments and Participations			96
13.2		Successors			99
14.  AMENDMENTS; WAIVERS					99
14.1		Amendments and Waivers			99
14.2		Replacement of Certain Lenders			100
14.3		No Waivers; Cumulative Remedies			101
15.  AGENT; THE LENDER GROUP					101
15.1		Appointment and Authorization of Agent			101
15.2		Delegation of Duties			102
15.3		Liability of Agent			102

 

iii

15.4		Reliance by Agent			103
15.5		Notice of Default or Event of Default			103
15.6		Credit Decision			103
15.7		Costs and Expenses; Indemnification			104
15.8		Agent in Individual Capacity			104
15.9		Successor Agent			105
15.10		Lender in Individual Capacity			105
15.11		Collateral Matters			105
15.12		Restrictions on Actions by Lenders; Sharing of Payments			107
15.13		Agency for Perfection			107
15.14		Payments by Agent to Lenders			107
15.15		Concerning the Collateral and Related Loan Documents			108
15.16		Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information			108
15.17		Several Obligations; No Liability			109
15.18		Sole Lead Arranger and Book Runner			109
16.  TAX MATTERS					109
16.1		Payments			109
16.2		Exemptions			110
16.3		Reductions			111
16.4		Refunds			112
17.  GENERAL PROVISIONS					112
17.1		Effectiveness			112
17.2		Section Headings			112
17.3		Interpretation			112
17.4		Severability of Provisions			113
17.5		Bank Product Providers			113
17.6		Debtor-Creditor Relationship			113
17.7		Counterparts; Electronic Execution			113
17.8		Revival and Reinstatement of Obligations			114
17.9		Confidentiality			114
17.10		Lender Group Expenses			115
17.11		Survival			115
17.12		Patriot Act			115
17.13		Integration			115
17.14		Keepwell			116
17.15		Judgment Currency			116
17.16		Parent as Administrative Agent for Borrowers			116
17.17		“Know Your Customer” Checks			117
17.18		Acknowledgment and Consent to Bail-In of EEA Financial Institutions			117
17.19		Conflicts with Intercreditor Agreement			118

 

iv

EXHIBITS AND SCHEDULES

 

Exhibit A-1		Form of Assignment and Acceptance
Exhibit B-1		Form of Borrowing Base Certificate
Exhibit C-1		Form of Compliance Certificate
Exhibit J-1		Form of Joinder
Exhibit L-1		Form of LIBOR Notice
Exhibit P-1		Form of Perfection Certificate
Exhibit S-1		Form of Solvency Certificate
Schedule A-1		Agent’s Accounts
Schedule A-2		Authorized Persons
Schedule C-1		Commitments
Schedule D-1		Designated Account
Schedule P-1		Permitted Investments
Schedule P-2		Permitted Liens
Schedule 2.11		Existing Letters of Credit
Schedule 3.1		Conditions Precedent to Initial Extension of Credit
Schedule 3.6		Conditions Subsequent
Schedule 4.1(b)		Chief Executive Offices, Etc.
Schedule 4.1(c)		Capitalization of Loan Parties and Subsidiaries
Schedule 4.2(d)		Subscription, Options, Warrants, Calls
Schedule 4.6(b)		Litigation
Schedule 4.10		Employee Benefits Plans
Schedule 4.11		Environmental Matters
Schedule 4.14		Indebtedness
Schedule 5.1		Financial Statements, Reports, Certificates
Schedule 5.2		Collateral Reporting
Schedule 6.5		Nature of Business

 

v

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “ Agreement ”), is entered into as of October 1, 2018 by and among the lenders identified on the signature pages hereof (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “ Lender ”, as that term is hereinafter further defined), WELLS FARGO BANK, NATIONAL ASSOCIATION , as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “ Agent ”), INDEPENDENCE CONTRACT DRILLING, INC., a Delaware corporation (“ Parent ”), as lead borrower for the Borrowers referenced below (in such capacity, together with its successors and assigns in such capacity, “ Lead Borrower ”), PATRIOT SARATOGA MERGER SUB, LLC, Delaware limited liability company (“ Merger Sub ”), ICD OPERATING LLC, a Delaware limited liability company formerly known as Sidewinder Drilling LLC (“ ICD Operating ”) and the other Affiliates of Parent party hereto from time to time as borrowers (such Affiliates together with Parent, Merger Sub and ICD Operating, each individually a “Borrower”, and collectively, jointly and severally, “ Borrowers ”), and each Affiliate of Parent party hereto from time to time as guarantors (each individually a “ Guarantor ” and collectively, jointly and severally, as “ Guarantors ”).

WHEREAS, the Borrowers have requested that the Lenders provide a revolving credit facility, and the Lenders have indicated their willingness to lend, in each case on the terms and conditions set forth herein.

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

 

1.	DEFINITIONS AND CONSTRUCTION.

1.1 Definitions . As used in this Agreement, the following terms shall have the following definitions:

“ ABL Priority Collateral ” has the meaning specified therefor in the Intercreditor Agreement.

“ Account ” means an account (as that term is defined in the UCC).

“ Account Debtor ” means any Person who is obligated on an Account, chattel paper, or a General Intangible.

“ Account Party ” has the meaning specified therefor in Section 2.11(h) of this Agreement.

“ Accounting Changes ” means changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successor thereto or any agency with similar functions).

“ Acquired Indebtedness ” means Indebtedness of a Person the assets or Equity Interests of which are acquired by a Loan Party or any of its Subsidiaries in a Permitted Acquisition; provided , that such Indebtedness (a) is not secured by Collateral, (b) was in existence prior to the date of such Permitted Acquisition and (c) was not incurred in connection with, or in contemplation of, such Permitted Acquisition.

“ Acquisition ” means (a) the purchase or other acquisition by a Loan Party of all or substantially all of the assets of (or any division or business line of) any other Person, or (b) the purchase or other acquisition (whether by means of a merger, consolidation, or otherwise) by a Person or its Subsidiaries of all or substantially all of the Equity Interests of any other Person.

“ Additional Documents ” has the meaning specified therefor in Section 5.12 of this Agreement.

“ Administrative Questionnaire ” has the meaning specified therefor in Section 13.1 of this Agreement.

“ Affected Lender ” has the meaning specified therefor in Section 2.13(b) of this Agreement.

“ Affiliate ” means, as applied to any Person, any other Person who controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of Equity Interests, by contract, or otherwise; provided , that , for purposes of the definition of Eligible Accounts and Section 6.10 of this Agreement: (a) any Person which owns directly or indirectly ten percent (10%) or more of the Equity Interests having ordinary voting power for the election of directors or other members of the governing body of a Person or ten percent (10%) or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed an Affiliate of such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each partnership in which a Person is a general partner shall be deemed an Affiliate of such Person.

“ Agent ” has the meaning specified therefor in the preamble to this Agreement.

“ Agent-Related Persons ” means Agent, together with its Affiliates, officers, directors, employees, attorneys, and agents.

“ Agent’s Account ” means the Deposit Account of Agent identified as “Agent’s Accounts” on Schedule A-1 .

“ Agent’s Liens ” means the Liens granted by each Loan Party to Agent under the Loan Documents and securing the Obligations.

“ Agreement ” means this Credit Agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.

“ Agreement Currency ” has the meaning specified therefor in Section 17.15 of this Agreement.

“ Anti-Corruption Laws ” means the FCPA, the U.K. Bribery Act of 2010, as amended, and all other applicable laws and regulations or ordinances concerning or relating to bribery, money laundering or corruption in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business.

“ Anti-Money Laundering Laws ” means the applicable laws or regulations in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.

“ Applicable Margin ” means (a) as to Revolving Loans for which interest is calculated based on the Base Rate, the Applicable Base Rate Margin set forth below, and (b) as to Revolving Loans for which interest is calculated based on LIBOR, the Applicable LIBOR Margin set forth below,

 

2

Tier		Quarterly Average Excess Availability		Applicable Base Rate Margin				Applicable LIBOR Margin
1		Greater than $26,666,666			1.00	%			2.00	%
2		Greater than $13,333,333 but less than or equal to $26,666,666			1.25	%			2.25	%
3		Less than or equal to $13,333,333			1.50	%			2.50	%

provided , that , (i) the Applicable Margin shall be calculated and established once each calendar quarter and shall remain in effect until adjusted for the next calendar quarter, (ii) each adjustment of the Applicable Margin shall be effective as of the first day of each such calendar quarter based on the Quarterly Average Excess Availability for the immediately preceding calendar quarter, (iii) notwithstanding anything to the contrary contained herein, for the period from the Closing Date until the last day of the first full calendar quarter immediately following the Closing Date, the Applicable Margin shall be based on the applicable percentage set forth in Tier 2, and (iv) in the event that the Lead Borrower fails to provide any Borrowing Base Certificate or other information with respect thereto for any period on the date required hereunder, effective as of the date on which such Borrowing Base Certificate or other information was otherwise required, at Agent’s option, the Applicable Margin shall be based on the highest rate above until the next Business Day after a Borrowing Base Certificate or other information is provided for the applicable period at which time the Applicable Margin shall be adjusted as otherwise provided herein. In the event that at any time after the end of any calendar quarter the Quarterly Average Excess Availability for such calendar quarter used for the determination of the Applicable Margin was greater than the actual amount of the Quarterly Average Excess Availability for such period as a result of the inaccuracy of information provided by or on behalf of any Borrower to Agent for the calculation of Excess Availability, the Applicable Margin for such period shall be adjusted to the applicable percentage based on such actual Quarterly Average Excess Availability and any additional interest for the applicable period as a result of such recalculation shall be promptly paid to Agent. The foregoing shall not be construed to limit the rights of Agent or Lenders with respect to the amount of interest payable after a Default or Event of Default whether based on such recalculated percentage or otherwise.

“ Application Event ” means the occurrence of (a) a failure by Borrowers to repay all of the Obligations in full on the Maturity Date, or (b) an Event of Default and the election by Agent or the Required Lenders to require that payments and proceeds of Collateral be applied pursuant to Section 2.4(b)(iii) of this Agreement.

“ Assignee ” has the meaning specified therefor in Section 13.1(a) of this Agreement.

“ Assignment and Acceptance ” means an Assignment and Acceptance Agreement substantially in the form of Exhibit A-1.

“ Authorized Person ” means any one of the individuals identified on Schedule A-2 , as such schedule is updated from time to time by written notice from Lead Borrower to Agent.

“ Bail-In Action ” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

3

“ Bail-In Legislation ” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-in Legislation Schedule.

“ Bank Product ” means any one or more of the following financial products or accommodations extended to any Loan Party or any of its Subsidiaries by a Bank Product Provider: (a) credit cards, (b) payment card processing services, (c) debit cards, (d) stored value cards, (e) commercial cards and purchase cards (including so- called “procurement cards” or “P-cards”), (f) Cash Management Services, or (g) transactions under Hedge Agreements.

“ Bank Product Agreements ” means those agreements entered into from time to time by any Loan Party or any of its Subsidiaries with a Bank Product Provider in connection with the obtaining of any of the Bank Products.

“ Bank Product Collateralization ” means providing cash collateral (pursuant to documentation reasonably satisfactory to Agent) to be held by Agent for the benefit of the Bank Product Providers (other than the Hedge Providers) in an amount reasonably determined by Agent as sufficient to satisfy the reasonably estimated credit exposure, operational risk or processing risk with respect to the then existing Bank Product Obligations (other than Hedge Obligations).

“ Bank Product Obligations ” means (a) all obligations, liabilities, reimbursement obligations, fees, or expenses owing by any Loan Party to any Bank Product Provider pursuant to or evidenced by a Bank Product Agreement and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, (b) all Hedge Obligations, and (c) all amounts that Agent or any Lender is obligated to pay to a Bank Product Provider as a result of Agent or such Lender purchasing participations from, or executing guarantees or indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided by such Bank Product Provider to any Loan Party. Anything to the contrary contained in the foregoing notwithstanding, the Bank Product Obligations shall exclude any Excluded Swap Obligation.

“ Bank Product Provider ” means Wells Fargo or any of its Affiliates.

“ Bank Product Reserves ” means, as of any date of determination, those reserves that Agent deems necessary or appropriate to establish (based upon the Bank Product Providers’ determination of the liabilities and obligations of each Loan Party and its Subsidiaries in respect of Bank Product Obligations) in respect of Bank Products then provided or outstanding.

“ Bankruptcy Code ” means title 11 of the United States Code, as in effect from time to time.

“ Base Rate ” means the greatest of (a) the Federal Funds Rate plus one-half percent (  ¹ ⁄ ₂ %), (b) the LIBOR Rate (which rate shall be calculated based upon an Interest Period of one month and shall be determined on a daily basis), plus one percentage point, and (c) the rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate (and, if any such announced rate is below zero, then the rate determined pursuant to this clause (c) shall be deemed to be zero).

 

4

“ Base Rate Loan ” means a Revolving Loan that bears interest at a rate determined by reference to the Base Rate.

“ Base Rate Margin ” means the Applicable Base Rate Margin as set forth in the definition of the term Applicable Margin.

“ Board of Directors ” means, as to any Person, the board of directors (or comparable managers) of such Person, or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers).

“ Board of Governors ” means the Board of Governors of the Federal Reserve System of the United States (or any successor).

“ Borrower ” and “ Borrowers ” have the respective meanings specified therefor in the preamble to this Agreement.

“ Borrower Materials ” has the meaning specified therefor in Section 17.9(c) of this Agreement.

“ Borrowing ” means a borrowing consisting of Revolving Loans made on the same day by the Lenders (or Agent on behalf thereof), or by Agent in the case of a Special Advance.

“ Borrowing Base ” means, as of any date of determination, the result of:

(a) 85% of the amount of Eligible Accounts, minus

(b) the aggregate amount of Reserves, if any, established by Agent from time to time under Section 2.1(c) of this Agreement.

“ Borrowers ” has the meaning specified therefor in the preamble to this Agreement.

“ Borrowing Base Certificate ” means a certificate in the form of Exhibit B-1 to this Agreement.

“ Business Day ” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the state of New York, except that, if a determination of a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also shall exclude any day on which banks are closed for dealings in Dollar deposits in the London interbank market.

“ Capital Expenditures ” means, with respect to any Person for any period, the amount of all expenditures by such Person and its Subsidiaries during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed, but excluding, without duplication (a) with respect to the purchase price of assets that are purchased substantially contemporaneously with the trade-in of existing assets during such period, the amount that the gross amount of such purchase price is reduced by the credit granted by the seller of such assets for the assets being traded in at such time, (b) expenditures made during such period to consummate one or more Permitted Acquisitions, (c) expenditures made during such period to the extent made with the identifiable proceeds of an equity investment in a Loan Party or any of its Subsidiaries which equity investment is made substantially contemporaneously with the making of the expenditure, and (d) expenditures during such period that, pursuant to a written agreement, are reimbursed by a third Person (excluding any Loan Party or any of its Affiliates) within one hundred eighty (180) days of the date such expenditures are made.

 

5

“ Capitalized Lease Obligation ” means that portion of the obligations under a Capital Lease that is required to be capitalized in accordance with GAAP.

“ Capital Lease ” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

“ Cash Dominion Event ” means at any time (a) Excess Availability is less than 12.5% of the Maximum Credit at any time, or (b) a Specified Event of Default has occurred and is continuing; provided , that , to the extent that the Cash Dominion Event has occurred due to (i) clause (a) of this definition, if Excess Availability shall be equal to or greater than the applicable amount provided for in clause (a) of this definition for at least thirty (30) consecutive days thereafter, the Cash Dominion Event shall no longer be deemed to exist or be continuing until such time as Excess Availability may again be less than the applicable amount provided for in clause (a) of this definition and (ii) clause (b) of this definition, if such Specified Event of Default has been cured or waived, the Cash Dominion Event shall no longer be deemed to exist or be continuing.

“ Cash Equivalents ” means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one (1) year from the date of acquisition thereof, (b) marketable direct obligations issued or fully guaranteed by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within one (1) year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor’s Rating Group (“ S&P ”) or Moody’s Investors Service, Inc. (“ Moody’s ”), (c) commercial paper maturing no more than two hundred seventy (270) days from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time deposits, overnight bank deposits or bankers’ acceptances maturing within one (1) year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof or the District of Columbia or any United States branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $1,000,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies the criteria described in clause (d) above, or (ii) any other bank organized under the laws of the United States or any state thereof so long as the full amount maintained with any such other bank is insured by the Federal Deposit Insurance Corporation, (f) repurchase obligations of any commercial bank satisfying the requirements of clause (d) of this definition or of any recognized securities dealer having combined capital and surplus of not less than $1,000,000,000, having a term of not more than seven days, with respect to securities satisfying the criteria in clauses (a) or (d) above, (g) debt securities with maturities of six (6) months or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the criteria described in clause (d) above, and (h) Investments in money market funds substantially all of whose assets are invested in the types of assets described in clauses (a) through (g) above.

“ Cash Management Services ” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement, merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements.

“ Certain Funds Provision ” has the meaning specified therefor on Schedule 3.1 .

“ CFC ” means (a) a controlled foreign corporation (as that term is defined in the IRC) in which any Loan Party is a “United States shareholder” within the meaning of Section 951(b) of the IRC or (b) any Subsidiary all or substantially all of the assets of which consist, directly or indirectly, of Equity Interests of Subsidiaries described in clause (a) of this definition.

 

6

“ Change of Control ” means that:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than the Permitted Holders, becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “ option right ”)), directly or indirectly, of more than a majority of the equity securities of Parent entitled to vote for members of the board of directors or equivalent governing body of Parent on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right);

(b) the passage of thirty (30) days from the date upon which any Person or two or more Persons acting in concert, other than the Permitted Holders, shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of Parent, or control over the equity securities of Parent entitled to vote for members of the board of directors or equivalent governing body of Parent on a fully-diluted basis (and taking into account all such securities that such Person or group has the right to acquire pursuant to any option right) representing more than a majority of the combined voting power of such securities;

(c) during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing body of Parent cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body

(d) Parent fails to own and control, directly or indirectly, 100% of the Equity Interests of any other Loan Party, other than pursuant to transactions permitted under Section 6.3 , or

(e) the occurrence of any “Change of Control” as defined in the Term Loan Agreement.

“ Change in Law ” means the occurrence after the date of this Agreement of: (a) the adoption or effectiveness of any law, rule, regulation, judicial ruling, judgment or treaty, (b) any change in any law, rule, regulation, judicial ruling, judgment or treaty or in the administration, interpretation, implementation or application by any Governmental Authority of any law, rule, regulation, guideline or treaty, or (c) the making or issuance by any Governmental Authority of any request, rule, guideline or directive, whether or not having the force of law; provided, that notwithstanding anything in this Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith, and (ii) all requests, rules, guidelines or directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities shall, in each case, be deemed to be a “ Change in Law ,” regardless of the date enacted, adopted or issued.

 

7

“ Closing Date ” means the date of the making of the initial Revolving Loan (or other extension of credit) under this Agreement.

“ Closing Date Merger ” means the merger of Merger Sub with and into Target with Target as the surviving entity so that, immediately after giving effect thereto, Target will be a wholly-owned Subsidiary of Parent.

“ Closing Date Merger Agreement ” means the Agreement and Plan of Merger, dated as of July 18, 2018, by and among Parent, Merger Sub, Target and the Members’ Representative party thereto.

“ Closing Date Merger Agreement Representations ” means those representations and warranties made by or on behalf of Target, its Subsidiaries or their respective businesses in the Closing Date Merger Agreement as are material to the interests of Lenders, but only to the extent that Merger Sub (or any of its applicable Affiliates) has the right to terminate its (or their) obligations under the Closing Date Merger Agreement or decline to consummate the Closing Date Merger as a result of the breach of such representations and warranties.

“ Closing Date Merger Documents ” means the Closing Date Merger Agreement and all other documents related thereto and executed in connection therewith.

“ Collateral ” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by any Loan Party in or upon which a Lien is granted by such Person in favor of Agent or Lenders under any of the Loan Documents; provided, that the definition of “Collateral” shall not include any Excluded Collateral.

“ Collateral Access Agreement ” means a landlord waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in any Loan Party’s books and records or Equipment, in each case, in form and substance reasonably satisfactory to Agent.

“ Collateral Documents ” means, collectively, each of the security agreements or other similar agreements delivered to Agent pursuant to the terms of this Agreement, and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of Agent, including the Guaranty and Security Agreement.

“ Collections ” means all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, cash proceeds of asset sales, rental proceeds and tax refunds).

“ Commitment ” means, with respect to each Lender, its Commitment, and with respect to all Lenders, their Commitments, in each case as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which such Lender became a Lender under this Agreement, as such amounts may be reduced or increased from time to time in accordance with the terms of this Agreement.

“ Commodity Exchange Act ” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

8

“ Company Material Adverse Effect ” has the meaning specified therefor in the Closing Date Merger Agreement (as in effect on July 18, 2018).

“ Compliance Certificate ” means a certificate substantially in the form of Exhibit C-1 delivered by the chief financial officer of Lead Borrower to Agent.

“ Consolidated ” means, when used to modify a financial term, test, statement, or report of a Person, the application or preparation of such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP, of the financial condition or operating results of such Person and its Subsidiaries; provided , that when the term “Consolidated” is used herein in reference to the Borrowers and their Subsidiaries, the term “Consolidated” shall mean Parent and its Subsidiaries on a consolidated basis, with such consolidated numbers then determined on a combined basis, all in accordance with GAAP.

“ Consolidated Interest Charges ” means, for any period, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Hedge Agreements or agreements governing hedging obligations, but excluding any non-cash or deferred interest plus (b) the portion of rent expense with respect to such period under Capitalized Lease Obligations that is treated as interest in accordance with GAAP, in each case of or by the Borrowers and their Subsidiaries, all as determined on a Consolidated basis in accordance with GAAP.

“ Copyright Security Agreement ” has the meaning specified therefor in the Guaranty and Security Agreement.

“ Confidential Information ” has the meaning specified therefor in Section17.9(a) of this Agreement.

“ Consolidated Net Income ” means, for any period, the aggregate of the net income (or loss) of the Borrowers and their Subsidiaries for such period, determined on a Consolidated basis in accordance with GAAP; provided, however, that:

(a) any net after-tax extraordinary, nonrecurring or unusual gains or non-cash losses shall be excluded;

(b) the Consolidated Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period;

(c) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business (as determined in good faith by ICD) shall be excluded;

(d) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of indebtedness shall be excluded;

(e) the Consolidated Net Income for such period of any Person that is not a Subsidiary of such Person or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent Person or a Subsidiary thereof in respect of such period;

 

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(f) (1) the non-cash portion of “straight-line” rent expense shall be excluded and (2) the cash portion of “straight-line” rent expense which exceeds the amount expensed in respect of such rent expense shall be included;

(g) unrealized gains and losses relating to hedging transactions and mark-to-market of Indebtedness denominated in foreign currencies resulting from the application of ASC 830 shall be excluded;

(h) the income (or loss) of any non-consolidated entity during such period in which any other Person has a joint interest shall be excluded, except to the extent of the amount of cash dividends or other distributions actually paid in cash to any of ICD or its Subsidiaries during such period; and

(i) the income (or loss) of a Subsidiary (or any asset given pro forma treatment) during such period and accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with ICD or any of its Subsidiaries or that Person’s assets are acquired by ICD or any of its Subsidiaries shall be excluded.

“ Consolidated Non-cash Charges ” means, with respect to the Parent and its Subsidiaries for any period, the aggregate depreciation, amortization, impairment, compensation, rent and other non-cash expenses of the Parent and its Subsidiaries reducing Consolidated Net Income of such Person for such period on a Consolidated basis and otherwise determined in accordance with GAAP (including non-cash charges resulting from purchase accounting in connection with any Acquisition or Disposition that is consummated after the Closing Date), but excluding (a) any such charge which consists of or requires an accrual of, or cash reserve for, anticipated cash charges for any future period and (b) the non-cash impact of recording the change in fair value of any embedded derivatives under ASC 815 and related interpretations as a result of the terms of any agreement or instrument to which such Consolidated Non-cash Charges relate.

“ Consolidated Taxes ” means, with respect to the Parent and its Subsidiaries on a Consolidated basis for any period, provision for taxes based on income, profits or capital, including, without limitation, state franchise and similar taxes.

“ Contribution and Exchange Agreement ” has the meaning specified in the definition of Conversion and Release.

“ Control Agreement ” means any control agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by any Loan Party, Agent, and the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account) or its equivalent in any jurisdiction.

“ Conversion and Release ” means that the Parent, the Target, the holders of indebtedness under the Existing First Lien Note Purchase Agreement, the holder of indebtedness under the Existing Second Lien Note Purchase Agreement and others will enter into a Contribution and Exchange Agreement on terms reasonably acceptable to Agent (the “Contribution and Exchange Agreement”), pursuant to which all such indebtedness will be satisfied and discharged, the Existing First Lien Note Purchase Agreement and the Existing Second Lien Note Purchase Agreement will be terminated, and all liens securing obligations under or in connection with the Existing First Lien Note Purchase Agreement and the Existing Second Lien Note Purchase Agreement will be terminated and released.

 

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“ Covenant Testing Period ” means a period (a) commencing on the last day of the fiscal month of Loan Parties most recently ended prior to a Covenant Trigger Event for which Loan Parties are required to deliver to Agent monthly financial statements pursuant to Schedule 5.1 to this Agreement, and (b) continuing through and including the first day after such Covenant Trigger Event that Excess Availability has equaled or exceeded 10% of the Maximum Credit for 30 consecutive calendar days.

“ Covenant Trigger Event ” means if at any time Excess Availability is less than 10% of the Maximum Credit.

“ Cure Amount ” has the meaning specified therefor in Section 7.2(a) of the Agreement.

“ Cure Right ” has the meaning specified therefor in Section 7.2(a) of the Agreement.

“ Daily Balance ” means, as of any date of determination and with respect to any Obligation, the amount of such Obligation owed at the end of such day.

“ Default ” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.

“ Defaulting Lender ” means any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies Agent and Lead Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable Default or Event of Default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to Agent, Issuing Bank, or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two (2) Business Days of the date when due, (b) has notified any Borrower, Agent or Issuing Bank in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable Default or Event of Default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by Agent or Lead Borrower, to confirm in writing to Agent and Lead Borrower that it will comply with its prospective funding obligations hereunder ( provided , that , such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Agent and Lead Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of any Insolvency Proceeding, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-in Action; provided , that , a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender upon delivery of written notice of such determination to Lead Borrower, Issuing Bank, and each Lender.

 

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“ Defaulting Lender Rate ” means (a) for the first three (3) days from and after the date the relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Revolving Loans that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto).

“ Deposit Account ” means (a) any deposit account (as that term is defined in the UCC), and (b) with respect to any Deposit Account located outside of the United States, any bank account with a deposit function.

“ Designated Account ” means the Deposit Account of Lead Borrower identified on Schedule D-1 to this Agreement (or such other Deposit Account of Lead Borrower located at Designated Account Bank that has been designated as such, in writing, by Lead Borrower to Agent).

“ Designated Account Bank ” has the meaning specified therefor in Schedule D-1 to this Agreement (or such other bank that is located within the United States that has been designated as such, in writing, by Lead Borrower to Agent).

“ Dilution ” means, as of any date of determination, a percentage, based upon the experience of the immediately prior three (3) months, that is the result of dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising allowances, credits, or other dilutive items with respect to Borrowers’ Accounts during such period, by (b) Borrowers’ billings with respect to Accounts during such period.

“ Dilution Reserve ” means, as of any date of determination, an amount sufficient to reduce the advance rate against Eligible Accounts by the extent to which Dilution is in excess of 5%.

“ Disposition ” or “ Dispose ” means the sale, transfer, assignment, exclusive license, lease or other disposition (including any sale and leaseback transaction) (whether in one transaction or in a series of transactions) of any property by any Person, including (a) any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith and (b) any sale, transfer, assignment, or other disposition of any Equity Interests of another Person, but, for the avoidance of doubt, not the issuance by such Person of its Equity Interests.

“ Disqualified Equity Interests ” means any Equity Interests that, by their terms (or by the terms of any security or other Equity Interests into which they are convertible or for which they are exchangeable), or upon the happening of any event or condition (a) matures or are mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), (b) are redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (c) provide for the scheduled payments of dividends in cash, or (d) are or become convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 180 days after the Maturity Date.

“ Disqualified Lender ” means (a) those banks, financial institutions and other institutional lenders and investors that have been separately identified in writing by Parent to Agent by email transmission on September 24, 2018, (b) those companies that are competitors of a Loan Party that are separately identified in writing by Administrative Borrower to Agent by email transmission on September 24, 2018 and, with the reasonable consent of Agent, from time to time, after the Closing Date, and (c) in the case of

 

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each of clauses (a)  and (b) , any of their Affiliates that are identified in writing by Administrative Borrower to Agent by email transmission on September 24, 2018 and, with the reasonable consent of Agent, from time to time, after the Closing Date. The identification of any Person as a Disqualified Lender after the date hereof shall be effective only as of the time of such identification and any such identification shall have no retroactive effect of any kind, including to disqualify any Person that theretofore shall have become a Lender. Notwithstanding the foregoing, each Loan Party and the Lenders acknowledge and agree that Agent will not have any responsibility or obligation of any kind to determine whether any Lender or potential Lender is a Disqualified Lender and Agent will have no liability with respect to any assignment made to a Disqualified Lender. Parent shall confirm, upon the written request of Agent or any Lender, whether a particular Person is a Disqualified Lender.

“ Dollars ” or “$” means United States dollars.

“ Document ” means a document (as that term is defined in the UCC).

“ Domestic Subsidiary ” means any Subsidiary of Parent that is organized under the laws of any political subdivision of the United States.

“ DQ List ” has the meaning specified therefor in Section 13.1(i) .

“ Drawing Document ” means any Letter of Credit or other document presented for purposes of drawing under any Letter of Credit, including by electronic transmission such as SWIFT, electronic mail, facsimile or computer-generated communication.

“ Earn-Outs ” means unsecured liabilities of a Loan Party arising under an agreement to make any deferred payment as a part of the Purchase Price for a Permitted Acquisition, including performance bonuses or consulting payments in any related services, employment or similar agreement, in an amount that is subject to or contingent upon the revenues, income, cash flow or profits (or the like) of the target of such Permitted Acquisition.

“ EBITDA ” means, with respect to any fiscal period and with respect to Parent and its Subsidiaries determined, in each case, on a consolidated basis in accordance with GAAP:

(a) Consolidated Net Income, plus

(b) without duplication and to the extent deducted in determining such Consolidated Net Income for such period (other than with respect to clause (ix) below), each of the following items:

(i) income tax expense, net of tax refunds,

(ii) Consolidated Interest Charges,

(iii) Consolidated Non-cash Charges,

(iv) the amount of costs, expenses and fees paid to third parties during such period in connection with the transactions contemplated hereby to occur on the Closing Date and post-closing matters related thereto in an aggregate amount, during the term of this Agreement, not to exceed $13,500,000,

 

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(v) any premiums, expenses or charges (other than Consolidated Non-cash Charges) related to any issuance or sale of Equity Interests, Investment, Acquisition, Disposition or recapitalization permitted to be made hereunder (whether consummated or not),

(vi) any non-cash costs or expense incurred pursuant to any management equity plan or stock option plan or other management or employee benefit plan or agreement or any stock subscription or shareholder agreement,

(vii) the amount of any minority interest expense consisting of income of a Subsidiary attributable to minority equity interests of third parties in any non-wholly owned Subsidiary, net of any cash distributions made to such third parties in such period,

(viii) any net after-tax extraordinary, nonrecurring or unusual losses (including cash severance costs); provided that, solely with respect to cash losses added back pursuant to this clause (viii), Borrowers shall deliver to the Lenders supporting documentation reasonably satisfactory to the Required Lenders in respect of such cash losses,

(ix) proceeds of business interruption insurance received in cash during such period, to the extent not already included in Consolidated Net Income, and

(x) charges, losses or expenses to the extent indemnified, insured or reimbursed by a third party not an affiliate of a Loan Party to the extent such indemnification, insurance or reimbursement is actually received in cash for such period, minus

(c) without duplication, (i) any net after-tax extraordinary, non-recurring or unusual gains and any non-cash income or gain increasing Consolidated Net Income for such period, excluding any such items to the extent they represent (1) the reversal in such period of an accrual of, or reserve for, potential cash expense in a prior period, (2) any non-cash gains with respect to cash actually received in a prior period to the extent such cash did not increase Consolidated Net Income in a prior period or (3) items representing ordinary course accruals of cash to be received in future periods; plus (ii) any net gain from discontinued operations or net gains from the disposal of discontinued operations to the extent increasing Consolidated Net Income.

For the purposes of calculating EBITDA for any period of twelve consecutive months (each, a “ Reference Period ”), if at any time during such Reference Period (and on or after the Closing Date), any Loan Party or any of its Subsidiaries shall have made a Permitted Acquisition or a Disposition permitted hereunder, EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if any such Permitted Acquisition or Disposition (and any increase or decrease in the component financial definitions used in the calculation of EBITDA attributable to any Permitted Acquisition or Disposition) occurred on the first day of such Reference Period.

“ EEA Financial Institution ” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“ EEA Member Country ” means any of the member states of the European Union, Iceland, Liechtenstein and Norway.

 

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“ EEA Resolution Authority ” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“ Eligible Accounts ” means those Accounts created by a Borrower in the ordinary course of its business, that arise out of such Borrower’s rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made in the Loan Documents, and that are not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided , that such criteria may be revised from time to time by Agent in Agent’s Permitted Discretion to address the results of any information with respect to the Borrowers’ business or assets of which Agent becomes aware after the Closing Date, including any field examination performed by or received by Agent from time to time after the Closing Date. In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits, unapplied cash, taxes, finance charges, service charges, discounts, credits, allowances, and rebates. Eligible Accounts shall not include the following:

(a) (i) Accounts that the Account Debtor has failed to pay within 60 days of due date not to exceed 90 days of invoice date and (ii) up to $500,000 of Accounts that the Account Debtor has failed to pay within 60 days of the due date not to exceed 120 days of invoice date,

(b) Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above,

(c) Accounts with selling terms of more than 90 days,

(d) Accounts with respect to which the Account Debtor is an Affiliate of any Borrower or an employee or agent of any Borrower or any Affiliate of any Borrower,

(e) Accounts (i) arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional, or (ii) with respect to which the payment terms are “C.O.D.”, cash on delivery or other similar terms,

(f) Accounts that are not payable in Dollars,

(g) Accounts with respect to which the Account Debtor either (i) does not maintain its chief executive office in the United States or Canada, or (ii) is not organized under the laws of the United States or Canada or any state or province thereof, or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (A) the Account is supported by an irrevocable letter of credit reasonably satisfactory to Agent (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and, if requested by Agent, is directly drawable by Agent, or (B) the Account is covered by credit insurance in form, substance, and amount, and by an insurer, reasonably satisfactory to Agent,

(h) Accounts with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with respect to which Borrowers have complied, to the reasonable satisfaction of Lender, with the Assignment of Claims Act, 31 USC §3727), or (ii) any state of the United States or any other Governmental Authority,

 

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(i) Accounts with respect to which the Account Debtor is a creditor of a Borrower, has or has asserted a right of recoupment or setoff, or has disputed its obligation to pay all or any portion of the Account, solely to the extent of such claim, right of recoupment or setoff, or dispute,

(j) (1) Accounts with respect to an Account Debtor (other than as set forth in clause (j)(2) below) whose Eligible Accounts owing to Borrowers exceed 15% (such percentage, as applied to a particular Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts, solely to the extent of the obligations owing by such Account Debtor in excess of such percentage and (2) Accounts with respect to Concho Resources Inc. and its subsidiaries, BP America Production Company, Jagged Peak Energy Inc. and any other Account Debtor approved by Agent in writing, whose Eligible Accounts owing to Borrowers exceed 25% (such percentage, as applied to such Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts, solely to the extent of the obligations owing by such Account Debtor in excess of such percentage; provided, that in each case, the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit,

(k) Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to which any Borrower has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Account Debtor,

(l) Accounts, the collection of which, Agent, in its Permitted Discretion, believes to be doubtful, including by reason of the Account Debtor’s financial condition,

(m) Accounts that are not subject to a valid and perfected first priority Agent’s Lien,

(n) Accounts (i) with respect to unearned or deferred revenue for which services have not yet been completed or (ii) with respect to which the services giving rise to such Account have not been performed and billed to the Account Debtor,

(o) Accounts with respect to which the Account Debtor is a Sanctioned Person or Sanctioned Entity,

(p) Accounts (i) that represent the right to receive progress payments or other advance billings that are due prior to the completion of performance by the applicable Borrower of the subject contract for goods or services, or (ii) that represent credit card sales,

(q) Accounts owned by a target acquired in connection with a Permitted Acquisition, or a Person that is joined to this Agreement as a Borrower pursuant to the provisions of this Agreement or Accounts owned by Parent, in each case, until the completion of a field examination with respect to such Accounts, the results of which are, in each case, satisfactory to Agent in its Permitted Discretion; or

(r) Accounts arising out of the sale of any Goods.

“ Eligible Transferee ” means (a) a commercial bank organized under the laws of the United States, or any state thereof, and having total assets in excess of $1,000,000,000, (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development or a political subdivision of any such country and which has total assets in excess of $1,000,000,000, provided that such bank is acting through a branch or agency located in the

 

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United States, (c) a finance company, insurance company, or other financial institution or fund that is engaged in making, purchasing, or otherwise investing in commercial loans in the ordinary course of its business and having (together with its Affiliates) total assets in excess of $1,000,000,000, (d) any Affiliate (other than individuals) of a pre-existing Lender, (e) so long as no Event of Default has occurred and is continuing, any other Person approved by Agent and Borrower (such approval by Borrower not to be unreasonably withheld, conditioned or delayed), and (f) during the continuation of an Event of Default, any other Person approved by Agent; provided , that , no Disqualified Lender shall qualify as an Eligible Transferee.

“ Environmental Action ” means any written complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other written communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials (a) from any assets, properties, or businesses of any Loan Party, or any of their predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by any Loan Party, or any of their predecessors in interest.

“ Environmental Law ” means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy, or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on any Loan Party, relating to the environment, the effect of the environment on employee health, or Hazardous Materials, in each case as amended from time to time.

“ Environmental Liabilities ” means all liabilities, monetary obligations, losses, damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand, or Remedial Action required, by any Governmental Authority or any third party, and which relate to any Environmental Action.

“ Environmental Lien ” means any Lien in favor of any Governmental Authority for Environmental Liabilities.

“ Equipment ” means equipment (as that term is defined in the UCC).

“ Equity Interests ” means, with respect to a Person, all of the shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in such Person, whether voting or nonvoting, including capital stock (or other ownership or profit interests or units), preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto.

“ ERISA Affiliate ” means (a) any Person subject to ERISA that is treated as a single employer with any Loan Party or its Subsidiaries under IRC Section 414(b), (b) any trade or business subject to ERISA that is treated as a single employer with any Loan Party or its Subsidiaries under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any organization subject to ERISA that is a member of an affiliated service group of which any Loan Party or any of its Subsidiaries is a member under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that is treated as a single employer with any Loan Party or its Subsidiaries under IRC Section 414(o).

 

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“ ERISA Event ” means (a) any Reportable Event as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Pension Plan, other than those events as to which the 30-day notice period has been waived; (b) a withdrawal by a Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations by any Loan Party or any ERISA Affiliate that is treated as such a withdrawal from a Pension Plan under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent to terminate any Pension Plan, other than in a standard termination pursuant to Section 4041(b) of ERISA, or the treatment of a Multiemployer Plan amendment as a termination under Section 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (f) with respect to a Pension Plan, the failure to satisfy the minimum funding standard of IRC Section 412 or Section 302 of ERISA, whether or not waived; (g) the failure of any Loan Party or any ERISA Affiliate to make any required contribution to a Multiemployer Plan; (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate; or (i) the imposition of a Lien upon the property or any Loan Party or any ERISA Affiliate pursuant to the IRC or ERISA with respect to any Pension Plan, including pursuant to Section 430(k) of the IRC.

“ EU Bail-In Legislation Schedule ” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

“ Event of Default ” has the meaning specified therefor in Article 8 of this Agreement.

“ Excess Availability ” means at any time, the amount equal to (a) the lesser of the Borrowing Base or the Maximum Credit minus (b) the Revolver Usage.

“ Exchange Act ” means the Securities Exchange Act of 1934, as in effect from time to time.

“ Existing Credit Facilities ” means the credit facilities pursuant to (a) the Credit Agreement, dated as of November 15, 2017, as amended, by and between the Target and Wells Fargo, and (b) the Second Amended and Restated Credit Agreement, dated as of July 14, 2017, as amended, by and among Parent, CIT Finance LLC as agent, and others.

“ Existing First Lien Note Purchase Agreement ” means the First Lien Note Purchase Agreement dated as of February 15, 2017, by and among the Target and the purchasers party thereto, as amended.

“ Existing Letters of Credit ” means, collectively, the letters of credit set forth on Schedule 2.11 .

“ Existing Second Lien Note Purchase Agreement ” means the Amended and Restated Second Lien Note Purchase Agreement, dated as of February 15, 2017, by and among the Target and the purchasers party thereto, as amended.

“ Excluded Accounts ” has the meaning specified thereafter in the Guaranty and Security Agreement.

 

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“ Excluded Collateral ” means the following, except to the extent that any of the following may be collateral for obligations under the Term Loan Documents: (a) shares of any Subsidiary that is a “CFC” in excess of sixty-five percent of all of the issued and outstanding shares of Equity Interests of such Subsidiary entitled to vote (within the meaning of Treasury Regulation Section 1.956-2) to secure the Obligations if a pledge of a greater percentage would result in material adverse tax consequences to Parent or any other Loan Party, (b) motor vehicles or other assets subject to a certificate of title statute, letter of credit rights (other than to the extent such rights can be perfected by filing a UCC-1 and commercial tort claims with a value less than $150,000), (c) leasehold interests in Real Property, (d) Excluded Accounts, (e) any rights or interests in any contract, agreement, lease, permit, license, charter or license agreement, as such, if under the terms of such contract, agreement, lease, permit, license, charter or license agreement covering real or personal property, or applicable law with respect thereto, the valid grant of a Lien thereon to Agent would constitute or result in a breach, termination or default under such contract, agreement, lease, permit, license, charter or license agreement and such breach, termination or default has not been or is not waived or the consent of the other party to such contract, agreement, lease, permit, license, charter or license agreement has not been or is not otherwise obtained or under applicable law such prohibition cannot be waived; provided, that, the foregoing exclusion shall in no way be construed (i) to apply if any such prohibition is unenforceable under Sections 9-406, 9-407 or 9-408 of the Uniform Commercial Code or other applicable law or (ii) so as to limit, impair or otherwise affect Agent’s unconditional continuing liens on any rights or interests of a Loan Party in or to monies due or to become due under any such contract, lease, permit, license, charter or license agreement, (f) any United States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a lien thereon would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law; provided, that, upon submission and acceptance by the U.S. Patent and Trademark Office of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a), such intent-to-use trademark application shall be considered Collateral. Proceeds of Excluded Collateral shall be deemed Collateral, and (g) any property as to which Agent agrees (in consultation with the Borrowers) that the costs of obtaining a security interest in, or Lien on, such property, or perfection thereof, are excessive in relation to the value to the Lender Group and the Bank Product Providers of the security interest to be afforded thereby. Notwithstanding the foregoing, any and all proceeds of Excluded Collateral, to the extent that the proceeds are not themselves Excluded Collateral, shall be Collateral.

“ Excluded Domestic Holdco ”: a Domestic Subsidiary substantially all of the assets of which (whether held directly or indirectly) consist of Equity Interests of one or more Foreign Subsidiaries.

“ Excluded Subsidiary ” means any Subsidiary that is (a) a Foreign Subsidiary, (b) a direct or indirect Subsidiary of a Foreign Subsidiary or an Excluded Domestic Holdco; (c) an Excluded Domestic Holdco, (d) a captive insurance company; (e) a not-for-profit Subsidiary; (f) a Domestic Subsidiary that is a disregarded entity for U.S. federal income tax purposes and that owns Equity Interests of a Foreign Subsidiary; (g) prohibited or restricted by organizational documents or any contract existing on (but not incurred in anticipation of) the Closing Date (or if such Subsidiary is acquired after the Closing Date, on the date of such acquisition (so long as such prohibition did not arise as part of, or in anticipation of, such acquisition)) or applicable law (including any requirement to obtain the consent of a Governmental Authority) or third party consent that has not been obtained) from guaranteeing or granting Liens to secure the Obligations; (h) a Subsidiary of any of the foregoing Subsidiaries (to the extent such Subsidiary satisfies the exceptions described in any of the foregoing clauses (a) through (h)); and (i) any other Subsidiary if a guaranty by such Subsidiary would (in the reasonable good faith judgment of the Parent in consultation with the Agent) result in material adverse tax consequences to the Borrowers. Notwithstanding the foregoing, any Subsidiary that is a borrower or guarantor under the Term Loan Documents shall not be an Excluded Subsidiary.

 

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“ Excluded Swap Obligation ” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or a portion of the guaranty of such Loan Party of, or the grant by such Loan Party of a security interest to secure, such Swap Obligation (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guaranty of such Loan Party or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guaranty or security interest is or becomes illegal.

“ Excluded Taxes ” means (a) any Tax imposed on the net income or net profits of any Lender, any Participant or any Recipient Agent (including any franchise Taxes and branch profits Taxes), in each case (i) imposed as a result of such Lender, Participant or Recipient Agent being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) Taxes that would not have been imposed but for a Lender’s, Participant’s or Recipient Agent’s failure to comply with the requirements of Section 16.2 of this Agreement, (c) any United States federal withholding Taxes that would be imposed on amounts payable to a Lender based upon the applicable withholding rate in effect at the time such Lender becomes a party to this Agreement (or designates a new lending office, other than a designation made at the request of a Loan Party), except that Excluded Taxes shall not include (i) any amount that such Lender (or its assignor, if any) was previously entitled to receive pursuant to Section 16.1 of this Agreement, if any, with respect to such withholding Tax at the time such Lender becomes a party to this Agreement (or designates a new lending office), and (ii) additional United States federal withholding taxes that may be imposed after the time such Lender becomes a party to this Agreement (or designates a new lending office), as a result of a change in law, rule, regulation, treaty, order or other decision or other Change in Law with respect to any of the foregoing by any Governmental Authority, and (d) any withholding Taxes imposed under FATCA.

“ FATCA ” means Sections 1471 through 1474 of the IRC, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), and (a) any current or future regulations or official interpretations thereof, (b) any agreements entered into pursuant to Section 1471(b)(1) of the IRC (or any amended or successor version described above), and (c) any intergovernmental agreement entered into by the United States (or any fiscal or regulatory legislation, rules, or practices adopted pursuant to any such intergovernmental agreement entered into in connection therewith) and a foreign government or one or more agencies thereof to implement the foregoing and any fiscal or regulatory legislation, rules or official practices adopted pursuant to such published intergovernmental agreement, treaty or convention.

“ FCPA ” means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.

“ Federal Funds Rate ” means, for any period, a fluctuating interest rate per annum equal to, for each day during such period, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Agent from three Federal funds brokers of recognized standing selected by it (and, if any such rate is below zero, then the rate determined pursuant to this definition shall be deemed to be zero).

 

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“ Fee Letter ” means the fee letter, dated July 18, 2018, between Parent and Wells Fargo.

“ Fixed Charges ” means, with respect to any fiscal period and with respect to Parent and its Subsidiaries determined on a Consolidated basis in accordance with GAAP, the sum, without duplication, of (a) Consolidated Interest Charges required to be paid (other than interest paid-in-kind, amortization of financing fees, and other non-cash Consolidated Interest Charges) during such period, plus (b) scheduled principal payments in respect of Indebtedness that are required to be paid during such period, plus (c) all amounts paid with respect to Earn-Outs during such period, plus (d) solely for purposes of calculating the Fixed Charge Coverage Ratio as used in clause (b) of the definition of Payment Conditions, all Restricted Payments (whether in cash or other property, other than common Equity Interests) during such period.

“ Fixed Charge Coverage Ratio ” means, with respect to any fiscal period and with respect to Parent and its Subsidiaries determined on a consolidated basis in accordance with GAAP, the ratio of (a) EBITDA for the twelve month period ending on such date, minus Unfinanced Capital Expenditures made (to the extent not already incurred in a prior period) or incurred during the twelve month period ending on such date, minus Consolidated Taxes paid in cash during the twelve (12) month period ending on such date, to (b) Fixed Charges for the twelve (12) month period ending on such date.

“ Flow of Funds Agreement ” means a pay proceeds letter, dated as of even date with this Agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by Borrowers and Agent.

“ Foreign Subsidiary ” means any Subsidiary other than a Domestic Subsidiary.

“ Fronting Fee ” has the meaning specified therefor in Section 2.11(k) of this Agreement.

“ Funding Date ” means the date on which a Borrowing occurs.

“ Funding Losses ” has the meaning specified therefor in Section 2.12(c)(iii) of this Agreement.

“ GAAP ” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

“ General Intangible ” means a general intangible (as that term is defined in the UCC).

“ Goods ” means goods (as that term is defined in the UCC).

“ Governing Documents ” means, with respect to any Person, the certificate or articles of incorporation or association, memorandum of association, by-laws, or other organizational documents of such Person.

“ Governmental Authority ” means the government of any nation or any political subdivision thereof, whether at the national, state, territorial, provincial, county, municipal or any other level, 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 (including any supra-national bodies such as the European Union or the European Central Bank).

“ Guarantor ” means (a) each Person that guaranties all or a portion of the Obligations, including any Person that is a “Guarantor” under the Guaranty and Security Agreement, and (b) each other Person that becomes a guarantor after the Closing Date pursuant to Section 5.11 of this Agreement, provided, that, “Guarantor” shall not include any Excluded Subsidiary.

 

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“ Guaranty and Security Agreement ” means a guaranty and security agreement, dated as of even date with this Agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by each of the Loan Parties to Agent.

“ Hazardous Materials ” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million.

“ Hedge Agreement ” means a “swap agreement” as that term is defined in Section 101(53B)(A) of the Bankruptcy Code.

“ Hedge Obligations ” means any and all obligations or liabilities, whether absolute or contingent, due or to become due, now existing or hereafter arising, of Loan Parties arising under, owing pursuant to, or existing in respect of Hedge Agreements entered into with one or more of the Hedge Providers; provided that, anything to the contrary contained in the foregoing notwithstanding, the Hedge Obligations shall exclude any Excluded Swap Obligation.

“ Hedge Provider ” means Wells Fargo or any of its Affiliates.

“ Increased Reporting Event ” means if at any time Excess Availability is less than 12.5% of the Maximum Credit.

“ Increased Reporting Period ” means the period commencing upon the occurrence of an Increased Reporting Event and continuing until the first day after such Increased Reporting Event that Excess Availability equals or exceeds 12.5% of the Maximum Credit; provided that, if Excess Availability is equal to or greater than 12.5% of the Maximum Credit for at least thirty (30) consecutive days after such Increased Reporting Event, the Increased Reporting Event shall no longer be deemed to exist or be continuing until such time as Excess Availability may again be less than 12.5% of the Maximum Credit.

“ Indebtedness ” as to any Person means (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, or other financial products, (c) all obligations of such Person as a lessee under Capital Leases, (d) all obligations or liabilities of others secured by a Lien on any asset of such Person, irrespective of whether such obligation or liability is assumed, (e) all obligations of such Person to pay the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices and, for the avoidance of doubt, other than royalty payments payable in the ordinary course of business in respect of non-exclusive licenses) and any Earn-Out or similar obligations to the extent required to be recognized as a liability on the balance sheet of such Person under GAAP, (f) all monetary obligations of such Person owing under Hedge Agreements (which amount shall be calculated based on the amount that would be payable by such Person if the Hedge Agreement were

 

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terminated on the date of determination), (g) any Disqualified Equity Interests of such Person, and (h) any obligation of such Person guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (a) through (g) above. For purposes of this definition, (i) the amount of any Indebtedness represented by a guaranty or other similar instrument shall be the lesser of the principal amount of the obligations guaranteed and still outstanding and the maximum amount for which the guaranteeing Person may be liable pursuant to the terms of the instrument embodying such Indebtedness, and (ii) the amount of any Indebtedness which is limited or is non-recourse to a Person or for which recourse is limited to an identified asset shall be valued at the lesser of (A) if applicable, the limited amount of such obligations, and (B) if applicable, the fair market value of such assets securing such obligation.

“ Indemnified Liabilities ” has the meaning specified therefor in Section 10.3 of this Agreement.

“ Indemnified Person ” has the meaning specified therefor in Section 10.3 of this Agreement.

“ Insolvency Laws ” means, collectively, the Bankruptcy Code, and any other applicable state, provincial, territorial or federal bankruptcy or insolvency laws, each as now and hereafter in effect, any successors to such statutes and any other applicable insolvency or other similar law of any jurisdiction, including any law of any jurisdiction permitting a debtor to obtain a stay or a compromise of the claims of its creditors against it and including any rules and regulations pursuant thereto.

“ Indemnified Taxes ” means, (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by, or on account of any obligation of, any Loan Party under any Loan Document, and (b) to the extent not otherwise described in the foregoing clause (a), Other Taxes.

“ Insolvency Proceeding ” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“ Intercreditor Agreement ” means the Intercreditor Agreement, dated as of the Closing Date, among Agent and Term Loan Agent, as amended, restated or modified from time to time in accordance with its terms.

“ Interest Expense ” means, for any period, the aggregate of the interest expense of Parent and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

“ Interest Period ” means, with respect to each LIBOR Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending one (1), two (2), three (3) or six (6) months thereafter; provided , that , (a) interest shall accrue at the applicable rate based upon the LIBOR Rate from and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (b) any Interest Period that would end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day, (c) with respect to an Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period), the Interest Period shall end on the last Business Day of the calendar month that is one (1), two (2), three (3) or six (6) months after the date on which the Interest Period began, as applicable, and (d) Borrowers may not elect an Interest Period which will end after the Maturity Date.

 

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“ Inventory ” means inventory (as that term is defined in the UCC).

“ Investment ” means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, capital contributions (excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business, and (b)  bona fide accounts receivable arising in the ordinary course of business), or acquisitions of Indebtedness, Equity Interests, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustment for increases or decreases in value, or write-ups, write-downs, or write-offs with respect to such Investment.

“ IRC ” means the Internal Revenue Code of 1986, as in effect from time to time.

“ ISP ” means, with respect to any Letter of Credit, the International Standby Practices 1998 (International Chamber of Commerce Publication No. 590) and any version or revision thereof accepted by the Issuing Bank for use.

“ Issuer Document ” means, with respect to any Letter of Credit, a letter of credit application, a letter of credit agreement, or any other document, agreement or instrument entered into (or to be entered into) by a Borrower in favor of Issuing Bank and relating to such Letter of Credit.

“ Issuing Bank ” means Wells Fargo.

“ Joinder ” means a joinder agreement substantially in the form of Exhibit J-1 to this Agreement.

“ Judgment Currency ” has the meaning specified therefor in Section 17.15 of the Agreement.

“ Landlord Reserve ” means, as to each location at which a Borrower has books and records located and as to which a Collateral Access Agreement has not been received by Agent, a reserve in an amount equal to 3 months’ rent, storage charges, fees or other amounts under the lease or other applicable agreement relative to such location or, if greater and Agent so elects in its Permitted Discretion, the number of months’ rent, storage charges, fees or other amounts for which the landlord or other property owner will have, under applicable law, a Lien to secure the payment of such amounts under the lease or other applicable agreement relative to such location.

“ Lender ” has the meaning set forth in the preamble to this Agreement, shall include Issuing Bank, and shall also include any other Person made a party to this Agreement pursuant to the provisions of Section 13.1 of this Agreement and “ Lenders ” means each of Lenders or any one or more of them.

“ Lender Group ” means each of the Lenders (including Issuing Bank) and Agent or any one or more of them (as the context requires).

“ Lender Group Expenses ” means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by any Loan Party under any of the Loan Documents that are paid, advanced, or incurred by the Lender Group, (b) documented out-of-pocket fees or charges paid or incurred by Agent in connection with the Lender Group’s transactions with any Loan Party under any of the Loan Documents, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, corporate, bankruptcy, litigation, UCC searches and including searches with the patent and trademark office, the copyright office, or the

 

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department of motor vehicles), filing, recording, publication, real estate surveys, real estate title policies and endorsements, and environmental audits, (c) Agent’s customary fees and charges imposed or incurred in connection with any background checks or OFAC/PEP searches related to any Loan Party or its Affiliates, (d) Agent’s customary fees and charges (as adjusted from time to time) with respect to the disbursement of funds (or the receipt of funds) to or for the account of any Borrower (whether by wire transfer or otherwise), together with any documented out-of-pocket costs and expenses incurred in connection therewith, (e) customary charges imposed or incurred by Agent resulting from the dishonor of checks payable by or to any Loan Party, (f) reasonable and documented out-of-pocket costs and expenses paid or incurred by the Lender Group to correct any default or enforce any provision of the Loan Documents, or during the continuance of an Event of Default, in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (g) subject to Section 5.7(c), field examination fees and expenses (including travel, meals, and lodging) of Agent related to any field examinations or inspections to the extent of the fees and charges (and up to the amount of any limitation) contained in this Agreement or the Fee Letter, (h) reasonable documented costs and out-of-pocket expenses (including reasonable and documented attorneys’ fees and expenses) related to third party claims or any other suit or adverse proceeding paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or the Lender Group’s relationship with any Loan Party, (i) Agent’s reasonable and documented costs and out-of-pocket expenses (including reasonable and documented attorneys’ fees limited to a single counsel in the United States and any other jurisdiction of a Loan Party or where its assets are located) incurred in advising, structuring, drafting, reviewing, administering (including travel, meals, and lodging), syndicating (including SyndTrak, Intralinks or other communications costs incurred in connection with a syndication of the loan facilities), or amending, waiving or modifying the Loan Documents, and (j) Agent’s and each Lender’s reasonable and documented costs and out-of-pocket expenses (including reasonable and documented outside attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including reasonable outside attorneys, accountants, consultants, and other advisors fees and expenses incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning any Loan Party or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether suit or other adverse proceeding is brought, or in taking any enforcement action or any Remedial Action concerning the Collateral.

“ Lender Group Representatives ” has the meaning specified therefor in Section 17.9 of this Agreement.

“ Lender-Related Person ” means, with respect to any Lender, such Lender, together with such Lender’s Affiliates, officers, directors, employees, attorneys, and agents.

“ Letter of Credit ” means a letter of credit (as that term is defined in the UCC) issued by Issuing Bank for the account of any Borrower, including the Existing Letters of Credit.

“ Letter of Credit Collateralization ” means either (a) providing cash collateral (pursuant to documentation reasonably satisfactory to Agent (including that Agent has a first priority perfected Lien in such cash collateral), including provisions that specify that the Letter of Credit Fees and all commissions, fees, charges and expenses provided for in Section 2.11(k) of this Agreement (including any fronting fees) will continue to accrue while the Letters of Credit are outstanding) to be held by Agent for the benefit of the Revolving Lenders in an amount equal to one hundred five percent (105%) of the then existing Letter of Credit Usage, (b) delivering to Agent documentation executed by all beneficiaries under the Letters of Credit, in form and substance reasonably satisfactory to Agent and Issuing Bank, terminating all of such beneficiaries’ rights under the Letters of Credit, or (c) providing Agent with a

 

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standby letter of credit, in form and substance reasonably satisfactory to Agent, from a commercial bank acceptable to Agent (in its sole discretion) in an amount equal to one hundred five percent (105%) of the then existing Letter of Credit Usage (it being understood that the Letter of Credit Fee and all fronting fees set forth in this Agreement will continue to accrue while the Letters of Credit are outstanding and that any such fees that accrue must be an amount that can be drawn under any such standby letter of credit).

“ Letter of Credit Disbursement ” means a payment made by Issuing Bank pursuant to a Letter of Credit.

“ Letter of Credit Exposure ” means, as of any date of determination with respect to any Lender, such Lender’s participation in the Letter of Credit Usage pursuant to Section 2.11(e) on such date.

“ Letter of Credit Fee ” has the meaning specified therefor in Section 2.6(b) of this Agreement.

“ Letter of Credit Indemnified Costs ” has the meaning specified therefor in Section 2.11(f) of this Agreement.

“ Letter of Credit Related Person ” has the meaning specified therefor in Section 2.11(f) of this Agreement.

“ Letter of Credit Sublimit ” means $7,500,000.

“ Letter of Credit Usage ” means, as of any date of determination, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit, plus (b) the aggregate amount of outstanding reimbursement obligations with respect to Letters of Credit which remain unreimbursed or which have not been paid through a Revolving Loan.

“ LIBOR Deadline ” has the meaning specified therefor in Section 2.12(b)(i) of this Agreement.

“ LIBOR Notice ” means a written notice in the form of Exhibit L-1 to this Agreement.

“ LIBOR Option ” has the meaning specified therefor in Section 2.12(a) of this Agreement.

“ LIBOR Rate ” means, in relation to any LIBOR Rate Loan, the rate per annum published by ICE Benchmark Administration Limited (or any successor page or other commercially available source as Agent may designate from time to time) as of 11:00 a.m., London time, two (2) Business Days prior to the commencement of the requested Interest Period, for a term, and in an amount, comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrowers in accordance with this Agreement (and, if any such published rate is below zero, then the rate determined pursuant to this clause (b) shall be deemed to be zero). Each determination of the LIBOR Rate shall be made by the Agent and shall be conclusive in the absence of manifest error.

“ LIBOR Rate Loan ” means each portion of a Revolving Loan that bears interest at a rate determined by reference to the LIBOR Rate.

“ LIBOR Rate Margin ” means the Applicable LIBOR Rate Margin as set forth in the definition of the term Applicable Margin.

 

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“ Lien ” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest, or other security arrangement and any other preference, priority, or preferential arrangement of any kind or nature whatsoever, including any conditional sale contract or other title retention agreement, the interest of a lessor under a Capital Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.

“ Loan Account ” has the meaning specified therefor in Section 2.9(b) of this Agreement.

“ Loan ” means any Revolving Loan or Special Advance made (or to be made) hereunder.

“ Loan Documents ” means this Agreement, the Guaranty and Security Agreement and the other Collateral Documents, the Control Agreements, any Borrowing Base Certificate, the Fee Letter, any Issuer Documents, the Intercreditor Agreement, the Letters of Credit, the Loan Managers Side Letter, the Patent Security Agreement, the Trademark Security Agreement, any note or notes executed by Borrowers in connection with this Agreement and payable to any member of the Lender Group, and any other instrument or agreement entered into, now or in the future, by any Loan Party and any member of the Lender Group in connection with this Agreement (but specifically excluding Bank Product Agreements).

“ Loan Party ” means any Borrower or any Guarantor.

“ Margin Stock ” as defined in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.

“ Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, the financial condition, results of operations, properties, assets or liabilities of the Loan Parties and their Subsidiaries, taken as a whole, (b) a material impairment of the rights and remedies of the Agent or any Lender under the Loan Documents (including, without limitation, the Lender Group’s ability to enforce the Obligations or realize upon the Collateral), or of the ability of the Loan Parties, taken as a whole, to perform their obligations under the Loan Documents, (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Loan Parties, taken as a whole, of the Loan Documents, or (d) a material adverse change in, or a material adverse effect upon, the enforceability or priority of Agent’s Liens with respect to all or a material portion of the Collateral.

“ Material Contract ” means, with respect to any Loan Party, (i) the Closing Date Merger Documents, and (ii) all other contracts or agreements, the loss of which could reasonably be expected to result in a Material Adverse Effect.

“ Maturity Date ” means the earlier of (a) the maturity date under the Term Loan Agreement or (b) October 1, 2023.

“ Maximum Credit ” means $40,000,000, decreased by the amount of reductions in the Commitments made in accordance with Section 2.4(c) of this Agreement.

“ Moody’s ” has the meaning specified therefor in the definition of Cash Equivalents.

“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate makes or is obligated to make contributions, during the preceding five plan years has made or been obligated to make contributions, or with respect to which any Loan Party has any liability.

“ Non-Consenting Lender ” has the meaning specified therefor in Section 14.2(a) of this Agreement.

 

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“ Non-Defaulting Lender ” means each Lender other than a Defaulting Lender.

“ Obligations ” means (a) all loans (including the Revolving Loans (including Special Advances)), debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), reimbursement or indemnification obligations with respect to Letters of Credit (irrespective of whether contingent), premiums, liabilities (including all amounts charged to the Loan Account pursuant to this Agreement), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), Lender Group Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, and all covenants and duties of any other kind and description owing by any Loan Party arising out of, under, pursuant to, in connection with, or evidenced by this Agreement or any of the other Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all other expenses or other amounts that any Loan Party is required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents, and (b) all Bank Product Obligations; provided , that , anything to the contrary contained in the foregoing notwithstanding, the Obligations shall exclude any Excluded Swap Obligation. Without limiting the generality of the foregoing, the Obligations of Borrowers under the Loan Documents include the obligation to pay (i) the principal of the Revolving Loans, (ii) interest accrued on the Revolving Loans, (iii) the amount necessary to reimburse Issuing Bank for amounts paid or payable pursuant to Letters of Credit, (iv) Letter of Credit commissions, fees (including fronting fees) and charges, (v) Lender Group Expenses, (vi) fees payable under this Agreement or any of the other Loan Documents, and (vii) indemnities and other amounts payable by any Loan Party under any Loan Document. Any reference in this Agreement or in the Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

“ OFAC ” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“ Originating Lender ” has the meaning specified therefor in Section 13.1(e) of this Agreement.

“ Other Connection Taxes ” means, with respect to any Lender, Participant or Recipient Agent, Taxes imposed as a result of a present or former connection between such Lender, Participant or Recipient Agent and the jurisdiction or taxing authority imposing the Tax (other than any such connection arising solely from such Lender or such Participant having executed, delivered or performed its obligations, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced its rights or remedies under this Agreement or any other Loan Document).

“ Other Taxes ” means all present or future stamp, court, or documentary, intangible, recording, filing, excise, or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 14.2).

“ Overadvance ” means, as of any date of determination, that the Revolver Usage is greater than any of the limitations set forth in Section 2.1 or Section 2.11 .

“ Parent ” has the meaning specified therefor in the preamble to this Agreement.

 

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“ Participant ” has the meaning specified therefor in Section 13.1(e) of this Agreement.

“ Pass-Through Tax Liabilities ” means the amount of state and federal income tax paid or to be paid by any direct or indirect owner of any Equity Interest in Administrative Borrower on taxable income earned by Administrative Borrower and attributable to such owner of such Equity Interest as a result of the “pass-through” tax status of the Administrative Borrower (and, as applicable, any direct or indirect owner thereof), assuming the highest marginal income tax rate for federal and state income tax purposes of an individual residing in New York County, New York, after taking into account any deduction for state income taxes in calculating the federal income tax liability and all other deductions, credits, deferrals and other reductions (including unused, unexpired prior year loss carry-forwards) available to such owner of such Equity Interest from or through Administrative Borrower.

“ Patent Security Agreement ” has the meaning specified therefor in the Guaranty and Security Agreement.

“ Patriot Act ” has the meaning specified therefor in Section 4.13 of this Agreement.

“ Payment Conditions ” means, at the time of determination with respect to any specified transaction or payment the following:

(a) as of the date of any such transaction or payment, and after giving effect thereto, no Event of Default shall exist or have occurred and be continuing;

(b) as of the date of any such transaction or payment, and after giving effect thereto, either:

(i) the Excess Availability for the immediately preceding thirty (30) consecutive day period shall be not less twenty-five percent (25%) of the Maximum Credit and after giving effect to the transaction or payment, on a pro forma basis using the most recent calculation of the Borrowing Base immediately prior to any such payment or transaction, the Excess Availability shall be not less than such amount; or

(ii) both (A) the Excess Availability for the immediately preceding thirty (30) consecutive day period shall be not less than twenty percent (20%) of the Maximum Credit and after giving effect to the transaction or payment, on a pro forma basis using the most recent calculation of the Borrowing Base immediately prior to any such payment or transaction, the Excess Availability shall be not less than such amount, and (B) as of the date of any such transaction or payment, and after giving effect thereto, on a pro forma basis, the Fixed Charge Coverage Ratio of Parent and its Subsidiaries for the immediately preceding twelve (12) consecutive fiscal months ending on the last day of the applicable fiscal period prior to the date of such payment or transaction for which Agent has received financial statements shall be at least 1.00 to 1.00; and

(c) Agent shall have received a certificate of an Authorized Officer of Lead Borrower certifying as to compliance with the preceding clauses and demonstrating (in reasonable detail) the calculations required thereby.

“ PBGC ” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity thereto performing similar functions.

“ Pension Plan ” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by any Loan Party or any ERISA Affiliate or to which any Loan Party or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five (5) plan years.

 

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“ Perfection Certificate ” means a certificate in the form of Exhibit P-1 to this Agreement.

“ Permitted Acquisition ” means any Acquisition so long as:

(a) each of the Payment Conditions shall be satisfied,

(b) Lead Borrower has provided Agent with its due diligence package relative to the proposed Acquisition, including forecasted balance sheets, profit and loss statements, and cash flow statements of the Person or assets to be acquired, all prepared on a basis consistent with such Person’s (or assets’) historical financial statements, together with appropriate supporting details and a statement of underlying assumptions for the one (1) year period following the date of the proposed Acquisition, on a quarter by quarter basis), in form and substance (including as to scope and underlying assumptions) reasonably satisfactory to Agent; provided that such diligence package shall only be required to be delivered by Borrowers for Acquisitions with a Purchase Price in excess of $5,000,000 and for any Acquisitions funded in whole or in part with proceeds of Revolving Loans,

(c) Lead Borrower has provided Agent with written notice of the proposed Acquisition at least fifteen (15) Business Days prior to the anticipated closing date of the proposed Acquisition and, not later than five (5) Business Days prior to the anticipated closing date of the proposed Acquisition, copies of the acquisition agreement and other material documents relative to the proposed Acquisition, which agreement and documents must be reasonably acceptable to Agent,

(d) the assets being acquired (other than a de minimis amount of assets in relation to Loan Parties’ total assets), or the Person whose Equity Interests are being acquired, are substantially similar to the business of Loan Parties or a business reasonably related or incidental thereto,

(e) the subject assets or Equity Interests, as applicable, are being acquired directly by a Loan Party, and, in connection therewith, the applicable Loan Party shall have complied with Section 5.11 or 5.12 , as applicable, of this Agreement,

(f) the assets being acquired (other than a de minimis amount of assets in relation to the assets being acquired) are located within the United States or Canada or the Person whose Equity Interests are being acquired is organized in a jurisdiction located within the United States or Canada, and

(g) such Acquisition shall not be hostile and shall have been approved by the board of directors (or other similar body) or the requisite number of stockholders or other equityholders, as applicable, of the target as required by the governing documents of such target.

“ Permitted Discretion ” means, with reference to Agent, a determination made in good faith in the exercise of its reasonable business judgment based on how an asset-based lender with similar rights providing a credit facility of the type set forth in this Agreement would act in similar circumstances at the time with the information then available to it.

“ Permitted Dispositions ” means:

(a) sales, abandonment, or other Dispositions of Equipment (excluding Rig Fleet Equipment) that is substantially worn, damaged, or obsolete or no longer used or useful in the ordinary course of business and leases or subleases of Real Property not useful in the conduct of the business of the Loan Parties and their Subsidiaries,

 

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(b) sales of Inventory to buyers in the ordinary course of business,

(c) the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents,

(d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business,

(e) the granting of Permitted Liens,

(f) the sale or discount, in each case without recourse, of accounts receivable (other than Eligible Accounts) arising in the ordinary course of business, but only in connection with the compromise or collection thereof,

(g) any involuntary loss, damage or destruction of property,

(h) any involuntary condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, or confiscation or requisition of use of property,

(i) the leasing or subleasing of assets of any Loan Party or its Subsidiaries in the ordinary course of business,

(j) the sale or issuance of Equity Interests (other than Disqualified Equity Interests) of Borrowers,

(k) (i) the lapse of registered patents, trademarks, copyrights and other intellectual property of any Loan Party or any of its Subsidiaries to the extent not economically desirable in the conduct of its business, or (ii) the abandonment of patents, trademarks, copyrights, or other intellectual property rights in the ordinary course of business so long as (in each case under clauses (i) and (ii)), (A) with respect to copyrights, such copyrights are not material revenue generating copyrights, and (B) such lapse is not materially adverse to the interests of the Lender Group,

(l) the making of Restricted Payments that are expressly permitted to be made pursuant to this Agreement,

(m) the making of Permitted Investments,

(n) so long as no Event of Default has occurred and is continuing or would immediately result therefrom, transfers of assets (i) from any Loan Party or any of its Subsidiaries to a Loan Party, and (ii) from any Subsidiary of any Loan Party that is not a Loan Party to any other Subsidiary of any Loan Party,

(o) dispositions of Equipment (excluding Rig Fleet Equipment) to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property, or (ii) the net cash proceeds of such disposition are applied within 365 days following the applicable Loan Party’s or Subsidiary’s receipt of such net cash proceeds to the purchase price of Equipment useful in the Loan Parties’ business (or are otherwise applied in accordance with the

 

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Term Loan Agreement); provided , that (A) to the extent the property being transferred constitutes Collateral, such replacement property shall constitute Collateral, (B) the applicable Loan Party or its Subsidiary receives at least the fair market value of the assets so disposed, and (C) such net cash proceeds will not be used to prepay any Revolving Loans (except as otherwise permitted by the Intercreditor Agreement),

(p) sales or other dispositions of Rig Fleet Equipment not to exceed $25,000,000 in the aggregate in any fiscal year, so long as (i) no Default or Event of Default has occurred and is continuing or would immediately result therefrom, and (ii) each such sale or disposition is in an arm’s-length transaction with a third party and the applicable Loan Party or its Subsidiary receives at least the fair market value of the assets so disposed,

(q) sales or other dispositions of assets (excluding Rig Fleet Equipment, other Equipment and, except as permitted by clause (f) above, the sale or discount of accounts receivable) not otherwise permitted in clauses (a) through (q) above so long as (i) no Default or Event of Default has occurred and is continuing or would immediately result therefrom, (ii) each such sale or disposition is in an arm’s-length transaction and the applicable Loan Party or its Subsidiary receives at least the fair market value of the assets so disposed, and (iii) the consideration received by the applicable Loan Party or its Subsidiary consists of at least 75% cash and Cash Equivalents and is paid at the time of the closing of such sale or disposition, and

(r) sales or other dispositions of assets (excluding Rig Fleet Equipment and, except as permitted by clause (f) above, the sale or discount of accounts receivable) not otherwise permitted in clauses (a) through (q) above not exceeding $5,000,000 during the term of this Agreement.

“ Permitted Holder ” means MSD Partners, L.P., MSD Credit Opportunity Master Fund, L.P., MSD Energy Investments, L.P., and their respective Affiliates so long as Lenders shall have completed its Patriot Act searches, OFAC/PEP searches, and customary individual background checks and searches, as required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, the results of which shall be reasonably satisfactory to the Lenders.

“ Permitted Indebtedness ” means:

(a) Indebtedness in respect of the Obligations,

(b) Indebtedness as of the Closing Date set forth on Schedule 4.14 to this Agreement and any Refinancing Indebtedness in respect of such Indebtedness,

(c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in respect of such Indebtedness,

(d) Indebtedness arising in connection with the endorsement of instruments or other payment items for deposit,

(e) Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary course of business with respect to surety and appeal bonds, performance bonds, bid bonds, appeal bonds, completion guarantee and similar obligations, and (ii) unsecured guarantees arising with respect to customary indemnification obligations to purchasers in connection with Permitted Dispositions,

 

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(f) Indebtedness incurred in the ordinary course of business in respect of credit cards, credit card processing services, debit cards, stored value cards, commercial cards (including so-called “purchase cards”, “procurement cards” or “p-cards”), or Cash Management Services,

(g) contingent liabilities in respect of any indemnification obligation, adjustment of purchase price, non-compete, or similar obligation of any Loan Party incurred in connection with the consummation of one or more Permitted Acquisitions,

(h) to the extent constituting Indebtedness, Permitted Investments,

(i) unsecured Indebtedness incurred in respect of netting services, overdraft protection, and other like services, in each case, incurred in the ordinary course of business,

(j) unsecured Indebtedness of any Loan Party or its Subsidiaries, in an aggregate outstanding amount not to exceed $10,000,000, in respect of Earn-Outs owing to sellers of assets or Equity Interests to such Loan Party or its Subsidiaries that is incurred in connection with the consummation of one or more Permitted Acquisitions so long as such unsecured Indebtedness is on terms and conditions reasonably acceptable to the Required Lenders,

(k) accrual of interest, accretion or amortization of original issue discount, or the payment of interest in kind, in each case, on Indebtedness that otherwise constitutes Permitted Indebtedness,

(l) unsecured Indebtedness of any Loan Party owing to employees, former employees, former officers, directors, or former directors (or any spouses, ex-spouses, or estates of any of the foregoing) incurred in connection with the repurchase or redemption by such Loan Party of the Equity Interests of ICD that has been issued to such Persons permitted by Section 6.7 ,

(m) Indebtedness evidenced by the Term Loan Agreement in an aggregate principal amount not to exceed the amount thereof permitted by the Intercreditor Agreement,

(n) Indebtedness owed to any Person to finance property, casualty, liability or other insurance to any Loan Party or any of its Subsidiaries, so long as the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the year in which such Indebtedness is incurred and such Indebtedness is outstanding only during such year,

(o) the incurrence by any Loan Party or its Subsidiaries of Indebtedness under Hedge Agreements that is incurred for the bona fide purpose of hedging the interest rate, commodity, or foreign currency risks associated with such Loan Party’s or such Subsidiary’s operations and not for speculative purposes,

(p) unsecured Acquired Indebtedness in an amount not to exceed $15,000,000 outstanding at any one time so long as (i) the aggregate annual amortization with respect to such Acquired Indebtedness does not exceed 2.5% of the principal amount of such Acquired Indebtedness and (ii) such Acquired Indebtedness does not have any principal payments being made prior to the date that is six (6) months after the Maturity Date,

(q) Subordinated Indebtedness , and

(r) any other unsecured Indebtedness of any Borrower or any Subsidiary not covered by clauses (a) through (o) above in an aggregate principal amount not to exceed $15,000,000.

 

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“ Permitted Intercompany Advances ” means loans made by (a) a Loan Party to another Loan Party, (b) a Subsidiary of a Loan Party that is not a Loan Party to another Subsidiary of a Loan Party that is not a Loan Party, and (c) a Subsidiary of a Loan Party that is not a Loan Party to a Loan Party, so long as the parties thereto are party to an intercompany subordination agreement in form and substance reasonably satisfactory to Lender.

“ Permitted Investments ” means:

(a) Investments in cash and Cash Equivalents,

(b) Investments in negotiable instruments deposited or to be deposited for collection in the ordinary course of business,

(c) advances made in connection with purchases and acquisitions of Inventory, supplies, materials, equipment, goods, services, contract rights, or licenses or leases of intellectual property, in each case, in the ordinary course of business,

(d) Investments received in settlement of amounts due to any Loan Party or any of its Subsidiaries effected in the ordinary course of business or owing to any Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings involving an account debtor or upon the foreclosure or enforcement of any Lien in favor of a Loan Party or its Subsidiaries,

(e) Investments owned by any Loan Party or any of its Subsidiaries on the Closing Date and set forth on Schedule P-1 to this Agreement,

(f) guarantees permitted under the definition of “Permitted Indebtedness”,

(g) Permitted Intercompany Advances,

(h) Equity Interests or other securities acquired in connection with the satisfaction or enforcement of Indebtedness or claims due or owing to a Loan Party or its Subsidiaries (in bankruptcy of customers or suppliers or otherwise outside the ordinary course of business) or as security for any such Indebtedness or claims,

(i) deposits of cash made in the ordinary course of business to secure performance of operating leases,

(j) (i) non-cash loans and advances to employees, officers, and directors of a Loan Party or any of its Subsidiaries for the purpose of purchasing Equity Interests in Parent so long as the proceeds of such loans are used in their entirety to purchase such Equity Interests in Parent, and (ii) loans and advances to employees and officers of a Loan Party or any of its Subsidiaries in the ordinary course of business for any other business purpose and in an aggregate amount not to exceed $1,000,000 at any one time,

(k) Permitted Acquisitions,

(l) Investments in the form of capital contributions and the acquisition of Equity Interests made by any Loan Party in any other Loan Party (other than capital contributions to or the acquisition of Equity Interests of Parent),

 

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(m) Investments resulting from entering into (i) Bank Product Agreements or (ii) Hedge Agreements permitted by clause (o) of the definition of “Permitted Indebtedness”,

(n) equity Investments by any Loan Party in any Subsidiary of such Loan Party which is required by law to maintain a minimum net capital requirement or as may be otherwise required by applicable law,

(o) Investments held by a Person acquired in a Permitted Acquisition to the extent that such Investments were not made in contemplation of or in connection with such Permitted Acquisition and were in existence on the date of such Permitted Acquisition,

(p) Investments consisting of non-cash consideration received in connection with Permitted Dispositions, so long as the non-cash consideration received in connection with any Permitted Disposition does not exceed 25% of the total consideration received in connection with such Permitted Disposition,

(q) Investments consisting of the licensing or contribution of intellectual property, in each case, on a non-exclusive basis, pursuant to joint marketing arrangements with other Persons,

(r) Investments consisting of earnest money deposits required in connection with a purchase agreement, or letter of intent, or other acquisitions to the extent not otherwise prohibited hereunder,

(s) contributions to a “rabbi” trust for the benefit of employees or other grantor trust subject to claims of creditors in the case of a bankruptcy of any Loan Party or any of its Subsidiaries,

(t) so long as no Event of Default has occurred and is continuing or would result therefrom, any other Investments in an aggregate amount not to exceed $5,000,000, and

(u) other Investments using cash or Cash Equivalents; provided , that , each of the Payment Conditions shall be satisfied.

“ Permitted Liens ” means

(a) Liens granted to, or for the benefit of, Agent to secure the Obligations,

(b) Liens for unpaid taxes, assessments, or other governmental charges or levies that either (i) are not yet delinquent, or (ii) do not have priority over Agent’s Liens and the underlying taxes, assessments, or charges or levies are the subject of Permitted Protests,

(c) judgment Liens arising solely as a result of the existence of judgments, orders, or awards that do not constitute an Event of Default under Section 8.3 of this Agreement,

(d) Liens set forth on Schedule P-2 to this Agreement; provided, that to qualify as a Permitted Lien, any such Lien described on Schedule P-2 to this Agreement shall only secure the Indebtedness that it secures on the Closing Date and any Refinancing Indebtedness in respect thereof,

(e) the interests of lessors under operating leases and non-exclusive licensors under license agreements,

(f) Liens on fixed or capital assets or the interests of lessors under Capital Leases permitted under clause (c) of the definition of “Permitted Indebtedness” and so long as (i) such Lien attaches only to the fixed asset purchased or acquired and the proceeds thereof, and (ii) such Lien only secures the Indebtedness that was incurred to acquire the fixed asset purchased or acquired or any Refinancing Indebtedness in respect thereof,

 

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(g) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests,

(h) Liens on amounts deposited to secure Parent’s and its Subsidiaries’ obligations in connection with worker’s compensation or other unemployment insurance,

(i) Liens on amounts deposited to secure Parent’s and its Subsidiaries’ obligations in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money,

(j) Liens on amounts deposited to secure ICD’s and its Subsidiaries’ reimbursement obligations with respect to surety or appeal bonds obtained in the ordinary course of business,

(k) with respect to any Real Property, easements, rights of way, and zoning restrictions that do not materially interfere with or impair the use or operation thereof,

(l) non-exclusive licenses of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business,

(m) Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is the subject of permitted Refinancing Indebtedness and so long as the replacement Liens only encumber those assets that secured the original Indebtedness,

(n) rights of setoff or bankers’ liens upon deposits of funds in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such Deposit Accounts in the ordinary course of business,

(o) Liens solely on any cash earnest money deposits made by a Loan Party or any of its Subsidiaries in connection with any letter of intent or purchase agreement with respect to a Permitted Acquisition,

(p) Liens on Collateral securing the Indebtedness permitted under clause (m) of the definition of “Permitted Indebtedness” to the extent such Liens are subject to the Intercreditor Agreement, and

(q) Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance premiums to the extent (i) such financing is permitted under clause (n) the definition of “Permitted Indebtedness” and (ii) the aggregate amount of Indebtedness secured by such Liens does not exceed $5,000,000.

“ Permitted Protest ” means the right of any Loan Party or any of its Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment; provided , that (a) a reserve with respect to such obligation is established on such Loan Party’s or its Subsidiaries’ books and records in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by such Loan Party or its Subsidiary, as applicable, in good faith, and (c) Agent is reasonably satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of Agent’s Liens.

 

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“ Permitted Purchase Money Indebtedness ” means, as of any date of determination, Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), at the time of, or within 60 days after, the acquisition of any fixed assets (other than Rig Fleet Equipment) for the purpose of financing all or any part of the acquisition cost thereof, in an aggregate principal amount outstanding not in excess of $15,000,000 at any one time.

“ Person ” means natural persons, corporations, limited liability companies, unlimited liability company, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.

“ Projections ” means the Loan Parties’ forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow statements, all prepared on a basis consistent with Lead Borrower’s historical financial statements, together with appropriate supporting details and a statement of underlying assumptions.

“ Pro Rata Share ” means, as of any date of determination:

(a) with respect to a Lender’s obligation to make all or a portion of the Revolving Loans, with respect to such Lender’s right to receive payments of interest, fees, and principal with respect to the Revolving Loans, and with respect to all other computations and other matters related to the Commitments or the Revolving Loans, the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender, by (ii) the aggregate Revolving Loan Exposure of all Lenders,

(b) with respect to a Lender’s obligation to participate in the Letters of Credit, with respect to such Lender’s obligation to reimburse Issuing Bank, and with respect to such Lender’s right to receive payments of Letter of Credit Fees, and with respect to all other computations and other matters related to the Letters of Credit, the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender, by (ii) the aggregate Revolving Loan Exposure of all Lenders; provided , that , if all of the Revolving Loans have been repaid in full and all Commitments have been terminated, but Letters of Credit remain outstanding, Pro Rata Share under this clause shall be the percentage obtained by dividing (A) the Letter of Credit Exposure of such Lender, by (B) the Letter of Credit Exposure of all Lenders, and

(c) with respect to all other matters and for all other matters as to a particular Lender (including the indemnification obligations arising under Section 15.7 of this Agreement), the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender, by (ii) the aggregate Revolving Loan Exposure of all Lenders, in any such case as the applicable percentage may be adjusted by assignments permitted pursuant to Section 13.1 ; provided , that , if all of the Loans have been repaid in full and all Commitments have been terminated, Pro Rata Share under this clause shall be the percentage obtained by dividing (A) the Letter of Credit Exposure of such Lender, by (B) the Letter of Credit Exposure of all Lenders.

“ Protective Advances ” has the meaning specified therefor in Section 2.3(d)(i) of this Agreement.

“ Purchase Money Indebtedness ” means Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at the time of, or within sixty (60) days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.

 

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“ Purchase Price ” means, with respect to any Acquisition, an amount equal to the aggregate consideration, whether cash, property or securities (including the maximum amount of Earn-Outs), paid or delivered by a Loan Party in connection with such Acquisition (whether paid at the closing thereof or payable thereafter and whether fixed or contingent), but excluding therefrom (a) any cash of the seller and its Affiliates used to fund any portion of such consideration, and (b) any cash or Cash Equivalents acquired in connection with such Acquisition.

“ Qualified ECP Guarantor ” means, in respect of any Swap Obligation, each Guarantor that has total assets exceeding $10,000,000 at the time the relevant guaranty, keepwell, or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

“ Qualified Equity Interests ” means and refers to any Equity Interests issued by Parent (and not by one or more of its Subsidiaries) that is not a Disqualified Equity Interest.

“ Quarterly Average Excess Availability ” means, at any time, the daily average of the aggregate amount of the Excess Availability for the immediately preceding calendar quarter, commencing on the first day of such calendar quarter.

“ Real Property ” means any estates or interests in real or immovable property now owned or hereafter acquired by any Loan Party and the improvements thereto.

“ Receivable Reserves ” means, as of any date of determination, those reserves that Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c) , to establish and maintain (including Landlord Reserves for books and records locations and reserves for rebates, discounts, warranty claims, and returns) with respect to the Eligible Accounts or the Maximum Credit.

“ Recipient Agent ” means an agent that receives payments on behalf of the Lenders and the Participants.

“ Record ” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

“ Refinancing ” means, collectively, substantially concurrently with the consummation of the Closing Date Merger, the repayment in full of all indebtedness under each of the Existing Credit Facilities, and the release of any Liens securing such indebtedness; provided that the foregoing shall not be construed to require the termination of any of the Existing Letters of Credit.

“ Refinancing Indebtedness ” means refinancings, renewals, or extensions of Indebtedness (other than Indebtedness in respect of the Obligations) so long as:

(a) such refinancings, renewals, or extensions do not result in an increase in the principal amount of the Indebtedness so refinanced, renewed, or extended, other than by the amount of premiums paid thereon and the fees and expenses incurred in connection therewith and by the amount of unfunded commitments with respect thereto,

(b) such refinancings, renewals, or extensions do not result in a shortening of the final maturity date or the average weighted maturity (measured as of the refinancing, renewal, or extension) of the Indebtedness so refinanced, renewed, or extended, nor (except in the case of Term Loan Indebtedness) are they on terms or conditions that, taken as a whole, are or could reasonably be expected to be materially adverse to the interests of the Lenders nor (in the case of Term Loan Indebtedness) are they on terms and conditions which contravene the Intercreditor Agreement,

 

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(c) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension must include subordination terms and conditions that are at least as favorable to the Lender Group as those that were applicable to the refinanced, renewed, or extended Indebtedness,

(d) the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated with respect to the Indebtedness that was refinanced, renewed, or extended,

(e) if the Indebtedness that is refinanced, renewed or extended was unsecured, such refinancing, renewal or extension shall be unsecured, and

(f) if the Indebtedness (other than Term Loan Indebtedness) that is refinanced, renewed, or extended was secured (i) such refinancing, renewal, or extension shall be secured by substantially the same or less collateral as secured such refinanced, renewed or extended Indebtedness on terms no less favorable to the Agent or the Lender Group, and (ii) the Liens securing such refinancing, renewal or extension shall not have a priority more senior than the Liens securing such Indebtedness that is refinanced, renewed or extended;

(g) if the Indebtedness that is refinanced, renewed or extended was Term Loan Indebtedness, any Liens securing such refinancing, renewal or extension shall be subject to the Intercreditor Agreement (or another intercreditor agreement in form and substance acceptable to Agent).

“ Related Fund ” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.

“ Remedial Action ” means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) restore or reclaim natural resources or the environment, (d) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (e) conduct any other actions with respect to Hazardous Materials required by Environmental Laws.

“ Replacement Lender ” has the meaning specified therefor in Section 2.13(b) of this Agreement.

“ Report ” has the meaning specified therefor in Section 15.16(a) of this Agreement.

“ Required Lenders ” means, at any time, Lenders having or holding more than fifty percent (50%) of the aggregate Revolving Loan Exposure of all Lenders; provided , that , (i) the Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the determination of the Required Lenders, and (ii) at any time there are two or more Lenders (who are not Affiliates of one another or Defaulting Lenders), “Required Lenders” must include at least two Lenders (who are not Affiliates of one another).

 

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“ Reserves ” means, as of any date of determination, Bank Product Reserves, Receivables Reserves, Dilution Reserve, and those other reserves that Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c) , to establish and maintain (including reserves with respect to (a) sums that any Loan Party or its Subsidiaries are required to pay under any Section of this Agreement or any other Loan Document (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed to pay, and (b) amounts owing by any Loan Party or its Subsidiaries to any Person to the extent secured by a Lien on, or trust over, any of the Collateral (other than a Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent likely would have a priority superior to Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral) with respect to the Borrowing Base or the Maximum Credit.

“ Restricted Payment ” means (a) any declaration or payment of any dividend or the making of any other payment or distribution, directly or indirectly, on account of Equity Interests issued by any Loan Party or any of its Subsidiaries (including any payment in connection with any merger or consolidation involving any Loan Party or any of its Subsidiaries) or to the direct or indirect holders of Equity Interests issued by any Loan Party or any of its Subsidiaries in their capacity as such (other than dividends or distributions payable in Qualified Equity Interests issued by any Loan Party or any of its Subsidiaries), or (b) any purchase, redemption, making of any sinking fund or similar payment, or other acquisition or retirement for value (including in connection with any merger or consolidation involving any Loan Party or any of its Subsidiaries) any Equity Interests issued by any Loan Party or any of its Subsidiaries, or (c) any making of any payment to retire, or to obtain the surrender of, any outstanding warrants, options, or other rights to acquire Equity Interests of any Loan Party now or hereafter outstanding.

“ Revolver Usage ” means, as of any date of determination, the sum of (a) the amount of outstanding Revolving Loans (inclusive of Protective Advances), plus (b) the amount of the Letter of Credit Usage.

“ Revolving Loan Exposure ” means, with respect to any Revolving Lender, as of any date of determination (a) prior to the termination of the Commitments, the amount of such Lender’s Commitment, and (b) after the termination of the Commitments, the aggregate outstanding principal amount of the Revolving Loans of such Lender.

“ Revolving Loans ” has the meaning specified in Section 2.1(a) of this Agreement.

“ Rig ” means any land-based drilling and workover rig owned by any Loan Party, together with all Rig Accessories that are installed on or affixed to such Rig.

“ Rig Accessories ” means pumps, drilling equipment, machinery, equipment, forklifts, bulldozers and other parts necessary or useful for the drilling operation of any Rig.

“ Rig Fleet Equipment ” means any Loan Party’s Rigs and partial Rigs and any Loan Party’s Equipment related to such Rigs and partial Rigs.

“ Sanctioned Entity ” means (a) a country or territory or a government of a country or territory, (b) an agency of the government of a country or territory, (c) an organization directly or indirectly controlled by a country or territory or its government, or (d) a Person resident in or determined to be resident in a country or territory, in each case of clauses (a) through (d) that is a target of Sanctions, including a target of any country sanctions program administered and enforced by OFAC.

 

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“ Sanctioned Person ” means, at any time, (a) any a Person named on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC, OFAC’s consolidated Non-SDN list or any other Sanctions-related list maintained by any relevant Governmental Authority, (b) a Person or legal entity that is a target of Sanctions, (c) any Person operating, organized or resident in a Sanctioned Entity, or (d) any Person directly or indirectly owned or controlled (individually or in the aggregate) by or acting on behalf of any such Person or Persons described in clauses (a) through (c) above.

“ Sanctions ” means individually and collectively, respectively, any and all economic sanctions, trade sanctions, financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes anti-terrorism laws and other sanctions laws, regulations or embargoes, including those imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future executive order, (b) the United Nations Security Council, (c) the European Union or any European Union member state, (d) Her Majesty’s Treasury of the United Kingdom, or (e) any other Governmental Authority with jurisdiction over any member of the Lender Group, Bank Product Provider, Hedge Provider or any Loan Party or any of their respective Subsidiaries.

“ S&P ” has the meaning specified therefor in the definition of Cash Equivalents.

“ SEC ” means the United States Securities and Exchange Commission and any successor thereto.

“ Securities Account ” means a securities account (as that term is defined in the UCC).

“ Securities Act ” means the Securities Act of 1933, as amended from time to time, and any successor statute.

“ Sellers ” means the owners of the Equity Interests of the Target immediately before giving effect to the Closing Date Merger.

“ Settlement ” has the meaning specified therefor in Section 2.3(e)(i) of this Agreement.

“ Settlement Date ” has the meaning specified therefor in Section 2.3(e)(i) of this Agreement.

“ Solvent ” means, with respect to any Person as of any date of determination, that (a) at fair valuations, the sum of such Person’s debts (including contingent liabilities) is less than all of such Person’s assets, (b) such Person is not engaged or about to engage in a business or transaction for which the remaining assets of such Person are unreasonably small in relation to the business or transaction or for which the property remaining with such Person is an unreasonably small capital, (c) such Person has not incurred and does not intend to incur, or reasonably believe that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise), and (d) such Person is “solvent” or not “insolvent”, as applicable within the meaning given those terms and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).

“ Special Advances ” has the meaning specified therefor in Section 2.3(d)(iii) of this Agreement.

 

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“ Specified Equity Contribution ” means cash equity contributions (which if in the form of preferred equity shall be on terms and conditions reasonably acceptable to Agent) made directly or indirectly by a Person (other than a Loan Party) to Parent as a cash equity contribution in accordance with Section 7.2 , which equity contribution is added to EBITDA for the purposes of calculating compliance with Section 7.1 .

“ Specified Event of Default ” means (a) any Event of Default arising under Section 8.1 of the Agreement, (b) any Event of Default arising under Section 8.4 of the Agreement, (c) any Event of Default arising under Section 8.5 of the Agreement, (d) any Event of Default arising under Section 8.2(a) of the Agreement resulting from the failure to comply with Section 5.2 of the Agreement (with respect to delivery of each of the items set forth in clauses (a) through (h) of Schedule 5.2 to the Agreement), (e) any Event of Default arising under Section 8.2(a) of the Agreement resulting from the failure to comply with Section 7(k) of the Guaranty and Security Agreement, (f) any Event of Default arising under Section 8.2(a) arising from the failure to comply with Section 7 of the Agreement and (g) any Event of Default arising under Section 8.7 of the Agreement resulting from any representation or warranty under Section 4.22 of the Agreement being untrue.

“ Specified Representations ” means the representations and warranties made by the Parent and its Subsidiaries in Section 4.1(a)(i), 4.2(a), 4.2(b)(i) (as it relates to no conflict with the Governing Documents of any Loan Party and laws or regulations applicable to any Loan Party), 4.2(b)(ii) (as it relates to no conflict with Material Contracts that relate to Indebtedness), 4.4(a) (in each case, as it relates to the due authorization, execution, delivery and performance of the Loan Documents and enforceability thereof), 4.4(b), 4.9, 4.13, 4.16, 4.17 or 4.18 of this Agreement.

“ Standard Letter of Credit Practice ” means, for Issuing Bank, any domestic or foreign law or letter of credit practices applicable in the city in which Issuing Bank issued the applicable Letter of Credit or, for its branch or correspondent, such laws and practices applicable in the city in which it has advised, confirmed or negotiated such Letter of Credit, as the case may be, in each case, (a) which letter of credit practices are of banks that regularly issue letters of credit in the particular city, and (b) which laws or letter of credit practices are required or permitted under ISP or UCP, as chosen in the applicable Letter of Credit.

“ Subordinated Indebtedness ” means any unsecured Indebtedness of Loan Parties incurred from time to time (a) that is subordinated in right of payment (which, for the avoidance of doubt, shall include a restriction on all cash payments with respect to such Indebtedness) to the Obligations, (b) that is not guaranteed by any Subsidiaries other than Loan Parties, (c) that is not subject to scheduled amortization, redemption, sinking fund or similar payment and does not have a final maturity, in each case, on or before the date that is six months after the Maturity Date, (d) that does not include any financial covenants or any covenant or agreement that is more restrictive or onerous on any Loan Party in any material respect than any comparable covenant in the Agreement and is otherwise on terms and conditions reasonably acceptable to Agent, (e) limited to cross-payment default and cross-acceleration to designated “senior debt” (including the Obligations), and (f) that is subject to a subordination agreement, in form and substance reasonably acceptable to Agent.

“ Subordination Provisions ” has the meaning specified therefor in Section 8.13 of this Agreement.

“ Subsidiary ” of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the Equity Interests having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity.

 

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“ Supermajority Lenders ” means, at any time, Revolving Lenders having or holding more than sixty-six and two-thirds percent (66 2/3%) of the aggregate Revolving Loan Exposure of all Lenders; provided , that , (i) the Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the determination of the Supermajority Lenders, and (ii) at any time there are two or more Lenders (who are not Affiliates of one another), “Supermajority Lenders” must include at least two Lenders (who are not Affiliates of one another or Defaulting Lenders).

“ Swap Obligation ” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

“ Target ” means Sidewinder Drilling LLC, a Delaware limited liability company.

“ Taxes ” means any 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, and all interest, penalties or additions to tax with respect thereto.

“ Tax Lender ” has the meaning specified therefor in Section 14.2(a) of this Agreement.

“ Term Loan Agent ” means U.S. Bank National Association, in its capacity as agent under the Term Loan Agreement and the other Term Loan Documents and its successors and assigns, together with any replacement or successor agent thereunder.

“ Term Loan Agreement ” means the Credit Agreement, dated of even date herewith, by and among Term Loan Agent, Term Loan Lenders, Parent and certain of its affiliates (as the same may be subsequently amended, restated, refinanced, replaced, extended, renewed or restructured in accordance with the provisions hereof and the terms of the Intercreditor Agreement).

“ Term Loan Documents ” means, collectively, the following; (a) the Term Loan Agreement and (b) all agreements, documents and instruments at any time executed and/or delivered in connection therewith.

“ Term Loan Lenders ” means those certain financial institutions from time to time party to the Term Loan Agreement as lenders.

“ Term Priority Collateral ” has the meaning specified therefor in the Intercreditor Agreement.

“ Trademark Security Agreement ” has the meaning specified therefor in the Guaranty and Security Agreement.

“ Transactions ” means, collectively, the Closing Date Merger, the Refinancing, the credit facility under the Term Loan Agreement, the credit facility under this Agreement, the Conversion and Release, and the other transactions related to the foregoing.

“ UCC ” means the New York Uniform Commercial Code, as in effect from time to time.

“ UCP ” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits 2007 Revision, International Chamber of Commerce Publication No. 600 and any version or revision thereof accepted by Issuing Bank for use.

“ Unfinanced Capital Expenditures ” means Capital Expenditures (a) not financed with the proceeds of any incurrence of Indebtedness (other than the incurrence of any Revolving Loans), the proceeds of any sale or issuance of Equity Interests or equity contributions, the proceeds of any asset sale, or any insurance proceeds, and (b) that are not reimbursed by a third person (excluding any Loan Party or any of its Affiliates) in the period such expenditures are made pursuant to a written agreement.

 

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“ United States ” means the United States of America.

“ Unused Line Fee ” has the meaning specified therefor in Section 2.10(b) of this Agreement.

“ US Dollars ” or “ $ ” means the lawful currency of the United States.

“ Voidable Transfer ” has the meaning specified therefor in Section 17.8 of this Agreement.

“ Wells Fargo ” means Wells Fargo Bank, National Association, a national banking association.

“ Withdrawal Liability ” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Title IV of ERISA.

“ Write-Down and Conversion Powers ” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

1.2 Accounting Terms . All accounting terms not specifically defined herein shall be construed in accordance with GAAP; provided , that , if Lead Borrower notifies Agent that Borrowers request an amendment to any provision hereof to eliminate the effect of any Accounting Change occurring after the Closing Date or in the application thereof on the operation of such provision (or if Agent notifies Lead Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such Accounting Change or in the application thereof, then Agent and Borrowers agree that they will negotiate in good faith amendments to the provisions of this Agreement that are directly affected by such Accounting Change with the intent of having the respective positions of Lenders and Borrowers after such Accounting Change conform as nearly as possible to their respective positions immediately before such Accounting Change took effect and, until any such amendments have been agreed upon and reasonably agreed to by Agent, the provisions in this Agreement shall be calculated as if no such Accounting Change had occurred. When used herein, the term “financial statements” shall include the notes and schedules thereto. Whenever the term “Parent”, “Borrowers” is used in respect of a financial covenant or a related definition, it shall be understood to mean the Loan Parties and their Subsidiaries on a consolidated basis, unless the context clearly requires otherwise. Notwithstanding anything to the contrary contained herein, all financial statements delivered hereunder shall be prepared, and all financial covenants contained herein shall be calculated, without giving effect to any election under the Statement of Financial Accounting Standards Board’s Accounting Standards Codification Topic 825 (or any similar accounting principle) permitting a Person to value its financial liabilities or Indebtedness at the fair value thereof.

1.3 UCC . Any terms used in this Agreement that are defined in the UCC, shall be construed and defined as set forth in the UCC unless otherwise defined herein; provided , that , to the extent that the UCC is used to define any term herein and such term is defined differently in different Articles of the UCC, the definition of such term contained in Article 9 of the UCC shall govern.

1.4 Construction . Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,”

 

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“herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan Document to (i) any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein), and (ii) any law, statute, rule or regulation shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law (it being understood that nothing in this clause shall give retroactive effect to such consolidation, amendment, replacement, supplement or interpretation). The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties. Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations shall mean (a) the payment or repayment in full in immediately available funds of (i) the principal amount of, and interest accrued and unpaid with respect to, all outstanding Loans, together with the payment of any premium applicable to the repayment of the Loans, (ii) all Lender Group Expenses that have accrued and are unpaid regardless of whether demand has been made therefor, and (iii) all fees or charges that have accrued hereunder or under any other Loan Document (including the Letter of Credit Fee and the Unused Line Fee) and are unpaid, (b) in the case of contingent reimbursement obligations with respect to Letters of Credit, providing Letter of Credit Collateralization, (c) in the case of obligations with respect to Bank Products (other than Hedge Obligations), providing Bank Product Collateralization, (d) the receipt by Agent of cash collateral in order to secure any other contingent Obligations for which a claim or demand for payment has been made on or prior to such time or in respect of matters or circumstances known to Agent or a Lender at such time that are reasonably expected to result in any loss, cost, damage, or expense (including attorneys’ fees and legal expenses), such cash collateral to be in such amount as Agent reasonably determines is appropriate to secure such contingent Obligations, (e) the payment or repayment in full in immediately available funds of all other outstanding Obligations (including the payment of any termination amount then applicable (or which would or could become applicable as a result of the repayment of the other Obligations) under Hedge Agreements provided by Hedge Providers) other than (i) unasserted contingent indemnification Obligations, (ii) any Bank Product Obligations (other than Hedge Obligations) that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding without being required to be repaid or cash collateralized, and (iii) any Hedge Obligations that, at such time, are allowed by the applicable Hedge Provider to remain outstanding without being required to be repaid, and (f) the termination of all of the Commitments of the Lenders. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in any other Loan Document shall be satisfied by the transmission of a Record.

1.5 Time References . Unless the context of this Agreement or any other Loan Document clearly requires otherwise, all references to time of day refer to Central standard time or Central daylight saving time, as in effect in Dallas, Texas on such day. For purposes of the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to and including”; provided , that , with respect to a computation of fees or interest payable to Agent or any Lender, such period shall exclude the first day and include the last day so long as payment is received on or before the time specified in Section 2.4, but in any event consist of at least one (1) full day.

1.6 Schedules and Exhibits . All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

 

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2. LOANS AND TERMS OF PAYMENT.

2.1 Revolving Loans .

(a) Subject to the terms and conditions of this Agreement, and during the term of this Agreement, each Lender agrees (severally, not jointly or jointly and severally) to make revolving loans (“ Revolving Loans ”) to Borrowers in an amount at any one time outstanding not to exceed the lesser of:

(i) such Lender’s Commitment, or

(ii) such Lender’s Pro Rata Share of an amount equal to the lesser of:

(A) the amount equal to (1) the Maximum Credit, less (2) the Letter of Credit Usage at such time, and

(B) the amount equal to (1) the Borrowing Base as of such date, less (2) the Letter of Credit Usage at such time.

(b) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement. The outstanding principal amount of the Revolving Loans, together with interest accrued and unpaid thereon, shall constitute Obligations and shall be due and payable on the Maturity Date or, if earlier, on the date on which they otherwise become due and payable pursuant to the terms of this Agreement. Borrowers hereby jointly and severally promise to repay all amounts due hereunder with respect to the Revolving Loans.

(c) Anything to the contrary in this Section 2.1 notwithstanding, Agent shall have the right (but not the obligation) at any time, in the exercise of its Permitted Discretion, to establish and increase or decrease Reserves against the Borrowing Base or the Maximum Credit. The amount of any Reserve established by Agent, and any changes to the eligibility criteria set forth in the definitions of Eligible Accounts shall have a reasonable relationship to the event, condition, other circumstance, or fact that is the basis for such reserve or change in eligibility and shall not be duplicative of any other reserve established and currently maintained or eligibility criteria. To the extent that an event, condition or matter as to any Eligible Accounts is addressed pursuant to the treatment thereof within the applicable definition of such term, Agent shall not also establish a Reserve to address the same event, condition or matter.

2.2 Reserved .

2.3 Borrowing Procedures and Settlements .

(a) Procedure for Borrowing Revolving Loans . Each Borrowing shall be made by a written request by an Authorized Person delivered to Agent (which may be delivered through Agent’s electronic platform or portal) and received by Agent no later than 11:00 a.m. (i) on the Business Day that is one (1) Business Day prior to the requested Funding Date in the case of a request for a Base Rate Loan, and (ii) on the Business Day that is three (3) Business Days prior to the requested Funding Date in the case of all other requests, specifying (A) the amount of such Borrowing, and (B) the requested Funding Date (which shall be a Business Day); provided, that Agent may, in its sole discretion, elect to accept as timely requests that are received later than 11:00 a.m. on the applicable Business Day. All Borrowing requests which are not made on-line via Agent’s electronic platform or portal shall be subject to (and unless Agent elects otherwise in the exercise of its sole discretion, such Borrowings shall not be made until the completion of) Agent’s authentication process (with results satisfactory to Agent) prior to the funding of any such requested Revolving Loan.

 

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(b) [Reserved].

(c) Making of Revolving Loans .

(i) After receipt of a request for a Borrowing pursuant to Section 2.3(a)(i) , Agent shall notify the Lenders by telecopy, telephone, email, or other electronic form of transmission, of the requested Borrowing; such notification to be sent on the Business Day that is (A) in the case of a Base Rate Loan, at least one (1) Business Day prior to the requested Funding Date, or (B) in the case of a LIBOR Rate Loan, prior to 11:00 a.m. at least three (3) Business Days prior to the requested Funding Date. If Agent has notified the Lenders of a requested Borrowing on the Business Day that is one (1) Business Day prior to the Funding Date, then each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s Account, not later than 10:00 a.m. on the Business Day that is the requested Funding Date. After Agent’s receipt of the proceeds of such Revolving Loans from the Lenders, Agent shall make the proceeds thereof available to Borrowers on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Agent to the Designated Account; provided , that , subject to the provisions of Section 2.3(d)(ii) , no Lender shall have an obligation to make any Revolving Loan, if (1) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or (2) as of the date of the requested Borrowing and after giving effect thereto, the Revolver Usage would exceed the lesser of the Borrowing Base or the Maximum Credit.

(ii) Unless Agent receives notice from a Lender prior to 9:30 a.m. on the Business Day that is the requested Funding Date relative to a requested Borrowing as to which Agent has notified the Lenders of a requested Borrowing that such Lender will not make available as and when required hereunder to Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrowers a corresponding amount. If, on the requested Funding Date, any Lender shall not have remitted the full amount that it is required to make available to Agent in immediately available funds and if Agent has made available to Borrowers such amount on the requested Funding Date, then such Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s Account, no later than 10:00 a.m. on the Business Day that is the first Business Day after the requested Funding Date (in which case, the interest accrued on such Lender’s portion of such Borrowing for the Funding Date shall be for Agent’s separate account). If any Lender shall not remit the full amount that it is required to make available to Agent in immediately available funds as and when required hereby and if Agent has made available to Borrowers such amount, then that Lender shall be obligated to immediately remit such amount to Agent, together with interest at the Defaulting Lender Rate for each day until the date on which such amount is so remitted. A notice submitted by Agent to any Lender with respect to amounts owing under this Section 2.3(c)(ii) shall be conclusive, absent manifest error. If the amount that a Lender is required to remit is made available to Agent, then such payment to Agent shall constitute such Lender’s Revolving Loan for all purposes of this Agreement. If such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Lead Borrower of such failure to fund and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Revolving Loans composing such Borrowing.

 

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(d) Protective Advances and Optional Overadvances .

(i) Any contrary provision of this Agreement or any other Loan Document notwithstanding, but subject to Section 2.3(d)(iv) , at any time (A) after the occurrence and during the continuance of a Default or an Event of Default, or (B) that any of the other applicable conditions precedent set forth in Section 3 are not satisfied, Agent hereby is authorized by Borrowers and the Lenders, from time to time, in Agent’s sole discretion, to make Revolving Loans to, or for the benefit of, Borrowers, on behalf of the Lenders, that Agent, in its Permitted Discretion, deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, or (2) to enhance the likelihood of repayment of the Obligations (other than the Bank Product Obligations) (the Revolving Loans described in this Section 2.3(d)(i) shall be referred to as “ Protective Advances ”). Notwithstanding the foregoing, the aggregate amount of all Protective Advances outstanding at any one time shall not exceed ten percent (10%) of the Maximum Credit.

(ii) Any contrary provision of this Agreement or any other Loan Document notwithstanding, but subject to Section 2.3(d)(iv) , the Lenders hereby authorize Agent, and Agent may, but is not obligated to, knowingly and intentionally, continue to make Revolving Loans to Borrowers notwithstanding that an Overadvance exists or would be created thereby, so long as (A) after giving effect to such Revolving Loans, the outstanding Revolver Usage does not exceed the Borrowing Base by more than ten percent (10%) of the Maximum Credit, and (B) after giving effect to such Revolving Loans, the outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) does not exceed the Maximum Credit. In the event Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by the immediately foregoing provisions, regardless of the amount of, or reason for, such excess, Agent shall notify the Lenders as soon as practicable (and prior to making any (or any additional) intentional Overadvances (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) unless Agent determines that prior notice would result in imminent harm to the Collateral or its value, in which case Agent may make such Overadvances and provide notice as promptly as practicable thereafter), and the Lenders thereupon shall, together with Agent, jointly determine the terms of arrangements that shall be implemented with Borrowers intended to reduce, within a reasonable time, the outstanding principal amount of the Revolving Loans to Borrowers to an amount permitted by the preceding sentence. In such circumstances, if any Lender with a Commitment objects to the proposed terms of reduction or repayment of any Overadvance, the terms of reduction or repayment thereof shall be implemented according to the determination of the Required Lenders. The foregoing provisions are meant for the benefit of the Lenders and Agent and are not meant for the benefit of Borrowers, which shall continue to be bound by the provisions of Section 2.4(e) . Each Lender shall be obligated to settle with Agent as provided in Section 2.3(e) (or Section 2.3(g) , as applicable) for the amount of such Lender’s Pro Rata Share of any unintentional Overadvances by Agent reported to such Lender, any intentional Overadvances made as permitted under this Section 2.3(d)(ii) , and any Overadvances resulting from the charging to the Loan Account of interest, fees, or Lender Group Expenses.

(iii) Each Protective Advance and each Overadvance (each, a “ Special Advance ”) shall be deemed to be a Revolving Loan hereunder, except that no Special Advance shall be eligible to be a LIBOR Rate Loan and, prior to Settlement therefor, all payments on the Special Advances shall be payable to Agent solely for its own account. The Special Advances shall be repayable on demand, secured by Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Revolving Loans that are Base Rate Loans. The provisions of this Section 2.3(d) are for the exclusive benefit of Agent and the Lenders and are not intended to benefit Borrowers (or any other Loan Party) in any way.

 

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(iv) Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary: (A) no Special Advance may be made by Agent if such Special Advance would cause the aggregate principal amount of Special Advances outstanding to exceed an amount equal to ten percent (10%) of the Maximum Credit; and (B) to the extent that the making of any Special Advance causes the aggregate Revolver Usage to exceed the Maximum Credit, such portion of such Special Advance shall be for Agent’s sole and separate account and not for the account of any Lender and shall be entitled to priority in repayment in accordance with Section 2.4(b) .

(e) Settlement . It is agreed that each Lender’s funded portion of the Revolving Loans is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding Revolving Loans. Such agreement notwithstanding, Agent, and the other Lenders agree (which agreement shall not be for the benefit of Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among the Lenders as to the Revolving Loans (including Special Advances) shall take place on a periodic basis in accordance with the following provisions:

(i) Agent shall request settlement (“ Settlement ”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by Agent in its sole discretion (A) for itself, with respect to the outstanding Special Advances, and (B) with respect to any Loan Party’s or any of their Subsidiaries’ payments or other amounts received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m. on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the “ Settlement Date ”). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Revolving Loans (including Special Advances) for the period since the prior Settlement Date. Subject to the terms and conditions contained herein (including Section 2.3(g) ): (1) if the amount of the Revolving Loans (including Special Advances) made by a Lender that is not a Defaulting Lender exceeds such Lender’s Pro Rata Share of the Revolving Loans (including Special Advances) as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Special Advances), and (2) if the amount of the Revolving Loans (including Special Advances) made by a Lender is less than such Lender’s Pro Rata Share of the Revolving Loans (including Special Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m. on the Settlement Date transfer in immediately available funds to The Agent Payment Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Special Advances). Such amounts made available to Agent under clause (2) of the immediately preceding sentence shall be applied against the amounts of the applicable Special Advances shall constitute Revolving Loans of such Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.

(ii) In determining whether a Lender’s balance of the Revolving Loans (including Special Advances) is less than, equal to, or greater than such Lender’s Pro Rata Share of the Revolving Loans (including Special Advances) as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Agent with respect to principal, interest, fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral.

 

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(iii) Between Settlement Dates, Agent, to the extent Special Advances are outstanding, may pay over to Agent, as applicable, any payments or other amounts received by Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to the Special Advances. During the period between Settlement Dates, Agent with respect to Special Advances, and each Lender with respect to the Revolving Loans, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Agent, or the Lenders, as applicable.

(iv) Anything in this Section 2.3(e) to the contrary notwithstanding, in the event that a Lender is a Defaulting Lender, Agent shall be entitled to refrain from remitting settlement amounts to the Defaulting Lender and, instead, shall be entitled to elect to implement the provisions set forth in Section 2.3(g) .

(f) Notation . Consistent with Section 13.1 , Agent, as a non-fiduciary agent for Borrowers, shall maintain a register showing the principal amount and stated interest of the Revolving Loans owing to each Lender, including Special Advances owing to Agent, and the interests therein of each Lender, from time to time and such register shall, absent manifest error, conclusively be presumed to be correct and accurate.

(g) Defaulting Lenders .

(i) Notwithstanding the provisions of Section 2.4(b)(iii) , Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrowers to Agent for the Defaulting Lender’s benefit or any proceeds of Collateral that would otherwise be remitted hereunder to the Defaulting Lender, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments (A) first, to Agent to the extent of any Special Advances that were made by Agent and that were required to be, but were not, paid by Defaulting Lender, (B) second, to Issuing Bank, to the extent of the portion of a Letter of Credit Disbursement that was required to be, but was not, paid by the Defaulting Lender, (C) third, to each Non-Defaulting Lender ratably in accordance with their Commitments (but, in each case, only to the extent that such Defaulting Lender’s portion of a Revolving Loan (or other funding obligation) was funded by such other Non-Defaulting Lender), (D) fourth, in Agent’s sole discretion, to a suspense account maintained by Agent, the proceeds of which shall be retained by Agent and may be made available to be re-advanced to or for the benefit of Borrowers (upon the request of Borrowers and subject to the conditions set forth in Section 3.2 ) as if such Defaulting Lender had made its portion of Revolving Loans (or other funding obligations) hereunder, and (E) fifth, from and after the date on which all other Obligations have been paid in full, to such Defaulting Lender in accordance with tier (M) of Section 2.4(b)(iii) . Subject to the foregoing, Agent may hold and, in its discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all such payments received and retained by Agent for the account of such Defaulting Lender. Solely for the purposes of voting or consenting to matters with respect to the Loan Documents (including the calculation of Pro Rata Share in connection therewith) and for the purpose of calculating the fee payable under Section 2.10(b) , such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero; provided , that , the foregoing shall not apply to any of the matters governed by Section 14.1(a)(i) through (iii) . The provisions of this Section 2.3(g) shall remain effective with respect to such Defaulting Lender until the earlier of (1) the date on which all of the Non-Defaulting Lenders, Agent, Issuing Bank, and Borrowers shall have waived, in writing, the application of this Section 2.3(g) to such Defaulting Lender, or (2) the date on which such Defaulting Lender makes payment of all amounts that it was obligated to fund hereunder, pays to Agent all amounts owing by Defaulting Lender in respect of the amounts that it was obligated to fund hereunder, and, if requested by Agent, provides adequate assurance of its ability to perform its future obligations hereunder (on which earlier date, so long as no Event of Default has occurred and is continuing, any remaining cash collateral held by Agent pursuant to Section 2.3(g)(ii) shall be released to Borrowers). The operation of this Section 2.3(g) shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting

 

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Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by any Borrower of its duties and obligations hereunder to Agent, Issuing Bank, or to the Lenders other than such Defaulting Lender. Any failure by a Defaulting Lender to fund amounts that it was obligated to fund hereunder shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Borrowers, at their option, upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being paid its share of the outstanding Obligations (other than Bank Product Obligations, but including (1) all interest, fees, and other amounts that may be due and payable in respect thereof, and (2) an assumption of its Pro Rata Share of its participation in the Letters of Credit); provided , that , any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’ rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund. In the event of a direct conflict between the priority provisions of this Section 2.3(g) and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.3(g) shall control and govern.

(ii) If any Letter of Credit is outstanding at the time that a Lender becomes a Defaulting Lender then:

(A) such Defaulting Lender’s Letter of Credit Exposure shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Pro Rata Shares but only to the extent (1) the sum of all Non-Defaulting Lenders’ Pro Rata Share of Revolver Usage plus such Defaulting Lender’s Letter of Credit Exposure does not exceed the total of all Non-Defaulting Lenders’ Commitments and (2) the conditions set forth in Section 3.2 are satisfied at such time;

(B) if the reallocation described in clause (A) above cannot, or can only partially, be effected, Borrowers shall within one Business Day following notice by the Agent cash collateralize such Defaulting Lender’s Letter of Credit Exposure, pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the Agent, for so long as such Letter of Credit Exposure is outstanding; provided , that , Borrowers shall not be obligated to cash collateralize any Defaulting Lender’s Letter of Credit Exposure if such Defaulting Lender is also Issuing Bank;

(C) if Borrowers cash collateralize any portion of such Defaulting Lender’s Letter of Credit Exposure pursuant to this Section 2.3(g)(ii) , Borrowers shall not be required to pay any Letter of Credit Fees to Agent for the account of such Defaulting Lender pursuant to Section 2.6(b) with respect to such cash collateralized portion of such Defaulting Lender’s Letter of Credit Exposure during the period such Letter of Credit Exposure is cash collateralized;

(D) to the extent the Letter of Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant to this Section 2.3(g)(ii) , then the Letter of Credit Fees payable to the Non-Defaulting Lenders pursuant to Section 2.6(b) shall be adjusted in accordance with such Non-Defaulting Lenders’ Letter of Credit Exposure;

(E) to the extent any Defaulting Lender’s Letter of Credit Exposure is neither cash collateralized nor reallocated pursuant to this Section 2.3(g)(ii) , then, without prejudice to any rights or remedies of Issuing Bank or any Lender hereunder, all Letter of Credit Fees that would have otherwise been payable to such Defaulting Lender under Section 2.6(b) with respect to such portion of such Letter of Credit Exposure shall instead be payable to Issuing Bank until such portion of such Defaulting Lender’s Letter of Credit Exposure is cash collateralized or reallocated;

 

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(F) so long as any Lender is a Defaulting Lender, Issuing Bank shall not be required to issue, amend, or increase any Letter of Credit, in each case, to the extent (x) the Defaulting Lender’s Pro Rata Share of Letter of Credit cannot be reallocated pursuant to this Section 2.3(g)(ii) , or (y) the Issuing Bank has not otherwise entered into arrangements reasonably satisfactory to the Issuing Bank and Borrowers to eliminate the Issuing Bank’s risk with respect to the Defaulting Lender’s participation in Letters of Credit; and

(G) Agent may release any cash collateral provided by Borrowers pursuant to this Section 2.3(g)(ii) to Issuing Bank and Issuing Bank may apply any such cash collateral to the payment of such Defaulting Lender’s Pro Rata Share of any Letter of Credit Disbursement that is not reimbursed by Borrowers pursuant to Section 2.11(d) . Subject to Section 17.14 , no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(h) Independent Obligations . All Revolving Loans (other than Special Advances) shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Revolving Loan (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.

(i) Loan Management Service . If Borrowers and Agent have separately agreed that Borrowers may use the Loan Management Service (and such agreement is still in effect), Borrowers shall not request and Agent shall no longer honor a request for a Borrowing made in accordance with Section 2.3(a) , and all Borrowings will instead be initiated by Agent and credited to the applicable Designated Account as Borrowings as of the end of each Business Day in an amount sufficient to maintain an agreed upon ledger balance in the applicable Designated Account, subject only to the limitations provided in Section 2.1 . If Agent terminates Borrowers’ access to the Loan Management Service, Borrowers may continue to request Borrowings as provided in Section 2.3(a) , subject to the other terms and conditions of this Agreement. Agent shall have no obligation to make a Borrowing through the Loan Management Service after the occurrence and during the continuance of a Default or an Event of Default, or in an amount in excess of the limitations provided in Section 2.1 , and may terminate the Loan Management Service at any time in its sole discretion.

 

2.4

Payments; Reductions of Commitments; Prepayments .

 

(a)

Payments by Borrowers .

(i) Except as otherwise expressly provided herein, all payments by Borrowers shall be made to Agent’s Account for the account of the Lender Group and shall be made in immediately available funds, no later than 1:30 p.m. on the date specified herein. Any payment received by Agent later than 1:30 p.m. shall be deemed to have been received (unless Agent, in its sole discretion, elects to credit it on the date received) on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day.

 

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(ii) Unless Agent receives notice from Borrowers prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in full as and when required, Agent may assume that Borrowers have made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrowers do not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid.

 

(b)

Apportionment and Application .

(i) So long as no Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, all principal and interest payments received by Agent shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender) and all payments of fees and expenses received by Agent (other than fees or expenses that are for Agent’s separate account or for the separate account of Issuing Bank) shall be apportioned ratably among the Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee or expense relates.

(ii) Subject to Section 2.4(b)(v) and Section 2.4(e) , all payments to be made hereunder by Borrowers shall be remitted to Agent and all such payments, and all proceeds of Collateral received by Agent, shall be applied, so long as no Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, to reduce the balance of the Revolving Loans outstanding and, thereafter, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.

(iii) At any time that an Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, all payments remitted to Agent and all proceeds of Collateral received by Agent shall be applied as follows:

(A) first , to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to Agent under the Loan Documents and to pay interest and principal on Special Advances that are held solely by Agent pursuant to the terms of Section 2.3(d)(iv) , until paid in full,

(B) second , to pay any fees or premiums then due to Agent under the Loan Documents, until paid in full,

(C) third , to pay interest due in respect of all Protective Advances, until paid in full,

(D) fourth , to pay the principal of all Protective Advances, until paid in full,

(E) fifth , ratably, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to any of Lenders under the Loan Documents, until paid in full,

(F) sixth , ratably, to pay any fees or premiums then due to any of Lenders under the Loan Documents, until paid in full,

(G) [Reserved],

 

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(H) [Reserved],

(I) ninth , ratably, to pay interest accrued in respect of the Revolving Loans (other than Protective Advances), until paid in full,

(J) tenth , ratably

(1) ratably, to pay the principal of all Revolving Loans, until paid in full,

(2) to Agent, to be held by Agent, for the benefit of Issuing Bank (and for the ratable benefit of each of t Lenders that have an obligation to pay to Agent, for the account of Issuing Bank, a share of each Letter of Credit Disbursement), as cash collateral in an amount up to one hundred five percent (105%) of the Letter of Credit Usage (to the extent permitted by applicable law, such cash collateral shall be applied to the reimbursement of any Letter of Credit Disbursement as and when such disbursement occurs and, if a Letter of Credit expires undrawn, the cash collateral held by Agent in respect of such Letter of Credit shall, to the extent permitted by applicable law, be reapplied pursuant to this Section 2.4(b)(iii) , beginning with tier (A) hereof),

(3) up to the amount (after taking into account any amounts previously paid pursuant to this clause (3) during the continuation of the applicable Application Event) of the most recently established Bank Product Reserve to (y) the Bank Product Providers based upon amounts then certified by the applicable Bank Product Provider to Agent (in form and substance satisfactory to Agent) to be due and payable to such Bank Product Providers on account of Bank Product Obligations of Borrowers, and (z) with any balance to be paid to Agent, to be held by Agent, for the ratable benefit of the Bank Product Providers, as cash collateral, which cash collateral may be released by Agent to the applicable Bank Product Provider and applied by such Bank Product Provider to the payment or reimbursement of any amounts due and payable with respect to Bank Product Obligations owed by any Loan Party to the applicable Bank Product Provider as and when such amounts first become due and payable and, if and at such time as all such Bank Product Obligations are paid or otherwise satisfied in full, the cash collateral held by Agent in respect of such Bank Product Obligations shall be reapplied pursuant to this Section 2.4(b)(iii) , beginning with tier (A) hereof,

(K) eleventh , to pay any other Obligations other than Obligations owed to Defaulting Lenders (including being paid, ratably, to the Bank Product Providers on account of all amounts then due and payable in respect of Bank Product Obligations, with any balance to be paid to Agent, to be held by Agent, for the ratable benefit of the Bank Product Providers, as cash collateral (which cash collateral may be released by Agent to the applicable Bank Product Provider and applied by such Bank Product Provider to the payment or reimbursement of any amounts due and payable with respect to Bank Product Obligations owed to the applicable Bank Product Provider as and when such amounts first become due and payable and, if and at such time as all such Bank Product Obligations are paid or otherwise satisfied in full, the cash collateral held by Agent in respect of such Bank Product Obligations shall be reapplied pursuant to this Section 2.4(b)(iii) , beginning with tier (A) hereof),

(L) twelfth , ratably to pay any Obligations owed to Defaulting Lenders; and

(M) thirteenth , to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.

(iv) Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided in Section 2.3(e) .

 

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(v) In each instance, so long as no Application Event has occurred and is continuing, Section 2.4(b)(iii) shall not apply to any payment made by Borrowers to Agent and specified by Lead Borrower to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement or any other Loan Document.

(vi) For purposes of Section 2.4(b)(iii) , “paid in full” of a type of Obligation means payment in cash or immediately available funds of all amounts owing on account of such type of Obligation, including interest accrued after the commencement of any Insolvency Proceeding, default interest, interest on interest, and expense reimbursements, irrespective of whether any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

(vii) In the event of a direct conflict between the priority provisions of this Section 2.4 and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, if the conflict relates to the provisions of Section 2.3(g) and this Section 2.4 , then the provisions of Section 2.3(g) shall control and govern, and if otherwise, then the terms and provisions of this Section 2.4 shall control and govern.

(c) Reduction of Commitments . The Commitments shall terminate on the Maturity Date or earlier termination thereof pursuant to the terms of this Agreement. Borrowers may reduce the Commitments, without premium or penalty, to an amount (which may be zero) not less than the sum of (i) the Revolver Usage as of such date, plus (ii) the principal amount of all Revolving Loans not yet made as to which a request has been given by Borrowers under Section 2.3(a) , plus (iii) the amount of all Letters of Credit not yet issued as to which a request has been given by Borrowers pursuant to Section 2.11(a) . Each such reduction shall be in an amount which is not less than $5,000,000 (unless the Commitments are being reduced to zero and the amount of the Commitments in effect immediately prior to such reduction are less than $5,000,000), shall be made by providing not less than ten (10) Business Days prior written notice to Agent, and shall be irrevocable. The Commitments, once reduced, may not be increased. Each such reduction of the Commitments shall reduce the Commitments of each Lender proportionately in accordance with its ratable share thereof. In connection with any reduction in the Commitments prior to the Maturity Date, if any Loan Party or any of its Subsidiaries owns any Margin Stock, Borrowers shall deliver to Agent an updated Form U-1 (with sufficient additional originals thereof for each Lender), duly executed and delivered by the Borrowers, together with such other documentation as Agent shall reasonably request, in order to enable Agent and the Lenders to comply with any of the requirements under Regulations T, U or X of the Federal Reserve Board.

(d) Optional Prepayments . Borrowers may prepay the principal of any Revolving Loan at any time in whole or in part, without premium or penalty.

 

(e)

Mandatory Prepayments .

(i) Borrowing Base . If, at any time, (A) the Revolver Usage on such date exceeds (B) the lesser of (1) the Borrowing Base as then in effect, or (2) the Maximum Credit, then Borrowers shall promptly, but in any event within two (2) Business Days of the earlier of (1) any Borrower having knowledge after due inquiry of the existence thereof; or (2) receiving notice of the existence thereof, prepay in accordance with Section 2.4(f)(i) an aggregate amount equal to the amount of such excess, without premium or penalty.

(ii) Equity Cure. Within one (1) Business Day after the date of receipt by any Loan Party of the proceeds of any Specified Equity Contribution pursuant to Section 7.2 , Borrowers shall prepay or repay the Obligations in accordance with Section 2.4(f) in an amount equal to one hundred percent (100%) of such proceeds.

 

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(iii) Collections . If a Cash Dominion Event has occurred and is continuing and subject to the terms of the Intercreditor Agreement, all proceeds of Collateral will be applied to prepay the Obligations in accordance with Section 2.4(f) .

(f) Application of Payments . Each prepayment pursuant to Section 2.4(e) shall, (i) so long as no Application Event shall have occurred and be continuing, be applied, first, to the outstanding principal amount of the Revolving Loans until paid in full, and second, to cash collateralize the Letters of Credit in an amount equal to one hundred five percent (105%) of the then outstanding Letter of Credit Usage, and (ii) if an Application Event shall have occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(iii) .

 

2.5

Promise to Pay; Promissory Notes .

(a) Promise to Pay . Borrowers jointly and severally agree to pay Lender Group Expenses incurred promptly and, in any event, within three (3) Business Days of receipt of notice thereof by Agent (it being acknowledged and agreed that any charging of such costs, expenses or Lender Group Expenses to any Loan Account pursuant to the provisions of Section 2.6(d) shall be deemed to constitute notice by Agent and prompt payment by Borrowers for the purposes of this Section 2.5(a)) . Borrowers jointly and severally promise to pay all of the Obligations (including principal, interest, premiums, if any, fees, costs, and expenses (including Lender Group Expenses)) in full on the Maturity Date or, if earlier, on the date on which such Obligations (other than the Bank Product Obligations) become due and payable pursuant to the terms of this Agreement. Borrowers agree that their obligations contained in the first sentence of this Section 2.5(a) shall survive payment or satisfaction in full of all other Obligations.

(b) Promissory Notes . Any Lender may request that any portion of its Commitments or the Loans made by it be evidenced by one or more promissory notes. In such event, Borrowers shall execute and deliver to such Lender the requested promissory notes payable to the order of such Lender in a form furnished by Agent and reasonably satisfactory to Borrowers. Thereafter, the portion of the Commitments and Loans evidenced by such promissory notes and interest thereon shall at all times be represented by one or more promissory notes in such form payable to the order of the payee named therein.

 

2.6

Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations .

(a) Interest Rates . Except as provided in Section 2.6(c) , all Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof as follows:

(i) if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and

(ii) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.

(b) Letter of Credit Fee . Subject to Section 2.6(c) , Borrowers shall pay Agent (for the ratable benefit of the Revolving Lenders), a Letter of Credit fee (the “ Letter of Credit Fee ”) (which fee shall be in addition to the fronting fees and commissions, other fees, charges and expenses set forth in Section 2.11(k)) that shall accrue at a per annum rate equal to the LIBOR Rate Margin times the times the average amount of the Letter of Credit Usage during the immediately preceding month.

 

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(c) Default Rate . Upon the occurrence and during the continuation of an Event of Default and at the election of Agent or Required Lenders,

(i) all Obligations (except for undrawn Letters of Credit) that have been charged to any Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof at a per annum rate equal to two (2) percentage points above the per annum rate otherwise applicable hereunder, and

(ii) the Letter of Credit Fees shall be increased to two (2) percentage points above the per annum rate otherwise applicable hereunder.

(d) Payment . Except to the extent provided to the contrary in Section 2.10 , Section 2.11(k) or Section 2.12(a) , (i) all interest and all other fees payable hereunder or under any of the other Loan Documents (other than Letter of Credit Fees) shall be due and payable, in arrears, on the first day of each month, (ii) all Letter of Credit Fees payable hereunder, and all fronting fees and all commissions, other fees, charges and expenses provided for in Section 2.11(k) shall be due and payable, in arrears, on the first Business Day of each month, and (iii) all costs and expenses payable hereunder or under any of the other Loan Documents, and all other Lender Group Expenses shall be due and payable on the earlier of (A) the first day of the month following the date on which the applicable costs, expenses, or Lender Group Expenses were first incurred, or (B) the date on which demand therefor is made by Agent (it being acknowledged and agreed that any charging of such costs, expenses or Lender Group Expenses to the Loan Account pursuant to the provisions of the following sentence shall be deemed to constitute a demand for payment thereof for the purposes of this subclause (B)). Borrowers hereby authorize Agent, from time to time without prior notice to Borrowers, to charge to the Loan Account (A) on the first day of each month, all interest accrued during the prior month on the Revolving Loans, (B) on the first Business Day of each month, all Letter of Credit Fees accrued or chargeable hereunder during the prior month, (C) as and when incurred or accrued, all fees and costs provided for in Section 2.10(a) or (c) , (D) on the first day of each month, the Unused Line Fee accrued during the prior month pursuant to Section 2.10(b) , (E) as and when due and payable, all other fees payable hereunder or under any of the other Loan Documents, (F) as and when incurred or accrued, all other Lender Group Expenses, and (G) as and when due and payable all other payment obligations payable under any Loan Document or any Bank Product Agreement (including any amounts due and payable to the Bank Product Providers in respect of Bank Products). All amounts (including interest, fees, costs, expenses, Lender Group Expenses, or other amounts payable hereunder or under any other Loan Document or under any Bank Product Agreement) charged to the Loan Account shall thereupon constitute Revolving Loans hereunder, shall constitute Obligations hereunder, and shall initially accrue interest at the rate then applicable to Revolving Loans that are Base Rate Loans (unless and until converted into LIBOR Rate Loans in accordance with the terms of this Agreement).

(e) Computation . All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year, in each case, for the actual number of days elapsed in the period during which the interest or fees accrue. In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Base Rate automatically and immediately shall be increased or decreased by an amount equal to such change in the Base Rate.

(f) Intent to Limit Charges to Maximum Lawful Rate . In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided , that , anything contained herein to the contrary notwithstanding, if such rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as

 

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of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum amount as is allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.

2.7 Crediting Payments . The receipt of any payment item by Agent shall not be required to be considered a payment on account unless such payment item is a wire transfer of immediately available funds made to Agent’s Account or unless and until such payment item is honored when presented for payment. Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not to have made such payment. Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Agent only if it is received into Agent’s Account on a Business Day on or before 1:30 p.m. If any payment item is received into Agent’s Account on a non-Business Day or after 1:30 p.m. on a Business Day (unless Agent, in its sole discretion, elects to credit it on the date received), it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day.

2.8 Designated Account . Agent is authorized to make the Revolving Loans, and Issuing Bank is authorized to issue the Letters of Credit, under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(d) . Borrowers agree to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Revolving Loans requested by Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Borrowers, any Revolving Loan requested by Borrowers and made by Agent or the Lenders hereunder shall be made to the Designated Account.

2.9 Maintenance of Loan Account; Statements of Obligations . Agent shall maintain an account on its books in the name of Borrowers (the “Loan Account”) on which Borrowers will be charged with all Revolving Loans (including Special Advances) made by Agent or the Lenders to Borrowers or for Borrowers’ account, the Letters of Credit issued or arranged by Issuing Bank for Borrowers’ account, and with all other payment Obligations hereunder or under the other Loan Documents, including, accrued interest, fees and expenses, and Lender Group Expenses. In accordance with Section 2.7, the Loan Account will be credited with all payments received by Agent from Borrowers or for Borrowers’ account. Agent shall make available to Borrowers monthly statements regarding the Loan Account, including the principal amount of the Revolving Loans, interest accrued hereunder, fees accrued or charged hereunder or under the other Loan Documents, and a summary itemization of all charges and expenses constituting Lender Group Expenses accrued hereunder or under the other Loan Documents, and each such statement, absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and the Lender Group unless, within thirty (30) days after Agent first makes such a statement available to Borrowers, Borrowers shall deliver to Agent written objection thereto describing the error or errors contained in such statement.

2.10 Fees .

(a) Agent Fees . Borrowers shall, and hereby jointly and severally agree to, pay to Agent, for the account of Agent, as and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter.

(b) Unused Line Fee . Borrowers shall, and hereby jointly and severally agree to, pay to Agent, for the ratable account of Lenders, an unused line fee (the “ Unused Line Fee ”) in an amount equal to the 0.375% (or 0.25% at any time when Revolver Usage is greater fifty percent (50%) of the Maximum Credit) per annum times the result of (i) the Maximum Credit, less (ii) the average daily amount of the

 

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Revolver Usage during the immediately preceding month (or portion thereof), which Unused Line Fee shall be due and payable in arrears on the first day of each month from and after the Closing Date up to the first day of the month prior to the date on which the Obligations are paid in full and on the date on which the Obligations are paid in full.

(c) Field Examination and Other Fees . Borrowers shall pay to Agent, subject to the limitations set forth in Section 5.7 , field examination fees and charges, as and when incurred or chargeable, as follows (i) a fee of $1,000 per day, per field examiner, plus documented out-of-pocket expenses (including travel, meals, and lodging) for each field examination of Borrowers performed by personnel employed by Agent and (ii) the documented fees or charges paid or incurred by Agent if it elects to employ the services of one or more third Persons to perform field examinations of Loan Parties, to establish electronic collateral reporting systems, to appraise the Collateral, or any portion thereof, or to assess Borrowers’ business valuation. All amounts due and owing under this clause (c)  shall constitute part of the Obligations.

 

2.11

Letters of Credit .

(a) Subject to the terms and conditions of this Agreement, upon the request of Borrowers made in accordance herewith, and prior to the Maturity Date, Issuing Bank agrees to issue requested standby Letters of Credit or sight commercial Letters of Credit for the account of Borrowers. By submitting a request to Issuing Bank for the issuance of a Letter of Credit, Borrowers shall be deemed to have requested that Issuing Bank issue the requested Letter of Credit. Each request for the issuance of a Letter of Credit, or the amendment, renewal, or extension of any outstanding Letter of Credit, shall be (i) irrevocable and made in writing by an Authorized Person, (ii) delivered to Agent and Issuing Bank via telefacsimile or other electronic method of transmission reasonably acceptable to Agent and Issuing Bank and reasonably in advance of the requested date of issuance, amendment, renewal, or extension, and (iii) subject to Issuing Bank’s authentication procedures with results satisfactory to Issuing Bank. Each such request shall be in form and substance reasonably satisfactory to Agent and Issuing Bank and (i) shall specify (A) the amount of such Letter of Credit, (B) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (C) the proposed expiration date of such Letter of Credit, (D) the name and address of the beneficiary of the Letter of Credit, and (E) such other information (including, the conditions to drawing, and, in the case of an amendment, renewal, or extension, identification of the Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit, and (ii) shall be accompanied by such Issuer Documents as Agent or Issuing Bank may request or require, to the extent that such requests or requirements are consistent with the Issuer Documents that Issuing Bank generally requests for Letters of Credit in similar circumstances. Issuing Bank’s records of the content of any such request will be conclusive. Anything contained herein to the contrary notwithstanding, Issuing Bank may, but shall not be obligated to, issue a Letter of Credit that supports the obligations of a Loan Party or one of its Subsidiaries in respect of (x) a lease of real property to the extent that the face amount of such Letter of Credit exceeds the highest rent (including all rent-like charges) payable under such lease for a period of one year, or (y) an employment contract to the extent that the face amount of such Letter of Credit exceeds the highest compensation payable under such contract for a period of one year.

(b) Issuing Bank shall have no obligation to issue a Letter of Credit if any of the following would result after giving effect to the requested issuance:

(i) the Letter of Credit Usage would exceed the Letter of Credit Sublimit, or

(ii) the Letter of Credit Usage would exceed the Maximum Credit less the outstanding amount of Revolving Loans, or

 

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(iii) the Letter of Credit Usage would exceed the Borrowing Base at such time less the outstanding principal balance of the Revolving Loans at such time.

(c) In the event there is a Defaulting Lender as of the date of any request for the issuance of a Letter of Credit, Issuing Bank shall not be required to issue or arrange for such Letter of Credit to the extent (i) the Defaulting Lender’s Letter of Credit Exposure with respect to such Letter of Credit may not be reallocated pursuant to Section 2.3(g)(ii) , or (ii) Issuing Bank has not otherwise entered into arrangements reasonably satisfactory to it and Borrowers to eliminate Issuing Bank’s risk with respect to the participation in such Letter of Credit of the Defaulting Lender, which arrangements may include Borrowers cash collateralizing such Defaulting Lender’s Letter of Credit Exposure in accordance with Section 2.3(g)(ii) . Additionally, Issuing Bank shall have no obligation to issue or extend a Letter of Credit if (A) any order, judgment, or decree of any Governmental Authority or arbitrator shall, by its terms, purport to enjoin or restrain Issuing Bank from issuing such Letter of Credit, or any law applicable to Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over Issuing Bank shall prohibit or request that Issuing Bank refrain from the issuance of letters of credit generally or such Letter of Credit in particular, or (B) the issuance of such Letter of Credit would violate one or more policies of Issuing Bank applicable to letters of credit generally.

(d) Any Issuing Bank (other than Wells Fargo or any of its Affiliates) shall notify Agent in writing no later than the Business Day prior to the Business Day on which such Issuing Bank issues any Letter of Credit. In addition, each Issuing Bank (other than Wells Fargo or any of its Affiliates) shall, on the first Business Day of each week, submit to Agent a report detailing the daily undrawn amount of each Letter of Credit issued by such Issuing Bank during the prior calendar week. Each Letter of Credit shall be in form and substance reasonably acceptable to Issuing Bank, including the requirement that the amounts payable thereunder must be payable in Dollars. If Issuing Bank makes a payment under a Letter of Credit, Borrowers shall pay to Agent an amount equal to the applicable Letter of Credit Disbursement on the Business Day such Letter of Credit Disbursement is made and, in the absence of such payment, the amount of the Letter of Credit Disbursement immediately and automatically shall be deemed to be a Revolving Loan hereunder (notwithstanding any failure to satisfy any condition precedent set forth in Section 3 ) and, initially, shall bear interest at the rate then applicable to Revolving Loans that are Base Rate Loans. If a Letter of Credit Disbursement is deemed to be a Revolving Loan hereunder, Borrowers’ obligation to pay the amount of such Letter of Credit Disbursement to Issuing Bank shall be automatically converted into an obligation to pay the resulting Revolving Loan. Promptly following receipt by Agent of any payment from Borrowers pursuant to this paragraph, Agent shall distribute such payment to Issuing Bank or, to the extent that Lenders have made payments pursuant to Section 2.11(e) to reimburse Issuing Bank, then to such Lenders and Issuing Bank as their interests may appear.

(e) Promptly following receipt of a notice of a Letter of Credit Disbursement pursuant to Section 2.11(d) , each Lender agrees to fund its Pro Rata Share of any Revolving Loan deemed made pursuant to Section 2.11(d) on the same terms and conditions as if Borrowers had requested the amount thereof as a Revolving Loan and Agent shall promptly pay to Issuing Bank the amounts so received by it from the Revolving Lenders. By the issuance of a Letter of Credit (or an amendment, renewal, or extension of a Letter of Credit) and without any further action on the part of Issuing Bank or the Lenders, Issuing Bank shall be deemed to have granted to each Lender, and each Lender shall be deemed to have purchased, a participation in each Letter of Credit issued by Issuing Bank, in an amount equal to its Pro Rata Share of such Letter of Credit, and each such Revolving Lender agrees to pay to Agent, for the account of Issuing Bank, such Lender’s Pro Rata Share of any Letter of Credit Disbursement made by Issuing Bank under the applicable Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to Agent, for the account of Issuing Bank, such Lender’s Pro Rata Share of each Letter of Credit Disbursement made by Issuing Bank and not

 

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reimbursed by Borrowers on the date due as provided in Section 2.11(d) , or of any reimbursement payment that is required to be refunded (or that Agent or Issuing Bank elects, based upon the advice of counsel, to refund) to Borrowers for any reason. Each Lender acknowledges and agrees that its obligation to deliver to Agent, for the account of Issuing Bank, an amount equal to its respective Pro Rata Share of each Letter of Credit Disbursement pursuant to this Section 2.11(e) shall be absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth in Section 3 . If any such Lender fails to make available to Agent the amount of such Lender’s Pro Rata Share of a Letter of Credit Disbursement as provided in this Section, such Lender shall be deemed to be a Defaulting Lender and Agent (for the account of Issuing Bank) shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate until paid in full.

(f) Each Borrower agrees to indemnify, defend and hold harmless each member of the Lender Group (including Issuing Bank and its branches, Affiliates, and correspondents) and each such Person’s respective directors, officers, employees, attorneys and agents (each, including Issuing Bank, a “Letter of Credit Related Person”) (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and disbursements of attorneys, experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), which may be incurred by or awarded against any such Letter of Credit Related Person (other than Taxes, which shall be governed by Section 16) (the “Letter of Credit Indemnified Costs”), and which arise out of or in connection with, or as a result of:

(i) any Letter of Credit or any pre-advice of its issuance;

(ii) any transfer, sale, delivery, surrender or endorsement (or lack thereof) of any Drawing Document at any time(s) held by any such Letter of Credit Related Person in connection with any Letter of Credit;

(iii) any action or proceeding arising out of, or in connection with, any Letter of Credit (whether administrative, judicial or in connection with arbitration), including any action or proceeding to compel or restrain any presentation or payment under any Letter of Credit, or for the wrongful dishonor of, or honoring a presentation under, any Letter of Credit;

(iv) any independent undertakings issued by the beneficiary of any Letter of Credit;

(v) any unauthorized instruction or request made to Issuing Bank in connection with any Letter of Credit or requested Letter of Credit, or any error, omission, interruption or delay in such instruction or request, whether transmitted by mail, courier, electronic transmission, SWIFT, or any other telecommunication including communications through a correspondent;

(vi) an adviser, confirmer or other nominated person seeking to be reimbursed, indemnified or compensated;

(vii) any third party seeking to enforce the rights of an applicant, beneficiary, nominated person, transferee, assignee of Letter of Credit proceeds or holder of an instrument or document;

(viii) the fraud, forgery or illegal action of parties other than the Letter of Credit Related Person;

 

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(ix) any prohibition on payment or delay in payment of any amount payable by Issuing Bank to a beneficiary or transferee beneficiary of a Letter of Credit arising out of Anti-Corruption Laws, Anti-Money Laundering Laws, or Sanctions;

(x) Issuing Bank’s performance of the obligations of a confirming institution or entity that wrongfully dishonors a confirmation;

(xi) any foreign language translation provided to Issuing Bank in connection with any Letter of Credit;

(xii) any foreign law or usage as it relates to Issuing Bank’s issuance of a Letter of Credit in support of a foreign guaranty including without limitation the expiration of such guaranty after the related Letter of Credit expiration date and any resulting drawing paid by Issuing Bank in connection therewith; or

(xiii) the acts or omissions, whether rightful or wrongful, of any present or future de jure or de facto governmental or regulatory authority or cause or event beyond the control of the Letter of Credit Related Person;

provided , that such indemnity shall not be available to any Letter of Credit Related Person claiming indemnification under clauses (i) through (x) above to the extent that such Letter of Credit Indemnified Costs may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction to have resulted directly from the gross negligence or willful misconduct of the Letter of Credit Related Person claiming indemnity. Borrowers hereby agree to pay the Letter of Credit Related Person claiming indemnity on demand from time to time all amounts owing under this Section 2.11(f) . If and to the extent that the obligations of Borrowers under this Section 2.11(f) are unenforceable for any reason, Borrowers agree to make the maximum contribution to the Letter of Credit Indemnified Costs permissible under applicable law. This indemnification provision shall survive termination of this Agreement and all Letters of Credit.

(g) The liability of Issuing Bank (or any other Letter of Credit Related Person) under, in connection with or arising out of any Letter of Credit (or pre-advice), regardless of the form or legal grounds of the action or proceeding, shall be limited to direct damages suffered by Borrowers that are caused directly by Issuing Bank’s gross negligence or willful misconduct in (i) honoring a presentation under a Letter of Credit that on its face does not at least substantially comply with the terms and conditions of such Letter of Credit, (ii) failing to honor a presentation under a Letter of Credit that strictly complies with the terms and conditions of such Letter of Credit, or (iii) retaining Drawing Documents presented under a Letter of Credit. Borrowers’ aggregate remedies against Issuing Bank and any Letter of Credit Related Person for wrongfully honoring a presentation under any Letter of Credit or wrongfully retaining honored Drawing Documents shall in no event exceed the aggregate amount paid by Borrowers to Issuing Bank in respect of the honored presentation in connection with such Letter of Credit under Section 2.11(d) , plus interest at the rate then applicable to Base Rate Loans hereunder. Borrowers shall take action to avoid and mitigate the amount of any damages claimed against Issuing Bank or any other Letter of Credit Related Person, including by enforcing its rights against the beneficiaries of the Letters of Credit. Any claim by Borrowers under or in connection with any Letter of Credit shall be reduced by an amount equal to the sum of (x) the amount (if any) saved by Borrowers as a result of the breach or alleged wrongful conduct complained of, and (y) the amount (if any) of the loss that would have been avoided had Borrowers taken all reasonable steps to mitigate any loss, and in case of a claim of wrongful dishonor, by specifically and timely authorizing Issuing Bank to effect a cure.

 

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(h) Borrowers are responsible for the final text of the Letter of Credit as issued by Issuing Bank, irrespective of any assistance Issuing Bank may provide such as drafting or recommending text or by Issuing Bank’s use or refusal to use text submitted by Borrowers. Borrowers understand that the final form of any Letter of Credit may be subject to such revisions and changes as are deemed necessary or appropriate by Issuing Bank, and Borrowers hereby consent to such revisions and changes not materially different from the application executed in connection therewith. Borrowers are solely responsible for the suitability of the Letter of Credit for Borrowers’ purposes. If Borrowers request Issuing Bank to issue a Letter of Credit for an affiliated or unaffiliated third party (an “ Account Party ”), (i) such Account Party shall have no rights against Issuing Bank; (ii) Borrowers shall be responsible for the application and obligations under this Agreement; and (iii) communications (including notices) related to the respective Letter of Credit shall be among Issuing Bank and Borrowers. Borrowers will examine the copy of the Letter of Credit and any other documents sent by Issuing Bank in connection therewith and shall promptly notify Issuing Bank (not later than three (3) Business Days following Borrowers’ receipt of documents from Issuing Bank) of any non-compliance with Borrowers’ instructions and of any discrepancy in any document under any presentment or other irregularity. Borrowers understand and agree that Issuing Bank is not required to extend the expiration date of any Letter of Credit for any reason. With respect to any Letter of Credit containing an “automatic amendment” to extend the expiration date of such Letter of Credit, Issuing Bank, in its sole and absolute discretion, may give notice of nonrenewal of such Letter of Credit and, if Borrowers do not at any time want the then current expiration date of such Letter of Credit to be extended, Borrowers will so notify Agent and Issuing Bank at least 30 calendar days before Issuing Bank is required to notify the beneficiary of such Letter of Credit or any advising bank of such non-extension pursuant to the terms of such Letter of Credit.

(i) Borrowers’ reimbursement and payment obligations under this Section 2.11 are absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever, including:

(i) any lack of validity, enforceability or legal effect of any Letter of Credit, any Issuer Document, this Agreement, or any Loan Document, or any term or provision therein or herein;

(ii) payment against presentation of any draft, demand or claim for payment under any Drawing Document that does not comply in whole or in part with the terms of the applicable Letter of Credit or which proves to be fraudulent, forged or invalid in any respect or any statement therein being untrue or inaccurate in any respect, or which is signed, issued or presented by a Person or a transferee of such Person purporting to be a successor or transferee of the beneficiary of such Letter of Credit;

(iii) Issuing Bank or any of its branches or Affiliates being the beneficiary of any Letter of Credit;

(iv) Issuing Bank or any correspondent honoring a drawing against a Drawing Document up to the amount available under any Letter of Credit even if such Drawing Document claims an amount in excess of the amount available under the Letter of Credit;

(v) the existence of any claim, set-off, defense or other right that any Loan Party or any of its Subsidiaries may have at any time against any beneficiary or transferee beneficiary, any assignee of proceeds, Issuing Bank or any other Person;

(vi) Issuing Bank or any correspondent honoring a drawing upon receipt of an electronic presentation under a Letter of Credit requiring the same, regardless of whether the original Drawing Documents arrive at Issuing Bank’s counters or are different from the electronic presentation;

 

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(vii) any other event, circumstance or conduct whatsoever, whether or not similar to any of the foregoing that might, but for this Section 2.11(i) , constitute a legal or equitable defense to or discharge of, or provide a right of set-off against, any Borrower’s or any of its Subsidiaries’ reimbursement and other payment obligations and liabilities, arising under, or in connection with, any Letter of Credit, whether against Issuing Bank, the beneficiary or any other Person; or

(viii) the fact that any Default or Event of Default shall have occurred and be continuing;

provided , that , subject to Section 2.11(g ) above, the foregoing shall not release Issuing Bank from such liability to Borrowers as may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction against Issuing Bank following reimbursement or payment of the obligations and liabilities, including reimbursement and other payment obligations, of Borrowers to Issuing Bank arising under, or in connection with, this Section 2.11 or any Letter of Credit.

(j) Without limiting any other provision of this Agreement, Issuing Bank and each other Letter of Credit Related Person (if applicable) shall not be responsible to Borrowers for, and Issuing Bank’s rights and remedies against Borrowers and the obligation of Borrowers to reimburse Issuing Bank for each drawing under each Letter of Credit shall not be impaired by:

(i) honor of a presentation under any Letter of Credit that on its face substantially complies with the terms and conditions of such Letter of Credit, even if the Letter of Credit requires strict compliance by the beneficiary;

(ii) honor of a presentation of any Drawing Document that appears on its face to have been signed, presented or issued (A) by any purported successor or transferee of any beneficiary or other Person required to sign, present or issue such Drawing Document or (B) under a new name of the beneficiary;

(iii) acceptance as a draft of any written or electronic demand or request for payment under a Letter of Credit, even if nonnegotiable or not in the form of a draft or notwithstanding any requirement that such draft, demand or request bear any or adequate reference to the Letter of Credit;

(iv) the identity or authority of any presenter or signer of any Drawing Document or the form, accuracy, genuineness or legal effect of any Drawing Document (other than Issuing Bank’s determination that such Drawing Document appears on its face substantially to comply with the terms and conditions of the Letter of Credit);

(v) acting upon any instruction or request relative to a Letter of Credit or requested Letter of Credit that Issuing Bank in good faith believes to have been given by a Person authorized to give such instruction or request;

(vi) any errors, omissions, interruptions or delays in transmission or delivery of any message, advice or document (regardless of how sent or transmitted) or for errors in interpretation of technical terms or in translation or any delay in giving or failing to give notice to any Borrower;

(vii) any acts, omissions or fraud by, or the insolvency of, any beneficiary, any nominated person or entity or any other Person or any breach of contract between any beneficiary and any Borrower or any of the parties to the underlying transaction to which the Letter of Credit relates;

 

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(viii) assertion or waiver of any provision of the ISP or UCP that primarily benefits an issuer of a letter of credit, including any requirement that any Drawing Document be presented to it at a particular hour or place;

(ix) payment to any presenting bank (designated or permitted by the terms of the applicable Letter of Credit) claiming that it rightfully honored or is entitled to reimbursement or indemnity under Standard Letter of Credit Practice applicable to it;

(x) acting or failing to act as required or permitted under Standard Letter of Credit Practice applicable to where Issuing Bank has issued, confirmed, advised or negotiated such Letter of Credit, as the case may be;

(xi) honor of a presentation after the expiration date of any Letter of Credit notwithstanding that a presentation was made prior to such expiration date and dishonored by Issuing Bank if subsequently Issuing Bank or any court or other finder of fact determines such presentation should have been honored;

(xii) dishonor of any presentation that does not strictly comply or that is fraudulent, forged or otherwise not entitled to honor; or

(xiii) honor of a presentation that is subsequently determined by Issuing Bank to have been made in violation of international, federal, state or local restrictions on the transaction of business with certain prohibited Persons.

(k) Borrowers shall pay immediately upon demand to Agent for the account of Issuing Bank as non-refundable fees, commissions, and charges (it being acknowledged and agreed that any charging of such fees, commissions, and charges to the Loan Account pursuant to the provisions of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for the purposes of this Section 2.11(k) ): (i) a fronting fee (a “ Fronting Fee ”) payable to Issuing Bank in accordance with Section 2.6(d) with respect all outstanding Letters of Credit in the amount of .125% per annum on the average daily amount of the Letter of Credit Exposure during the calculation period, plus (ii) any and all other customary commissions, fees and charges then in effect imposed by, and any and all expenses incurred by, Issuing Bank, or by any adviser, confirming institution or entity or other nominated person, relating to Letters of Credit, at the time of issuance of any Letter of Credit and upon the occurrence of any other activity with respect to any Letter of Credit (including transfers, assignments of proceeds, amendments, drawings, renewals or cancellations).

(l) If by reason of (x) any Change in Law, or (y) compliance by Issuing Bank or any other member of the Lender Group with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Board of Governors as from time to time in effect (and any successor thereto):

(i) any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued or caused to be issued hereunder or hereby, or any Loans or obligations to make Loans hereunder or hereby, or

(ii) there shall be imposed on Issuing Bank or any other member of the Lender Group any other condition regarding any Letter of Credit, Loans or obligations to make Loans hereunder,

and the result of the foregoing is to increase, directly or indirectly, the cost to Issuing Bank or any other member of the Lender Group of issuing, making, participating in, or maintaining any Letter of Credit or

 

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making any Loan hereunder, or, in any case, to reduce the amount receivable in respect thereof, then, and in any such case, Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify Borrowers, and Borrowers shall pay within thirty (30) days after demand therefor, such amounts as Agent may specify to be necessary to compensate Issuing Bank or any other member of the Lender Group for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Base Rate Loans hereunder; provided , that (A) Borrowers shall not be required to provide any compensation pursuant to this Section 2.11(l) for any such amounts incurred more than one hundred (180) days prior to the date on which the demand for payment of such amounts is first made to Borrowers, and (B) if an event or circumstance giving rise to such amounts is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. The determination by Agent of any amount due pursuant to this Section 2.11(l) , as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto.

(m) Each standby Letter of Credit shall expire not later than the date that is twelve (12) months after the date of the issuance of such Letter of Credit; provided, that any standby Letter of Credit may provide for the automatic extension thereof for any number of additional periods each of up to one year in duration; provided , that , with respect to any Letter of Credit which extends beyond the Maturity Date, Letter of Credit Collateralization shall be provided therefor on or before the date that is five (5) Business Days prior to the Maturity Date. Each commercial Letter of Credit shall expire on the earlier of (i) one hundred twenty (120) days after the date of the issuance of such commercial Letter of Credit and (ii) five Business Days prior to the Maturity Date.

(n) If (i) any Event of Default shall occur and be continuing, or (ii) Excess Availability shall at any time be less than zero, then on the Business Day following the date when the Lead Borrower receives notice from Agent or the Required Lenders (or, if the maturity of the Obligations has been accelerated, Revolving Lenders with Letter of Credit Exposure representing greater than fifty percent (50%) of the total Letter Credit Exposure) demanding Letter of Credit Collateralization pursuant to this Section 2.11(n) upon such demand, Borrowers shall provide Letter of Credit Collateralization with respect to the then existing Letter of Credit Usage. If Borrowers fail to provide Letter of Credit Collateralization as required by this Section 2.11(n) , the Revolving Lenders may (and, upon direction of Agent, shall) advance, as Revolving Loans the amount of the cash collateral required pursuant to the Letter of Credit Collateralization provision so that the then existing Letter of Credit Usage is cash collateralized in accordance with the Letter of Credit Collateralization provision (whether or not the Revolver Commitments have terminated, an Overadvance exists or the conditions in Section 3 are satisfied).

(o) Unless otherwise expressly agreed by Issuing Bank and Borrowers when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP or UCP shall apply to each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter of Credit.

(p) Issuing Bank shall be deemed to have acted with due diligence and reasonable care if Issuing Bank’s conduct is in accordance with Standard Letter of Credit Practice or in accordance with this Agreement.

(q) In the event of a direct conflict between the provisions of this Section 2.11 and any provision contained in any Issuer Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.11 shall control and govern.

 

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(r) The provisions of this Section 2.11 shall survive the termination of this Agreement and the repayment in full of the Obligations with respect to any Letters of Credit that remain outstanding.

(s) At Borrowers’ costs and expense, Borrowers shall execute and deliver to Issuing Bank such additional certificates, instruments and/or documents and take such additional action as may be reasonably requested by Issuing Bank to enable Issuing Bank to issue any Letter of Credit pursuant to this Agreement and related Issuer Document, to protect, exercise and/or enforce Issuing Banks’ rights and interests under this Agreement or to give effect to the terms and provisions of this Agreement or any Issuer Document. Each Borrower irrevocably appoints Issuing Bank as its attorney-in-fact and authorizes Issuing Bank, without notice to Borrowers, to execute and deliver ancillary documents and letters customary in the letter of credit business that may include but are not limited to advisements, indemnities, checks, bills of exchange and issuance documents. The power of attorney granted by the Borrowers is limited solely to such actions related to the issuance, confirmation or amendment of any Letter of Credit and to ancillary documents or letters customary in the letter of credit business. This appointment is coupled with an interest.

(t) On the Closing Date, each of the Existing Letters of Credit shall be deemed to have been issued as a Letter of Credit under this Agreement by the Issuing Bank, and such Issuing Bank shall be deemed, without further action by any party hereto, to have granted to each of the Lenders, and each Lender shall be deemed, without further action by any party hereto, to have acquired from such Issuing Bank, a participation (on the terms specified in this Section 2.11) in each Existing Letter of Credit equal to such Lender’s Pro Rata Share thereof. Concurrently with such sale of participations, the participations granted pursuant to the terms of the Existing Credit Agreement to the lenders party thereto shall be automatically cancelled without further action by any of the parties hereto. Each Lender acknowledges and agrees that its obligation to acquire participations in Existing Letters of Credit pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each payment by a Lender in respect of such participations shall be made without any offset, abatement, withholding or reduction whatsoever.

 

2.12

LIBOR Option .

(a) Interest and Interest Payment Dates . In lieu of having interest charged at the rate based upon the Base Rate, Borrowers shall have the option, subject to Section 2.12(b) below (the “ LIBOR Option ”) to have interest on all or a portion of the Revolving Loans be charged (whether at the time when made (unless otherwise provided herein), upon conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the Interest Period applicable thereto; provided , that , subject to the following clauses (ii) and (iii), in the case of any Interest Period greater than three (3) months in duration, interest shall be payable at three (3) month intervals after the commencement of the applicable Interest Period and on the last day of such Interest Period), (ii) the date on which all or any portion of the Obligations are accelerated pursuant to the terms hereof, or (iii) the date on which this Agreement is terminated pursuant to the terms hereof. On the last day of each applicable Interest Period, unless Borrowers have properly exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of interest then applicable to Base Rate Loans of the same type hereunder. At any time that an Event of Default has occurred and is continuing, at the written election of Agent or the Required Lenders, Borrowers no longer shall have the option to request that Revolving Loans or any portion of the Term Loan bear interest at a rate based upon the LIBOR Rate.

 

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(b) LIBOR Election .

(i) Borrowers may, at any time and from time to time, so long as Borrowers have not received a notice from Agent (which notice Agent may elect to give or not give in its discretion unless Agent is directed to give such notice by the Required Lenders, in which case, it shall give the notice to Borrowers), after the occurrence and during the continuance of an Event of Default, to terminate the right of Borrowers to exercise the LIBOR Option during the continuance of such Event of Default, elect to exercise the LIBOR Option by notifying Agent prior to 11:00 a.m. at least three (3) Business Days prior to the commencement of the proposed Interest Period (the “ LIBOR Deadline ”). Notice of Borrowers’ election of the LIBOR Option for a permitted portion of the Revolving Loans and an Interest Period pursuant to this Section shall be made by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline. Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of the affected Lenders.

(ii) Each LIBOR Notice shall be irrevocable and binding on Borrowers. In connection with each LIBOR Rate Loan, each Borrower shall jointly and severally indemnify, defend, and hold Agent and the Lenders harmless against any loss, cost, or expense actually incurred by Agent or any Lender as a result of (A) the payment or required assignment of any principal of any LIBOR Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (B) the conversion of any LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto, or (C) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses, “ Funding Losses ”). A certificate of Agent or a Lender delivered to Lead Borrower setting forth in reasonable detail any amount or amounts that Agent or such Lender is entitled to receive pursuant to this Section 2.12 shall be conclusive absent manifest error. Borrowers shall pay such amount to Agent or the Lender, as applicable, within thirty (30) days of the date of its receipt of such certificate. If a payment of a LIBOR Rate Loan on a day other than the last day of the applicable Interest Period would result in a Funding Loss, Agent may, in its sole discretion at the request of Borrowers, hold the amount of such payment as cash collateral in support of the Obligations until the last day of such Interest Period and apply such amounts to the payment of the applicable LIBOR Rate Loan on such last day, it being agreed that Agent has no obligation to so defer the application of payments to any LIBOR Rate Loan and that, in the event that Agent does not defer such application, Borrowers shall be obligated to pay any resulting Funding Losses.

(iii) Unless Agent, in its sole discretion, agrees otherwise, Borrowers shall have not more than five (5) LIBOR Rate Loans in effect at any given time. Borrowers may only exercise the LIBOR Option for proposed LIBOR Rate Loans of not less than $1,000,000.

(c) Conversion; Prepayment . Borrowers may convert LIBOR Rate Loans to Base Rate Loans or prepay LIBOR Rate Loans at any time; provided , that , in the event that LIBOR Rate Loans are converted or prepaid on any date that is not the last day of the Interest Period applicable thereto, including as a result of any prepayment through the required application by Agent of any payments or proceeds of Collateral in accordance with Section 2.4(b) or for any other reason, including early termination of the term of this Agreement or acceleration of all or any portion of the Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders and their Participants harmless against any and all Funding Losses in accordance with Section 2.12 (b)(ii) .

(d) Special Provisions Applicable to LIBOR Rate .

 

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(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of maintaining or obtaining any eurodollar deposits or increased costs (other than Taxes which shall be governed by Section 16 ), in each case, due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period, including any Changes in Law and changes in the reserve requirements imposed by the Board of Governors, which additional or increased costs would increase the cost of funding or maintaining loans bearing interest at the LIBOR Rate. In any such event, the affected Lender shall give Lead Borrower and Agent notice of such a determination and adjustment and Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Borrowers may, by notice to such affected Lender (A) require such Lender to furnish to Borrowers a statement setting forth in reasonable detail the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment, or (B) repay the LIBOR Rate Loans of such Lender with respect to which such adjustment is made (together with any amounts due under Section 2.12(b)(ii) ).

(ii) In the event that any change in market conditions or any Change in Law shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed circumstances to Agent and Lead Borrower and Agent promptly shall transmit the notice to each other Lender and (A) in the case of any LIBOR Rate Loans of such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (B) Borrowers shall not be entitled to elect the LIBOR Option until such Lender determines that it would no longer be unlawful or impractical to do so.

(e) No Requirement of Matched Funding . Anything to the contrary contained herein notwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate.

 

2.13

Capital Requirements .

(a) If, after the date hereof, Issuing Bank or any Lender determines that (i) any Change in Law regarding capital, liquidity or reserve requirements for banks or bank holding companies, or (ii) compliance by Issuing Bank or such Lender, or their respective parent bank holding companies, with any guideline, request or directive of any Governmental Authority regarding capital adequacy or liquidity requirements (whether or not having the force of law), has the effect of reducing the return on Issuing Bank’s, such Lender’s, or such holding companies’ capital or liquidity as a consequence of Issuing Bank’s or such Lender’s commitments, Loans, participations or other obligations hereunder to a level below that which Issuing Bank, such Lender, or such holding companies could have achieved but for such Change in Law or compliance (taking into consideration Issuing Bank’s, such Lender’s, or such holding companies’ then existing policies with respect to capital adequacy or liquidity requirements and assuming the full utilization of such entity’s capital) by any amount deemed by Issuing Bank or such Lender to be material, then Issuing Bank or such Lender may notify Borrowers and Agent thereof. Following receipt of such notice, Borrowers agree to pay Issuing Bank or such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, payable within thirty (30) days after presentation by Issuing Bank or such Lender of a statement in the amount and setting forth in reasonable detail Issuing Bank’s or such Lender’s calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error). In determining such amount, Issuing Bank or such Lender may use any reasonable averaging and attribution methods. Failure or delay on the part of Issuing Bank or any Lender to demand compensation pursuant to

 

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this Section shall not constitute a waiver of Issuing Bank’s or such Lender’s right to demand such compensation; provided , that Borrowers shall not be required to compensate Issuing Bank or a Lender pursuant to this Section for any reductions in return incurred more than one hundred eighty (180) days prior to the date that Issuing Bank or such Lender notifies Borrowers of such Change in Law giving rise to such reductions and of such Lender’s intention to claim compensation therefor; provided , that , if such claim arises by reason of the Change in Law that is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

(b) If Issuing Bank or any Lender requests additional or increased costs referred to in Section 2.11(l) or Section 2.12(d)(i) or amounts under Section 2.13(a) or sends a notice under Section 2.12(d)(ii) relative to changed circumstances (such Issuing Bank or Lender, an “ Affected Lender ”), then, at the request of Lead Borrower, such Affected Lender shall use reasonable efforts to promptly designate a different one of its lending offices or to assign its rights and obligations hereunder to another of its offices or branches, if (i) in the reasonable judgment of such Affected Lender, such designation or assignment would eliminate or reduce amounts payable pursuant to Section 2.11(l) , Section 2.12(d)(i) or Section 2.13(a) , as applicable, or would eliminate the illegality or impracticality of funding or maintaining LIBOR Rate Loans, and (ii) in the reasonable judgment of such Affected Lender, such designation or assignment would not subject it to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to it. Borrowers agree to pay all reasonable out-of-pocket costs and expenses incurred by such Affected Lender in connection with any such designation or assignment. If, after such reasonable efforts, such Affected Lender does not so designate a different one of its lending offices or assign its rights to another of its offices or branches so as to eliminate Borrowers’ obligation to pay any future amounts to such Affected Lender pursuant to Section 2.11(l) , Section 2.12(d)(i) or Section 2.13(a) , as applicable, or to enable Borrowers to obtain LIBOR Rate Loans, then Borrowers (without prejudice to any amounts then due to such Affected Lender under Section 2.11(l) , Section 2.12(d)(i) or Section 2.13(a) , as applicable) may, unless prior to the effective date of any such assignment the Affected Lender withdraws its request for such additional amounts under Section 2.11(l) , Section 2.12(d)(i) or Section 2.13(a) , as applicable, or indicates that it is no longer unlawful or impractical to fund or maintain LIBOR Rate Loans, may designate a different Issuing Bank or substitute a Lender or prospective Lender, in each case, reasonably acceptable to Agent to purchase the Obligations owed to such Affected Lender and such Affected Lender’s commitments hereunder (a “ Replacement Lender ”), and if such Replacement Lender agrees to such purchase, such Affected Lender shall assign to the Replacement Lender its Obligations and commitments, and upon such purchase by the Replacement Lender, which such Replacement Lender shall be deemed to be “Issuing Bank” or a “Lender” (as the case may be) for purposes of this Agreement and such Affected Lender shall cease to be “Issuing Bank” or a “Lender” (as the case may be) for purposes of this Agreement.

(c) Notwithstanding anything herein to the contrary, the protection of Sections 2.11(l) , 2.12(d) , and 2.13 shall be available to Issuing Bank and each Lender (as applicable) regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, judicial ruling, judgment, guideline, treaty or other change or condition which shall have occurred or been imposed, so long as it shall be customary for issuing banks or lenders affected thereby to comply therewith. Notwithstanding any other provision herein, neither Issuing Bank nor any Lender shall demand compensation pursuant to this Section 2.13 if it shall not at the time be the general policy or practice of Issuing Bank or such Lender (as the case may be) to demand such compensation in similar circumstances under comparable provisions of other credit agreements, if any.

 

2.14

Reserved .

 

2.15

Reserved .

 

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2.16

Joint and Several Liabilities of Borrowers .

(a) Each Borrower is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Lender Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations.

(b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including any Obligations arising under this Section 2.16 ), it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them. Accordingly, each Borrower hereby waives any and all suretyship defenses that would otherwise be available to such Borrower under applicable law.

(c) If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due, whether upon maturity, acceleration, or otherwise, or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to, or perform, such Obligations until such time as all of the Obligations are paid in full and without the need for demand, protest, or any other notice or formality.

(d) The Obligations of each Borrower under the provisions of this Section 2.16 constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of the provisions of this Agreement (other than this Section 2.16(d) ) or any other circumstances whatsoever.

(e) Without limiting the generality of the foregoing and except as otherwise expressly provided in this Agreement, each Borrower hereby waives presentments, demands for performance, protests and notices, including notices of acceptance of its joint and several liability, notice of any Revolving Loans or any Letters of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Agreement, notices of the existence, creation, or incurring of new or additional Obligations or other financial accommodations or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any right to proceed against any other Borrower or any other Person, to proceed against or exhaust any security held from any other Borrower or any other Person, to protect, secure, perfect, or insure any security interest or Lien on any property subject thereto or exhaust any right to take any action against any other Borrower, any other Person, or any collateral, to pursue any other remedy in any member of the Lender Group’s or any Bank Product Provider’s power whatsoever, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement), any right to assert against any member of the Lender Group or any Bank Product Provider, any defense (legal or equitable), set-off, counterclaim, or claim which each Borrower may now or at any time hereafter have against any other Borrower or any other party liable to any member of the Lender Group or any Bank Product Provider, any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Obligations or any security therefor, and any right or defense arising by reason of any claim or defense based upon an election of remedies by any member of the Lender Group or any Bank Product Provider including any defense based upon an impairment or elimination of such Borrower’s rights of subrogation, reimbursement, contribution, or indemnity of such

 

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Borrower against any other Borrower. Without limiting the generality of the foregoing, each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any Borrower. Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of any Agent or Lender with respect to the failure by any Borrower to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.16 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of its Obligations under this Section 2.16 , it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this Section 2.16 shall not be discharged except by performance and then only to the extent of such performance. The Obligations of each Borrower under this Section 2.16 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any other Borrower or any Agent or Lender. Each of the Borrowers waives, to the fullest extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement hereof. Any payment by any Borrower or other circumstance which operates to toll any statute of limitations as to any Borrower shall operate to toll the statute of limitations as to each of the Borrowers. Each of the Borrowers waives any defense based on or arising out of any defense of any Borrower or any other Person, other than payment of the Obligations to the extent of such payment, based on or arising out of the disability of any Borrower or any other Person, or the validity, legality, or unenforceability of the 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 Obligations to the extent of such payment. Agent may, at the election of the Required Lenders, foreclose upon any Collateral held by Agent by one or more judicial or nonjudicial sales or other dispositions, whether or not every aspect of any such sale is commercially reasonable or otherwise fails to comply with applicable law or may exercise any other right or remedy Agent, any other member of the Lender Group, or any Bank Product Provider may have against any Borrower or any other Person, or any security, in each case, without affecting or impairing in any way the liability of any of the Borrowers hereunder except to the extent the Obligations have been paid.

(f) Each Borrower represents and warrants to Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower further represents and warrants to Agent and Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents. Each Borrower hereby covenants that such Borrower will continue to keep informed of Borrowers’ financial condition and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.

(g) The provisions of this Section 2.16 are made for the benefit of Agent, each member of the Lender Group, each Bank Product Provider, and their respective successors and assigns, and may be enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may arise and without requirement on the part of Agent, any member of the Lender Group, any Bank Product Provider, or any of their successors or assigns first to marshal any of its or their claims or to exercise any of its or their rights against any Borrower or to exhaust any remedies available to it or them against any Borrower or to resort to any other source or means of obtaining payment of any of the Obligations

 

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hereunder or to elect any other remedy. The provisions of this Section 2.16 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied. If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by Agent or any Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.16 will forthwith be reinstated in effect, as though such payment had not been made.

(h) Each Borrower hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to Agent or Lenders with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash. Any claim which any Borrower may have against any other Borrower with respect to any payments to any Agent or any member of the Lender Group hereunder or under any of the Bank Product Agreements are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization, administration, or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.

(i) Each Borrower hereby agrees that after the occurrence and during the continuance of any Cash Dominion Event, such Borrower will not demand, sue for or otherwise attempt to collect any indebtedness of any other Borrower owing to such Borrower until the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing sentence, such Borrower shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Borrower as trustee for Agent, and such Borrower shall deliver any such amounts to Agent for application to the Obligations in accordance with Section 2.4(b) .

 

3.	CONDITIONS; TERM OF AGREEMENT.

3.1 Conditions Precedent to the Initial Extension of Credit . The obligation of each Lender to make its initial extension of credit provided for hereunder is subject to the fulfillment, to the satisfaction of Agent and each Lender, of each of the conditions precedent set forth on Schedule 3.1 (the making of such initial extension of credit by a Lender being conclusively deemed to be its satisfaction or waiver of the conditions precedent).

3.2 Conditions Precedent to all Extensions of Credit . The obligation of the Lender Group (or any member thereof) to make any Revolving Loans hereunder (or to extend any other credit hereunder) at any time after the Closing Date shall be subject to the following conditions precedent:

(a) the representations and warranties of each Loan Party contained in this Agreement or in the other Loan Documents shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date); and

 

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(b) no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof; and

(c) after giving effect to the requested Revolving Loan or other extension of credit hereunder, the Revolver Usage shall not exceed the lesser of the Maximum Credit or the Borrowing Base then in effect.

3.3 Maturity . The Commitments shall continue in full force and effect for a term ending on the Maturity Date hereunder. The foregoing notwithstanding, the Lender Group, upon the election of the Required Lenders, shall have the right to terminate its obligations under this Agreement immediately and without notice upon the occurrence and during the continuation of an Event of Default.

3.4 Effect of Maturity . On the Maturity Date or, if earlier, the date that the Commitments are terminated whether pursuant to Section 2.4(c) or otherwise, all Commitments of the Lender Group to provide additional credit hereunder shall automatically be terminated and all of the Obligations (other than (a) Bank Product Obligations (other than Hedge Obligations) that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding without being required to be repaid or cash collateralized, and (b) any Hedge Obligations that, at such time, are allowed by the applicable hedging counterparty to remain outstanding without being required to be repaid) immediately shall become due and payable without notice or demand and Borrowers shall be required to repay all of the Obligations (other than Hedge Obligations and Bank Product Obligations as set forth in this Section 3.4) in full. No termination of the obligations of the Lender Group (other than payment in full of the Obligations and termination of the Commitments) shall relieve or discharge any Loan Party of its duties, obligations, or covenants hereunder or under any other Loan Document and Agent’s Liens in the Collateral shall continue to secure the Obligations and shall remain in effect until all Obligations have been paid in full and the Commitments have been terminated. When all of the Obligations have been paid in full and the Lender Group’s obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrowers’ sole expense, execute and deliver any termination statements, lien releases, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, Agent’s Liens and all notices of security interests and liens previously filed by Agent.

3.5 Early Termination by Borrowers . Borrowers have the option, at any time upon ten (10) Business Days prior written notice to Agent (or such shorter period of time as consented to by Agent), to terminate this Agreement and terminate the Commitments hereunder by repaying to Agent all of the Obligations in full.

3.6 Conditions Subsequent . The obligation of the Lender Group (or any member thereof) to continue to make Revolving Loans (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of the conditions subsequent set forth on Schedule 3.6 to this Agreement (the failure by Borrowers to so perform or cause to be performed such conditions subsequent as and when required by the terms thereof (unless such date is extended, in writing, by Agent, which Agent may do without obtaining the consent of the other members of the Lender Group), shall constitute an Event of Default).

 

4.	REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, each Loan Party makes the following representations and warranties to Agent which shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), as of the Closing Date,

 

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and shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), as of the date of the making of each Revolving Loan (or other extension of credit) made thereafter, as though made on and as of the date of such Revolving Loan (or other extension of credit) (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date), and such representations and warranties shall survive the execution and delivery of this Agreement:

 

4.1

Due Organization and Qualification; Subsidiaries .

(a) Each Loan Party and each of its Subsidiaries (i) is duly organized and existing and in good standing under the laws of the jurisdiction of its organization, (ii) is qualified to do business in any state where the failure to be so qualified would reasonably be expected to result in a Material Adverse Effect, and (iii) has all requisite power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted, except where failure to do so would not reasonably be expected to result in a Material Adverse Effect. Each Loan Party has the requisite power and authority to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby.

(b) Set forth on Schedule 4.1(b) to this Agreement (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement) is a complete and accurate description of the authorized Equity Interests of each Loan Party, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding.

(c) Set forth on Schedule 4.1(c) to this Agreement (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement), is a complete and accurate list of the Loan Parties’ direct and indirect Subsidiaries, showing: (i) the number of shares of each class of common and preferred Equity Interests authorized for each of such Subsidiaries, and (ii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by each Loan Party. All of the outstanding Equity Interests of each such Subsidiary has been validly issued and is fully paid and non-assessable.

(d) Except as set forth on Schedule 4.1(d) to this Agreement, there are no subscriptions, options, warrants, or calls relating to any shares of any Loan Party’s or any of its Subsidiaries’ Equity Interests, including any right of conversion or exchange under any outstanding security or other instrument. No Loan Party is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its Equity Interests or any security convertible into or exchangeable for any of its Equity Interests.

 

4.2

Due Authorization; No Conflict .

(a) As to each Loan Party, the execution, delivery, and performance by such Loan Party of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Loan Party.

(b) As to each Loan Party, the execution, delivery, and performance by such Loan Party of the Loan Documents to which it is a party do not and will not (i) violate any material provision of federal, state, or local law or regulation applicable to any Loan Party or its Subsidiaries, the Governing Documents of any Loan Party or its Subsidiaries, or any order, judgment, or decree of any court or other

 

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Governmental Authority binding on any Loan Party or its Subsidiaries where any such violation would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under the Term Loan Agreement or any other Material Contract of any Loan Party or its Subsidiaries where any such conflict, breach or default would individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (iii) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of any Loan Party, other than Permitted Liens, or (iv) require any approval of any holder of Equity Interests of a Loan Party or any approval or consent of any Person under any material agreement of any Loan Party, other than consents or approvals that have been obtained and that are still in force and effect and except, in the case of material agreements, for consents or approvals, the failure to obtain would not individually or in the aggregate reasonably be expected to cause a Material Adverse Effect.

4.3 Governmental Consents . The execution, delivery, and performance by each Loan Party of the Loan Documents to which such Loan Party is a party and the consummation of the transactions contemplated by the Loan Documents do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect or if not obtained, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Agent for filing or recordation, as of the Closing Date.

 

4.4

Binding Obligations; Perfected Liens .

(a) Each Loan Document has been duly executed and delivered by each Loan Party that is a party thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

(b) Upon execution and delivery of the Loan Documents, Agent’s Liens are validly created, perfected (other than (i) in respect of motor vehicles that are subject to a certificate of title, (ii) money, (iii) letter-of-credit rights (other than supporting obligations), (iv) commercial tort claims (other than those that, by the terms of the Guaranty and Security Agreement, are required to be perfected), and (v) any Deposit Accounts and Securities Accounts not subject to a Control Agreement as permitted by Section 7(k) of the Guaranty and Security Agreement, and subject only to the filing of financing statements, the recordation of the Patent Security Agreement, the Trademark Security Agreement, and the Copyright Security Agreement, in each case, in the appropriate filing offices), and first priority Liens, subject only to Permitted Liens which are non-consensual Permitted Liens, Liens securing Permitted Purchase Money Indebtedness, the interests of lessors under Capital Leases or, solely in the case of Term Loan Priority Collateral, subject to Liens permitted by clause (p) of the definition of Permitted Liens.

4.5 Title to Assets; No Encumbrances . Each of the Loan Parties and its Subsidiaries has (a) good, sufficient and legal title to (in the case of fee interests in Real Property), (b) valid leasehold interests in (in the case of leasehold interests in real or personal property), and (c) good and marketable title to (in the case of all other personal property), all of their respective Accounts, Rig Fleet Equipment and other material assets reflected in their most recent financial statements delivered pursuant to Section 5.1 , in each case except for assets disposed of since the date of such financial statements to the extent permitted hereby and, solely as to leasehold interests, except to the extent the failure to have such valid leasehold interests would not reasonably be expected to have a Material Adverse Effect. All of such assets are free and clear of Liens except for Permitted Liens.

 

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4.6

Litigation .

(a) There are no actions, suits, or proceedings pending or, to the knowledge of any Borrower, threatened in writing against a Loan Party or any of its Subsidiaries that either individually or in the aggregate would reasonably be expected to result in a Material Adverse Effect.

(b) Schedule 4.6(b) to this Agreement sets forth a complete and accurate description of each of the actions, suits, or proceedings with asserted liabilities in excess of, or that could reasonably be expected to result in liabilities in excess of, $1,000,000 that, as of the Closing Date, is pending or, to the knowledge of any Borrower threatened in writing against a Loan Party or any of its Subsidiaries.

4.7 Compliance with Laws . No Loan Party nor any of its Subsidiaries (a) is in violation of any applicable laws, rules, regulations, executive orders, or codes (including Environmental Laws) that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect, or (b) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.

4.8 No Material Adverse Effect . All historical financial statements relating to the Loan Parties and their Subsidiaries that have been delivered by Borrowers to Lender have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, the Loan Parties’ and their Subsidiaries’ consolidated financial condition as of the date thereof and results of operations for the period then ended. Since June 18, 2018, no event, circumstance, or change has occurred that has or could reasonably be expected to result in a Material Adverse Effect.

4.9 Solvency . As of the Closing Date, the Loan Parties and their Subsidiaries, taken as a whole on a consolidated basis, are Solvent.

 

4.10

Employee Benefits .

(a) Except as set forth on Schedule 4.10 , no Loan Party, none of their Subsidiaries, nor any of their ERISA Affiliates maintains or contributes to any Pension Plan. No ERISA Event has occurred that, when taken together with all other ERISA Events for which liability is reasonably expected to occur, would reasonably be expected to result in a Material Adverse Effect.

(b) (i) No ERISA Event has occurred during the five year period prior to the date on which this representation is made or deemed made or is reasonably expected to occur; (ii) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iii) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 of ERISA with respect to a Multiemployer Plan; and (iv) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could reasonably be expected to be subject to Sections 4069 or 4212(c) of ERISA, except, with respect to each of the foregoing clauses of this Section 4.10(b), as would not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

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(c) The Pension Plans of any Loan Party and any ERISA Affiliate are funded to the extent required by the terms of each Pension Plan, if any, and by the requirements of any material Law applicable in the jurisdiction in which the relevant Pension Plan is maintained, and neither any Loan Party nor any ERISA Affiliate maintains a Pension Plan that is, or is expected to be, in at-risk status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code) in each case, except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

4.11 Environmental Condition . Except as set forth on Schedule 4.11 to this Agreement, (a) to each Borrower’s knowledge, no Loan Party’s nor any of its Subsidiaries’ properties or assets has ever been used by a Loan Party, its Subsidiaries, or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such disposal, production, storage, handling, treatment, release or transport was in violation, in any material respect, of any applicable Environmental Law, (b) [reserved], (c) no Loan Party nor any of its Subsidiaries has received written notice that a Lien arising under any Environmental Law has attached to any revenues or to any Real Property owned or operated by a Loan Party or its Subsidiaries, and (d) no Loan Party nor any of its Subsidiaries nor any of their respective facilities or operations is subject to any outstanding written order, consent decree, or settlement agreement with any Person relating to any Environmental Law or Environmental Liability that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect. Except as set forth on Schedule 4.11 to this Agreement, to each Borrower’s knowledge, no Loan Party’s nor any of its Subsidiaries’ properties or assets has ever been listed as a Hazardous Materials disposal site under applicable Environmental Laws.

4.12 Complete Disclosure . All factual information taken as a whole (other than forward-looking information and projections and information of a general economic nature and general information about Borrowers’ industry) furnished by or on behalf of a Loan Party or its Subsidiaries in writing to Agent (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement or the other Loan Documents, and all other such factual information taken as a whole (other than forward-looking information and projections and information of a general economic nature and general information about Loan Parties’ industry) hereafter furnished by or on behalf of a Loan Party or its Subsidiaries in writing to Agent 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; provided that, in the case of information with respect to Target, the foregoing representations are limited to the knowledge of Parent. The Projections delivered to Agent on July 3, 2018 represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent, Borrowers’ good faith estimate, on the date such Projections are delivered, of the Loan Parties’ and their Subsidiaries’ future performance for the periods covered thereby based upon assumptions believed by Borrowers to be reasonable at the time of the delivery thereof to Agent (it being understood that such Projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Loan Parties and their Subsidiaries, and no assurances can be given that such Projections will be realized, and although reflecting Borrowers’ good faith estimate, projections or forecasts based on methods and assumptions which Borrowers believed to be reasonable at the time such Projections were prepared, are not to be viewed as facts, and that actual results during the period or periods covered by the Projections may differ materially from projected or estimated results).

4.13 Patriot Act . To the extent applicable, each Loan Party is in compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001, as amended) (the “ Patriot Act ”).

 

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4.14 Indebtedness . Set forth on Schedule 4.14 to this Agreement is a true and complete list of all Indebtedness of each Loan Party and each of its Subsidiaries outstanding immediately prior to the Closing Date that is to remain outstanding immediately after giving effect to the closing hereunder on the Closing Date and such Schedule accurately sets forth the aggregate principal amount of such Indebtedness as of the Closing Date.

4.15 Payment of Taxes . Except as otherwise permitted under Section 5.5 , all federal Tax returns and reports and all material state and local Tax returns and reports of each Loan Party and its Subsidiaries required to have been filed by any of them have been timely filed, and all material Taxes shown on such Tax returns to be due and payable and all other Taxes upon a Loan Party and its Subsidiaries and upon their respective assets, income, businesses and franchises that are due and payable have been paid when due and payable. Each Loan Party and each of its Subsidiaries have made adequate provision in accordance with GAAP for all Taxes not yet due and payable. No Borrower knows of any proposed material Tax assessment against a Loan Party or any of its Subsidiaries that is not being actively contested by such Loan Party or such Subsidiary diligently, in good faith, and by appropriate proceedings; provided , that such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor.

4.16 Margin Stock . Neither any Loan Party nor any of its Subsidiaries owns any Margin Stock or is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the loans made to Borrowers will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors. Neither any Loan Party nor any of its Subsidiaries expects to acquire any Margin Stock.

4.17 Governmental Regulation . No Loan Party nor any of its Subsidiaries is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable. No Loan Party nor any of its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940.

4.18 OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws . No Loan Party or any of its Subsidiaries is in violation of any Sanctions . No Loan Party or any of its Subsidiaries or, to the knowledge of such Loan Party, any director, officer, employee or agent of such Loan Party or such Subsidiary (a) is a Sanctioned Person or a Sanctioned Entity, (b) has any assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. Each of the Loan Parties and its Subsidiaries has implemented and maintains in effect policies and procedures designed to ensure compliance with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Loan Parties and its Subsidiaries, and to the knowledge of each such Loan Party, each director, officer, employee and agent of each such Loan Party and each such Subsidiary, is in compliance with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. No proceeds of any Loan made or Letter of Credit issued hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity, or otherwise used in any manner that would result in a violation of any Sanction, Anti-Corruption Law or Anti-Money Laundering Law by any Person (including Agent, any Lender, any Bank Product Provider, any Hedge Provider or any other individual or entity participating in any transaction).

 

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4.19 Employee and Labor Matters . Except as would not individually or in the aggregate be reasonably expected to have a Material Adverse Effect, there is (i) no unfair labor practice complaint pending or, to the knowledge of any Borrower, threatened in writing against any Loan Party or its Subsidiaries before any Governmental Authority and no grievance or arbitration proceeding pending or threatened in writing against any Loan Party or its Subsidiaries which arises out of or under any collective bargaining agreement, (ii) no strike, labor dispute, slowdown, stoppage or similar action or grievance pending or threatened in writing against any Loan Party or its Subsidiaries, or (iii) to the knowledge of any Borrower, no union representation question existing with respect to the employees of any Loan Party or its Subsidiaries and no union organizing activity taking place with respect to any of the employees of any Loan Party or its Subsidiaries. None of any Loan Party or its Subsidiaries has incurred any material liability or obligation under the Worker Adjustment and Retraining Notification Act or similar state law, which remains unpaid or unsatisfied. The hours worked and payments made to employees of each Loan Party and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable legal requirements, except to the extent such violations would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. All material payments due from any Loan Party or its Subsidiaries on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of Borrowers, except where the failure to do so would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

4.20 [Reserved] .

4.21 Leases . Each Loan Party and its Subsidiaries enjoy peaceful and undisturbed possession under all leases material to their business and to which they are parties or under which they are operating, and, subject to Permitted Protests, all of such material leases are valid and subsisting and no material default by the applicable Loan Party or its Subsidiaries exists under any of them.

4.22 Eligible Accounts . As to each Account that is identified by Borrowers as an Eligible Account in a Borrowing Base Certificate submitted to Agent, such Account is (a) a bona fide existing payment obligation of the applicable Account Debtor created by the rendition of services to such Account Debtor in the ordinary course of a Borrower’s business, (b) owed to such Borrower without any known defenses, disputes, offsets, counterclaims, or rights of return or cancellation, and (c) not excluded as ineligible by virtue of one or more of the excluding criteria (other than any Agent-discretionary criteria) set forth in the definition of Eligible Accounts.

4.23 Hedge Agreements . On each date that any Hedge Agreement is executed by any Hedge Provider, Borrower and each other Loan Party satisfy all eligibility, suitability and other requirements under the Commodity Exchange Act (7 U.S.C. § 1, et seq., as in effect from time to time) and the Commodity Futures Trading Commission regulations.

4.24 Closing Date Merger Documents; Term Loan Documents.

(a) Borrowers have delivered to Agent a complete and correct copy of the Closing Date Merger Documents, including all schedules and exhibits thereto. The execution, delivery and performance of each of the Closing Date Merger Documents has been duly authorized by all necessary action on the part of each Loan Party who is a party thereto. Each Closing Date Merger Document is the legal, valid and binding obligation of each Loan Party who is a party thereto, enforceable against each such Loan Party in accordance with its terms, in each case, except (i) as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors’ rights, and (ii) the availability of the remedy of specific performance or injunctive or other equitable relief is subject to the discretion of the court before which any proceeding

 

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therefor may be brought. No Loan Party is in default in the performance or compliance with any provisions thereof. All representations and warranties made by a Loan Party in the Closing Date Merger Documents and in the certificates delivered in connection therewith are true and correct in all material respects. To each Loan Party’s knowledge, none of the Sellers’ representations or warranties in the Closing Date Merger Documents contain any untrue statement of a material fact or omit any fact necessary to make the statements therein not misleading, in any case that could reasonably be expected to result in a Material Adverse Effect.

(b) As of the Closing Date, the Closing Date Merger has been consummated in all material respects, in accordance with all applicable laws. As of the Closing Date, all requisite approvals by Governmental Authorities having jurisdiction over Loan Parties and, to each Loan Party’s knowledge, the Sellers, with respect to the Closing Date Merger, have been obtained (including filings or approvals required under the Hart-Scott-Rodino Antitrust Improvements Act), except for any approval the failure to obtain could not reasonably be expected to be material to the interests of the Lenders. As of the Closing Date, after giving effect to the transactions contemplated by the Closing Date Merger Documents, Parent will have good title to all of the Equity Interests issued by the Target, free and clear of all Liens other than Permitted Liens.

(c) No court of competent jurisdiction has issued any injunction, restraining order or other order which prohibits consummation of the transactions described in the Closing Date Merger Documents and no governmental or other action or proceeding has been threatened or commenced, seeking any injunction, restraining order or other order which seeks to void or otherwise modify the transactions described in the Closing Date Merger Documents.

(d) Borrowers have delivered to Agent a complete and correct copy of the Term Loan Documents, including all schedules and exhibits thereto, executed on the Closing Date. The execution, delivery and performance of each of the Term Loan Documents has been duly authorized by all necessary action on the part of each Loan Party who is a party thereto. Each Term Loan Document is the legal, valid and binding obligation of each Loan Party who is a party thereto, enforceable against each such Loan Party in accordance with its terms, in each case, except (i) as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors’ rights, and (ii) the availability of the remedy of specific performance or injunctive or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought.

 

5.	AFFIRMATIVE COVENANTS.

Each Loan Party covenants and agrees that, until the termination of all of the Commitments and the payment in full of the Obligations:

5.1 Financial Statements, Reports, Certificates . Borrowers (a) will deliver to Agent each of the financial statements, reports, and other items set forth on Schedule 5.1 to this Agreement no later than the times specified therein, (b) agree that no Subsidiary of a Loan Party will have a fiscal year different from that of Administrative Borrower, (c) agree to maintain a system of accounting that enables Loan Parties to produce financial statements in accordance with GAAP, and (d) agree that they will, and will cause each other Loan Party to, (i) keep a reporting system that shows all additions, sales, claims, returns, and allowances with respect to their and their Subsidiaries’ sales, and (ii) maintain their billing systems and practices substantially as in effect as of the Closing Date and shall only make material modifications thereto with notice to, and with the consent of, Lender.

 

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5.2 Reporting . Borrowers (a) will deliver to Agent each of the reports set forth on Schedule 5.2 to this Agreement at the times specified therein, and (b) agree to use commercially reasonable efforts in cooperation with Agent to facilitate and implement a system of electronic collateral reporting in order to provide electronic reporting of each of the items set forth on such Schedule.

5.3 Existence . Except as otherwise permitted under Section 6.3 or Section 6.4 , each Loan Party will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect such Person’s valid existence and good standing in its jurisdiction of organization and, except as would not reasonably be expected to result in a Material Adverse Effect, good standing with respect to all other jurisdictions in which it is qualified to do business and any rights, franchises, permits, licenses, accreditations, authorizations, or other approvals material to their businesses.

5.4 Maintenance of Properties . Each Loan Party will, and will cause each of its Subsidiaries to, maintain and preserve all of its assets that are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear, tear, casualty, and condemnation and Permitted Dispositions excepted (and except where the failure to so maintain and preserve assets could not reasonably be expected to result in a Material Adverse Effect).

5.5 Taxes . Each Loan Party will, and will cause each of its Subsidiaries to, pay in full before delinquency or before the expiration of any extension period all Taxes imposed, levied, or assessed against it, or any of its assets or in respect of any of its income, businesses, or franchises, other than to the extent that the validity of such Tax is the subject of a Permitted Protest.

5.6 Insurance . Each Loan Party will, and will cause each of its Subsidiaries to, at the expense of such Loan Party or such Subsidiary, maintain insurance respecting each of each Loan Party’s and its Subsidiaries’ assets wherever located, covering liabilities, losses or damages as are customarily are insured against by other Persons engaged in same or similar businesses and similarly situated and located. Borrowers also shall maintain, or cause a Loan Party to maintain, with respect to each Loan Party and each of its Subsidiaries, general liability insurance, flood insurance for Collateral located in a flood plain, product liability insurance, director’s and officer’s liability insurance, fiduciary liability insurance, and employment practices liability insurance, as well as insurance against larceny, embezzlement, and criminal misappropriation. All such policies of insurance shall be with financially sound and reputable insurance companies acceptable to Agent (it being agreed that, as of the Closing Date, the insurance companies with which the Company maintains such insurance policies are acceptable to Agent) and in such amounts as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated and located and, in any event, in amount, adequacy, and scope reasonably satisfactory to Agent (it being agreed that the amount, adequacy, and scope of the policies of insurance of Borrowers in effect as of the Closing Date are acceptable to Agent). All property insurance policies are to be made payable to Agent for the benefit of Agent and Lenders, as their interests may appear, in case of loss, pursuant to a standard loss payable endorsement with a standard non-contributory “lender” or “secured party” clause and are to contain such other provisions as Agent may reasonably require to fully protect Agent’s and Lenders’ interest in the Collateral and to any payments to be made under such policies. All certificates of property and general liability insurance are to be delivered to Agent, with the Agent’s loss payable and additional insured endorsements in favor of Agent, and shall provide for not less than thirty days (ten days in the case of non-payment) prior written notice to Agent of the exercise of any right of cancellation. If any Loan Party or its Subsidiaries fails to maintain such insurance, Agent may arrange for such insurance, but at Borrowers’ expense and without any responsibility on Agent’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. Borrowers shall give Agent prompt notice of any loss exceeding $1,000,000 covered by the casualty or business interruption insurance of any Loan Party or its Subsidiaries. Upon the occurrence and during the continuance of an Event of Default, Agent shall have the sole right to file

 

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claims under any property and general liability insurance policies in respect of the Collateral, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

5.7 Inspection .

(a) Each Loan Party will, and will cause each of its Subsidiaries to, permit Agent, any Lender and each of their respective duly authorized representatives or agents to visit any of its properties and inspect any of its assets or books and records, to examine and make copies of its books and records, and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers and employees (provided, that an authorized representative of a Borrower shall be allowed to be present) at such reasonable times and intervals as Agent may designate and, so long as no Default or Event of Default has occurred and is continuing, with reasonable prior notice to Borrowers and during regular business hours, at Borrowers’ expense and subject to the limitations set forth below in Section 5.7(c) .

(b) Each Loan Party will, and will cause each of its Subsidiaries to, permit Agent and each of its duly authorized representatives or agents to conduct field examinations at such reasonable times and intervals as Agent may designate and, so long as no Default or Event of Default has occurred and is continuing, with reasonable prior notice to Borrowers and during regular business hours, at Borrowers’ expense, subject to the limitations set forth below in Section 5.7(c) .

(c) So long as no Event of Default shall have occurred and be continuing during a calendar year, Borrowers shall not be obligated to reimburse Agent for more than one (1) field examination in such calendar year (increasing to two (2) field examinations if an Increased Reporting Event has occurred during such calendar year).

5.8 Compliance with Laws . Each Loan Party will, and will cause each of its Subsidiaries to, comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

5.9 Environmental . Each Loan Party will, and will cause each of its Subsidiaries to,

(a) Keep any property either owned or operated by any Loan Party or its Subsidiaries free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens,

(b) Comply with all Environmental Laws other than Environmental Laws the non-compliance with which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect,

(c) Promptly notify Agent and Lenders of any release of which any Loan Party has knowledge of a Hazardous Material in any reportable quantity from or onto property owned or operated by any Loan Party or its Subsidiaries and take any Remedial Actions required to abate said release or otherwise to come into compliance with applicable Environmental Law, other than releases which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, and

 

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(d) Promptly, but in any event within ten Business Days of its receipt thereof, provide Agent and Lenders with written notice of any of the following: to the extent, in the case of clauses (ii) and (iii), any of the following could reasonably be expected to have a Material Adverse Effect: (i) notice that an Environmental Lien has been filed against any of the real or personal property of a Loan Party or its Subsidiaries, (ii) commencement of any Environmental Action or written notice that an Environmental Action will be filed against a Loan Party or its Subsidiaries, and (iii) written notice of a violation, citation, or other administrative order from a Governmental Authority.

5.10 Disclosure Updates . Each Loan Party will, promptly and in no event later than five Business Days after obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished to Agent or Lenders contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein, taken as a whole, not misleading in light of the circumstances in which made. The foregoing to the contrary notwithstanding, any notification pursuant to the foregoing provision will not cure or remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the effect of amending or modifying this Agreement or any of the Schedules hereto.

5.11 Formation or Acquisition of Subsidiaries . If any Loan Party forms or acquires any new Subsidiary (other than an Excluded Subsidiary), such Loan Party shall, within fifteen (15) days of such event (or such later date as permitted by Agent), (a) cause such new Subsidiary (i) to be joined as a Borrower hereunder pursuant to a Joinder to this Agreement or to become a Guarantor of the Obligations, as determined by Agent, and (ii) to provide to Agent a joinder to the Guaranty and Security Agreement, in each case, together with such other security agreements, as well as appropriate financing statements, all in form and substance reasonably satisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide, or cause the applicable Loan Party to provide, to Agent a pledge agreement (or an addendum to the Guaranty and Security Agreement) and appropriate certificates and powers or financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary in form and substance reasonably satisfactory to Agent; provided , that only 65% of the total outstanding voting Equity Interests of any Excluded Subsidiary described in clause (a) or (c) of the definition or Excluded Subsidiary, and (c) provide to Agent all other documentation, including the Governing Documents of such Subsidiary and one or more opinions of counsel reasonably satisfactory to Agent, which, in its opinion, is appropriate with respect to the execution and delivery of the applicable documentation referred to above. Any document, agreement, or instrument executed or issued pursuant to this Section 5.11 shall constitute a Loan Document.

5.12 Further Assurances . Each Loan Party will, and will cause each of the other Loan Parties to, at any time upon the reasonable request of Agent, in writing, execute or deliver to Agent any and all financing statements, security agreements, pledges, assignments, opinions of counsel, and all other documents (the “ Additional Documents ”) that Agent may reasonably request in form and substance reasonably satisfactory to Agent, to create, perfect, and continue perfected or to better perfect Agent’s Liens in all of the assets of each of the Loan Parties (whether now owned or hereafter arising or acquired, tangible or intangible), and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, if any Borrower or any other Loan Party refuses or fails to execute or deliver any reasonably requested Additional Documents within a reasonable period of time not to exceed 10 days following the request to do so, each Borrower and each other Loan Party hereby authorizes Agent to execute any such Additional Documents in the applicable Loan Party’s name and authorizes Agent to file such executed Additional Documents in any appropriate filing office. In furtherance of, and not in limitation of, the foregoing, each Loan Party shall take such actions as Agent may reasonably request, in writing, from time to time to ensure that the Obligations are guaranteed by the Guarantors and are secured by substantially all of the assets of the Loan Parties, including all of the outstanding capital Equity Interests of each Borrower and its Subsidiaries (in each case, other than with respect to any assets consisting of Excluded Collateral) pursuant to Section 3 of the Guaranty and Security Agreement).

 

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5.13 Location of Chief Executive Office . Each Loan Party will, and will cause each of its Subsidiaries to, keep their respective chief executive offices only at the locations identified on Schedule 7 to the Guaranty and Security Agreement. Each Loan Party will, and will cause each of its Subsidiaries to, use their commercially reasonable efforts to obtain Collateral Access Agreements for each of the locations identified on Schedule 7 to the Guaranty and Security Agreement.

5.14 OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws . Each Loan Party will, and will cause each of its Subsidiaries to, comply with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Loan Parties and its Subsidiaries will implement and maintain in effect policies and procedures designed to ensure compliance by the Loan Parties and their Subsidiaries and their respective directors, officers, employees and agents with, and each of the Loan Parties and their respective Subsidiaries will comply with, all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.

 

6.	NEGATIVE COVENANTS.

Each Loan Party covenants and agrees that, until termination of all of the Commitments and the payment in full of the Obligations:

6.1 Indebtedness . Each Loan Party will not, and will not permit any of its Subsidiaries to, create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except for Permitted Indebtedness.

6.2 Liens . Each Loan Party will not, and will not permit any of its Subsidiaries to, create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens.

6.3 Restrictions on Fundamental Changes . Each Loan Party will not, and will not permit any of its Subsidiaries to,

(a) Other than the Closing Date Merger, enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its Equity Interests, except for (i) any merger between Loan Parties; provided , that a Borrower must be the surviving entity of any such merger to which it is a party, (ii) any merger between a Loan Party and a Subsidiary of such Loan Party that is not a Loan Party so long as such Loan Party is the surviving entity of any such merger, and (iii) any merger between Subsidiaries of any Loan Party that are not Loan Parties,

(b) liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), except for (i) the liquidation or dissolution of non-operating Subsidiaries of any Loan Party with nominal assets and nominal liabilities, (ii) the liquidation or dissolution of a Loan Party (other than any Borrower) or any of its wholly-owned Subsidiaries so long as all of the assets (including any interest in any Equity Interests) of such liquidating or dissolving Loan Party or Subsidiary are transferred to a Loan Party that is not liquidating or dissolving, or (iii) the liquidation or dissolution of a Subsidiary of any Loan Party that is not a Loan Party (other than any such Subsidiary the Equity Interests of which (or any portion thereof) is subject to a Lien in favor of Agent) so long as all of the assets of such liquidating or dissolving Subsidiary are transferred to a Subsidiary of a Loan Party that is not liquidating or dissolving,

 

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(c) suspend or cease operating a substantial portion of its or their business, except as permitted pursuant to clauses (a) or (b) above or in connection with a transaction permitted under Section 6.4, or

(d) change its classification/status for U.S. federal income tax purposes.

6.4 Disposal of Assets . Other than Permitted Dispositions or transactions expressly permitted by Sections 6.3 or 6.9 , each Loan Party will not, and will not permit any of its Subsidiaries to, convey, sell, lease, license, assign, transfer, or otherwise dispose of any of its or their assets.

6.5 Nature of Business . Each Loan Party will not, and will not permit any of its Subsidiaries to, make any material change in the nature of its or their business as described in Schedule 6.5 to this Agreement or acquire any properties or assets that are not reasonably related to the conduct of such business activities; provided , that the foregoing shall not prevent any Loan Party and its Subsidiaries from engaging in any business that is reasonably related or ancillary to its or their business.

6.6 Prepayments and Amendments . Each Loan Party will not, and will not permit any of its Subsidiaries to,

(a) except in connection with Refinancing Indebtedness permitted by Section 6.1 ,

(i) optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of any Loan Party or its Subsidiaries, other than (A) the Obligations in accordance with this Agreement, (B) Hedge Obligations, (C) Permitted Intercompany Advances or (D) Indebtedness under the Term Loan Agreement and other Indebtedness so long as, in each case, each of the Payment Conditions shall be satisfied, or

(ii) [Reserved], or

(b) Directly or indirectly, amend, modify, or change any of the terms or provisions of:

(i) any agreement, instrument, document, indenture, or other writing evidencing or concerning Permitted Indebtedness other than (A) the Obligations in accordance with this Agreement, (B) Hedge Obligations, (C) Permitted Intercompany Advances, (D) Indebtedness in respect of the Term Loan Documents to the extent expressly permitted pursuant to the Intercreditor Agreement, and (E) Indebtedness permitted under clauses (c) , (e)  and (f)  of the definition of Permitted Indebtedness, or

(ii) the Governing Documents of any Loan Party or any of its Subsidiaries if the effect thereof, either individually or in the aggregate, would reasonably be expected to be materially adverse to the interests of the Lenders.

6.7 Restricted Payments; Management Fees . Each Loan Party will not, and will not permit any of its Subsidiaries to, make any Restricted Payment; provided , that so long as it is permitted by law:

(a) So long as Parent is a “pass-through” tax entity for United States federal income tax purposes, and after first providing such supporting documentation as Agent may request, Parent may declare and pay distributions in the amount of the Pass-Through Tax Liabilities.

(b) (i) Each Subsidiary of a Loan Party may make Restricted Payments to any Loan Party and (ii) each Subsidiary of a Loan Party that is not a Loan Party may make Restricted Payments to another Subsidiary that is not a Loan Party.

 

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(c) Parent may make other Restricted Payments; provided , that , each of the Payment Conditions shall be satisfied.

(d) Parent may pay management fees to MSD Capital LP and its Affiliates in an aggregate amount not to exceed $250,000 per calendar year, so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom.

(e) The Loan Parties may consummate repurchases, redemptions or other acquisitions or retirements for value of Equity Interests made or deemed to be made in connection with any exercise, vesting, settlement or exchange, as applicable, of stock options, warrants, restricted stock, restricted stock units or other similar rights in an aggregate amount not to exceed $5,000,000 during any calendar year and $15,000,000 during the term of this Agreement, provided , that , each of the Payment Conditions shall be satisfied.

(f) So long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, Parent may make other Restricted Payments with proceeds received by Parent from the sale of Equity Interests of Parent other than proceeds of Specified Equity Contributions; provided that any such Restricted Payments are made no later than 30 days after such proceeds have been received by Parent.

6.8 Accounting Methods . Each Loan Party will not, and will not permit any of its Subsidiaries to, modify or change its fiscal year or its method of accounting (other than as may be required to conform to GAAP).

6.9 Investments . Each Loan Party will not, and will not permit any of its Subsidiaries to, directly or indirectly, make or acquire any Investment or incur any liabilities (including contingent obligations) for or in connection with any Investment except for Permitted Investments.

6.10 Transactions with Affiliates . Each Loan Party will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction with any Affiliate of any Loan Party or any of its Subsidiaries except for:

(a) transactions (other than the payment of management, consulting, monitoring, or advisory fees) between such Loan Party or its Subsidiaries, on the one hand, and any Affiliate of such Loan Party or its Subsidiaries, on the other hand, so long as such transactions are no less favorable, taken as a whole, to such Loan Party or its Subsidiaries, as applicable, than would be obtained in an arm’s length transaction with a non-Affiliate,

(b) any indemnity provided for the benefit of directors (or comparable managers) of a Loan Party or one of its Subsidiaries so long as it has been approved by such Loan Party’s or such Subsidiary’s board of directors (or comparable governing body) in accordance with applicable law,

(c) the payment of reasonable compensation, severance, or employee benefit arrangements to employees, officers, and outside directors of a Loan Party or one of its Subsidiaries in the ordinary course of business and consistent with industry practice so long as it has been approved by such Loan Party’s or such Subsidiary’s board of directors (or comparable governing body) in accordance with applicable law,

(d) (i) transactions solely among the Loan Parties, and (ii) transactions solely among Subsidiaries of Loan Parties that are not Loan Parties,

(e) transactions permitted by Section 6.3 , Section 6.7 , or Section 6.9 ,

 

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(f) Permitted Indebtedness constituting Subordinated Indebtedness owing to Affiliates,

(g) agreements for the non-exclusive licensing of intellectual property, or distribution of products, in each case, among the Loan Parties and their Subsidiaries for the purpose of the counterparty thereof operating its business, and agreements for the assignment of intellectual property from any Loan Party or any of its Subsidiaries to any Loan Party, or

(h) the Term Loan Agreement and the transactions contemplated thereby to the extent any such Affiliate is an “Affiliated Lender” as defined in the Term Loan Agreement.

6.11 Use of Proceeds . Each Loan Party will not, and will not permit any of its Subsidiaries to, use the proceeds of any Loan made hereunder for any purpose other than (a) on the Closing Date, (i) to pay the fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, and the other Transactions, in each case, as set forth in the Flow of Funds Agreement, (ii) to consummate the Refinancing, and (iii) after application of the proceeds of loans under the Term Loan Agreement, to pay a portion of the merger consideration in respect of the Closing Date Merger, and (b) thereafter, consistent with the terms and conditions hereof, for their lawful and permitted purposes; provided that (x) no part of the proceeds of the loans made to Borrowers will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors, (y) no part of the proceeds of any Loan or Letter of Credit will be used, directly or indirectly, to make any payments to a Sanctioned Entity or a Sanctioned Person, to fund any investments, loans or contributions in, or otherwise make such proceeds available to, a Sanctioned Entity or a Sanctioned Person, to fund any operations, activities or business of a Sanctioned Entity or a Sanctioned Person), or in any other manner that would result in a violation of Sanctions by any Person, and (z) no part of the proceeds of any Loan or Letter of Credit will be used, directly or indirectly, in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Sanctions, Anti-Corruption Laws or Anti-Money Laundering Laws.

6.12 Limitation on Issuance of Equity Interests . Except for the issuance or sale of Qualified Equity Interests by Parent, each Loan Party will not, and will not permit any of its Subsidiaries to, issue or sell any of its Equity Interests.

 

7.	FINANCIAL COVENANT.

7.1 Fixed Charge Coverage Ratio . Each Borrower covenants and agrees that, until the termination of all of the Commitments and the payment in full of the Obligations, Borrowers will maintain a Fixed Charge Coverage Ratio, calculated on a trailing twelve month basis and measured as of the last day of each calendar month during any Covenant Testing Period (including the last day thereof), in each case of at least 1.00 to 1.00.

7.2 Right to Cure .

(a) Notwithstanding anything to the contrary contained in Section 7.1, subject to Section 7.2(b), in the event that Borrowers fail to comply with the requirements of Section 7.1 with respect to any fiscal period, after the end of such fiscal period until the expiration of the tenth (10th) Business Day subsequent to the date on which financial statements with respect to the fiscal period for which such covenant is being measured are required to be delivered, any Person (other than a Loan Party) shall have the right to make a Specified Equity Contribution to Parent (collectively, the “ Cure Right ”), and so long as Parent actually receives cash (the “ Cure Amount ”) pursuant to the exercise of such Cure Right no later than ten (10) Business Days after the date on which financial statements with respect to the fiscal period for which such covenant is being measured are required to be delivered), then the amounts for purposes of determining compliance with the covenant in Section 7.1 shall be recalculated giving effect to the following pro forma adjustments:

 

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(i) EBITDA shall be increased, solely for the purpose of determining compliance with the covenant in Section 7.1 and not for any other purpose under this Agreement, by an amount equal to the Cure Amount; and

(ii) if, after giving effect to the foregoing recalculations, the Borrowers shall then be in compliance with the requirements of Section 7.1, the Borrowers shall be deemed to have satisfied the requirements of Section 7.1 as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and any applicable breach or default of Section 7.1 that had occurred shall be deemed cured for purposes of this Agreement.

(b) Limitation on Exercise of Cure Right . Notwithstanding anything herein to the contrary contained herein or in any Loan Document, (i) no Lender shall be required to make any Loans and no Issuing Bank shall be required to issue or amend any Letters of Credit, in each case, during the ten (10) Business Day period referred to above, (ii) in each twelve (12) consecutive fiscal month period there shall be a period of six (6) consecutive fiscal months in which the Cure Right is not exercised, (iii) the Cure Amount shall be no greater than one hundred (100%) percent of the amount required for purposes of compliance with Section 7.1 as provided above, (iv) the Cure Right shall not be exercised more than four (4) times during the term of this Agreement, (v) all Specified Equity Contributions shall be disregarded for purposes of determining any pricing, any financial ratio-based conditions or any baskets or threshold under this Agreement, and (vi) no Specified Equity Contribution shall result in any reduction of Indebtedness for purposes of calculating compliance with any financial covenant under this Agreement.

 

8.	EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default (each, an “ Event of Default ”) under this Agreement:

8.1 Payments . If Borrowers fail to pay when due and payable, or when declared due and payable, (a) all or any portion of the Obligations consisting of interest, fees, or charges due to the Lender Group, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof constituting principal) constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period of three Business Days, (b) all or any portion of the principal of the Obligations, or (c) any amount payable to Issuing Bank in reimbursement of any drawing under a Letter of Credit which have not been paid through a Revolving Loan;

8.2 Covenants . If any Loan Party or any of its Subsidiaries:

(a) fails to perform or observe any covenant or other agreement contained in any of (i)  Sections 3.6 , 5.1 , 5.2 , 5.3 (solely if any Borrower is not in existence in its jurisdiction of organization), 5.5 (solely with respect to F.I.C.A., F.U.T.A., federal income taxes and any other taxes or assessments the non-payment of which may result in a Lien having priority over Agent’s Liens), 5.6 , 5.7 , 5.11 , 5.13 or 5.14 of this Agreement, (ii)  Section 6 of this Agreement, (iii)  Section 7 of this Agreement (subject to the Cure Right), or (iv)  Section 7 of the Guaranty and Security Agreement;

 

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(b) fails to perform or observe any covenant or other agreement contained in any of Sections 5.3 (other than if any Borrower is not in existence in its jurisdiction of organization), 5.4 , 5.5 (other than F.I.C.A., F.U.T.A., federal income taxes and any other taxes or assessments the non-payment of which may result in a Lien having priority over Agent’s Liens), 5.8 , 5.10 and 5.12 of this Agreement and such failure continues for a period of fifteen (15) days after the earlier of (i) the date on which such failure shall first become known to any officer of any Borrower, or (ii) the date on which written notice thereof is given to Borrowers by Agent; or

(c) fails to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or agreement that is the subject of another provision of this Section 8 (in which event such other provision of this Section 8 shall govern), and such failure continues for a period of thirty days after the earlier of (i) the date on which such failure shall first become known to any officer of any Borrower, or (ii) the date on which written notice thereof is given to Borrowers by Agent;

8.3 Judgments . If one or more judgments, orders, or awards for the payment of money involving an aggregate amount of $5,000,000, or more (except to the extent fully covered (other than to the extent of customary deductibles) by insurance pursuant to which the insurer has not denied coverage) is entered or filed against a Loan Party or any of its Subsidiaries, or with respect to any of their respective assets, and either (a) there is a period of thirty consecutive days at any time after the entry of any such judgment, order, or award during which (i) the same is not discharged, satisfied, vacated, or bonded pending appeal, or (ii) a stay of enforcement thereof is not in effect, or (b) enforcement proceedings are commenced upon such judgment, order, or award;

8.4 Voluntary Bankruptcy, Etc . If an Insolvency Proceeding is commenced by a Loan Party or any of its Subsidiaries;

8.5 Involuntary Bankruptcy, Etc . If an Insolvency Proceeding is commenced against a Loan Party or any of its Subsidiaries and any of the following events occur: (a) such Loan Party or such Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within sixty calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, such Loan Party or its Subsidiary, or (e) an order for relief shall have been issued or entered therein;

8.6 Default under Other Agreements . If (a) an “event of default” occurs under the Term Loan Documents or (b) there is a default in one or more other agreements to which a Loan Party or any of its Subsidiaries is a party with one or more third Persons relative to a Loan Party’s or any of its Subsidiaries’ Indebtedness involving an aggregate amount of $5,000,000 or more (other than Indebtedness under the Term Loan Documents), and such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such third Person, irrespective of whether exercised, to accelerate the maturity of such Loan Party’s or its Subsidiary’s obligations thereunder, or (c) a default in or an involuntary early termination of one or more Hedge Agreements to which a Loan Party or any of its Subsidiaries is a party and any Lender is a counterparty, or (d) a default in or an involuntary early termination of one or more Hedge Agreements to which a Loan Party or any of its Subsidiaries is a party and a Bank Product Provider is not a counterparty and, in either event under this clause (d), the swap termination costs to be paid by such Loan Party or Subsidiary to the counterparty in accordance with the terms of such Hedge Agreement are $2,000,000 or more;

 

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8.7 Representations, Etc . If any warranty, representation, certificate, statement, or Record made herein or in any other Loan Document or delivered in writing to Agent or any Lender in connection with this Agreement or any other Loan Document proves to be untrue in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of the date of issuance or making or deemed making thereof;

8.8 Guaranty . If the obligation of any Guarantor under the guaranty contained in the Guaranty and Security Agreement or under any other guaranty in favor of Agent is limited or terminated by operation of law or by such Guarantor (other than in accordance with the terms of this Agreement) or if any Guarantor repudiates or revokes or purports to repudiate or revoke any such guaranty;

8.9 Security Documents . If the Guaranty and Security Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, (except to the extent of Permitted Liens which are non-consensual Permitted Liens, Liens securing Permitted Purchase Money Indebtedness or the interests of lessors under Capital Leases) first priority Lien on the Collateral covered thereby, or such Lien shall for any reason cease to be a perfected and first priority Lien (except to the extent of Permitted Liens which are non-consensual Permitted Liens, Liens securing Permitted Purchase Money Indebtedness or the interests of lessors under Capital Leases), except (a) as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement, (b) with respect to Collateral the aggregate value of which, for all such Collateral, does not exceed at any time, $2,500,000 or (c) pursuant to the terms of the Intercreditor Agreement;

8.10 Loan Documents . The validity or enforceability of any Loan Document shall at any time for any reason (other than solely as the result of an action or failure to act on the part of Agent) be declared to be null and void, or a proceeding shall be commenced by a Loan Party or its Subsidiaries, or by any Governmental Authority having jurisdiction over a Loan Party or its Subsidiaries, seeking to establish the invalidity or unenforceability thereof, or a Loan Party or its Subsidiaries shall deny that such Loan Party or its Subsidiaries has any liability or obligation purported to be created under any Loan Document;

8.11 Change of Control . A Change of Control shall occur, whether directly or indirectly;

8.12 ERISA . (i) The occurrence of any of the following events: (a) any Loan Party or ERISA Affiliate fails to make full payment when due of all amounts which any Loan Party or ERISA Affiliate is required to pay as contributions, installments, or otherwise to or with respect to a Pension Plan or Multiemployer Plan, and such failure could reasonably be expected to result in liability to any Loan Party in excess of $1,000,000, or (b) an ERISA Event, which could reasonably be expected to result in liability to any Loan Party in excess of $1,000,000, either individually or in the aggregate; or

8.13 Subordination; Intercreditor Agreement . (a) The provisions of the Intercreditor Agreement shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against the Term Loan Agent, or (b) the subordination provisions of the documents evidencing or governing any Subordinated Indebtedness (together with similar provisions of the Intercreditor Agreement, collectively, the “ Subordination Provisions ”) shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of such Subordinated Indebtedness; or (c) any Person shall, directly or indirectly, disavow or contest in any manner (A) the effectiveness, validity or enforceability of any of the Subordination Provisions, (B) that the Subordination Provisions exist for the benefit of the Loan Parties, or (C) that all payments of principal of or premium and interest on the applicable Subordinated Indebtedness, or realized from the liquidation of any property of any Loan Party, shall be subject to any Subordination Provisions applicable thereto.

 

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9. RIGHTS AND REMEDIES.

9.1 Rights and Remedies . Upon the occurrence and during the continuation of an Event of Default, Agent may, and, at the instruction of the Required Lenders, shall (in each case under clauses (a) or (b) below by written notice to Lead Borrower), in addition to any other rights or remedies provided for hereunder or under any other Loan Document or by applicable law, do any one or more of the following:

(a) by written notice to Lead Borrower, (i) declare the Obligations (other than the Bank Product Obligations), whether evidenced by this Agreement or by any of the other Loan Documents immediately due and payable, whereupon the same shall become and be immediately due and payable and Borrowers shall be obligated to repay all of such Obligations in full, without presentment, demand, protest, or further notice or other requirements of any kind, all of which are hereby expressly waived by Borrower and (ii) direct Borrowers to provide (and Borrowers agree that upon receipt of such notice Borrowers will provide) Letter of Credit Collateralization to Agent to be held as security for Borrowers’ reimbursement obligations for drawings that may subsequently occur under issued and outstanding Letters of Credit;

(b) by written notice to Lead Borrower, declare the Commitments terminated, whereupon the Commitments shall immediately be terminated together with (i) any obligation of any Lender hereunder to make Revolving Loans, and (ii) the obligation of Issuing Bank to issue Letters of Credit; and

(c) exercise all other rights and remedies available to Agent or Lenders under the Loan Documents or applicable law.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Section 8.4 or Section 8.5 , in addition to the remedies set forth above, without any notice to Borrower or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations (other than the Bank Product Obligations), inclusive of all accrued and unpaid interest thereon and all fees and all other amounts owing under this Agreement or under any of the other Loan Documents, shall automatically and immediately become due and payable and Borrower shall be obligated to repay all of such Obligations in full, without presentment, demand, protest, or notice of any kind, all of which are expressly waived by Borrower.

9.2 Remedies Cumulative . The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the UCC, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.

10. WAIVERS; INDEMNIFICATION.

10.1 Demand; Protest; etc . Each Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which any Borrower may in any way be liable.

10.2 The Lender Group’s Liability for Collateral . Each Borrower hereby agrees that: (a) so long as Agent complies with its obligations, if any, under the UCC, the Lender Group shall not in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by the Loan Parties.

 

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10.3 Indemnification . Each Loan Party shall pay, indemnify, defend, and hold the Agent- Related Persons, the Lender-Related Persons, the Issuing Bank and each Participant (each, an “ Indemnified Person ”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and disbursements of attorneys (limited to a single counsel for the Lender Group, one local counsel for the Lender Group in each appropriate jurisdiction and, in the case of an actual or perceived conflict of interest involving an Indemnified Person, one counsel for such Indemnified Person), experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution and delivery (provided that Loan Parties shall not be liable for costs and expenses (including attorneys’ fees) of any Lender (other than Wells Fargo) incurred in advising, structuring, drafting, reviewing, administering or syndicating the Loan Documents), enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Loan Parties’ compliance with the terms of the Loan Documents ( provided , that , the indemnification in this clause (a) shall not extend to (i) disputes solely between or among Lenders, (ii) disputes solely between or among Lenders and their respective Affiliates; it being understood and agreed that the indemnification in this clause (a) shall extend to Agent (but not Lenders unless the dispute involves an act or omission of a Loan Party) relative to disputes between or among Agent on the one hand, and one or more Lenders, or one or more of their Affiliates, on the other hand, or (iii) any Taxes or any costs attributable to Taxes, which shall be governed by Section 16.1 ), (b) with respect to any actual or prospective investigation, litigation, or proceeding related to this Agreement, any other Loan Document, the making of any Loans or issuance of any Letters of Credit, or the use of the proceeds of any Loans or Letters of Credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto, and (c) in connection with or arising out of any presence or release of Hazardous Materials at, on, under, to or from any assets or properties owned, leased or operated by any Loan Party or any Environmental Actions, Environmental Liabilities or Remedial Actions related in any way to any such assets or properties of Loan Parties (each and all of the foregoing, the “ Indemnified Liabilities ”). The foregoing to the contrary notwithstanding, Loan Parties shall have no obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnified Person or its Affiliates, or its or their respective officers, directors, employees, attorneys, or agents, or from a material breach of the material obligations of such Indemnified Person under the Loan Documents. This provision shall survive the termination of this Agreement and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which Loan Parties were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Loan Parties with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON ; PROVIDED , THAT, THE FOREGOING INDEMNITY SHALL NOT APPLY IF A COURT OF COMPETENT JURISDICTION ENTERS A FINAL NON APPEALABLE JUDGMENT THAT SUCH INDEMNIFIED LIABILITIES HAVE RESULTED PRIMARILY FROM THE GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PERSON OR ITS OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, OR AGENTS .

 

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11. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as a party may designate in accordance herewith), or telefacsimile. In the case of notices or demands to any Loan Party or Agent, as the case may be, they shall be sent to the respective address set forth below:

If to any Loan Party:   c/o Independence Contract Drilling, Inc.

20475 State Highway 249

Suite 300

Houston, TX, 77070

Attn: Anthony Gallegos

Fax No. 713-800-7417

with copies to:             Sidley Austin LLP

1000 Louisiana Street

Suite 6000

Houston, TX 77002

Attn: David Buck

Fax No. 713-495-7799

If to Agent:                 Wells Fargo Bank, National

Association

14241 Dallas Parkway, 9th Floor

Dallas, Texas 75254-2936

Attn: Loan Portfolio Manager

Fax No.: 866-598-5212

with copies to:             OTTERBOURG P.C.

230 Park Avenue

New York, New York 10169

Attn: Thomas P. Duignan, Esq.

Fax No.: 212-682-6104

Any party hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands sent in accordance with this Section 11 , shall be deemed received on the earlier of the date of actual receipt or three (3) Business Days after the deposit thereof in the mail; provided , that , (a) notices sent by overnight courier service shall be deemed to have been given when received, (b) notices by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient), and (c) notices by electronic mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return email or other written acknowledgment).

 

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12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK; PROVIDED , HOWEVER , THAT IF THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK SHALL GOVERN IN REGARD TO THE VALIDITY, PRIORITY, PERFECTION OR EFFECT OF PERFECTION OF ANY LIEN OR IN REGARD TO PROCEDURAL MATTERS AFFECTING ENFORCEMENT OF ANY LIENS IN COLLATERAL, SUCH LAWS OF SUCH OTHER JURISDICTIONS SHALL CONTINUE TO APPLY TO THAT EXTENT.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED , THAT , ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH LOAN PARTY AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b) .

(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH LOAN PARTY AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH LOAN PARTY AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

(d) EACH LOAN PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK AND THE STATE OF NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS

 

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AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1 Assignments and Participations .

(a) Subject to the conditions set forth in Section 13.1(a)(ii) below, any Lender may assign and delegate all or any portion of its rights and duties under the Loan Documents (including the Obligations owed to it and its Commitments) to one or more assignees so long as such prospective assignee is an Eligible Transferee (each, an “ Assignee ”), with the prior written consent (such consent not be unreasonably withheld or delayed) of:

(i) Lead Borrower; provided, that, (A) no consent of Lead Borrower shall be required (1) if an Event of Default exists or has occurred and is continuing, or (2) in connection with an assignment to a Related Fund or to a Person that is a Lender or an Affiliate (other than natural persons) of a Lender and (B) Borrowers shall be deemed to have consented to a proposed assignment unless they object thereto by written notice to Agent within five (5) Business Days after having received notice thereof; and

(ii) Agent and Issuing Bank.

(b) Assignments shall be subject to the following additional conditions:

(i) no assignment may be made (i) as long as no Event of Default has occurred and is continuing, any Disqualified Lender, or (ii) to a natural person,

(ii) no assignment may be made to a Loan Party, an Affiliate of a Loan Party, any holder of Subordinated Indebtedness,

(iii) the amount of the Commitments and the other rights and obligations of the assigning Lender hereunder and under the other Loan Documents subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to Agent) shall be in a minimum amount (unless waived by Agent) of $5,000,000 (except such minimum amount shall not apply to (A) an assignment or delegation by any Lender to any other Lender, an Affiliate of any Lender, or a Related Fund of such Lender, or (B) a group of new Lenders, each of which is an Affiliate of each other or a Related Fund of such new Lender to the extent that the aggregate amount to be assigned to all such new Lenders is at least $5,000,000),

(iv) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement,

(v) the parties to each assignment shall execute and deliver to Agent an Assignment and Acceptance; provided, that, Borrowers and Agent may continue to deal solely and directly with the assigning Lender in connection with the interest so assigned to an Assignee until written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Borrowers and Agent by such Lender and the Assignee,

 

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(vi) unless waived by Agent, the assigning Lender or Assignee has paid to Agent, for Agent’s separate account, a processing fee in the amount of $3,500;

(vii) the assignee, if it is not a Lender, shall deliver to Agent an Administrative Questionnaire in a form approved by Agent (the “Administrative Questionnaire”); and

(c) From and after the date that Agent notifies the assigning Lender (with a copy to Lead Borrower) that it has received an executed Assignment and Acceptance and, if applicable, payment of the required processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall be a “ Lender ” and shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 10.3 and Section 16 ) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto); provided , however , that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Section 15 and Section 17.9(a) .

(d) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrowers or the performance or observance by Borrowers of any of their obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such Assignee will, independently and without reliance upon Agent, such assigning Lender 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, (v) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement and the other Loan Documents as are delegated to Agent, by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(e) Immediately upon Agent’s receipt of the required processing fee, if applicable, and delivery of notice to the assigning Lender pursuant to Section 13.1(b) , this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

(f) Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons (a “ Participant ”) participating interests in all or any portion of its Obligations, its Commitment, and the other rights and interests of that Lender (the “ Originating Lender ”) hereunder and under the other Loan Documents; provided , that , (i) the Originating Lender shall remain a “Lender” for all purposes of this Agreement and the other Loan Documents and the Participant receiving the

 

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participating interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Agent, and Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of any of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender (other than a waiver of default interest), or (E) decrease the amount or postpones the due dates of scheduled principal repayments or prepayments or premiums payable to such Participant through such Lender, (v) no participation shall be sold (i) as long as no Event of Default has occurred and is continuing, any Disqualified Lender, or (ii) to a natural person, and (vi) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Borrowers, the Collections of Loan Parties, the Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by Lenders among themselves.

(g) In connection with any such assignment or participation or proposed assignment or participation or any grant of a security interest in, or pledge of, its rights under and interest in this Agreement, a Lender may, subject to the provisions of Section 17.9 , disclose all documents and information which it now or hereafter may have relating to the Loan Parties and their Subsidiaries and their respective businesses.

(h) Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law; provided , that , no such pledge shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(i) Agent shall have the right, and each Loan Party hereby expressly authorizes Agent, to provide the list of Disqualified Lenders provided by Borrowers and any updates thereto from time to time (collectively, the “DQ List”) to each Lender requesting the same and such Lender may so provide the DQ List to any potential assignees or participants.

 

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13.2 Successors . This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided , that , Borrowers may not assign this Agreement or any rights or duties hereunder without Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio. No consent to assignment by Lenders shall release Borrowers from their obligations hereunder. A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 13.1 and, except as expressly required pursuant to Section 13.1 , no consent or approval by any Loan Party is required in connection with any such assignment.

14. AMENDMENTS; WAIVERS.

14.1 Amendments and Waivers .

(a) No amendment, waiver or other modification of any provision of this Agreement or any other Loan Document (other than Bank Product Agreements or the Fee Letter), and no consent with respect to any departure by Loan Parties therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and the Loan Parties that are party thereto and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided , that , no such waiver, amendment, or consent shall, unless in writing and signed by all of Lenders directly affected thereby and all of the Loan Parties that are party thereto, do any of the following:

(i) increase the amount of or extend the expiration date of any Commitment of any Lender or amend, modify, or eliminate the last sentence of Section 2.4(c) ,

(ii) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document,

(iii) reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document (except (A) in connection with the waiver of applicability of Section 2.6(c) (which waiver shall be effective with the written consent of the Required Lenders), and (B) that any amendment or modification of defined terms used in the financial covenant in this Agreement shall not constitute a reduction in the rate of interest or a reduction of fees for purposes of this clause (iii));

(iv) amend, modify, or eliminate this Section or any provision of this Agreement providing for consent or other action by all Lenders,

(v) amend, modify, or eliminate Section 15.11 ,

(vi) other than as permitted by Section 15.11 , release Agent’s Lien in and to any of the Collateral,

(vii) amend, modify, or eliminate the definition of “Required Lenders” , “Supermajority Lenders” or “Pro Rata Share”,

(viii) contractually subordinate any of Agent’s Liens (other than as expressly permitted pursuant to the Intercreditor Agreement),

(ix) other than in connection with a merger, amalgamation, liquidation, dissolution or sale of such Person expressly permitted by the terms hereof or the other Loan Documents, release any Borrower or all or substantially all of the Guarantors from any obligation for the payment of money or consent to the assignment or transfer by any Borrower or any Guarantor of any of its rights or duties under this Agreement or the other Loan Documents,

 

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