UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 2, 2018

 

 

Basic Energy Services, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware   1-32693   54-2091194

(State or other jurisdiction of

incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

801 Cherry Street, Suite 2100  
Fort Worth, Texas   76102
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (817) 334-4100

Not Applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

 

 

 


Item 1.01

Entry into a Material Definitive Agreement.

Indenture

On October 2, 2018, Basic Energy Services, Inc. (the “Company”) completed its previously announced offering (the “Offering”) of $300,000,000 aggregate principal amount of its 10.75% Senior Secured Notes due 2023 (the “Notes”). The Notes were issued under and are governed by an indenture, dated as of October 2, 2018 (the “Indenture”), by and among the Company, the guarantors named therein (the “Guarantors”), and UMB Bank, N.A. as Trustee and Collateral Agent (the “Trustee”). The Notes will initially be jointly and severally, fully and unconditionally guaranteed (the “Guarantees”) on a senior secured basis by the Guarantors and will be secured by first priority liens on substantially all of the Company’s and the Guarantors’ assets, other than accounts receivable, inventory and certain related assets.

The Indenture contains covenants that limit the ability of the Company and certain subsidiaries to:

 

   

incur additional indebtedness or issue preferred stock;

 

   

pay dividends or make other distributions to our stockholders;

 

   

repurchase or redeem capital stock or subordinated indebtedness and certain refinancings thereof;

 

   

make certain investments;

 

   

incur liens;

 

   

enter into certain types of transactions with affiliates;

 

   

limit dividends or other payments by restricted subsidiaries to the Company; and

 

   

sell assets or consolidate or merge with or into other companies.

These limitations are subject to a number of important qualifications and exceptions.

Upon an Event of Default (as defined in the Indenture), the Trustee or the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare the entire principal of, premium, if any, and accrued and unpaid interest, if any, on all the Notes to be due and payable immediately.

At any time on or prior to October 15, 2020, the Company may redeem up to 35% of the aggregate principal amount of the Notes at a redemption price equal to 110.750% of the principal amount, plus accrued and unpaid interest, if any, to the redemption date, with an amount of cash not greater than the net proceeds from certain equity offerings. At any time prior to October 15, 2020, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes plus a “make-whole” premium plus accrued and unpaid interest, if any, to the redemption date. The Company may also redeem all or a part of the Notes at any time on or after October 15, 2020, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to the redemption date.

The Company may redeem all, but not less than all, of the notes in connection with a company sale transaction, at a redemption price of 105.375% of principal for a company sale that occurs on or after April 15, 2019 and on or before October 15, 2019, or 108.063% of principal amount for a company sale that occurs after October 15, 2019 and before October 15, 2020, in each case plus accrued and unpaid interest, if any, to the redemption date. If the Company experiences a change of control, the Company may be required to offer to purchase the Notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the purchase date.

The Notes and the Guarantees rank equally in right of payment with all of the Company’s and the Guarantors’ existing and future unsubordinated indebtedness, effectively senior to all of the Company’s and the


Guarantors’ existing and future indebtedness to the extent of the value of the collateral securing the Notes but junior to other indebtedness that is secured by liens on assets other than collateral for the Notes to the extent of the value of such assets, and senior to all of the Company’s and the Guarantors’ future subordinated indebtedness.

Pursuant to a collateral rights agreement, the Notes and Guarantees will be secured by first priority liens, subject to limited exceptions, on the collateral securing the Notes, consisting of substantially all of the property and assets now owned or hereafter acquired by the Company and the Guarantors, except for certain excluded property described in the Indenture.

The foregoing description of the Indenture does not purport to be complete and is subject to and qualified in its entirety by reference to the complete text of the Indenture, a copy of which is being filed as Exhibit 4.1 hereto and is incorporated herein by reference.

Note Security Agreement

On October 2, 2018, the Company, the Guarantors and UMB Bank, N.A., as the collateral agent under the Indenture entered into a Security Agreement (the “Note Security Agreement”). The collateral under the Note Security Agreement includes (each as defined therein): (a) all Equipment, all Fixtures related to Material Real Property, all Intellectual Property, all Collateral Accounts; (b) all Investment Property (including Pledged Equity), all Commercial Tort Claims, all Documents, all General Intangibles, all Instruments and all Letter of Credit Rights, in each case, not constituting ABL Collateral; (c) all Records relating to the foregoing and any and all accessions to, substitutions for and replacements of the foregoing; and (d) all Proceeds, Supporting Obligations and products of the foregoing, and all collateral security and guarantees given by any person with respect to any of the foregoing.

The foregoing description of the Note Security Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the complete text of the Note Security Agreement, a copy of which is being filed as Exhibit 10.2 hereto and is incorporated herein by reference.

ABL Credit Agreement

On October 2, 2018, the Company replaced its existing Credit and Security Agreement, dated as of September 29, 2017 (as amended, restated, or otherwise modified, the “Prior ABL Credit Agreement”) among Basic Energy Receivables, LLC, as borrower, Basic Energy Services, L.P., as initial servicer, the Company, as performance guarantor, UBS AG, Stamford Branch, as administrative agent and collateral agent, and the lenders party thereto (collectively, the “Prior ABL Lenders”), by entering into an ABL Credit Agreement (the “ABL Credit Agreement”) among the Company, as borrower (in such capacity, the “Borrower”), Bank of America, N.A., as administrative agent (the “Administrative Agent”), swing line lender and letter of credit issuer, UBS Securities LLC, as syndication agent, PNC Bank National Association, as documentation agent and letter of credit issuer, and the other lenders from time to time party thereto (collectively, the “New ABL Lenders”). Pursuant to the ABL Credit Agreement, the New ABL Lenders have extended to the Borrower a revolving credit facility in the maximum aggregate principal amount of $150 million, subject to borrowing base capacity (the “ABL Facility”). The ABL Facility includes borrowing capacity for letters of credit of up to $50 million in the aggregate, and for borrowings on same-day notice under swingline loans subject to a sublimit of the lesser of (a) $15 million and (b) the aggregate commitments of the New ABL Lenders. The ABL Facility also provides capacity for base rate protective advances up to $10 million at the discretion of the Administrative Agent and provisions relating to overadvances.

Borrowings under the ABL Facility bear interest at a rate per annum equal to an applicable rate, plus, at Borrower’s option, either (a) a base rate or (b) a LIBO rate. The applicable rate is fixed from the closing date to April 1, 2019. After April 1, 2019, the applicable rate is determined by reference to the average daily availability as a percentage of the borrowing base during the fiscal quarter immediately preceding such applicable quarter.

In addition to paying interest on outstanding principal under the ABL Facility, the Borrower is required to pay customary commitment and letter of credit fees.


Principal amounts outstanding under the ABL Facility will be due and payable in full on the maturity date, which is five years from the closing of the facility; provided that if the Notes have not been redeemed by July 3, 2023, then the maturity date shall be July 3, 2023.

Substantially all of the domestic subsidiaries of the company guarantee the borrowings under the ABL Facility, and Borrower guarantees the payment and performance by each specified loan party of its obligations under its guaranty with respect to swap obligations. All obligations under the ABL Facility and the related guarantees are secured by a perfected first-priority security interest in substantially all accounts receivable, inventory, and certain other assets, not including equity interests.

The ABL Credit Agreement provides a trigger that (a) commencing on the day that (i) an Event of Default (as defined under the ABL Credit Agreement) occurs, or (ii) Availability (as defined under the ABL Credit Agreement) is less than the greater of (x) 12.5% of the Borrowing Base (as defined under the ABL Credit Agreement) or (y) $18,750,000, and (b) continuing until, during each of the preceding 30 consecutive days, no Event of Default has existed and Availability has at all times during such period exceeded the greater of (i) 12.5% of the Borrowing Base or (ii) $18,750,000, the Administrative Agent may elect to implement cash dominion in certain special accounts over which the Administrative Agent has exclusive control for withdrawal purposes.

The ABL Credit Agreement also provides a trigger that (a) commencing on the day that Availability is less than the greater of (x) 12.5% of the Borrowing or (y) $18,750,000, and (b) continuing until, during each of the preceding 30 consecutive days, Availability has at all times during such period exceeded the greater of 12.5% of the Borrowing Base or $18,750,000, a consolidated fixed charge coverage ratio covenant will spring into effect until the end of such trigger period.

The ABL Credit Agreement contains negative and affirmative covenants, events of default and repayment and prepayment provisions customarily applicable to asset-based senior credit facilities. The ABL Credit Agreement provides a covenant that each of the Loan Parties (as defined in the ABL Credit Agreement) must be able to incur the full amount of the Aggregate Commitments (as defined in the ABL Credit Agreement) and Obligations (as defined in the ABL Credit Agreement) as “permitted debt” under the Indenture with an additional ten percent (10%) available thereunder for increases in the Aggregate Commitments (as defined in the ABL Credit Agreement) (and the ability to incur liens securing the same). In addition, the ABL Facility contains various restrictive covenants that may limit the Company’s ability to:

 

   

incur additional indebtedness;

 

   

incur liens;

 

   

make investments;

 

   

enter into mergers and similar transactions;

 

   

make or declare dividends;

 

   

sell assets;

 

   

engage in any material line of business changes;

 

   

amend, modify, or change the Notes, the Senior Notes Documents (as defined in the ABL Credit Agreement), and any scheduled indebtedness, subject to certain exceptions); and

 

   

engage in certain other transactions.

These limitations are subject to a number of important qualifications and exceptions.


Upon an Event of Default (as defined in the ABL Credit Agreement), the Administrative Agent shall, at the request of, or may, with the consent of, two or more unaffiliated lenders holding more than 50% of total outstanding amounts and aggregate unused commitments, (i) terminate the commitments of the New ABL Lenders, (ii) declare the outstanding principal amount of all outstanding loans (including accrued and unpaid interest and other owed amounts) due and payable, (iii) require cash collateralization of letter of credit obligations, and (iv) exercise all rights and remedies available to the Administrative Agent or the New ABL Lenders under the ABL Facility or applicable law.

The foregoing description of the ABL Credit Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the complete text of the ABL Credit Agreement, a copy of which is being filed as Exhibit 10.1 hereto and is incorporated herein by reference.

ABL Security Agreement

On October 2, 2018, the Company, the debtors named therein and the Administrative Agent entered into a Security Agreement (the “ABL Security Agreement”). The collateral under the ABL Security Agreement includes (each as defined therein): (a) all Receivables (including unbilled accounts but excluding Accounts arising solely from the sale, assignment or other disposition of Senior Notes Collateral), all Contracts, all Chattel Paper, all Inventory, all Specified ABL Collateral, all Deposit Accounts (other than Excluded Accounts), all Securities Accounts and Commodity Accounts (other than Securities Accounts and Commodity Accounts that contain only the identifiable Proceeds of Senior Notes Collateral); (b) all Records relating to the foregoing and any and all accessions to, substitutions for and replacements of the foregoing; and (c) all Proceeds and Supporting Obligations of the foregoing.

The foregoing description of the ABL Security Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the complete text of the ABL Security Agreement, a copy of which is being filed as Exhibit 10.3 hereto and is incorporated herein by reference.

 

Item 1.02

Termination of a Material Definitive Agreement.

On October 2, 2018, in connection with the closing of the Offering, the Prior ABL Agreement was terminated. The outstanding debt pursuant to the Prior ABL Agreement was repaid with the proceeds of the Offering, the lender commitments under the Prior ABL Agreement were terminated and the outstanding liabilities with respect to obligations under the Prior ABL Agreement were released and discharged.

Additionally, on October 2, 2018, using the proceeds of the Offering, the Company also repaid its outstanding debt (including accrued interest) under that certain Amended and Restated Term Loan Agreement, dated as of December 23, 2016, among the Company, as the borrower, U.S. Bank National Association, as administrative agent, and the lenders party thereto (as amended, restated, or otherwise modified, the “Term Loan Agreement”) and terminated the Term Loan Agreement. The term loan repayment was made prior to the maturity date defined in the Term Loan Agreement, and the Company incurred repayment penalties of approximately $17.5 million associated with the term loan repayment.

The initial purchasers of the Notes in the Offering (the “Initial Purchasers”) and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the Initial Purchasers and their respective affiliates have, from time to time, engaged in, and may in the future engage in, various investment banking, financial advisory services and other commercial dealings in the ordinary course of business with us for which they have received, or may in the future receive, customary fees and commissions for these transactions. Certain of the Initial Purchasers or their affiliates that have a lending relationship with the Company hedge their credit exposure to the Company consistent with their customary risk management policies. Typically, such Initial Purchasers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in Company securities, including potentially the Notes offered pursuant to the Offering. Any such short


positions could adversely affect future trading prices of the Notes offered pursuant to the Offering. Affiliates of certain Initial Purchasers are lenders under the Company’s asset-based receivables facility and, accordingly, will receive a portion of the net proceeds of the Offering. As of June 30, 2018, the Company had total capital leases of approximately $85.3 million, approximately $13.2 million of which were with Banc of America Leasing & Capital, LLC, an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated. One of the Prior ABL Lenders, UBS AG, Stamford Branch, is a lender under the ABL Credit Agreement.

 

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information included in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03 of this Current Report on Form 8-K.

 

Item 8.01

Other Events.

On October 3, 2018, the Company issued a press release announcing that it had closed the Offering of the Notes in a private placement not registered under the Securities Act. A copy of the press release is being filed as Exhibit 99.1 hereto and is incorporated herein by reference.

Neither this Current Report on Form 8-K nor the press release attached hereto as Exhibit 99.1 constitutes an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful.

 

Item 9.01

Financial Statements and Exhibits.

(d)    Exhibits.

 

Exhibit Number   

Description

4.1    Indenture, dated as of October 2, 2018, by and among Basic Energy Services, Inc., the subsidiary guarantors party thereto and UMB Bank, N.A., as trustee and collateral agent.
4.2    Form of 10.75% Senior Secured Note due 2023 (included as Exhibit A in Exhibit 4.1).
10.1    ABL Credit Agreement, dated as of October  2, 2018, among Basic Energy Services, Inc., as borrower, Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, UBS Securities LLC, as syndication agent, PNC Bank National Association, as documentation agent and an L/C issuer, and the other lenders from time to time party thereto.
10.2    Security Agreement, dated as of October 2, 2018, among Basic Energy Services, Inc., as Borrower, the other Debtors party thereto, and UMB Bank, N.A., as administrative agent.
10.3    Security Agreement, dated as of October 2, 2018, among Basic Energy Services, Inc., as Borrower, the other Debtors party thereto, and Bank of America, N.A., as administrative agent.
99.1    Press Release dated October 3, 2018.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    Basic Energy Services, Inc.
Date: October 5, 2018     By:   /s/ T.M. “Roe” Patterson
      T.M. “Roe” Patterson
      President and Chief Executive Officer

Exhibit 4.1

Execution Version

BASIC ENERGY SERVICES, INC.,

AND

UMB BANK, N.A.,

as Trustee and Collateral Agent

 

 

INDENTURE

Dated as of October 2, 2018

 

 

10.75% Senior Secured Notes due 2023

 

 

 


Table of Contents

 

            Page  

ARTICLE I DEFINITIONS

     1  

SECTION 1.1

     DEFINITIONS      1  

SECTION 1.2

     OTHER DEFINITIONS      35  

SECTION 1.3

     RULES OF CONSTRUCTION      36  

ARTICLE II THE NOTES

     37  

SECTION 2.1

     FORM, DATING AND TERMS      37  

SECTION 2.2

     EXECUTION AND AUTHENTICATION      43  

SECTION 2.3

     REGISTRAR AND PAYING AGENT      44  

SECTION 2.4

     PAYING AGENT TO HOLD MONEY IN TRUST      44  

SECTION 2.5

     NOTEHOLDER LISTS      45  

SECTION 2.6

     TRANSFER AND EXCHANGE      45  

SECTION 2.7

     FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S      48  

SECTION 2.8

     MUTILATED, DESTROYED, LOST OR STOLEN NOTES      49  

SECTION 2.9

     OUTSTANDING NOTES      50  

SECTION 2.10

     TEMPORARY NOTES      51  

SECTION 2.11

     CANCELLATION      51  

SECTION 2.12

     PAYMENT OF INTEREST; DEFAULTED INTEREST      52  

SECTION 2.13

     COMPUTATION OF INTEREST      53  

SECTION 2.14

     CUSIP, COMMON CODE AND ISIN NUMBERS      53  

ARTICLE III COVENANTS

     53  

SECTION 3.1

     PAYMENT OF NOTES      53  

SECTION 3.2

     LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK      53  

SECTION 3.3

     LIMITATION ON RESTRICTED PAYMENTS      58  

SECTION 3.4

     LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES      62  

SECTION 3.5

     LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK      65  

SECTION 3.6

     LIMITATION ON LIENS      68  

SECTION 3.7

     DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES      69  

SECTION 3.8

     LIMITATION ON AFFILIATE TRANSACTIONS      69  

SECTION 3.9

     PURCHASE OF NOTES UPON A CHANGE OF CONTROL      71  

SECTION 3.10

     REPORTS      73  

SECTION 3.11

     FUTURE GUARANTORS      74  

SECTION 3.12

     MAINTENANCE OF OFFICE OR AGENCY      75  

 

i


SECTION 3.13

     CORPORATE EXISTENCE      75  

SECTION 3.14

     PAYMENT OF TAXES      75  

SECTION 3.15

     COMPLIANCE CERTIFICATE      75  

SECTION 3.16

     FURTHER INSTRUMENTS AND ACTS      76  

SECTION 3.17

     STATEMENT BY OFFICERS AS TO DEFAULT      76  

ARTICLE IV SUCCESSOR COMPANY

     76  

SECTION 4.1

     MERGER AND CONSOLIDATION      76  

SECTION 4.2

     SUCCESSOR SUBSTITUTED      77  

SECTION 4.3

     GUARANTOR MERGER      77  

ARTICLE V REDEMPTION OF NOTES

     78  

SECTION 5.1

     REDEMPTION      78  

SECTION 5.2

     OPTIONAL REDEMPTION      78  

SECTION 5.3

     ELECTION TO REDEEM; NOTICE TO TRUSTEE      79  

SECTION 5.4

     SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED      79  

SECTION 5.5

     NOTICE OF REDEMPTION      80  

SECTION 5.6

     DEPOSIT OF REDEMPTION PRICE      81  

SECTION 5.7

     NOTES PAYABLE ON REDEMPTION DATE      81  

SECTION 5.8

     NOTES REDEEMED IN PART      81  

ARTICLE VI DEFAULTS AND REMEDIES

     82  

SECTION 6.1

     EVENTS OF DEFAULT      82  

SECTION 6.2

     ACCELERATION      85  

SECTION 6.3

     OTHER REMEDIES      85  

SECTION 6.4

     WAIVER OF PAST DEFAULTS      86  

SECTION 6.5

     CONTROL BY MAJORITY      86  

SECTION 6.6

     LIMITATION ON SUITS      86  

SECTION 6.7

     RIGHTS OF HOLDERS TO RECEIVE PAYMENT      87  

SECTION 6.8

     COLLECTION SUIT BY TRUSTEE      87  

SECTION 6.9

     TRUSTEE MAY FILE PROOFS OF CLAIM      87  

SECTION 6.10

     PRIORITIES      88  

SECTION 6.11

     UNDERTAKING FOR COSTS      88  

ARTICLE VII TRUSTEE AND COLLATERAL AGENT

     88  

SECTION 7.1

     DUTIES OF TRUSTEE AND COLLATERAL AGENT      88  

SECTION 7.2

     RIGHTS OF TRUSTEE      90  

SECTION 7.3

     INDIVIDUAL RIGHTS OF TRUSTEE      92  

SECTION 7.4

     TRUSTEE’S AND COLLATERAL AGENT’S DISCLAIMER      92  

SECTION 7.5

     NOTICE OF DEFAULTS      92  

SECTION 7.6

     [RESERVED]      92  

SECTION 7.7

     COMPENSATION AND INDEMNITY      92  

SECTION 7.8

     REPLACEMENT OF TRUSTEE      93  

 

ii


SECTION 7.9

     SUCCESSOR TRUSTEE BY MERGER      94  

SECTION 7.10

     ELIGIBILITY; DISQUALIFICATION      94  

SECTION 7.11

     PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY      94  

SECTION 7.12

     APPLICATION FOR INSTRUCTION FROM THE COMPANY      94  

SECTION 7.13

     DUTIES AND RIGHTS OF THE COLLATERAL AGENT      95  

ARTICLE VIII DISCHARGE OF INDENTURE; DEFEASANCE

     95  

SECTION 8.1

     DISCHARGE OF LIABILITY ON NOTES; DEFEASANCE      95  

SECTION 8.2

     CONDITIONS TO DEFEASANCE      97  

SECTION 8.3

     APPLICATION OF TRUST MONEY      98  

SECTION 8.4

     REPAYMENT TO THE COMPANY      98  

SECTION 8.5

     INDEMNITY FOR GOVERNMENT SECURITIES      98  

SECTION 8.6

     REINSTATEMENT      98  

ARTICLE IX AMENDMENTS

     99  

SECTION 9.1

     WITHOUT CONSENT OF HOLDERS      99  

SECTION 9.2

     WITH CONSENT OF HOLDERS      100  

SECTION 9.3

     REVOCATION AND EFFECT OF CONSENTS AND WAIVERS      101  

SECTION 9.4

     NOTATION ON OR EXCHANGE OF NOTES      102  

SECTION 9.5

     TRUSTEE AND COLLATERAL AGENT TO SIGN AMENDMENTS      102  

ARTICLE X GUARANTEE

     102  

SECTION 10.1

     GUARANTEE      102  

SECTION 10.2

     LIMITATION ON LIABILITY; TERMINATION, RELEASE AND DISCHARGE      104  

SECTION 10.3

     RIGHT OF CONTRIBUTION      105  

SECTION 10.4

     NO SUBROGATION      105  

ARTICLE XI COLLATERAL AND SECURITY

     105  

SECTION 11.1

     SECURITY INTEREST      105  

SECTION 11.2

     REAL ESTATE MORTGAGES AND FILINGS      106  

SECTION 11.3

     AFTER ACQUIRED COLLATERAL; FURTHER ASSURANCES; OTHER AGREEMENTS WITH RESPECT TO COLLATERAL      109  

SECTION 11.4

     INFORMATION REGARDING COLLATERAL      111  

SECTION 11.5

     THE COLLATERAL AGENCY AGREEMENT      111  

SECTION 11.6

     RELEASE OF LIENS IN RESPECT OF NOTES      111  

SECTION 11.7

     COLLATERAL AGENT      112  

SECTION 11.8

     MAINTENANCE OF INSURANCE      112  

 

iii


ARTICLE XII MISCELLANEOUS

     113  

SECTION 12.1

     TIA NOT APPLICABLE      113  

SECTION 12.2

     NOTICES      113  

SECTION 12.3

     COMMUNICATION BY HOLDERS WITH OTHER HOLDERS      114  

SECTION 12.4

     CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT      114  

SECTION 12.5

     STATEMENTS REQUIRED IN CERTIFICATE OR OPINION      114  

SECTION 12.6

     WHEN NOTES DISREGARDED      115  

SECTION 12.7

     RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR      115  

SECTION 12.8

     LEGAL HOLIDAYS      115  

SECTION 12.9

     GOVERNING LAW      115  

SECTION 12.10

     NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, STOCKHOLDERS; ETC.      115  

SECTION 12.11

     SUCCESSORS      116  

SECTION 12.12

     MULTIPLE ORIGINALS      116  

SECTION 12.13

     TABLE OF CONTENTS; HEADINGS      116  

SECTION 12.14

     FORCE MAJEURE      116  

SECTION 12.15

     WAIVER OF JURY TRIAL      116  

SECTION 12.16

     CONSENT TO JURISDICTION      116  

EXHIBIT A    Form of the Note

  

EXHIBIT B    Form of Indenture Supplement to Add Guarantors

  

 

iv


This INDENTURE dated as of October 2, 2018, is among Basic Energy Services, Inc., a Delaware corporation (the “ Company ”), the Guarantors (as defined herein) and UMB Bank, N.A., a national banking association, as trustee (in such capacity, the “ Trustee ”) and collateral agent (in such capacity, the “ Collateral Agent ”).

RECITALS

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of (i) the Company’s 10.75% Senior Secured Notes due 2023, issued on the date hereof (the “ Initial Notes ”) and the Subsidiary Guarantees thereof by the Guarantors and (ii) if and when issued, an unlimited principal amount of additional 10.75% Senior Secured Notes due 2023 (the “ Additional Notes ” and, together with the Initial Notes, the “ Notes ”), and the Subsidiary Guarantees thereof by the Guarantors, that may be offered from time to time subsequent to the Issue Date, all as provided in and subject to Section 2.1.

ARTICLE I

DEFINITIONS

SECTION 1.1 Definitions .

ABL Collateral ” has the meaning assigned such term in the Security Agreement.

ABL Facility ” means (i) the Existing ABL Facility, or (ii) one or more asset-based credit facilities, working capital facilities, receivables facilities or revolving loan facilities, in each case secured by liens on ABL Collateral, with banks, financial institutions or other institutional lenders and any Affiliates of such Persons that provide cash management services, bank products or swap agreements or other secured parties thereunder, pursuant to credit or other agreements to be entered into by the Company or any of its Subsidiaries, including any notes, guarantees, collateral documents, instruments and other agreements executed in connection therewith, in each case as they may be further amended, supplemented or modified from time to time, and any renewal, increase, extension, refunding, restructuring, replacement or refinancing thereof in whole or in part (whether with the original administrative agent and lenders or another administrative agent or agents or one or more other lenders and whether provided under the original ABL Facility documentation or one or more other credit or other agreements or Indentures entered into from time to time).

Acquired Debt ” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, regardless of whether such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person, but excluding Indebtedness which is extinguished, retired or repaid in connection with such Person merging with or becoming a Restricted Subsidiary of such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

 

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Additional Notes ” has the meaning ascribed to it in the Recitals of this Indenture.

Additional Secured Debt Designation ” means the written agreement of the Priority Lien Representative of holders of any Series of Priority Lien Debt or the Junior Lien Representative of holders of any Series of Junior Lien Debt, as applicable, as set forth in the indenture, credit agreement or other agreement governing such Series of Priority Lien Debt or Series of Junior Lien Debt, for the benefit of (i) all holders of existing and future Priority Lien Debt, the Collateral Agent and each existing and future holder of Priority Liens, in the case of each additional Series of Priority Lien Debt and (ii) all holders of each existing and future Series of Junior Lien Debt, the applicable Junior Lien Collateral Agent and each existing and future holder of Junior Liens, in the case of each Series of Junior Lien Debt:

(1) in the case of any additional Series of Priority Lien Debt, that all such Priority Lien Obligations will be and are secured equally and ratably by all Priority Liens at any time granted by the Company or any Guarantor to secure any Obligations in respect of such Series of Priority Lien Debt, regardless of whether upon property otherwise constituting collateral for such Series of Priority Lien Debt, and that all such Priority Liens will be enforceable by the Collateral Agent for the benefit of all holders of Priority Lien Obligations, equally and ratably;

(2) in the case of any additional Series of Junior Lien Debt, that all such Junior Lien Obligations will be and are secured equally and ratably by all Junior Liens at any time granted by the Company or any Guarantor to secure any Obligations in respect of such Series of Junior Lien Debt, regardless of whether upon property otherwise constituting collateral for such Series of Junior Lien Debt, and that all such Junior Liens will be enforceable by the Junior Lien Collateral Agent for the benefit of all holders of Junior Lien Obligations, equally and ratably;

(3) that such Priority Lien Representative or Junior Lien Representative, as applicable, and the holders of Obligations in respect of such Series of Priority Lien Debt or Series of Junior Lien Debt, as applicable, are bound by the provisions of the Intercreditor Agreement, including the provisions relating to the ranking of Priority Liens and Junior Liens and the order of application of proceeds from the enforcement of Priority Liens and Junior Liens; and

(4) appointing the Collateral Agent or the Junior Lien Collateral Agent, as applicable, and consenting to the terms of the Intercreditor Agreement and the performance by the Collateral Agent or the Junior Lien Collateral Agent, as applicable, of, and directing the Collateral Agent or the Junior Lien Collateral Agent, as applicable, to perform, its obligations under the Collateral Agency Agreement or applicable Security Documents, as applicable, and the Intercreditor Agreement, together with all such powers as are reasonably incidental thereto.

Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

 

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Asset Sale ” means:

(1) the sale, lease, conveyance or other disposition of any assets or rights (including, without limitation, by way of a Sale/Leaseback Transaction), or any damage or loss of property resulting in the payment of property insurance or condemnation proceeds to the Company or any Restricted Subsidiary ( provided that the sale, lease, conveyance or other disposition of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by Section 3.9 and Article IV and not by Section 3.5; and

(2) the issuance of Equity Interests in any of the Company’s Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries;

provided that the following will not be deemed to be Asset Sales:

(1) (x) any sale, exchange, transfer or other disposition of inventory in the ordinary course of business or (y) any sale, exchange, transfer or other disposition of ABL Collateral in connection with an ABL Facility;

(2) any disposition of assets in trade or exchange for assets of comparable Fair Market Value used or usable in any Permitted Business (including, without limitation, the trade or exchange for a controlling interest in another business or all or substantially all of the assets or operating line of a business, in each case, engaged in a Permitted Business or for other non-current assets to be used in a Permitted Business); provided that (x) with respect to any such disposition or exchange of Collateral, such other assets also become Collateral and (y) any cash or Cash Equivalents received by the Company or a Restricted Subsidiary in connection with such trade or exchange (net of any transaction costs of the type deducted under the definition of “Net Proceeds”) shall be treated as Net Proceeds of an Asset Sale and shall be applied in the manner set forth in Section 3.5;

(3) a transfer of assets by the Company to a Restricted Subsidiary of the Company or by a Restricted Subsidiary of the Company to the Company or to a Restricted Subsidiary of the Company;

(4) an issuance or sale of Equity Interests by a Restricted Subsidiary of the Company to the Company or to another Restricted Subsidiary of the Company;

(5) (A) a Permitted Investment or (B) a Restricted Payment that is permitted by Section 3.3;

(6) the trade, sale or exchange of Cash Equivalents;

(7) the sale, exchange or other disposition of obsolete assets not integral to any Permitted Business;

 

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(8) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $5.0 million;

(9) the disposition of assets received in settlement of debts accrued in the ordinary course of business;

(10) the creation or perfection of a Lien on any assets (or any income or profit therefrom) of the Company or any of its Restricted Subsidiaries that is not prohibited by any covenant of this Indenture;

(11) the surrender or waiver in the ordinary course of business of contract rights or the settlement, release or surrender of contractual, non-contractual or other claims of any kind;

(12) an issuance or disposition of Equity Interests in a Restricted Subsidiary that, following such disposition or issuance, will be a Permitted Water Subsidiary, provided that the proceeds of any such disposition must be (i) cash or Cash Equivalents that are used within one year for capital investment or capital expenditures in the business of such Permitted Water Subsidiary or (ii) Replacement Assets used or useful in the business of the Permitted Water Subsidiary, and provided further that if such Restricted Subsidiary thereafter ceases to be a Permitted Water Subsidiary, then such disposition or issuance shall be treated as an Asset Sale subject to compliance with Section 3.3;

(13) the grant in the ordinary course of business of any non-exclusive license of patents, trademarks, registrations therefor and other similar intellectual property.

Attributable Debt ” in respect of a Sale/Leaseback Transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP. As used in the preceding sentence, the “net rental payments” under any lease for any such period shall mean the sum of rental and other payments required to be paid with respect to such period by the lessee thereunder, excluding any amounts required to be paid by such lessee on account of maintenance and repairs, insurance, taxes, assessments, water rates or similar charges. In the case of any lease that is terminable by the lessee upon payment of penalty, such net rental payment shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated.

Bankruptcy Code ” means Title 11 of the United States Code.

Bankruptcy Law ” means the Bankruptcy Code and any similar federal, state or foreign law for the relief of debtors.

 

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Beneficial Owner ” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns,” “Beneficially Owned” and “Beneficially Owning” will have a corresponding meaning.

Board of Directors ” means:

(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

(2) with respect to a partnership, the board of directors of the general partner of the partnership;

(3) with respect to a limited liability company, the managers or managing member or members of such limited liability company (as applicable) or any duly authorized committee of managers or managing members (as applicable) thereof; and

(4) with respect to any other Person, the board of directors or duly authorized committee of such Person serving a similar function.

Board Resolution ” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by its Board of Directors and to be in full force and effect on the date of such certification.

Borrowing Base ” means on any date of determination, an amount equal to 85% of the Company’s and its Restricted Subsidiaries’ accounts receivable, based on the Company’s balance sheet as of the end of the latest quarter for which the Company has internal financial statements available (and after giving pro forma effect to any acquisitions made subsequent to such balance sheet date; provided that any such adjustments shall be calculated in the manner provided in the definition of Fixed Charge Coverage Ratio).

Business Day ” means each day which is not a Legal Holiday (as defined in this Indenture).

Capital Lease Obligations ” means, at the time any determination thereof is to be made, the amount of the liability in respect of one or more capital leases that would at such time be required to be capitalized on a balance sheet in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. Notwithstanding the foregoing, any lease (whether entered into before or after the Issue Date) that would have been classified as an operating lease pursuant to GAAP as in effect on the Issue Date will be deemed not to represent a Capital Lease Obligation.

Capital Stock ” means (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

 

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Cash Equivalents ” means:

(1) United States dollars;

(2) Government Securities having maturities of not more than one year from the date of acquisition;

(3) marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition thereof, having a credit rating of “A” or better from either S&P or Moody’s;

(4) certificates of deposit, demand deposit accounts and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any lender party to the Credit Agreement or with any domestic commercial bank or any branch or agency of a non-U.S. bank licensed to conduct business in the United States, in each case having combined capital and surplus of at least $100.0 million and a short term deposit rating no lower than A2 or P2 by S&P or Moody’s, respectively;

(5) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2), (3) and (4) above entered into with any financial institution meeting the qualifications specified in clause (4) above;

(6) commercial paper having one of the two highest ratings obtainable from Moody’s or S&P and, in each case, maturing within one year after the date of acquisition thereof; and

(7) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (6) of this definition.

Cash Management Agreement ” means any agreement between the Company or any Guarantor and any lender or Affiliate of a lender under the ABL Facility to provide credit card, treasury, depository and cash management services or any automated clearing house transfers of funds or any other banking products or services.

Change of Control ” means the occurrence of one or more of the following events:

(1) any sale, lease, transfer, conveyance or other disposition (in one transaction or a series of related transactions) of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act, unless immediately following such sale, lease, transfer, conveyance or other disposition in compliance with this Indenture such properties or assets are owned, directly or indirectly, by the Company or a wholly-owned Restricted Subsidiary of the Company, in each case which occurrence is followed by a Rating Decline within 90 days thereafter;

 

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(2) the approval by the holders of Capital Stock of the Company of any plan or proposal for the liquidation or dissolution of the Company; or

(3) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the voting power of the Voting Stock of the Company, which occurrence is followed by a Rating Decline within 90 days thereafter.

Collateral ” means all property wherever located and whether now owned or at any time acquired after the Issue Date by the Company or any Guarantor as to which a Lien is granted, or is purported to be granted, under the Security Documents to secure the Notes or any Subsidiary Guarantee.

Collateral Account ” means, collectively, any deposit or other account under the sole control of the Collateral Agent and in which the Collateral Agent has perfected security interests, on behalf of the secured parties, that are free from all other Liens, and includes solely identifiable cash and Cash Equivalents received from Asset Sales of Collateral, an event of loss relating to Collateral, foreclosures on or sales of Collateral or any other awards or proceeds of Collateral pursuant to the Security Documents, including earnings, revenues, rents, issues, profits and income from the Collateral received pursuant to the Security Documents, and interest earned thereon.

Collateral Agency Agreement ” means the Collateral Agency Agreement, dated as of the Issue Date, among the Company, the Guarantors from time to time party thereto, the Trustee, the Collateral Agent and any other additional secured representative party thereto from time to time, as the same may be amended, supplemented or otherwise modified from time to time.

Collateral Agent ” means UMB Bank, N.A. in its capacity as Collateral Agent under the Collateral Agency Agreement, together with its successors in such capacity.

Collateral Trust Joinder ” means a joinder to the Collateral Agency Agreement in the form required thereunder.

Company ” means the Person named as the “Company” in the first introductory paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.

Company Sale ” means (1) any merger or consolidation of the Company with or into any other Person (other than an Affiliate of the Company), (2) any sale (in one transaction or a series of related transactions) of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act other than an Affiliate of the Company; or (3) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than any Affiliate of the Company becomes the Beneficial Owner, directly or indirectly, of more than 50% of the voting power of the Voting Stock of the Company.

Comparable Treasury Issue ” means, with respect to Notes to be redeemed, the U.S. Treasury security selected by an Independent Investment Banker as having a maturity most nearly equal to the period from the Redemption Date to October 15, 2020, that would be utilized at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity; provided that if such period is less than one year, then the U.S. Treasury security having a maturity of one year shall be used.

 

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Comparable Treasury Price ” means, with respect to any Redemption Date, (1) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Company obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

Consolidated Cash Flow ” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period, plus :

(1) an amount equal to any extraordinary, unusual or nonrecurring expenses or losses (including, regardless of whether otherwise includable as a separate item in the statement of Consolidated Net Income for such period, losses on sales of assets outside of the ordinary course of business), to the extent such expenses or losses were deducted in computing such Consolidated Net Income, plus

(2) an amount equal to any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income, plus

(3) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income, plus

(4) Fixed Charges of such Person for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income, plus

(5) unrealized non-cash losses of such Person and its Restricted Subsidiaries resulting from foreign currency balance sheet adjustments required by GAAP to the extent such losses were deducted in computing such Consolidated Net Income, plus

(6) depreciation and amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period), impairment and other non-cash charges or expenses of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation and amortization, impairment and other non-cash charges or expenses were deducted in computing such Consolidated Net Income, plus

(7) any fees, expenses, charges or losses (other than depreciation or amortization expense) related to any Equity Offering or other capital markets transaction, acquisition, disposition, recapitalization or the incurrence of Indebtedness permitted to be incurred under this Indenture (including a refinancing thereof), in each case regardless of whether successful, and including such fees, expenses, charges or losses (a) the offering of the Notes and any Credit Facilities and (b) any amendment or other modification of the Notes or any Credit Facilities and, in each case, deducted (and not added back) in computing such Consolidated Net Income, minus

 

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(8) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business,

in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the preceding, the provision for taxes on the income or profits of, and the Fixed Charges of and the depreciation and amortization, impairment and other non-cash charges or expenses of, a Restricted Subsidiary of the specified Person will be added to Consolidated Net Income to compute Consolidated Cash Flow of such Person only to the extent (and in same proportion) that the Net Income of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and only if a corresponding amount would be permitted at the date of determination to be dividended or distributed directly or indirectly to such Person by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders (without regard to any restrictions existing by reason of, or any governmental approvals necessary pursuant to, any law, rule, regulation, order or decree that is generally applicable to all Persons operating in any jurisdiction in which such Person or any of its Restricted Subsidiaries are conducting business so long as there is in effect no specific order, decree or other prohibition pursuant to any such law, rule or regulation in such jurisdiction limiting the payment of a dividend or similar distribution by such Restricted Subsidiary).

Consolidated Net Income ” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided , that

(1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary of the specified Person or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary of the specified Person;

(2) the Net Income of any Restricted Subsidiary that is not a Guarantor shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders (without regard to any restrictions existing by reason of, or any governmental approvals necessary pursuant to, any law, rule, regulation, order or decree that is generally applicable to all Persons operating in any jurisdiction in which such Person or any of its Restricted Subsidiaries are conducting business so long as there is in effect no specific order, decree or other prohibition pursuant to any such law, rule or regulation in such jurisdiction limiting the payment of a dividend or similar distribution by such Restricted Subsidiary);

(3) the cumulative effect of a change in accounting principles will be excluded;

 

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(4) any writedown of non-current assets shall be excluded, as if such writedown had not occurred;

(5) to the extent deducted in the calculation of Net Income, any charges associated with any premium or penalty paid, write-offs of deferred financing costs or other financial recapitalization charges in connection with redeeming or retiring any Indebtedness prior to its Stated Maturity will be added back to arrive at Consolidated Net Income; and

(6) any unrealized non-cash gains or losses in respect of hedges and other derivatives (including those pursuant to Financial Accounting Standards Board Accounting Standards Codification Topic No. 815, Derivatives and Hedging (“ FASB ASC 815 ”)) shall be excluded.

Consolidated Tangible Assets ” means, with respect to any specified Person as of any date of determination, the amount that would be set forth as total assets on a consolidated balance sheet of such Person and its Restricted Subsidiaries prepared in accordance with GAAP, less all goodwill, trade names, trademarks, patents, organization expense, unamortized debt discount and expense and other similar intangibles properly classified as intangibles in accordance with GAAP.

Credit Facilities ” means, with respect to the Company or any of its Restricted Subsidiaries, one or more debt facilities (including, without limitation, any ABL Facility), commercial paper facilities or Debt Issuances providing for revolving credit loans, term loans, term debt, debt securities, receivables financing (including through the sale of receivables to such lenders, other financiers or to special purpose entities formed to borrow from (or sell such receivables to) any lenders or other financiers against such receivables), letters of credit, bankers’ acceptances, other borrowings or Debt Issuances, in each case, as amended, restated, modified, renewed, extended, increased, refunded, replaced in any manner (whether upon or after termination or otherwise) or refinanced (including through one or more Debt Issuances) in whole or in part from time to time.

Custodian ” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

Debt Issuances ” means, with respect to the Company or any of its Restricted Subsidiaries, one or more issuances after the Issue Date of Indebtedness evidenced by Notes, debentures, bonds or other similar securities or instruments.

Default ” means any event that is or with the passage of time or the giving of notice (or both) would be an Event of Default.

Definitive Notes ” means certificated Notes.

depositary ” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified under this Indenture as the depositary with respect to the Notes, and any and all successors thereto appointed as depositary under this Indenture and having become such pursuant to the applicable provision of this Indenture. The initial depositary will be DTC.

 

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Disqualified Stock ” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature, in each case other than such Capital Stock that is solely redeemable with, or solely exchangeable for, any Common Stock (other than Disqualified Stock) of such Person or any direct or indirect parent company. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions prior to compliance by the Company with Sections 3.5 and 3.9, as applicable, and unless such repurchase or redemption complies with Section 3.3. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Indenture will be the maximum amount that the Company and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

Domestic Subsidiary ” means any Restricted Subsidiary of the Company formed under the laws of the United States or any state of the United States or the District of Columbia.

DTC ” means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depository institution hereinafter appointed by the Company.

Equity Interests ” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

Equity Offering ” means any public or private sale of Capital Stock of the Company or options, warrants or rights with respect to its Capital Stock (other than sales made to any Restricted Subsidiary of the Company and sales of Disqualified Stock) made for cash after the Issue Date.

Excluded Property ” means

(1) ABL Collateral;

(2) any real property that is not Material Real Property and all leasehold interests of any of the Company and the Guarantors, as lessee, in real property;

(3) any lease, license, permit, agreement or instrument that would otherwise constitute Collateral (referred to solely for purpose of this paragraph as a “Contract”), in each case in existence on the Issue Date or upon acquisition of the relevant Guarantor party thereto, to the extent that a grant of a security interest therein would violate or invalidate such Contract or create a right of termination in favor of any other party thereto or otherwise require consent thereunder (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any successor provision or provisions) of any relevant jurisdiction

 

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or any other applicable law (including the Bankruptcy Code) or principles of equity and only so long as such prohibition or consent requirement was not created in contemplation or anticipation of the Collateral requirements under this Indenture) provided that: (x) rights to payment under any such Contract otherwise constituting Excluded Property shall be included in the Collateral to the extent permitted under such Contract or by Section 9-406 or Section 9-408 of the Uniform Commercial Code and (y) all proceeds paid or payable to the Company or any Guarantor from any sale, transfer or assignment of such Contract and all rights to receive such proceeds shall be included in the Collateral;

(4) (a) solely in the case of any pledge of Equity Interests of any Foreign Subsidiary, any Equity Interests that are voting Equity Interests of such Foreign Subsidiary in excess of 65% of the outstanding voting Equity Interests of such class, (b) the Equity Interests of any direct or indirect Subsidiary of a Foreign Subsidiary and (c) the Equity Interests of Unrestricted Subsidiaries or of any Receivables Subsidiary;

(5) any property which is subject to a Capital Lease Obligation, purchase money obligation or other debt obligation if and to the extent that (i) such Capital Lease Obligation, purchase money obligation or other debt obligation was incurred pursuant to clause (3), (6) or (12) of Section 3.2(b) and the agreements or documents granting or governing such Capital Lease Obligation, purchase money obligation or other debt obligation validly prohibit, or otherwise require any consent (but only so long as such prohibition or consent requirement was not created in contemplation or anticipation of the Collateral requirements under this Indenture) and (ii) such restriction described in clause (i) above relates only to the asset or assets acquired by the Company or any Guarantor and attachments and accessions thereto, improvements thereof or substitutions therefor; provided that all proceeds paid or payable to the Company or any Guarantor from any sale, transfer or assignment or other voluntary or involuntary disposition of such assets and all rights to receive such proceeds shall be included in the Collateral to the extent not otherwise required to be paid to the holder of such Capital Lease Obligations, purchase money obligations or other debt obligations secured by such assets;

(6) any asset in which a pledge or security interest is prohibited by applicable law, rule or regulation (other than to the extent that any such prohibition would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any successor provision or provisions));

(7) any property or assets (including Equity Interests) owned by an Unrestricted Subsidiary or Equity Interests of an Unrestricted Subsidiary;

(8) any intent-to-use trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable federal law;

 

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(9) any governmental licenses or state or local franchises, charters and authorizations to the extent the granting of security interests therein are prohibited or restricted thereby; and

(10) any letter of credit rights to the extent a Lien thereon cannot be perfected by the filing of a financing statement under the Uniform Commercial Code.

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

Existing ABL Facility ” means the ABL Facility in effect as of the Issue Date (including all related documentation) described under the caption “Description of Other Indebtedness – ABL Facility” in the Offering Memorandum, as the same shall be modified, amended, refinanced or replaced with a similar accounts receivables financing.

Existing Indebtedness ” means the aggregate Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date.

Fair Market Value ” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party. Unless otherwise specified in this Indenture, the Fair Market Value of an asset, property or service in excess of $30.0 million will be determined by the Board of Directors of the Company acting in good faith, whose determination shall be conclusive and evidenced by a resolution of such Board of Directors, and any Fair Market Value of an asset, property or service equal to or less than $30.0 million will be determined by an officer of the Company acting in good faith.

Fixed Charge Coverage Ratio ” means, with respect to any specified Person for any four-quarter reference period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. If such Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, redeems, repurchases or repays any Indebtedness (other than revolving credit borrowings) or issues, repurchases or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “ Calculation Date ”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, Guarantee, redemption, repurchase or repayment of Indebtedness, or such issuance, repurchase or redemption of Preferred Stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above:

(1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period will be calculated giving pro forma effect to any expense, cost reductions and operating improvements that have occurred or, in the reasonable judgment of the chief financial officer or other senior financial person of such Person as set forth in an Officers’ Certificate, are reasonably expected to occur (regardless of whether those operating improvements or cost savings could then be reflected in pro forma financial statements prepared in accordance with Regulation S-X under the Securities Act or any other regulation or policy of the SEC);

 

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(2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded;

(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;

(4) any Person that is a Restricted Subsidiary of the specified Person on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period;

(5) any Person that is not a Restricted Subsidiary of the specified Person on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period;

(6) Fixed Charges attributable to interest on any Indebtedness (whether existing or being incurred) computed on a pro forma basis and bearing a floating interest rate will be computed as if the rate in effect on the Calculation Date (taking into account any interest rate option, swap, cap or similar agreement applicable to such Indebtedness if such agreement has a remaining term in excess of 12 months or, if shorter, at least equal to the remaining term of such Indebtedness) had been the applicable rate for the entire period; and

(7) Fixed Charges attributable to interest on any Indebtedness (whether existing or being incurred) computed on a pro forma basis and (a) bearing interest at an interest rate at the option of such Person will be computed by applying such option rate chosen by such Person and (b) bearing interest that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a Eurocurrency interbank offered rate, or other rate, will be deemed to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as such Person may designate.

Fixed Charges ” means, with respect to any specified Person for any period, the sum, without duplication, of:

(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments (other than amortization of debt issuance costs or debt extinguishment costs), the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings), and net of the effect of all payments made or received pursuant to Hedging Obligations with respect of interest rates; plus

 

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(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

(3) any interest on Indebtedness of another Person that is Guaranteed by such specified Person or one or more of its Restricted Subsidiaries or secured by a Lien on assets of such specified Person or one or more of its Restricted Subsidiaries, regardless of whether such Guarantee or Lien is called upon; plus

(4) all dividends or distributions, whether paid or accrued and regardless of whether in cash, on any series of Disqualified Stock of such Person or any series of Preferred Stock of its Restricted Subsidiaries, other than dividends or distributions on Equity Interests payable solely in Equity Interests of such Person (other than Disqualified Stock) or to such Person or a Restricted Subsidiary of such Person;

in each case, on a consolidated basis and determined in accordance with GAAP.

Foreign Subsidiary ” means any Restricted Subsidiary of the Company that is (a) a “controlled foreign corporation” within the meaning of Section 957 of the Internal Revenue Code of 1986, and (b) not a guarantor of Indebtedness of the Company or a Domestic Subsidiary.

GAAP ” means generally accepted accounting principles in the United States that are in effect from time to time.

Government Securities ” means direct obligations of, or obligations Guaranteed by, the United States of America for the payment of which Guarantees or obligations the full faith and credit of the United States of America is pledged.

Grantors ” means, collectively, the Company and the Guarantors.

Guarantee ” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise). When used as a verb, “Guarantee” has a correlative meaning.

Guarantors ” means:

(1) each of the Company’s Restricted Subsidiaries that are party to this Indenture as such on the Issue Date;

(2) each of the Company’s Domestic Subsidiaries that becomes a guarantor of the Notes pursuant to Section 3.11; and

 

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(3) each of the Company’s other Restricted Subsidiaries executing a supplemental Indenture in which such Restricted Subsidiary agrees to Guarantee the obligations of the Company under, or to be bound by the terms of, this Indenture;

provided that any Person constituting a Guarantor as described above shall cease to constitute a Guarantor when its Subsidiary Guarantee is released in accordance with the terms of this Indenture.

Hedging Contracts ” means, with respect to any specified Person:

(1) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements entered into with one or more financial institutions and designed to protect the Person or any of its Restricted Subsidiaries entering into the agreement against fluctuations in interest rates with respect to Indebtedness incurred;

(2) foreign exchange contracts and currency protection agreements entered into with one or more financial institutions and designed to protect the Person or any of its Restricted Subsidiaries entering into the agreement against fluctuations in currency exchanges rates with respect to Indebtedness incurred;

(3) any agreement that is a commodity index or a commodity swap, future or forward agreement or other similar agreement or arrangement designed to protect against fluctuations in the price of hydrocarbons used, produced, processed or sold by that Person or any of its Restricted Subsidiaries at the time;

(4) any swap, cap, collar, floor, put, call, option, future, other derivative, spot purchase or sale, forward purchase or sale, supply or off-take, transportation agreement, storage agreement or other commercial or trading agreement in or involving crude oil, natural gas, ethanol, biofuels or electricity any feedstock, blendstock, intermediate product, finished product, refined product or other hydrocarbons product, or any other energy, weather or emissions related commodity (including any crack spread), or any prices or price indexes relating to any of the foregoing commodities, or any economic index or measure of economic risk or value, or other benchmark against which payments or deliveries are to be made (including any combination of such transactions), in each case that is designed for the purpose of fixing, hedging, mitigating or swapping risk relating to such commodities either generally or under specific contingencies; and

(5) other agreements or arrangements designed to protect such Person or any of its Restricted Subsidiaries against fluctuations in interest rates, commodity prices or currency exchange rates or any adverse change in the creditworthiness of any counterparty,

in each case as are entered into only in the normal course of business and not for speculative purposes.

Hedging Obligations ” means any and all indebtedness, debts, liabilities and other obligations, howsoever arising, of the Company and/or any Guarantor to the counterparties under the Hedging Contracts of every kind and description (regardless of whether evidenced by any Note or instrument and regardless of whether for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, under the Hedging Contracts and all other obligations owed by the Company and the Guarantors to the counterparties under the Hedging Contracts, including any Guarantee obligations in respect thereof.

 

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Holder ” or “ Noteholder ” means a Person in whose name a Note is registered in the Notes Register.

Immaterial Subsidiary ” means, as of any date, any Restricted Subsidiary with total assets (based on Fair Market Value) as of such date, are less than $2.0 million, or together with all other such Immaterial Subsidiaries, with total assets (based on Fair Market Value) of less than $10.0 million; provided that a Restricted Subsidiary will not be considered to be an Immaterial Subsidiary if, directly or indirectly, it guarantees or otherwise provides direct credit support for any Indebtedness of the Company or any Guarantor.

Indebtedness ” means, with respect to any Person, without duplication,

(1) the principal of and premium, if any, with respect to indebtedness of such Person for borrowed money or evidenced by bonds, notes, debentures or similar instruments;

(2) reimbursement obligations of such Person for letters of credit or banker’s acceptances;

(3) Capital Lease Obligations of such Person;

(4) obligations of such Person for the payment of the balance deferred and unpaid of the purchase price of any property due more than six months after such property is acquired, except any such balance that constitutes an accrued expense or trade payable;

(5) Hedging Obligations (the amount of which at any time of determination shall be equal to the termination value of the agreement or arrangement giving rise to such Hedging Obligation that would be payable at such time); or

(6) Preferred Stock of a Restricted Subsidiary (but excluding, in each case, any accrued dividends);

in the case of the foregoing clauses (1) through (5) if and to the extent any of the foregoing obligations or indebtedness (other than letters of credit, banker’s acceptances and Hedging Obligations), but excluding amounts recorded in accordance with FASB ASC 815, would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP. In the case of clause (6), the amount of Indebtedness attributable to such Preferred Stock shall be the repurchase price calculated in accordance with the terms of such Preferred Stock as if the Preferred Stock were repurchased on the date on which Indebtedness is required to be determined pursuant to this Indenture; provided that if the Preferred Stock is not then permitted to be repurchased, the amount of Indebtedness shall be the greater of the liquidation preference and the book value of the Preferred Stock.

 

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In addition, the term “Indebtedness” includes, without duplication:

(A) obligations or indebtedness of others of the type referred to in the foregoing clauses (1) through (6) that are secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person), but in an amount not to exceed the lesser of the amount of such other Person’s obligation or indebtedness or the Fair Market Value of such asset; and

(B) to the extent not otherwise included, the guarantee by such Person of any obligations or indebtedness of others of the type referred to in the foregoing clauses (1) through (6), regardless of whether such Guarantee is contingent, and whether or not such Guarantee appears on the balance sheet of such Person.

Notwithstanding the foregoing, the following shall not constitute Indebtedness:

(A) accrued expenses and trade accounts payable arising in the ordinary course of business;

(B) any indebtedness that has been defeased in accordance with GAAP or defeased pursuant to the deposit of cash or Cash Equivalents (in an amount sufficient to satisfy all obligations relating thereto at maturity or redemption, as applicable, including all payments of interest and premium, if any) in a trust or account created or pledged for the sole benefit of the holders of such indebtedness, and subject to no other Liens, and in accordance with the other applicable terms of the instrument governing such indebtedness;

(C) any obligation arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided , however , that such obligation is extinguished within five business days of its incurrence; and

(D) any obligation arising from any agreement providing for indemnities, Guarantees, purchase price adjustments, holdbacks, contingency payment obligations based on the performance of the acquired or disposed assets or similar obligations (other than Guarantees of Indebtedness) incurred by any Person in connection with the acquisition or disposition of any assets, including Capital Stock.

The amount of any outstanding Indebtedness of a specified Person as of any date will be:

(i) the accreted value of such Indebtedness, in the case of any Indebtedness issued with original issue discount;

(ii) the principal amount of such Indebtedness, in the case of any other Indebtedness; and

(iii) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of (a) the Fair Market Value of such assets at the date of determination, and (b) the amount of the Indebtedness of the other Person.

Indenture ” means this Indenture as amended or supplemented from time to time.

 

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Independent Investment Banker ” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC and UBS Securities LLC, or one of their respective successors, or, if such firms or their respective successors, if any, as the case may be, are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company.

Initial Notes ” has the meaning ascribed to it in the Recitals of this Indenture.

Intercreditor Agreement ” means the Intercreditor Agreement among the Collateral Agent, the Trustee, and the other parties from time to time party thereto, that may be entered into in connection with the issuance of Junior Lien Debt, in substantially the form specified in the Collateral Agency Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time in accordance with Collateral Agency Agreement.

Insolvency or Liquidation Proceeding ” means:

(1) any voluntary or involuntary case or proceeding under the Bankruptcy Code with respect to the Company or any Guarantor;

(2) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to the Company or any Guarantor or with respect to a material portion of their respective assets;

(3) any liquidation, dissolution, reorganization or winding up of the Company or any Guarantor whether voluntary or involuntary and regardless of whether involving insolvency or bankruptcy; or

(4) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of the Company or any Guarantor.

Investments ” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding endorsements of negotiable instruments and documents in the ordinary course of business, and commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Company’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in Section 3.7. The acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in Section 3.3. Except as otherwise provided in this Indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value.

 

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Issue Date ” means the first date on which the Notes are issued, authenticated and delivered under this Indenture.

Junior Lien ” means a Lien, junior to the Priority Liens as provided in the Intercreditor Agreement, granted by the Company or any Guarantor to secure Junior Lien Obligations.

Junior Lien Collateral Agent ” means the Collateral Agent or trustee or other representative of lenders or holders of Junior Lien Obligations designated pursuant to the terms of the Junior Lien Documents and the Intercreditor Agreement, in each case, together with its successors and assigns.

Junior Lien Debt ” means any Indebtedness (other than intercompany Indebtedness owing to the Company or its Subsidiaries) of the Company or any Guarantor (including any Permitted Refinancing Indebtedness in respect thereof to the extent permitted by the Intercreditor Agreement) that is secured by a Junior Lien and that was permitted to be incurred and is outstanding under clauses clause (2)(c), (17) or (4) (insofar as such Indebtedness incurred under clause (4) refunds, refinances, extends, replaces, renews or defeases Indebtedness incurred and outstanding under clause (2)(c) or (17)) of the definition of “Permitted Debt” and is also permitted to be incurred and so secured under each applicable Junior Lien Document; provided that, in the case of any Indebtedness referred to in this definition:

(1) such Indebtedness does not mature and does not have any mandatory or scheduled payments or sinking fund obligations prior to 91 days after the maturity date of the Notes (except as a result of a customary change of control or asset sale repurchase offer provisions);

(2) on or before the date on which the first such Indebtedness is incurred by the Company or any Guarantor, the Company shall deliver to each Priority Lien Representative and Junior Lien Representative complete copies of each applicable Junior Lien Document (which shall provide that each secured party with respect to such Indebtedness shall be subject to and bound by the Intercreditor Agreement), along with an Officers’ Certificate certifying as to such Junior Lien Documents and identifying the obligations constituting Junior Lien Obligations;

(3) on or before the date on which any such Indebtedness is incurred by the Company or any Guarantor, such Indebtedness is designated by the Company, in an Officers’ Certificate delivered to the Junior Lien Representative and Collateral Agent as “Junior Lien Debt,” and such Officers’ Certificate also certifies that such Indebtedness is permitted and with respect to any other requirements set forth in the Intercreditor Agreement;

(4) a Junior Lien Representative is designated with respect to such Indebtedness and executes and delivers an Additional Secured Debt Designation on behalf of itself and all holders of such Indebtedness;

 

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(5) all relevant filings and recordations necessary to ensure that such Indebtedness is secured by the collateral in accordance with the applicable Security Documents are authorized, executed (if applicable) and recorded in each appropriate jurisdiction ( provided that this clause (5) may be satisfied on a post-closing basis if permitted by the Junior Lien Representative); and

(6) all other requirements set forth in the Intercreditor Agreement or applicable Security Documents as to the confirmation, grant or perfection of the Liens of the holders of Junior Lien Debt to secure such Indebtedness or Obligations in respect thereof are satisfied (and the satisfaction of such requirements and the other provisions of this clause (6) will be conclusively established if the Company delivers to the Junior Lien Representative an Officers’ Certificate stating that such requirements and other provisions have been satisfied and that such Indebtedness is “ Junior Lien Debt ”).

Junior Lien Documents ” means, collectively, any Indenture, credit agreement or other agreement or instrument pursuant to which Junior Lien Debt is incurred and the documents pursuant to which Junior Lien Obligations are granted.

Junior Lien Leverage Ratio ” means at any time of determination, the ratio of (i) the outstanding principal amount of Junior Lien Debt to (ii) the Consolidated Cash Flow of the Company for the four most recent full fiscal quarters for which internal financial statements are available ending on or prior to the date of determination, provided that such Junior Lien Leverage Ratio will be determined on a pro forma basis in a manner consistent with the definition of Fixed Charge Coverage Ratio.

Junior Lien Obligations ” means Junior Lien Debt and all other Obligations in respect thereof.

Junior Lien Representative ” means in the case of any Series of Junior Lien Debt, the trustee, agent or representative of the holders of such Series of Junior Lien Debt who is appointed as a representative of the Junior Lien Debt (for purposes related to the administration of the Security Documents) pursuant to this Indenture, credit agreement or other agreement governing such Series of Junior Lien Debt, together with its successors in such capacity.

Lien ” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest or encumbrance of any kind in respect of such asset, regardless of whether filed, recorded or otherwise perfected under applicable law, including (1) any conditional sale or other title retention agreement, (2) any lease in the nature thereof, (3) any option or other agreement to sell or give a security interest and (4) any filing, authorized by or on behalf of the relevant grantor, of any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease be deemed to constitute a Lien.

Make-Whole Price ” with respect to any Notes to be redeemed, means an amount equal to the greater of:

(1) 100% of the principal amount of such Notes; and

 

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(2) the sum of the present values of (a) the Redemption Price of such Notes at October 15, 2020 (as set forth in the table in Section 5.2(b) and (b) the remaining scheduled payments of interest from the Redemption Date through October 15, 2020 (not including any portion of such payments of interest accrued as of the Redemption Date) discounted back to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 50 basis points,

plus, in the case of both (1) and (2), accrued and unpaid interest on such Notes, if any, to the Redemption Date.

Material Real Property ” (a) any individual real property owned in fee by the Company or any Guarantor if the Fair Market Value is greater than or equal to $1.0 million and (b) to the extent that the aggregate Fair Market Value of all real property owned by the Company or any Guarantors not then subject to a Mortgage in favor of the Collateral Agent exceeds $20.0 million in the aggregate, any one or more individual real properties such that the remaining real property not then subject to a Mortgage in favor of the Collateral Agent has an aggregate Fair Market Value of not more than $20.0 million.

Moody’s ” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

Mortgages ” means the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents securing Liens on the Premises, as well as the other Collateral secured by and described in the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents.

Net Income ” means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends, excluding, however, (1) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any extraordinary or nonrecurring gain or loss, together with any related provision for taxes on such extraordinary or nonrecurring gain or loss.

Net Proceeds ” means the aggregate cash proceeds or Cash Equivalents received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (i) the direct costs relating to such Asset Sale (including, without limitation, legal, accounting, investment banking and brokers’ fees, sales and underwriting commissions and other reasonable costs incurred in preparing such asset for sale), any relocation expenses incurred as a result thereof and any related severance and associated costs, expenses and charges of personnel related to the sold assets and related operations, (ii) taxes paid or reserved as payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), (iii) distributions and payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Sale, (iv) amounts paid in order to satisfy any Lien attaching to an asset in connection with such Asset Sale and (v) any reserve for adjustment (regardless of whether placed in escrow) in respect of the sale price of such asset or assets established in accordance with GAAP.

 

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Non-Recourse Indebtedness ” means Indebtedness:

(1) as to which neither the Company nor any of its Restricted Subsidiaries, (a) provides any Guarantee or credit support of any kind (including any undertaking, Guarantee, indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise), in each case other than Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any joint venture owned by the Company or any Restricted Subsidiary to the extent securing otherwise Non-Recourse Indebtedness of such Unrestricted Subsidiary or joint venture; and

(2) no default with respect to which would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any of its Restricted Subsidiaries to declare pursuant to the express terms governing such Indebtedness a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its Stated Maturity.

Notes ” has the meaning ascribed to it in the Recitals to this Indenture.

Notes Custodian ” means the custodian with respect to a Global Note (as appointed by DTC), or any successor Person thereto and shall initially be the Trustee.

Notes Documents ” means, collectively, this Indenture, the Notes, the Collateral Agency Agreement and the Security Documents, in each case as each may be amended, restated, supplemented, modified, renewed, extended or refinanced in whole or in part from time to time.

Obligations ” means any principal, interest, penalties, fees, expenses, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and banker’s acceptances), damages and other liabilities (including all interest, fees and expenses accruing after the commencement of any Insolvency or Liquidation Proceeding at the rate provided for in the documentation with respect thereto, even if such interest, fees and expenses are not enforceable, allowable or allowed as a claim in such proceeding) and Guarantees of payment of such Obligations under agreements governing Indebtedness of the Company or its Restricted Subsidiaries.

Offering Memorandum ” means the final offering memorandum, dated September 25, 2018, relating to the offering by the Company of the Initial Notes.

Officer ” means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer or the Secretary of the Company. Officer of any Guarantor has a correlative meaning.

Officers’ Certificate ” means, in the case of the Company, a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company and, in the case of any Subsidiary Guarantor, a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of such Subsidiary Guarantor.

 

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Opinion of Counsel ” means a written opinion from legal counsel who is acceptable to the Trustee and that meets the requirements of Section 12.5. Such counsel may be an employee of or counsel to the Company, any Subsidiary of the Company.

Patriot Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, as amended, and signed into law October 26, 2001.

Payment Default ” means a Default relating to a failure by the Company to make any payment when due on the Notes.

Permitted Acquisition Indebtedness ” means Indebtedness or Disqualified Stock of the Company or any of its Restricted Subsidiaries to the extent such Indebtedness or Disqualified Stock was (i) Indebtedness or Disqualified Stock of a Person that was outstanding at the time such Person became a Restricted Subsidiary of the Company or merged or consolidated with or into the Company or a Restricted Subsidiary or (ii) in the event the Company is merged or consolidated into any other Person, or otherwise becomes a Subsidiary of any other Person, Guarantees made by the Company or a Restricted Subsidiary of the Indebtedness of the surviving Person in such merger or consolidation or new parent company of the Company or any Subsidiary of such surviving Person or new parent company; provided that, in each case, on the date such Person became a Restricted Subsidiary of the Company or the date of such acquisition, merger, consolidation or investment, as applicable, either: (a) immediately after giving effect to such transaction and any related financing transaction on a pro forma basis as if the same had occurred at the beginning of the applicable four-quarter period, the Company or such Person (if the Company is not the surviving Person in the transaction) would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 3.2(a); or (b) immediately after giving effect to such transaction and any related financing transaction on a pro forma basis as if the same had occurred at the beginning of the applicable four-quarter period, the Fixed Charge Coverage Ratio for the Company or such Person (if the Company is not the surviving Person in the transaction) is equal to or greater than the Fixed Charge Coverage Ratio for the Company (or such Person) immediately prior to such transaction.

Permitted Business ” means the lines of business conducted by the Company or any of its Restricted Subsidiaries on the Issue Date, any business incidental or reasonably related thereto and any reasonable extension thereof.

Permitted Debt ” has the meaning set forth in Section 3.2(b).

Permitted Investments ” means:

(1) any Investment in the Company or in a Restricted Subsidiary of the Company;

(2) any Investment in Cash Equivalents or deposit accounts maintained in the ordinary course of business consistent with past practices;

 

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(3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary of the Company; or

(b) such Person is merged or consolidated with or into, or transfers or otherwise disposes of all or substantially all of its properties or assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;

(4) any security or other Investment received or Investment made as a result of the receipt of non-cash consideration from:

(a) an Asset Sale that was made pursuant to and in compliance with Section 3.5; or

(b) a disposition of assets that does not constitute an Asset Sale;

(5) any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company or a direct or indirect parent thereof;

(6) any Investment received in compromise, settlement or resolution of debts, claims, obligations, litigation, arbitration or disputes, in each case, owed to the Company or any Restricted Subsidiary of the Company and arising out of transactions in the ordinary course of business;

(7) any Investment received in connection with or as a result of a bankruptcy, workout or reorganization of any Person;

(8) advances and extensions of credit in the nature of accounts receivable arising from the sale or lease of goods or services or the licensing of property in the ordinary course of business;

(9) advances and loans to employees, officers and directors (including, without limitation, loans and advances the net cash proceeds of which are used solely to purchase Equity Interests of the Company in connection with restricted stock or employee stock purchase plans, or to exercise stock received pursuant thereto or other incentive plans in a principal amount not to exceed the aggregate exercise or purchase price), or loans to refinance principal and accrued interest on any such loans, provided that the aggregate principal amount of such loans, advances and allowances shall not exceed at any time $2.5 million;

(10) Investments arising in connection with Hedging Obligations that are incurred in the ordinary course of business and not for speculative purposes;

(11) repurchases of or other Investments in the Notes;

 

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(12) any Guarantee of Indebtedness permitted to be incurred by Section 3.2 other than a Guarantee of Indebtedness of an Affiliate of the Company that is not a Restricted Subsidiary of the Company;

(13) any Investments in prepaid expenses, negotiable instruments held for collection, surety and performance bonds and worker’s compensation, and lease, utility, tax, performance and other similar deposits and prepaid expenses made in the ordinary course of business;

(14) any Investments existing on, or made pursuant to binding commitments existing on, the Issue Date and any Investment consisting of an extension, modification, renewal or replacement thereof; provided that the amount of any such Investment may be increased (a) as required by the terms of such Investment as in existence on the Issue Date or (b) as otherwise permitted under this Indenture;

(15) Investments acquired after the Issue Date as a result of the acquisition by the Company or any Restricted Subsidiary of the Company of another Person, including by way of a merger or consolidation with or into the Company or any of its Restricted Subsidiaries, or a transfer of all or substantially all of the properties or assets of another Person, in each case, in a transaction that is not prohibited by Section 4.1 to the extent that such Investments were not made in contemplation of such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation; and

(16) other Investments by the Company or any Restricted Subsidiary of the Company in any Person having an aggregate Fair Market Value (measured as of the date each such Investment is made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (16) (net of returns of capital, dividends and interest paid on Investments and sales, liquidations and redemptions of Investments), not to exceed the greater of (i) $40.0 million and (ii) 4.0% of Consolidated Tangible Assets; provided , however , that if any Investment pursuant to this clause (16) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (16) for so long as such Person continues to be a Restricted Subsidiary of the Company.

Permitted Liens ” means:

(1) Liens on assets (other than the Collateral) securing Indebtedness incurred and outstanding pursuant to clause (1) of the definition of “Permitted Debt” and related Obligations and Hedging Obligations and obligations under Cash Management Agreements;

(2) Liens on the Collateral securing the Notes and the Guarantees, other Priority Lien Debt and Junior Lien Debt;

(3) Liens granted in favor of the Company or the Guarantors;

 

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(4) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (6) of the definition of “Permitted Debt” covering only the assets acquired, leased, constructed, improved or developed with, such Indebtedness;

(5) Liens, other than on Collateral, existing on the Issue Date (other than Liens incurred under clause (1) of this definition);

(6) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings diligently pursued, provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

(7) carriers’, warehousemen’s, mechanics’, materialmen’s, repairman’s or other like Liens arising in the ordinary course of business;

(8) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation;

(9) Liens securing Indebtedness incurred and outstanding under clause (13) of the definition of “Permitted Debt” and deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(10) any interest or title of a lessor under any Capital Lease entered into by the Company or any of its Subsidiaries in the ordinary course of its business and covering only the property or assets so leased;

(11) Liens in favor of collecting or payor banks having a right of setoff, revocation, refund or chargeback with respect to money or instruments of the Company or any of its Subsidiaries on deposit with or in possession of such bank;

(12) Liens, other than on Collateral, to secure Hedging Obligations of the Company and its Restricted Subsidiaries, in each case incurred in the ordinary course of business and not for speculative purposes;

(13) Liens on property or assets of a Person existing at the time (a) such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary, (b) such Person becomes a Restricted Subsidiary or (c) such property is otherwise acquired by the Company or a Restricted Subsidiary; provided , that such Liens were in existence prior to the contemplation of such merger, consolidation or other acquisition and do not extend to any property or assets other than those of the Person merged into or consolidated with the Company or the Restricted Subsidiary in the case of a merger or consolidation pursuant to clause (a) or such property or assets in the case of such other acquisition in the case of clause (b) or (c);

 

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(14) Liens to secure any Permitted Refinancing Indebtedness with respect to Indebtedness that was previously secured pursuant to clauses (4), (5), (13) or this clause (14) of this definition; provided that the new Lien shall be limited to all or part of the same property or assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or assets or proceeds or distributions thereof);

(15) any Lien resulting from the deposit of money or other Cash Equivalents or other evidence of indebtedness in trust for the purpose of defeasing Indebtedness of the Company or any Restricted Subsidiary;

(16) Liens securing Indebtedness incurred and outstanding under clause (17) of the definition of “Permitted Debt;” and

(17) Liens on Equity Interests of Unrestricted Subsidiaries securing Indebtedness of Unrestricted Subsidiaries or obligations under agreements in respect of Unrestricted Subsidiaries.

Permitted Prior Liens ” means Liens described in clauses (6), (7), (8), (9), (11) or (13) in the definition of “Permitted Liens.” As used in this Indenture, all references to a “first-priority Lien” shall be subject to the relative priority of Permitted Prior Liens.

Permitted Refinancing Indebtedness ” means any Indebtedness of the Company or any of its Restricted Subsidiaries, or any Disqualified Stock of the Company, or portion of such Indebtedness or Disqualified Stock, issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease, discharge or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness) or any Disqualified Stock of the Company, including Indebtedness that extends, refinances, renews, replaces, defeases, discharges or refunds Permitted Refinancing Indebtedness, provided that:

(1) the principal amount (or accreted value, if applicable), or in the case of Disqualified Stock, the amount thereof determined in accordance with the definition of Disqualified Stock, of such Permitted Refinancing Indebtedness does not exceed the principal amount of the Indebtedness or the amount of the Disqualified Stock extended, refinanced, renewed, replaced, defeased, discharged or refunded (plus all accrued interest on the Indebtedness or accrued and unpaid dividends on the Disqualified Stock, as the case may be, and the amount of all fees and expenses, including premiums, incurred in connection therewith);

(2) such Permitted Refinancing Indebtedness (a) has a final maturity date that is either (i) no earlier than the final maturity date of the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced, defeased, discharged or refunded or (ii) more than 90 days after the final maturity date of the Notes; and (b) and has a Weighted Average Life to Maturity that is either (i) equal to or greater than the Weighted Average Life to Maturity of the Indebtedness or Disqualified Stock being extended, refinanced, renewed, replaced, defeased, discharged or refunded, or (ii) more than 90 days greater than the Weighted Average Life to Maturity of the Notes;

 

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(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased, discharged or refunded is subordinated in right of payment to the Notes or the Subsidiary Guarantees, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes or the Subsidiary Guarantees, as the case may be, on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased, discharged or refunded; and

(4) such Indebtedness is not incurred by a Restricted Subsidiary of the Company (other than a Guarantor) if the Company or a Guarantor is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased, discharged or refunded.

Permitted Water Subsidiary ” means a Restricted Subsidiary of the Company substantially all of the assets of which consist of water disposal wells, water processing equipment or facilities or water transportation pipelines or related assets (other than vehicles), provided that (i) less than a majority of the economic or voting power of the Equity Interests of such Restricted Subsidiary are held by Persons other than the Company or a Restricted Subsidiary of the Company, (ii) such Restricted Subsidiary continues to be a Restricted Subsidiary of the Company and a Guarantor of the Notes, (iii) the operations and policies of such Restricted Subsidiary are controlled by the Company, (iv) the existing and future assets of such Restricted Subsidiary, other than Excluded Property, will constitute Collateral in accordance with the provisions of this Indenture and the Security Documents.

Person ” means any individual, corporation, partnership, joint venture, association, joint stock company, trust, limited liability company, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

Preferred Stock ” means, with respect to any Person, any and all preferred or preference stock or other similar Equity Interests (however designated) of such Person whether outstanding or issued after the Issue Date.

Premises ” means any property that is required hereunder to be subject to a Mortgage in favor of the Collateral Agent.

Primary Treasury Dealer ” means a U.S. government securities dealer in the City of New York.

Priority Lien ” means a Lien granted by the Company or any other Guarantor in favor of the Collateral Agent, at any time, upon any Property of the Company or such other Guarantor to secure Obligations under the Priority Lien Documents.

Priority Lien Debt ” means (a) the Notes issued on the Issue Date and any related Subsidiary Guarantees and (b) any additional Notes and any other Indebtedness that was incurred pursuant to and outstanding under clause (2)(b), (17) or (4) (insofar as such Indebtedness incurred under clause (4) refunds, refinances, extends, replaces, renews or defeases Indebtedness incurred and outstanding under clause (2)(a), (2)(b) or (17)) of the definition of “Permitted Debt” (and any Guarantees thereof) that are secured equally and ratably with the Priority Lien Obligations by a Priority Lien that is permitted to be incurred and so secured under the terms of each applicable Priority Lien Document; provided , in the case of any additional Indebtedness referred to in this clause (b) (other than additional Notes), that:

 

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(1) such Indebtedness does not mature and does not have any mandatory or scheduled payments or sinking fund obligations prior to the maturity date of the Notes (except as a result of a customary change of control or asset sale repurchase offer provisions),

(2) on or prior to the date of incurrence of such Indebtedness by the Company or any Guarantor, such Indebtedness is designated by the Company, in an Officers’ Certificate delivered to each Priority Lien Representative and the Collateral Agent, as “Priority Lien Debt” for the purposes of the Priority Lien Documents,

(3) a Priority Lien Representative is designated with respect to such Indebtedness and executes and delivers to the Collateral Agent (i) an Additional Secured Debt Designation on behalf of itself and all holders of such Indebtedness and (ii) a Collateral Trust Joinder on behalf of itself and all holders of such Indebtedness, and

(4) all requirements set forth in the Collateral Agency Agreement as to the confirmation, grant or perfection of the Collateral Agent’s Lien to secure such additional Indebtedness or Obligations in respect thereof are satisfied (and the satisfaction of such requirements and the other provisions of this clause (b) will be conclusively established, absent manifest error, if the Company delivers to the Collateral Agent an Officers’ Certificate stating that such requirements and other provisions have been satisfied and that such Indebtedness is “Priority Lien Debt”).

Priority Lien Documents ” means the Notes Documents and any additional Indenture, credit agreement or other agreement pursuant to which any other Priority Lien Debt is incurred and secured in accordance with the terms of each applicable Priority Lien Document and the security documents related thereto (other than any security documents that do not secure such Priority Lien Obligations).

Priority Lien Leverage Ratio ” means at any time of determination, the ratio of (i) the outstanding principal amount of Priority Lien Debt to (ii) the Consolidated Cash Flow of the Company for the four most recent full fiscal quarters for which internal financial statements are available ending on or prior to the date of determination, provided that such Priority Lien Leverage Ratio will be determined on a pro forma basis in a manner consistent with the definition of Fixed Charge Coverage Ratio.

Priority Lien Obligations ” means the Priority Lien Debt and all other obligations (as defined under the applicable Priority Lien Document) in respect thereof.

Priority Lien Representative ” means (a) the Trustee, in the case of the Notes and (b) in the case of any other Series of Priority Lien Debt, the agent or trustee who maintains the transfer register for such Series of Priority Lien Debt and is appointed as a representative of such Series of Priority Lien Debt (for purposes related to the administration of the applicable Security Documents) pursuant to this Indenture, credit agreement or other agreement governing such Series of Priority Lien Debt and that executes and delivers an Additional Secured Debt Designation and a joinder in accordance with the provisions of the Collateral Agency Agreement.

 

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Priority Lien Secured Party ” means, at any time, the Collateral Agent and each agent, trustee, Noteholder, lender or issuing bank under Priority Lien Debt, in each case to the extent that the applicable Obligations are secured by Priority Liens, the beneficiaries of each indemnification obligation undertaken by any Grantor under any Priority Lien Document, each other Person that provides letters of credit, Guarantees or other credit support related thereto under any Priority Lien Document and each other holder of, or obligee in respect of, any Priority Lien Obligations, in each case to the extent designated as a secured party (or a party entitled to the benefits of the security) under any Priority Lien Document outstanding at such time.

QIB ” means any “qualified institutional buyer” as such term is defined in Rule 144A.

“Rating Agency ” means each of S&P and Moody’s, or if S&P or Moody’s or both shall not make a rating on the Notes publicly available (other than as a result of voluntary action, or inaction, on the part of the Company), a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Company (as certified by a resolution of the Board of Directors) which shall be substituted for S&P or Moody’s, or both, as the case may be.

Rating Category ” means:

(a) with respect to S&P, any of the following categories: AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor categories); and

(b) with respect to Moody’s, any of the following categories: Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories).

Rating Decline ” means a decrease in the rating of the Notes by at least one Rating Agency by one or more gradations (including gradations within Rating Categories as well as between Rating Categories). In determining whether the rating of the Notes has decreased by one or more gradations, gradations within Rating Categories, namely + or—for S&P, and 1, 2, and 3 for Moody’s, will be taken into account; for example, in the case of S&P, a rating decline either from BB+ to BB or BB- to B+ will constitute a decrease of one gradation.

Receivables Subsidiary ” means Basic Energy Receivables, LLC, BER Holdco, LLC or any other Restricted Subsidiary that engages in no activities other than in connection with the financing of accounts receivable.

Redemption Date ” means, with respect to any redemption of Notes, the date of redemption with respect thereto.

Reference Treasury Dealer ” means each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. LLC and UBS Securities LLC (or their respective affiliates that are Primary Treasury Dealers) and two additional Primary Treasury Dealers selected by the Company, and their respective successors; provided , however , that if any such firm or any such successor, as the case may be, shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

 

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Reference Treasury Dealer Quotations ” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by, or on behalf of, the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company or its agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, no later than the fourth business Day preceding such Redemption Date.

Regulation S ” means Regulation S under the Securities Act.

Replacement Assets ” means assets (other than Capital Stock) that are used or useful in a Permitted Business or a majority of the Voting Stock of any Person engaged in a Permitted Business that will become on the date of acquisition thereof a Restricted Subsidiary.

Restricted Investment ” means an Investment other than a Permitted Investment.

Restricted Notes ” means Initial Notes and Additional Notes bearing the Restricted Notes Legend.

Restricted Notes Legend ” means the legend set forth in Section 2.1(d)(1).

Restricted Subsidiary ” of a Person means any Subsidiary of the referenced Person that is not an Unrestricted Subsidiary or a direct or indirect Subsidiary of an Unrestricted Subsidiary; provided that, on the Issue Date, all Subsidiaries of the Company shall be Restricted Subsidiaries of the Company.

Rule 144A ” means Rule 144A under the Securities Act.

S&P ” means S&P Global Ratings, and its successors.

Sale/Leaseback Transaction ” means an arrangement relating to property or assets owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property or assets to a Person (other than the Company or a Restricted Subsidiary) and the Company or a Restricted Subsidiary leases such property or assets from such Person.

SEC ” means the United States Securities and Exchange Commission.

Securities Act ” means the Securities Act of 1933 (15 U.S.C. §§ 77a-77aa), as amended.

Security Agreement ” means that certain Security Agreement dated as of the date hereof by and among the Collateral Agent, the Company and the Guarantors.

Security Documents ” means the Collateral Agency Agreement, the ABL Collateral Rights Agreement (as defined in the Collateral Agency Agreement), the Intercreditor Agreement, the Security Agreement and all security agreements, pledge agreements, Mortgages, deeds of trust, collateral assignments, collateral agency agreements, debentures, control agreements or other grants or transfers for security executed and delivered by the Company or any Guarantor (including, without limitation, financing statements under the Uniform Commercial Code of the

 

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relevant state) creating (or purporting to create) a Lien upon Collateral in favor of the Collateral Agent or notice of such pledge, grant or assignment is given, in each case, as amended, modified, renewed, restated or replaced, in whole or in part, from time to time, in accordance with its terms and the terms of the Collateral Agency Agreement.

Series of Junior Lien Debt ” means, severally, each issue or series of Junior Lien Debt.

Series of Priority Lien Debt ” means, severally the Notes and each other issue or series of Priority Lien Debt.

Significant Subsidiary ” means any Subsidiary of the Company that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date.

Stated Maturity ” means, with respect to any installment of interest or principal, or sinking fund or mandatory redemption of principal, on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid or made, as applicable, in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

Subordinated Obligation ” means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter incurred) which pursuant to a written agreement is subordinate or junior in right of payment to the Notes and any Indebtedness of a Guarantor (whether outstanding on the Issue Date or thereafter incurred) which pursuant to a written agreement is subordinate or junior in right of payment to its Subsidiary Guarantee.

Subsidiary ” means, with respect to any Person,

(1) any corporation, association or other business entity of which more than 50% of the total voting power of the Voting Stock thereof is at the time owned or controlled, directly or indirectly, by such Person; and

(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or an entity described in clause (1) and related to such Person or (b) the only general partners of which are such Person or of one or more entities described in clause (1) and related to such Person (or any combination thereof).

Subsidiary Guarantee ” means the Guarantee of the Notes by each of the Guarantors pursuant to this Indenture.

Treasury Rate ” means, with respect to any Redemption Date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15” or any successor publication or data that is published or made available weekly by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded U.S. Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the stated

 

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maturity, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined, and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month), or (2) if such release (or any successor release) is not published or made available during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be calculated by the Company no later than the fourth business Day preceding the Redemption Date.

Trust Indenture Act ” the Trust Indenture Act of 1939, as amended.

Trustee ” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.

Trust Officer ” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

Uniform Commercial Code ” means the Uniform Commercial Code as in effect from time to time in any applicable jurisdiction.

Unrestricted Subsidiary ” means any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but only to the extent that such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) except as permitted by Section 3.8, is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; and

(3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition,

except, in the case of clause (1), (2), or (3), for any such Indebtedness that is subject to a Guarantee by or other obligation of, or any agreement, contract, arrangement or understanding with, or any equity subscription or credit support obligation of, the Company or Restricted Subsidiary that constitutes an Investment in such Subsidiary that has been effected as a Restricted Payment that complies with Section 3.3 or a Permitted Investment. All Subsidiaries of an Unrestricted Subsidiary shall also be Unrestricted Subsidiaries.

 

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Voting Stock ” of any specified Person as of any date means the Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of Capital Stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors of such Person.

Weighted Average Life to Maturity ” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by

(2) the then outstanding principal amount of such Indebtedness.

SECTION 1.2 Other Definitions .

 

Term

   Defined in
Section

“Affiliate Transaction”

   3.8

“Agent Members”

   2.1(e)(iii)

“Alternate Offer”

   3.9

“Asset Sale Offer Amount”

   3.5

“Asset Sale Offer Period”

   3.5

“Asset Sale Offer”

   3.5

“Asset Sale Purchase Date”

   3.5

“Authenticating Agent”

   2.2

“Cash Consideration”

   3.5

“Change of Control Offer”

   3.9

“Change of Control Payment”

   3.9

“Change of Control Payment Date”

   3.9

“Clearstream”

   2.1(b)

“Company Order”

   2.2

“Covenant Defeasance”

   8.1(b)

“Defaulted Interest”

   2.14

“Euroclear”

   2.1(b)

“Excess Proceeds”

   3.5

“Exchange Global Note”

   2.1(b)

“Global Notes”

   2.1(b)

“Initial Lien”

   3.6

“Legal Defeasance”

   8.1(b)

“Legal Holiday”

   12.8

“Paying Agent”

   2.3

 

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Term

   Defined in
Section

“protected purchaser”

   2.10

“Registrar”

   2.3

“Regulation S Global Note”

   2.1(b)

“Regulation S Notes”

   2.1(b)

“Resale Restriction Termination Date”

   2.6(b)

“Restricted Period”

   2.1(b)

“Rule 144A Global Note”

   2.1(b)

“Rule 144A Notes”

   2.1(b)

“Notes Register”

   2.3

“Notes Obligations”

   11.1(a)

“Special Interest Payment Date”

   2.14(a)

“Special Record Date”

   2.14(a)

“Successor Company”

   4.1

“Successor Guarantor”

   4.1

“Successor Guarantor”

   10.5

SECTION 1.3 Rules of Construction . Unless the context otherwise requires:

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3) “or” is not exclusive;

(4) “including” means including without limitation;

(5) words in the singular include the plural and words in the plural include the singular;

(6) all amounts expressed in this Indenture or in any of the Notes in terms of money refer to the lawful currency of the United States of America;

(7) when expressed as a command, the words “will” and “shall” have the same meaning; and

(8) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

 

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ARTICLE II

THE NOTES

SECTION 2.1 Form, Dating and Terms .

(a) The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited. The Initial Notes issued on the date hereof shall be in an aggregate principal amount of $300,000,000. In addition, the Company may issue, from time to time in accordance with the provisions of this Indenture, Additional Notes (as provided herein). Furthermore, Notes may be authenticated and delivered upon registration of transfer, exchange or in lieu of, other Notes pursuant to Section 2.2, 2.6, 2.10, 2.12, 5.8 or 9.4, in connection with an Asset Sale Offer pursuant to Section 3.5 or in connection with a Change of Control Offer or Alternate Offer pursuant to Section 3.9.

The Initial Notes and any Additional Notes shall be known and designated as “10.75% Senior Secured Notes due 2023” of the Company.

With respect to any Additional Notes, the Company shall set forth in (a) a Board Resolution and (b) (i) an Officers’ Certificate or (ii) one or more indentures supplemental hereto, the following information:

(1) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture; and

(2) the issue price and the issue date of such Additional Notes, including the date from which interest shall accrue.

If any Additional Notes are not fungible with the Initial Notes for U.S. Federal income tax purposes, such Additional Notes shall have a different CUSIP number and ISIN from the Initial Notes.

In authenticating and delivering Additional Notes, the Trustee shall be entitled to receive and shall be fully protected in conclusively relying upon, in addition to the Opinion of Counsel and Officers’ Certificate required by Section 12.4, an Opinion of Counsel as to the due authorization, execution, delivery, validity and enforceability (subject to customary exceptions) of such Additional Notes.

The Initial Notes and the Additional Notes shall be considered collectively as a single class for all purposes of this Indenture. Holders of the Initial Notes and the Additional Notes will vote and consent together on all matters to which such Holders are entitled to vote or consent as one class, and none of the Holders of the Initial Notes and the Additional Notes shall have the right to vote or consent as a separate class on any matter to which such Holders are entitled to vote or consent.

(b) The Initial Notes are being offered and sold by the Company pursuant to a Purchase Agreement, dated September 25, 2018, among the Company and the initial purchasers named herein. The Initial Notes and any Additional Notes shall be resold initially only to (A) QIBs in reliance on Rule 144A and (B) Non-U.S. Persons in reliance on Regulation S. Such Initial Notes and Additional Notes may thereafter be transferred to, among others, QIBs and purchasers in reliance on Regulation S, in each case, in accordance with the procedure described herein. Additional Notes offered after the date hereof may be offered and sold by the Company from time to time pursuant to one or more purchase agreements in accordance with applicable law.

 

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Initial Notes and Additional Notes offered and sold to QIBs in the United States of America in reliance on Rule 144A (the “ Rule 144A Notes ”) shall be issued in the form of a global Note substantially in the form of Exhibit A , which is hereby incorporated by reference and made a part of this Indenture, including appropriate legends as set forth in Section 2.1(d) (the “ Rule 144A Global Note ”), deposited with the Trustee, as Notes Custodian, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Rule 144A Global Note may be represented by more than one certificate, if so required by DTC’s rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of the Rule 144A Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as Notes Custodian, as hereinafter provided.

Initial Notes and any Additional Notes offered and sold outside the United States of America (the “ Regulation S Notes ”) in reliance on Regulation S shall initially be issued in the form of a global Note, without interest coupons, substantially in the form of Exhibit A including appropriate legends as set forth in Section 2.1(d) (the “ Regulation S Global Note ”) deposited upon issuance with, or on behalf of, the Trustee as Notes Custodian in the manner described in this Article II for credit to the respective accounts of the purchasers (or to such other accounts as they may direct) at Euroclear Bank S.A./N.V. (“ Euroclear ”) or Clearstream Banking, société anonyme (“ Clearstream ”). Prior to the 40th day after the later of the commencement of the offering of the Initial Notes and the Issue Date (such period through and including such 40th day, the “ Restricted Period ”), interests in the Regulation S Global Note may only be held through Euroclear and Clearstream, and may only be transferred to Non-U.S. Persons pursuant to Regulation S, unless exchanged for interests in another Global Note in accordance with the transfer and certification requirements described herein.

Investors may hold their interests in the Regulation S Global Note after the Restricted Period through organizations other than Euroclear or Clearstream that are participants in DTC’s system or directly through Euroclear or Clearstream, if they are participants in such systems, or indirectly through organizations which are participants in such systems. If such interests are held through Euroclear or Clearstream, Euroclear and Clearstream shall hold such interests in the applicable Regulation S Global Note on behalf of their participants through customers’ securities accounts in their respective names on the books of their respective depositaries. Such depositaries, in turn, shall hold such interests in the applicable Regulation S Global Note in customers’ securities accounts in the depositaries’ names on the books of DTC.

The Regulation S Global Note may be represented by more than one certificate, if so required by DTC’s rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of the Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

The Rule 144A Global Note and the Regulation S Global Note are collectively herein referred to as the “ Global Notes .”

 

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The principal of and interest on the Notes shall be payable at the office or agency of the Company maintained for such purpose in The City of New York, and at such other office or agency of the Company as may be maintained for such purpose pursuant to Section 2.3; provided , however , that, at the option of the Company, each installment of interest may be paid by (i) check mailed to addresses of the Persons entitled thereto as such addresses shall appear on the Notes Register or (ii) wire transfer to an account located in the United States maintained by the payee, subject to the last sentence of this paragraph. Payments in respect of Notes represented by a Global Note (including principal and interest) will be made by wire transfer of immediately available funds to the accounts specified by DTC. At the Company’s option, payments in respect of Notes represented by Definitive Notes (including principal and interest) may be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if the Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage, in addition to those set forth on Exhibit A and in Section 2.1(d). The Company shall approve any notation, endorsement or legend on the Notes. Each Note shall be dated the date of its authentication, and the Trustee’s certificate of authentication shall be substantially in the form set forth in Exhibit A . The terms of the Notes set forth in Exhibit A are part of the terms of this Indenture and, to the extent applicable, the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to be bound by such terms.

(c) Denominations . The Notes shall be issuable only in fully registered form, without coupons, and only in denominations of $2,000 and any integral multiple of $1,000 in excess thereof.

(d) Restrictive Legends . Unless and until an Initial Note or an Additional Note issued as a Restricted Note is sold under an effective registration statement:

(1) the Rule 144A Global Note and the Regulation S Global Note shall bear the following legend on the face thereof:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL, OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS ONE YEAR (IN THE CASE OF RULE 144A SECURITIES) OR 40 DAYS (IN THE CASE OF REGULATION S SECURITIES) AFTER THE LATER OF THE ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY

 

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BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE, OR TRANSFER PURSUANT TO CLAUSE (C), OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION, AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER OR THE ISSUER ON OR AFTER THE RESALE RESTRICTION TERMINATION DATE.

(2) Each Global Note, whether or not an Initial Note, shall bear the following legend on the face thereof:

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

(e) Book-Entry Provisions.

(i) This Section 2.1(e) shall apply only to Global Notes deposited with the Trustee, as Notes Custodian.

 

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(ii) Each Global Note initially shall (x) be registered in the name of Cede & Co. as the nominee of DTC, (y) be delivered to the Trustee as Notes Custodian and (z) bear legends as set forth in Section 2.1(d). Transfers of a Global Note (but not a beneficial interest therein) will be limited to transfers thereof in whole, but not in part, to the Depositary, its successors or their respective nominees, except as set forth in Section 2.1(e)(v) and 2.1(f). If a beneficial interest in a Global Note is transferred or exchanged for a beneficial interest in another Global Note, the Trustee will (x) record a decrease in the principal amount of the Global Note being transferred or exchanged equal to the principal amount of such transfer or exchange and (y) record a like increase in the principal amount of the other Global Note. Any beneficial interest in one Global Note that is transferred to a Person who takes delivery in the form of an interest in another Global Note, or exchanged for an interest in another Global Note, will, upon transfer or exchange, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer and exchange restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest.

(iii) Members of, or participants in, DTC (“ Agent Members ”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by DTC or by the Trustee as the Notes Custodian or under such Global Note, and DTC may be treated by the Company, the Guarantors, the Trustee and any agent of the Company, the Guarantors or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantors, the Trustee or any agent of the Company, the Guarantors or the Trustee from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its Agent Members, the operation of customary practices of DTC governing the exercise of the rights of a Holder of a beneficial interest in any Global Note.

(iv) In connection with any transfer of a portion of the beneficial interest in a Global Note pursuant to Section 2.1(f) to beneficial owners who are required to hold Definitive Notes, the Notes Custodian shall reflect on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in the Global Note to be transferred, and the Company shall execute, and the Trustee shall authenticate and make available for delivery, one or more Definitive Notes of like tenor and amount.

(v) In connection with the transfer of an entire Global Note to beneficial owners pursuant to Section 2.1(f), such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and make available for delivery, to each beneficial owner identified by DTC in exchange for its beneficial interest in such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations.

(vi) The registered Holder of a Global Note may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

 

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(vii) Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interests in such Global Note may be effected only through a book-entry system maintained by (a) the Holder of such Global Note (or its agent) or (b) any holder of a beneficial interest in such Global Note, and that ownership of a beneficial interest in such Global Note shall be required to be reflected in a book entry.

(f) Definitive Notes.

(i) Except as provided below, owners of beneficial interests in Global Notes will not be entitled to receive Definitive Notes. If required to do so pursuant to any applicable law or regulation, beneficial owners may obtain Definitive Notes in exchange for their beneficial interests in a Global Note upon written request in accordance with DTC’s and the Registrar’s procedures. In addition, Definitive Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in a Global Note if (A) DTC notifies the Company that it is unwilling or unable to continue as depositary for such Global Note or DTC ceases to be a clearing agency registered under the Exchange Act, at a time when DTC is required to be so registered in order to act as depositary, and in each case a successor depositary is not appointed by the Company within 90 days of such notice, (B) subject to DTC’s rules, the Company, at its option, delivers to the Trustee and Registrar written notice stating that such Global Note shall be so exchangeable or (C) an Event of Default has occurred and is continuing and DTC notifies the Company and the Trustee of DTC’s decision to exchange such Global Note for Definitive Notes. In the event of the occurrence of any of the events specified in the preceding sentence or in clause (A), (B) or (C) of the preceding sentence, Definitive Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of DTC (in accordance with its customary procedures).

(ii) Any Definitive Note delivered in exchange for an interest in a Global Note pursuant to Section 2.1(e)(iv) or (f) shall, except as otherwise provided by Section 2.6(d), bear the Restricted Notes Legend.

(iii) If a Definitive Note is transferred or exchanged for a beneficial interest in a Global Note, the Trustee will (x) cancel such Definitive Note, (y) record an increase in the principal amount of such Global Note equal to the principal amount of such transfer or exchange and (z) in the event that such transfer or exchange involves less than the entire principal amount of the canceled Definitive Note, the Company shall execute, and the Trustee shall authenticate and make available for delivery, to the transferring Holder a new Definitive Note representing the principal amount not so transferred.

 

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(iv) If a Definitive Note is transferred or exchanged for another Definitive Note, (x) the Trustee will cancel the Definitive Note being transferred or exchanged, (y) the Company shall execute, and the Trustee shall authenticate and make available for delivery, one or more new Definitive Notes in authorized denominations having an aggregate principal amount equal to the principal amount of such transfer or exchange to the transferee (in the case of a transfer) or the Holder of the canceled Definitive Note (in the case of an exchange), registered in the name of such transferee or Holder, as applicable, and (z) if such transfer or exchange involves less than the entire principal amount of the canceled Definitive Note, the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder thereof, one or more Definitive Notes in authorized denominations having an aggregate principal amount equal to the untransferred or unexchanged portion of the canceled Definitive Notes, registered in the name of the Holder thereof.

SECTION 2.2 Execution and Authentication . One Officer shall sign the Notes for the Company by manual or facsimile signature. If the Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

A Note shall not be valid until an authorized signatory of the Trustee manually authenticates the Note. The signature of the Trustee on a Note shall be conclusive evidence that such Note has been duly and validly authenticated and issued under this Indenture. A Note shall be dated the date of its authentication.

At any time and from time to time after the execution and delivery of this Indenture, the Trustee shall authenticate and make available for delivery: (1) Initial Notes for original issue on the Issue Date in an aggregate principal amount of $300,000,000 and (2) subject to the terms of this Indenture, Additional Notes for original issue in an unlimited principal amount, in each case upon a written order of the Company signed by one Officer of the Company (the “ Company Order ”). Such Company Order shall specify whether the Notes will be in the form of Definitive Notes or Global Notes, the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated and whether the Notes are to be Initial Notes or Additional Notes.

The Trustee may appoint an agent (the “ Authenticating Agent ”) reasonably acceptable to the Company to authenticate the Notes. Any such instrument shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Company. Unless limited by the terms of such appointment, any such Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by the Authenticating Agent. An Authenticating Agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

In case the Company, pursuant to Article IV, shall be consolidated or merged with or into any other Person or shall convey, transfer, lease or otherwise dispose of all or substantially all of its assets in one or more transactions to any Person and the Successor Company shall have executed an indenture supplemental hereto with the Trustee pursuant to Article IV, any of the Notes authenticated or delivered prior to such transaction may, from time to time, at the request of the

 

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Successor Company, be exchanged for other Notes executed in the name of the Successor Company, with such changes in phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Notes surrendered for such exchange and of like principal amount; and the Trustee, upon Company Order of the Successor Company, shall authenticate and make available for delivery Notes as specified in such order for the purpose of such exchange. If Notes shall at any time be authenticated and delivered in any new name of a Successor Company pursuant to this Section 2.2 in exchange or substitution for or upon registration of transfer of any Notes, such Successor Company, at the option of the Holders but without expense to them, shall provide for the exchange of all Notes at the time outstanding for Notes authenticated and delivered in such new name.

SECTION 2.3 Registrar and Paying Agent . The Company shall maintain in the continental United States an office or agency where Notes may be presented for registration of transfer or for exchange (the “ Registrar ”), and the Company shall maintain in New York, New York an office or agency where Notes may be presented for payment (the “ Paying Agent ”). The Registrar shall keep a register of the Notes and of their transfer and exchange (the “ Notes Register ”). The Company or any of its Restricted Subsidiaries may act as Registrar or Paying Agent. The Company may have one or more co-registrars and one or more additional paying agents. The term “Paying Agent” includes any additional paying agent and the term “Registrar” includes any co-registrar.

The Company shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of each such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.7.

The Company initially appoints the Trustee as Registrar and as Paying Agent for the Notes at its corporate trust office in New York, New York, which, on the date hereof, is located at 140 Broadway, Suite 4624, New York, New York 10005. The Company may remove any Registrar or Paying Agent upon written notice to such Registrar or Paying Agent and to the Trustee; provided , however , that no such removal shall become effective until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) above. The Registrar or Paying Agent may resign at any time upon written notice to the Company and the Trustee.

SECTION 2.4 Paying Agent to Hold Money in Trust . By no later than 11:00 a.m. (New York City time) on the date on which any principal or interest on any Note is due and payable, the Company shall deposit with the Paying Agent a sum sufficient in immediately available funds to pay such principal or interest when due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent shall hold in trust for the benefit of Noteholders or the Trustee all money held by such Paying Agent for the payment of principal or interest on the Notes (whether such assets have been distributed to it by the Company or other obligors on the Notes), shall notify the Trustee in writing of any default by the Company or any Guarantor in making any such payment and shall during the continuance of any default by the

 

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Company (or any other obligor upon the Notes) in the making of any payment in respect of the Notes, upon the written request of the Trustee, forthwith deliver to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Notes together with a full accounting thereof. If the Company or a Restricted Subsidiary of the Company acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent (other than the Trustee) to pay all money held by it to the Trustee and to account for any funds or assets disbursed by such Paying Agent. Upon complying with this Section 2.4, the Paying Agent (if other than the Company or a Restricted Subsidiary of the Company) shall have no further liability for the money delivered to the Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, the Trustee shall serve as Paying Agent for the Notes.

SECTION 2.5 Noteholder Lists . The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Noteholders. If the Trustee is not the Registrar, the Company, on its own behalf and on behalf of each of the Guarantors, shall furnish or cause the Registrar to furnish to the Trustee, in writing at least five Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Noteholders.

SECTION 2.6 Transfer and Exchange .

(a) A Holder may transfer a Note (or a beneficial interest therein) to another Person or exchange a Note (or a beneficial interest therein) for another Note or Notes of any authorized denomination by presenting to the Trustee a written request therefor stating the name of the proposed transferee or requesting such an exchange, accompanied by any certification, opinion or other document required by this Section 2.6. The Trustee shall promptly register any transfer or exchange that meets the requirements of this Section 2.6 by noting the same in the register maintained by the Trustee for the purpose, and no transfer or exchange shall be effective until it is registered in such register. The transfer or exchange of any Note (or a beneficial interest therein) may only be made in accordance with this Section 2.6 and Sections 2.1(e) and 2.1(f), as applicable, and, in the case of a Global Note (or a beneficial interest therein), the applicable rules and procedures of DTC, Euroclear and Clearstream. The Trustee shall refuse to register any requested transfer or exchange that does not comply with this paragraph.

(b) Transfers of Rule 144A Notes . The following provisions shall apply with respect to any proposed registration of transfer of a Rule 144A Note prior to the date which is one year after the later of the date of its original issue or the issuance of any Additional Notes and the last date on which the Company or any Affiliate of Company was the owner of such Notes (or any predecessor thereto) (the “ Resale Restriction Termination Date ”):

(i) a registration of transfer of a Rule 144A Note or a beneficial interest therein to a QIB shall be made upon the representation of the transferee in the form as set forth on the reverse of the Note that it is purchasing for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on

 

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Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; provided that no such written representation or other written certification shall be required in connection with the transfer of a beneficial interest in the Rule 144A Global Note to a transferee in the form of a beneficial interest in that Rule 144A Global Note in accordance with this Indenture and the applicable procedures of DTC; and

(ii) a registration of transfer of a Rule 144A Note or a beneficial interest therein to a Non-U.S. Person shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Section 2.7 from the proposed transferee and, if requested by the Company, the delivery of an Opinion of Counsel, certification and/or other information satisfactory to it.

(c) Transfers of Regulation S Notes . The following provisions shall apply with respect to any proposed transfer of a Regulation S Note prior to the expiration of the Restricted Period:

(i) a transfer of a Regulation S Note or a beneficial interest therein to a QIB shall be made upon the representation of the transferee, in the form of assignment on the reverse of the certificate, that it is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A; and

(ii) a transfer of a Regulation S Note or a beneficial interest therein to a Non-U.S. Person shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Section 2.9 hereof from the proposed transferee and, if requested by the Company, receipt by the Trustee or its agent of an Opinion of Counsel, certification and/or other information satisfactory to the Company.

After the expiration of the Restricted Period, interests in the Regulation S Note may be transferred in accordance with applicable law without requiring the certification set forth in Section 2.7 or any additional certification.

(d) Restricted Notes Legend . Upon the transfer, exchange or replacement of Notes not bearing a Restricted Notes Legend, the Registrar shall deliver Notes that do not bear a Restricted Notes Legend. Upon the transfer, exchange or replacement of Notes bearing a Restricted Notes Legend prior to the Resale Restriction Termination Date, the Registrar shall

 

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deliver only Notes that bear a Restricted Notes Legend unless (i) an Initial Note is being transferred pursuant to an effective registration statement or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. Any Additional Notes sold in a registered offering shall not be required to bear the Restricted Notes Legend.

(e) Retention of Written Communications . The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.1 or this Section 2.6. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable prior written notice to the Registrar.

(f) Obligations with Respect to Transfers and Exchanges of Notes .

(i) To permit registrations of transfers and exchanges, the Company shall, subject to the other terms and conditions of this Article II, execute and the Trustee shall authenticate Definitive Notes and Global Notes at the Registrar’s request.

(ii) No service charge shall be made to a Holder for any registration of transfer or exchange, but the Company may require the Holder to pay a sum sufficient to cover any transfer tax assessments or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charges payable upon exchange or transfer pursuant to Section 2.2, 2.8, 2.10, 3.5, 3.9, 5.8 or 9.5).

(iii) The Company (and the Registrar) shall not be required to register the transfer of or exchange of any Note (A) for a period (1) of 15 days before giving any notice of redemption of Notes or (2) beginning 15 days before an Interest Payment Date and ending on such Interest Payment Date or (B) selected for redemption, except the unredeemed portion of any Note being redeemed in part.

(iv) Prior to the due presentation for registration of transfer of any Note, the Company, any Guarantor, the Trustee, the Paying Agent or the Registrar may deem and treat the person in whose name a Note is registered as the owner of such Note for the purpose of receiving payment of principal and interest on such Note and for all other purposes whatsoever, including the transfer or exchange of such Note, whether or not such Note is overdue, and none of the Company, any Guarantor, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.

(v) Any Definitive Note delivered in exchange for an interest in a Global Note pursuant to Section 2.1(f) shall, except as otherwise provided by Section 2.6(d), bear the Restricted Notes Legend.

(vi) All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange.

 

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(g) No Obligation of the Trustee . The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, Agent Member or other Person with respect to the accuracy of the records of DTC or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than DTC) of any notice (including any notice of redemption or purchase) or the payment of any amount or delivery of any Notes (or other security or property) under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders in respect of the Notes shall be given or made only to or upon the order of the registered Holders (which shall be DTC or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through DTC subject to the applicable rules and procedures of DTC. The Trustee may conclusively rely and shall be fully protected in so relying upon information furnished by DTC with respect to its Agent Members and any beneficial owners. The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Agent Members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

SECTION 2.7 Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S .

[Date]

Basic Energy Services, Inc.

801 Cherry Street, Suite 2100

Fort Worth, Texas 76102

Attention: David Schorlemer

Ladies and Gentlemen:

 

Re:

Basic Energy Services, Inc. (the “ Company ”)

10.75% Senior Secured Notes due 2023 (the “ Notes ”)

Ladies and Gentlemen:

In connection with our proposed sale of $[________] aggregate principal amount of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the United States Securities Act of 1933, as amended (the “ Securities Act ”), and, accordingly, we represent that:

(a) the offer of the Notes was not made to a person in the United States;

 

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(b) either (i) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States or (ii) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States;

(c) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(a)(2) or Rule 904(a)(2) of Regulation S, as applicable; and

(d) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

In addition, if the sale is made during a restricted period and the provisions of Rule 903(b)(2), Rule 903(b)(3) or Rule 904(b)(1) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(b)(2), Rule 903(b)(3) or Rule 904(b)(1), as the case may be.

We also hereby certify that we [are][are not] an Affiliate of the Company and, to our knowledge, the transferee of the Notes [is][is not] an Affiliate of the Company.

You and the Company are entitled to rely conclusively upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S.

Very truly yours,

[Name of Transferor]

 

By:    
  Authorized Signatory

SECTION 2.8 Mutilated, Destroyed, Lost or Stolen Notes . If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Noteholder (a) satisfies the Company or the Trustee that such Note has been lost, destroyed or wrongfully taken within a reasonable time after such Noteholder has notice of such loss, destruction or wrongful taking and the Registrar has not registered a transfer prior to receiving such notification, (b) makes such request to the Company or Trustee prior to the Note being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a “ protected purchaser ”) and (c) satisfies any other reasonable requirements of the Trustee; provided , however , if after the delivery of such replacement Note, a protected purchaser of the Note for which such replacement Note was issued presents for payment or registration such replaced Note, the Trustee or the Company shall be entitled to recover such replacement Note from

 

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the Person to whom it was issued and delivered or any Person taking therefrom, except a protected purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Company or the Trustee in connection therewith. Such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent and the Registrar from any loss which any of them may suffer if a Note is replaced, and, in the absence of notice to the Company, any Guarantor or the Trustee that such Note has been acquired by a protected purchaser, the Company shall execute, and upon receipt of a Company Order the Trustee shall authenticate and make available for delivery, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or wrongfully taken Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or wrongfully taken Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Note, pay such Note.

Upon the issuance of any new Note under this Section 2.8, the Company may require that such Holder pay a sum sufficient to cover any transfer tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of counsel and of the Trustee) in connection therewith.

Subject to the proviso in the initial paragraph of this Section 2.8, every new Note issued pursuant to this Section in lieu of any mutilated, destroyed, lost or wrongfully taken Note shall constitute an original additional contractual obligation of the Company, any Guarantor and any other obligor upon the Notes, whether or not the mutilated, destroyed, lost or wrongfully taken Note shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section 2.8 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Notes.

SECTION 2.9 Outstanding Notes . Notes outstanding at any time are all Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those paid pursuant to Section 2.8 and those described in this Section as not outstanding. A Note does not cease to be outstanding in the event the Company or an Affiliate of the Company holds the Note; provided , however , that (i) for purposes of determining which are outstanding for consent or voting purposes hereunder, the provisions of Section 12.6 shall apply and (ii) in determining whether the Trustee shall be fully protected in making a determination whether the Holders of the requisite principal amount of outstanding Notes are present at a meeting of Holders of Notes for quorum purposes or have consented to or voted in favor of any request, demand, authorization, direction, notice, consent, waiver, amendment or modification hereunder, or relying upon any such quorum, consent or vote, only Notes which a Trust Officer of the Trustee actually knows to be held by the Company or an Affiliate of the Company shall not be considered outstanding.

If a Note is replaced pursuant to Section 2.8 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Note is held by a protected purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement pursuant to Section 2.8.

 

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If the Paying Agent segregates and holds in trust, in accordance with this Indenture, by 11:00 a.m. (New York City time) on a Redemption Date or other maturity date money sufficient to pay all principal and accrued interest payable on that date with respect to the Notes (or portions thereof) to be redeemed or otherwise maturing, as the case may be, then on and after that date such Notes (or portions thereof) cease to be outstanding and interest on them ceases to accrue.

SECTION 2.10 Temporary Notes . In the event that Definitive Notes are to be issued under the terms of this Indenture, until such Definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form, and shall carry all rights, of Definitive Notes but may have variations that the Company consider appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the temporary Notes at any office or agency maintained by the Company for that purpose and such exchange shall be without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Company shall execute, and the Trustee shall authenticate and make available for delivery in exchange therefor, one or more Definitive Notes representing an equal principal amount of Notes. Until so exchanged, the Holder of temporary Notes shall in all respects be entitled to the same benefits under this Indenture as a Holder of Definitive Notes.

SECTION 2.11 Cancellation . The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment or cancellation and dispose of such Notes in accordance with its internal policies and customary procedures (subject to the record retention requirements of the Exchange Act) or deliver canceled Notes to the Company pursuant to written direction by one Officer of the Company. If the Company or any Guarantor acquires any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.11. The Company may not issue new Notes to replace Notes they have paid or delivered to the Trustee for cancellation for any reason other than in connection with a transfer or exchange.

At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, transferred, redeemed, repurchased or canceled, such Global Note shall be returned by DTC or the Notes Custodian to the Trustee for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, redeemed, repurchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction.

 

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SECTION 2.12 Payment of Interest; Defaulted Interest . Interest on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Note (or one or more predecessor Notes) is registered at the close of business on the regular record date for such payment at the office or agency of the Company maintained for such purpose pursuant to Section 2.3.

Any interest on any Note which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of 30 days shall forthwith cease to be payable to the Holder on the regular record date, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes (such defaulted interest and interest thereon herein collectively called “ Defaulted Interest ”) shall be paid by the Company, at its election in each case, as provided in clause (a) or (b) below:

(a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment (the “ Special Interest Payment Date ”), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Company shall fix a record date (the “ Special Record Date ”) for the payment of such Defaulted Interest, which date shall be not more than 15 days and not less than 10 days prior to the Special Interest Payment Date and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Company shall promptly notify the Trustee in writing of such Special Record Date, and in the name and at the expense of the Company, the Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor to be given in the manner provided for in Section 12.2, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).

(b) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after written notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

(c) The Trustee shall not at any time be under any duty or responsibility to any Holder to determine the Defaulted Interest, or with respect to the nature, extent, or calculation of the amount of Defaulted Interest owed, or with respect to the method employed in such calculation of the Defaulted Interest.

 

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Subject to the foregoing provisions of this Section 2.12, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

SECTION 2.13 Computation of Interest . Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months.

SECTION 2.14 CUSIP, Common Code and ISIN Numbers . The Company in issuing the Notes may use “CUSIP”, “Common Code” and “ISIN” numbers and, if so, the Trustee shall use “CUSIP”, “Common Code” and “ISIN” numbers in notices of redemption or purchase as a convenience to Holders; provided , however , that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption or purchase and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption or purchase shall not be affected by any defect in or omission of such CUSIP, Common Code and ISIN numbers. The Company shall promptly notify the Trustee in writing of any change in the CUSIP, Common Code and ISIN numbers.

ARTICLE III

COVENANTS

SECTION 3.1 Payment of Notes . The Company shall promptly pay the principal and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture. Principal and interest shall be considered paid on the date due if by 11:00 a.m. (New York City time) on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due.

The Company shall pay interest on overdue principal, and it shall pay interest on overdue installments of interest (without regard to any grace period), at the rate specified in the Notes to the extent lawful.

SECTION 3.2 Limitation on Indebtedness and Preferred Stock .

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, Guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “ incur ,” with “ incurrence ” having a correlative meaning) any Indebtedness (including Acquired Debt), and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any Disqualified Stock or Preferred Stock; provided , however , that the Company or any Guarantor may incur Indebtedness (including Acquired Debt), the Company may issue Disqualified Stock, and any Guarantor may issue Preferred Stock or Disqualified Stock, if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or Preferred Stock is issued, as the case may be, would have been at least 2.25 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if such additional Indebtedness had been incurred, or such Disqualified Stock or Preferred Stock had been issued, as the case may be, at the beginning of such four-quarter period.

 

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(b) Notwithstanding the foregoing, the first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness or the issuance of any Disqualified Stock or Preferred Stock described in clauses (4) and (7) (the items described below in this paragraph being referred to collectively as “ Permitted Debt ”):

(1) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness and letters of credit under one or more Credit Facilities in an aggregate principal amount (or accreted value, as applicable) at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) not to exceed the greater of (A) $200.0 million, and (B) with respect to borrowings under an ABL Facility, the Borrowing Base;

(2) the incurrence by the Company and the Guarantors of Indebtedness represented by:

(a) the Notes and the Subsidiary Guarantees issued on the Issue Date;

(b) additional Priority Lien Debt (including additional Notes); provided that, immediately after giving effect to any such incurrence, the aggregate principal amount of Priority Lien Debt incurred under this clause (2)(b) then outstanding (including all Priority Lien Debt incurred to refinance any Indebtedness incurred pursuant to this clause (2)(b)) does not exceed the greater of (i) $37.5 million and (ii) an amount such that after giving effect to such incurrence and the use of proceeds thereof, the Priority Lien Leverage Ratio would not exceed 2.0 to 1.0; and

(c) Junior Lien Debt; provided that, immediately after giving effect to any such incurrence, the aggregate principal amount of Junior Lien Debt incurred under this clause (2)(c) then outstanding (including all Junior Lien Debt incurred to refinance any Indebtedness incurred pursuant to this clause (2)(c)) does not exceed the greater of (i) $100.0 million and (ii) an amount such that after giving effect to such incurrence and the use of proceeds thereof, the Junior Lien Leverage Ratio would not exceed 1.0 to 1.0;

(3) the incurrence by the Company or any of its Restricted Subsidiaries of Existing Indebtedness;

(4) the incurrence or issuance by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are applied to extend, renew, refund, refinance, replace, defease, discharge or otherwise retire for value, any Indebtedness (other than intercompany Indebtedness) or any Disqualified Stock of the Company, or any Indebtedness (other than intercompany Indebtedness) or Preferred Stock of any of the Restricted Subsidiaries of the Company, in each case that was permitted by this Indenture to be incurred or issued pursuant to the first paragraph of this covenant or under clauses (2), (3), (4), (6), (12) or (17) of this paragraph;

 

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(5) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided , however , that (a) if the Company or any Guarantor is the obligor and a Restricted Subsidiary of the Company that is not a Guarantor is the obligee on such Indebtedness, such Indebtedness will be subordinated to the payment in full of all Obligations then due with respect to the Notes, in the case of the Company, and the Subsidiary Guarantees, in the case of a Guarantor, and (b)(i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (ii) any sale or other transfer of any such Indebtedness to a Person that is neither the Company nor a Restricted Subsidiary of the Company, will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that is not then permitted by this clause (5);

(6) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred in connection with the purchase of, or for the purpose of financing the purchase of, all or any part of the purchase price or cost of design, construction, installation, improvement, deployment, refurbishment or modification of property, plant or equipment or furniture, fixtures and equipment, in each case, used in the business of the Company or any of its Restricted Subsidiaries, in an aggregate principal amount at any time outstanding, including all Permitted Refinancing Indebtedness incurred to extend, renew, refund, refinance, replace, defease, discharge or otherwise retire for value any Indebtedness incurred pursuant to this clause (6), not to exceed the greater of (i) $100.0 million and (ii) $25.0 million plus 10.0% of the Company’s Consolidated Tangible Assets (in each case reduced by the then outstanding principal amount of Capital Lease Obligations that were outstanding on the Issue Date and any refinancing, extensions or replacements thereof) determined as of the date of such incurrence;

(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of any Preferred Stock; provided , however , that (a) any subsequent issuance or transfer of Equity Interests that results in any such Preferred Stock being held by a Person other than the Company or a Restricted Subsidiary of the Company, and (b) any sale or other transfer of any such Preferred Stock to a Person that is neither the Company nor its Restricted Subsidiary, will be deemed, in each case, to constitute an issuance of such Preferred Stock by such Restricted Subsidiary that was not permitted by this clause (7);

(8) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness consisting of Hedging Obligations entered into in the ordinary course of business and not for speculative purposes;

 

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(9) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from agreements of the Company or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred in connection with the disposition or acquisition of any business, assets or a Restricted Subsidiary of the Company or any business or assets of its Restricted Subsidiaries, other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Restricted Subsidiary of the Company or any of its Restricted Subsidiaries for the purposes of financing such acquisition; provided , however , that (a) such Indebtedness is not reflected on the balance sheet of the Company or any of its Restricted Subsidiaries (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (a)) and (b) the maximum liability in respect of all such Indebtedness incurred in connection with a disposition shall at no time exceed the gross proceeds including noncash proceeds (the Fair Market Value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by the Company and its Restricted Subsidiaries in connection with such disposition;

(10) the Guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by any other provision of this covenant; provided that if the Indebtedness being Guaranteed is subordinated to or pari passu with the Notes, then the Guarantee must be subordinated or pari passu, as applicable, to the same extent as the Indebtedness Guaranteed;

(11) the issuance by a Restricted Subsidiary of the Company of Disqualified Stock to the Company or to any of its Restricted Subsidiaries; provided , however , that any subsequent event or issuance or transfer of any Equity Interests that results in the owner of such Disqualified Stock ceasing to be the Company or any of its Restricted Subsidiaries or any subsequent transfer of such Preferred Stock to a Person, other than the Company or one of its Restricted Subsidiaries, shall be deemed to be an issuance of Disqualified Stock by such Subsidiary that was not permitted by this clause (11);

(12) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Acquisition Indebtedness;

(13) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness incurred in the ordinary course of business under (a) documentary letters of credit, or surety bonds or insurance contracts, which are to be repaid in full not more than one year after the date on which such Indebtedness is originally incurred to finance the purchase of goods by the Company or a Restricted Subsidiary of the Company, (b) standby letters of credit, surety bonds or insurance contracts issued for the purpose of supporting (i) workers’ compensation or similar liabilities of the Company or any of its Restricted Subsidiaries or (ii) performance, payment, deposit or surety obligations of the Company or any of its Restricted Subsidiaries and (c) bid, advance payment and performance bonds and surety bonds or similar insurance contracts for the Company and its Restricted Subsidiaries, and refinancings thereof;

 

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(14) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five business days;

(15) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness to the extent that the net proceeds thereof are promptly deposited to defease or to satisfy and discharge the Notes;

(16) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness consisting of the financing of insurance premiums in customary amounts consistent with the operations and business of the Company and its Restricted Subsidiaries; and

(17) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness or the issuance by the Company of any Disqualified Stock in an aggregate principal amount (or accreted value, as applicable), including all Permitted Refinancing Indebtedness incurred to extend, renew, refund, refinance, replace, defease, discharge or otherwise retire for value any Indebtedness incurred or Disqualified Stock issued pursuant to this clause (17), not to exceed, at any one time outstanding, the greater of (a) $25.0 million and (b) 2.5% of Consolidated Tangible Assets as of any date of incurrence or issuance after giving pro forma effect to such incurrence or issuance and the application of proceeds therefrom.

(c) To the extent the Company’s Unrestricted Subsidiaries incur Non-Recourse Indebtedness and any such Indebtedness ceases to be Non-Recourse Indebtedness of such Unrestricted Subsidiary, then such event shall be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company that was subject to this covenant.

(d) For purposes of determining compliance with this covenant, in the event that an item of proposed Indebtedness (including Acquired Debt), Disqualified Stock or Preferred Stock meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (17) of the definition of “Permitted Debt” or is entitled to be incurred or issued pursuant to Section 3.2(a), the Company will be permitted, in its sole discretion, to divide, classify, redivide and reclassify such item on the date of its incurrence or issuance, or later redivide or reclassify all or a portion of such item, in any manner that complies with this Section 3.2. The accrual of interest or Preferred Stock or Disqualified Stock dividends or distributions, the accretion or amortization of original issue discount, the payment of interest in the form of additional Indebtedness, the reclassification of Preferred Stock or Disqualified Stock as Indebtedness due to a change in accounting principles, and the payment of dividends or distributions on Preferred Stock or Disqualified Stock in the form of additional shares or units of the same class of Preferred Stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Preferred Stock or Disqualified Stock for purposes of this Indenture; provided , in each such case, that the amount of any such accrual, accretion, amortization, reclassification or payment is included in Fixed Charges of the Company as accrued to the extent required by the definition of such term.

 

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(e) For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this Section 3.2, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary of the Company may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Permitted Refinancing Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Permitted Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

SECTION 3.3 Limitation on Restricted Payments .

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such, in each case other than dividends or distributions declared or paid in Equity Interests (other than Disqualified Stock) of the Company or declared or paid to the Company or any of its Restricted Subsidiaries;

(2) purchase, redeem or otherwise acquire or retire for value (including without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company (other than any such Equity Interests owned by a Restricted Subsidiary of the Company);

(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Subordinated Obligation, except a payment of interest or principal at or within one year of the Stated Maturity thereof; or

 

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(4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (3) above and this clause (4) being collectively referred to as “ Restricted Payments ”),

unless at the time of and after giving effect to such Restricted Payment:

(a) no Payment Default or Event of Default shall have occurred and be continuing; and

(b) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 3.2(a); and

(c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company or any of its Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by clauses (2) through (11) of Section 3.3(b)), is equal to or less than the sum, without duplication, of:

(i) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from October 1, 2018 to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a loss, less 100% of such loss), plus

(ii) 100% of (A) the aggregate net cash proceeds, or the Fair Market Value of assets or property other than cash, received by the Company since the Issue Date from the issue or sale of (1) Equity Interests of the Company (other than Disqualified Stock), or (2) Disqualified Stock or debt securities of the Company that have been converted into, or exchanged for, Equity Interests of the Company (other than Equity Interests (or Disqualified Stock or debt securities) of the Company sold to a Restricted Subsidiary of the Company and other than Disqualified Stock or debt securities that have been converted into or exchanged for Disqualified Stock), (B) with respect to Indebtedness that is incurred on or after the Issue Date, the amount by which such Indebtedness of the Company or any of its Restricted Subsidiaries is reduced on the Company’s consolidated balance sheet upon the conversion or exchange after the Issue Date of any such Indebtedness into or for Equity Interests of the Company (other than Disqualified Stock), and (C) the aggregate net cash proceeds, if any, received by the Company or any of its Restricted Subsidiaries upon any conversion or exchange described in clause (A) or clause (B) above, plus

 

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(iii) with respect to any Unrestricted Subsidiary that has been redesignated as a Restricted Subsidiary after the Issue Date, the Fair Market Value of the aggregate Restricted Investments made by the Company and its Restricted Subsidiaries in such Unrestricted Subsidiary at the time of such redesignation, plus

(iv) to the extent not already included in Consolidated Net Income for such period, an amount equal to the sum, without duplication, of (A) if any Restricted Investment that was made by the Company or any Restricted Subsidiary after the Issue Date is sold for cash or otherwise liquidated or repaid for cash, the cash return of capital with respect to such Restricted Investment resulting from such sale, liquidation or repayment (less any out-of-pocket costs incurred in connection with any such sale) plus (B) the net reduction in such Restricted Investment resulting from (1) repayments of loans or advances, or other transfers of assets, in each case to the Company or any of its Restricted Subsidiaries, (2) other repurchases, repayments or redemptions of such Restricted Investments, (3) the sale of any such Restricted Investment and (4) the release of any Guarantee (except to the extent any amounts are paid under such Guarantee) that constituted a Restricted Investment, plus

(v) 100% of any dividends or distributions received by the Company or any of its Restricted Subsidiaries after the Issue Date from an Unrestricted Subsidiary, to the extent such dividends or distributions were not otherwise included in Consolidated Net Income of the Company for such period.

(b) Notwithstanding the foregoing, Section 3.3(a) shall not prohibit:

(1) the payment of any dividend or distribution or the consummation of an irrevocable redemption within 60 days after the date of the declaration of such dividend or distribution or the delivery of the irrevocable notice of redemption, as the case may be, if at the date of the declaration or the date on which such irrevocable notice is delivered, such dividend, distribution or redemption would have complied with the provisions of this Indenture;

(2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of, the substantially concurrent sale or issuance (other than to a Restricted Subsidiary of the Company) of Equity Interests of the Company (other than Disqualified Stock), with a sale or issuance being deemed substantially concurrent if such Restricted Payment occurs not more than 120 days after such sale or issuance; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment shall be excluded from clause (c)(ii) of Section 3.3(a);

(3) the making of any principal payment on, or the defeasance, redemption, repurchase or other acquisition or retirement for value of any Subordinated Obligation (including the payment of any required premium and any fees and expenses incurred in connection with such defeasance, redemption, repurchase or other acquisition or retirement for value) with the net cash proceeds from a substantially concurrent incurrence of, or in substantially concurrent exchange for the issuance of, Permitted Refinancing Indebtedness;

 

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(4) the payment of any dividend or distribution by a Restricted Subsidiary of the Company to the holders of its Equity Interests (other than Disqualified Stock), including holders of Equity Interests (other than Disqualified Stock) in a Permitted Water Subsidiary, on a pro rata basis or on a basis more favorable to the Company or any of its Restricted Subsidiaries;

(5) so long as no Payment Default or Event of Default has occurred and is continuing, (i) the acquisition in open-market purchases of our common stock of the Company for matching contributions to its employee stock purchase and deferred compensation plans in the ordinary course of business; and (ii) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary of the Company held by any current or former officer, employee, consultant or director (or any of their respective heirs or estates or permitted transferees) of the Company or any of its Subsidiaries, provided , however , that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests pursuant to this clause (5) will not exceed the sum of (x) $5.0 million in any twelve-month period (with unused amounts in any twelve-month period being carried over into the following twelve-month period but not subsequent periods), plus (y) the aggregate amount of cash proceeds received by the Company from the issuance of Equity Interests (other than Disqualified Stock) to any such officer, employee, consultant or director that occurs after the Issue Date plus (z) the net cash proceeds of key man life insurance policies received by the Company or its Restricted Subsidiaries after the Issue Date;

(6) the repurchase of any Equity Interests of the Company or any of its Restricted Subsidiaries deemed to occur upon the exercise of stock or other equity options to the extent such Equity Interests represent a portion of the exercise price of those stock or other equity options, and any repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any of its Restricted Subsidiaries in connection with the exercise or vesting of any equity compensation (including, without limitation, stock or other equity options, warrants, restricted stock or equity, incentives, phantom stock or equity or other rights to acquire Equity Interests of the Company or any of its Restricted Subsidiaries) in order to satisfy the Company’s or such Restricted Subsidiaries’ tax withholding obligations with respect to such exercise or vesting;

(7) repurchases of Subordinated Obligations at a purchase price not greater than (i) 101% of the principal amount (or accreted value, if applicable) of such Subordinated Obligations plus accrued and unpaid interest thereon in the event of a Change of Control or (ii) 100% of the principal amount (or accreted value, if applicable) of such Subordinated Obligations plus accrued and unpaid interest thereon in the event of an Asset Sale, in connection with any change of control offer or asset sale offer required by the terms of such Subordinated Obligations, but only if:

 

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(a) in the case of a Change of Control, the Company has first complied with and fully satisfied its obligations under the Section 3.9, or

(b) in the case of an Asset Sale, the Company has complied with and fully satisfied its obligations in accordance with Section 3.5;

(8) payments of cash, dividends, distributions, advances or other Restricted Payments by the Company or any of its Restricted Subsidiaries to allow (a) the payment of cash in lieu of the issuance of fractional Equity Interests upon (i) the exercise of options or warrants or (ii) the conversion or exchange of Capital Stock of any such Person, and (b) the repurchase, redemption or other acquisition or retirement for value by the Company of fractional Equity Interests arising out of dividends, splits or combinations, business combinations or other transactions permitted by this Indenture;

(9) payments or distributions, directly or indirectly, to dissenting stockholders of the Company or any Restricted Subsidiary pursuant to applicable law in connection with a consolidation, amalgamation, reorganization, merger or transfer of assets of the Company or any Restricted Subsidiary that complies with Section 4.1;

(10) so long as no Payment Default or Event of Default has occurred and is continuing, the declaration and payment of regularly scheduled or accrued dividends or distributions to holders of any class or series of Disqualified Stock of the Company or any Preferred Stock of any Restricted Subsidiary of the Company issued on or after the Issue Date in accordance with the Fixed Charge Coverage Ratio in Section 3.2(a); and

(11) so long as no Payment Default or Event of Default has occurred and is continuing, other Restricted Payments in an aggregate amount at any time outstanding not to exceed $15.0 million.

(c) In determining whether any Restricted Payment is permitted by Section 3.3, the Company may allocate or reallocate all or any portion of such Restricted Payment among clauses (1) through (11) of Section 3.3(b) or among such clauses and Section 3.3(a), provided that at the time of such allocation or reallocation, all such Restricted Payments, or allocated portions thereof, would be permitted under the various provisions of this Section 3.3. The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment (or, in the case of a dividend or distribution, on the date of declaration) of the Restricted Investment proposed to be made or the assets or securities proposed to be paid, transferred or issued by the Company or any Restricted Subsidiary of the Company, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any cash Restricted Payment will be its face amount.

SECTION 3.4 Limitation on Restrictions on Distributions from Restricted Subsidiaries .

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary of the Company to:

 

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(1) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries on its Capital Stock, or pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; provided that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to the payment of dividends or liquidating distributions on common stock shall not be deemed to be a restriction on the ability to make distributions on Capital Stock;

(2) make loans or advances to the Company or any of its Restricted Subsidiaries; or

(3) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.

(b) However, the restrictions in Section 3.4(a) will not apply to encumbrances or restrictions existing under or by reason of:

(1) agreements governing Existing Indebtedness as in effect on the Issue Date and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements; provided that the encumbrances or restrictions contained in the amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the Issue Date;

(2) this Indenture, the Notes (and any additional Notes), the Subsidiary Guarantees, the Collateral Agency Agreement and the Security Documents;

(3) any future Liens that may be permitted to be granted under, or incurred not in violation of, any other provisions of this Indenture;

(4) agreements governing other Indebtedness or Preferred Stock permitted to be incurred or issued under the provisions of Section 3.2 and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements; provided that the encumbrances or restrictions contained therein are, in the good faith judgment of an officer of the Company not reasonably likely to have a material adverse effect on the ability of the Company to make required payments on the Notes;

(5) applicable law or any applicable rule, regulation, order, approval, license, permit or similar restriction;

(6) (a) any agreement or instrument relating to any property or assets acquired after the Issue Date, so long as such encumbrance or restriction relates only to the property or assets so acquired and is not and was not created in anticipation of such acquisition, and (b) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction

 

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is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, and any amendments, restatements, modifications, renewals, extensions, supplements, increases, refundings, replacements or refinancings thereof; provided , that the encumbrances and restrictions in any such amendments, restatements, modifications, renewals, extensions, supplements, increases, refundings, replacements or refinancings are, in the good faith judgment of an officer of the Company, no more restrictive, taken as a whole, than those in effect on the date of the acquisition; provided further , that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred;

(7) customary non-assignment provisions in contracts, agreements, licenses and leases entered into in the ordinary course of business;

(8) purchase money obligations, security agreements or mortgage financings for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property purchased or leased of the nature described in clause (3) of Section 3.4(a);

(9) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;

(10) agreements relating to secured Indebtedness otherwise permitted to be incurred pursuant to Section 3.2 and not in violation of Section 3.6, that limit the right of the debtor to dispose of assets securing such Indebtedness;

(11) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are, in the good faith judgment of an officer of the Company, not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;

(12) provisions with respect to the disposition or distribution of assets in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business or with the approval of the Company’s Board of Directors, which limitation is applicable only to the assets that are the subject of such agreements;

(13) encumbrances or restrictions contained in, or in respect of, Hedging Obligations incurred in the ordinary course of business and permitted under this Indenture;

(14) encumbrances or restrictions on cash, Cash Equivalents or other deposits or net worth imposed by customers or lessors under contracts or leases entered into in the ordinary course of business;

 

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(15) any instrument governing Indebtedness or Capital Stock of a Foreign Subsidiary; provided that such Indebtedness or Capital was otherwise permitted by the terms of this Indenture to be incurred or issued; and

(16) restrictions on property received in connection with a sale or issuance of Equity Interests in a Permitted Water Subsidiary that limit the use of such property in accordance with clause (12) of the definition of Asset Sale.

SECTION 3.5 Limitation on Sales of Assets and Subsidiary Stock .

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value (measured as of the date of the definitive agreement with respect to such Asset Sale) of the assets or Equity Interests issued or sold or otherwise disposed of; and

(2) either (x) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents or a combination thereof or (y) the Fair Market Value of the aggregate of all consideration other than cash or Cash Equivalents for all Asset Sales since the Issue Date would not exceed 5% of Consolidated Tangible Assets of the Company after giving effect to such Asset Sales; provided that any of the following items shall be deemed to be cash and Cash Equivalents for the purposes of this clause (2):

(a) other than with respect to an Asset Sale of Collateral, the assumption or forgiveness of any liabilities (as shown on the Company’s or the Restricted Subsidiary’s most recent balance sheet) of the Company or any Restricted Subsidiary of the Company (other than liabilities that are by their terms subordinated to Notes issued under this Indenture or any Subsidiary Guarantee) by the transferee of any such assets pursuant to a novation or other release or repurchase agreement that releases the Company or the Restricted Subsidiary from further liability;

(b) any securities, Notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or the Restricted Subsidiary into cash or Cash Equivalents within 180 days following their receipt (to the extent of cash or Cash Equivalents received); and

(c) other than with respect to an Asset Sale of Collateral, any stock or assets that constitute Replacement Assets; and

(3) the Net Proceeds from any such Asset Sale of Collateral is paid directly by the purchaser thereof to the Collateral Agent to be held in a Collateral Account for application in accordance with this covenant.

 

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Notwithstanding the foregoing provisions of the above paragraph, the Company and its Restricted Subsidiaries will not be required to cause any Net Proceeds to be held in a Collateral Account in accordance with clause (3) of the above paragraph except to the extent the aggregate Net Proceeds from all Asset Sales of Collateral that would then be held in a Collateral Account exceed $15.0 million.

(b) Within 365 days after the receipt of any Net Proceeds from an Asset Sale or, if the Company has entered into a binding commitment or commitments with respect to any of the actions described in clauses (1)(b) or (2)(a)-(d) below, within the later of (x) 360 days after the receipt of any Net Proceeds from an Asset Sale or (y) 180 days after the entering into of such commitment or commitments, the Company (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds:

(1) with respect to Asset Sales of Collateral,

(a) to repay, redeem, repurchase or otherwise retire the Notes or any other Priority Lien Debt (or any combination thereof); provided that if the Company or any Restricted Subsidiary shall so repay, redeem or reduce any Priority Lien Debt other than the Notes, the Company or such Restricted Subsidiary will redeem or equally and ratably repurchase (or offer to repurchase) the Notes as provided either, at the Company’s option, under “—Optional Redemption,” through open-market purchases (to the extent such purchases are at a purchase price at or above 100% of the principal amount thereof plus accrued but unpaid interest, if any) or by making an offer (in accordance with the procedures set forth below for an Asset Sale Offer (as defined below)) to all Holders to purchase their Notes at 100% of the principal amount thereof, plus the amount of accrued but unpaid interest, if any, on the amount of Notes that would otherwise be prepaid to the date of such repurchases; or

(b) to invest in Replacement Assets that would constitute Collateral; and

(2) with respect to Asset Sales other than an Asset Sale of Collateral,

(a) to acquire all or substantially all of the properties or assets of a Person primarily engaged in a Permitted Business if, as a result of such acquisition, such Person becomes a Restricted Subsidiary of the Company;

(b) to acquire any Capital Stock of a Person operating a Permitted Business if, after giving effect to such acquisition, such Person operating a Permitted Business is or becomes a Restricted Subsidiary of the Company;

(c) to make capital expenditures in respect of the Company’s or its Restricted Subsidiaries’ Permitted Business or make an Investment in Replacement Assets;

 

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(d) to acquire other assets that are used or useful in a Permitted Business or make an Investment in assets that will be used or useful in a Permitted Business; or

(e) to repay or retire Indebtedness of the Company or any Restricted Subsidiary (other than subordinated Indebtedness or Indebtedness owed to an Affiliate of the Company).

(c) Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 3.5(b) above shall be deemed to constitute “Excess Proceeds.” Within 10 business days after the aggregate amount of Excess Proceeds exceeds $20.0 million, or earlier at the Company’s option, the Company will be required to make an offer to the Holders of Notes issued thereunder and the holders of any other Priority Lien Debt that is subject to requirements with respect to the application of net proceeds from asset sales that are substantially similar to those contained in this Indenture (an “ Asset Sale Offer ”) to purchase on a pro rata basis (with the Excess Proceeds prorated between the Holders of the Notes and such holders of such other Priority Lien Debt based upon outstanding aggregate principal amounts) the maximum principal amount of the Notes and such other Priority Lien Debt that may be purchased or prepaid, as applicable, out of the prorated Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon to, but not including, the date of purchase, in accordance with the procedures set forth below. To the extent that the aggregate principal amount of the Notes and other Priority Lien Debt tendered (and electing to be redeemed or repaid, as applicable) pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company and its Restricted Subsidiaries may use any remaining Excess Proceeds for general corporate purposes and any other purpose not prohibited by this Indenture. If the aggregate principal amount of the Notes and such other Priority Lien Debt surrendered by holders thereof exceeds the amount of the prorated Excess Proceeds, the Company shall select the Notes and such other Priority Lien Debt to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

The Company will publicly announce the results of the Asset Sale Offer on or as soon as practicable after the date such Asset Sale Offer is completed.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 3.5, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue of the Company’s compliance with such securities laws or regulations.

(d) Any Asset Sale Offer will remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the “ Asset Sale Offer Period ”). No later than five Business Days after the termination of the Asset Sale Offer Period (the “ Asset Sale Purchase Date ”), the Company will purchase the principal amount of Notes and such other Priority Lien Debt as may be required to be purchased pursuant to this Section 3.5 (the “ Asset Sale Offer Amount ”) or, if less than the Asset Sale Offer Amount has been so validly tendered and not properly withdrawn, all Notes and such other Priority Lien Debt validly tendered and not properly withdrawn in response to the Asset Sale Offer.

 

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If the Asset Sale Purchase Date is on or after an interest record date and on or before the related Interest Payment Date, any accrued and unpaid interest, if any, will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no further interest will be payable to Holders who tender Notes pursuant to the Asset Sale Offer.

On or before the Asset Sale Purchase Date, the Company will, to the extent lawful, accept for payment, to the extent necessary on a pro rata basis as described above (except that any Notes represented by a Note in global form will be selected by such method as DTC or its nominee or successor may require or, where such nominee or successor is the Trustee, a method that most nearly approximates pro rata selection as the Trustee deems fair and appropriate unless otherwise required by law), Notes and such other Priority Lien Debt or portions of Notes and such other Priority Lien Debt so validly tendered and not properly withdrawn pursuant to the Asset Sale Offer, or if less than the Asset Sale Offer Amount has been validly tendered and not properly withdrawn, all Notes and such other Priority Lien Debt so validly tendered and not properly withdrawn, in each case in minimum principal amount of $2,000 and integral multiples of $1,000 in excess of $2,000; provided that if, following the repurchase of a portion of a Note, the remaining principal amount of such Note outstanding immediately after such repurchase would be less than $2,000, then the portion of such Note so repurchased shall be reduced such that the remaining principal amount of such Note outstanding immediately after such repurchase is $2,000. The Company will deliver to the Trustee an Officers’ Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.5 and, in addition, the Company will deliver all certificates and notes required, if any, by the agreements governing other Priority Lien Debt. The Company or the paying agent, as the case may be, will promptly (but in any case not later than five Business Days after the termination of the Asset Sale Offer Period) mail (or otherwise deliver in accordance with the applicable procedures of DTC) to each tendering Holder of Notes or holder or lender of such other Priority Lien Debt, as the case may be, an amount equal to the purchase price of the Notes or such other Priority Lien Debt so validly tendered and not properly withdrawn by such holder or lender, as the case may be, and accepted by the Company for purchase, and the Company will promptly issue a new Note, and the Trustee, upon delivery of an authentication order from the Company, will authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered; provided that each such new Note will be in a minimum principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000. In addition, the Company will take any and all other actions required by the agreements governing such other Priority Lien Debt. Any Note not so accepted will be promptly mailed or delivered by the Company to the Holder thereof.

SECTION 3.6 Limitation on Liens . The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock of a Restricted Subsidiary), whether owned on the Issue Date or acquired after that date, securing any Indebtedness.

 

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SECTION 3.7 Designation of Restricted and Unrestricted Subsidiaries .

The Board of Directors may designate any Subsidiary of the Company to be an Unrestricted Subsidiary under the circumstances and pursuant to the requirements described in the definition of “ Unrestricted Subsidiary ” which requirements include that such designation will be made in compliance with this Section 3.7. For purposes of making the determination as to whether such designation would be made in compliance with this Section 3.7, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary so designated will be deemed to be either Restricted Payments at the time of such designation and will reduce the amount available for Restricted Payments under Section 3.3(a) or constitute Permitted Investments to the extent available, as determined by the Company. All such outstanding Investments will be deemed to constitute Investments in an amount equal to the Fair Market Value of such Investments at the time of such designation. Any designation of a Subsidiary of the Issuer as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee an Officers’ Certificate certifying that such designation complied with the preceding conditions of this Section 3.7 and was permitted by the definition of “ Unrestricted Subsidiary ” herein.

The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if:

(1) immediately after giving effect to such designation, the Company could incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test in Section 3.2(a) or the Fixed Charge Coverage Ratio of the Company immediately after giving effect to such designation would not be less than the Fixed Charge Coverage Ratio of the Company immediately prior to such designation, and

(2) immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing.

SECTION 3.8 Limitation on Affiliate Transactions .

The Company will not, and will not permit any of its Restricted Subsidiaries to make any payment to, or sell, lease, transfer or otherwise dispose of any properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate of any such Person (each of the foregoing, an “ Affiliate Transaction ”) if such Affiliate Transaction involves aggregate consideration in excess of $2.0 million, unless:

(1) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that could have been obtained in a transaction by the Company or such Restricted Subsidiary with an unrelated Person or, if no comparable transaction is available with which to compare such Affiliate Transaction, such Affiliate Transaction is otherwise fair to the Company or the relevant Restricted Subsidiary from a financial point of view, evidenced (if required by clause (2) below) by the Officers’ Certificate provided for in clause (2) below; and

 

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(2) the Company delivers to the Trustee:

(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of at least $20.0 million but equal to or less than $40.0 million, an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (1) above; and

(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $40.0 million, a resolution of its Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (1) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of its Board of Directors, if any;

provided , that none of the following shall be deemed to be Affiliate Transactions and therefore shall not be subject to the provisions of the preceding paragraph:

(1) any employment or consulting agreement, equity award, equity option or equity appreciation agreement or plan, agreement, any officer or director indemnification, compensation or severance agreement or other similar compensation plan, agreement or arrangement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of its business and any payments pursuant thereto;

(2) transactions between or among (A) the Company and one or more Restricted Subsidiaries and (B) any Restricted Subsidiaries;

(3) transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliate of the Company solely because the Company owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;

(4) the performance of any written agreement in effect on the Issue Date, as such agreement may be amended, modified or supplemented from time to time; provided , however , that any amendment, modification or supplement entered into after the Issue Date will be permitted only to the extent that its terms do not adversely affect the rights of any Holders of the Notes (as determined in good faith by an officer of the Company) as compared to the terms of the agreement in effect on the Issue Date;

(5) loans or advances to officers, directors and employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures and other purposes, in each case, in the ordinary course of business;

(6) maintenance in the ordinary course of business of customary benefit programs or arrangements for employees, officers or directors, including vacation plans, health and life insurance plans, deferred compensation plans and retirement or savings plans and similar plans;

(7) fees and compensation paid to, and indemnity and insurance provided on behalf of, officers, directors, employees or consultants of the Company or any of its Restricted Subsidiaries in their capacity as such, to the extent such fees and compensation are reasonable and customary;

 

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(8) sales of Equity Interests of the Company (other than Disqualified Stock) to, or receipt of capital contributions from, Affiliates of the Company or any of its Restricted Subsidiaries;

(9) Restricted Payments that are permitted by Section 3.3 and any Permitted Investments;

(10) payments to an Affiliate in respect of the Notes or any other Indebtedness of the Company or any of its Restricted Subsidiaries on the same basis as concurrent payments are made or offered to be made in respect thereof to non-Affiliates;

(11) pledges by the Company or any of its Restricted Subsidiaries of Equity Interests in Unrestricted Subsidiaries for the benefit of lenders or other creditors of Unrestricted Subsidiaries;

(12) any transactions between the Company or any Restricted Subsidiary and any Person that is an Affiliate solely because a director of Person is also a director of the Company or a Restricted Subsidiary; provided that such director abstains from voting as a director of the Company or the Restricted Subsidiary, as applicable, in connection with the approval of the transaction; and

(13) any transaction in which the Company or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an accounting, appraisal or investment banking firm of national standing stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or that such transaction meets the requirements of clause (1) of the preceding paragraph.

SECTION 3.9 Purchase of Notes Upon a Change of Control .

(a) If a Change of Control occurs, each Holder of Notes will have the right, except as provided below, to require the Company to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holder’s Notes pursuant to an offer (a “ Change of Control Offer ”) on the terms set forth in this Indenture. In the Change of Control Offer, the Company will offer a payment in cash (a “ Change of Control Payment ”) equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest, if any, on the Notes repurchased to the date of purchase (the “ Change of Control Payment Date ”), subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant Interest Payment Date. Within 30 days following any Change of Control, the Company will send a notice to each Holder of Notes, describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes properly tendered prior to the expiration date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is sent, pursuant to the procedures required by this Indenture and described in such notice.

 

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(b) Promptly following the expiration of the Change of Control Offer, the Company will, to the extent lawful, accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer. Promptly following such acceptance, the Company will, on the Change of Control Payment Date:

(1) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

(2) deliver or cause to be delivered to the Trustee the Notes properly accepted for payment, together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.

(c) The paying agent will promptly mail or wire transfer to each Holder of Notes properly tendered the Change of Control Payment for such Notes (or, if all the Notes are then in global form, make such payment through the facilities of the depositary), and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000. Any Note so accepted for payment will cease to accrue interest on and after the Change of Control Payment Date unless the Company defaults in making the Change of Control Payment. The Company will announce to the Holders of the Notes the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

(d) The provisions described above that require the Company to make a Change of Control Offer following a Change of Control will be applicable regardless of whether any other provisions of this Indenture are applicable, except as described in the immediately following paragraph.

(e) The Company will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, (2) a notice of redemption with respect to all outstanding Notes has been given pursuant to Article V unless and until there is a default in payment of the applicable Redemption Price, or (3) in connection with or in contemplation of any Change of Control, the Company has made an offer to purchase (an “ Alternate Offer ”) any and all Notes validly tendered at a cash price equal to or higher than the Change of Control Payment and has purchased all Notes properly tendered in accordance with the terms of such Alternate Offer.

(f) Notwithstanding anything to the contrary contained in this Indenture, a Change of Control Offer or an Alternate Offer may be made in advance of a Change of Control and conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer or Alternate Offer is made. The closing date of any such Change of Control Offer made in advance of a Change of Control may be changed to conform to the actual closing date of the Change of Control; provided that such closing date is not earlier than 30 days nor later than 60 days from the date the Change of Control Offer notice is sent as described in the first paragraph of this section.

 

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(g) In the event that Holders of not less than 90% in aggregate principal amount of the outstanding Notes accept a Change of Control Offer or Alternate Offer and the Company (or any third party making such Change of Control Offer in lieu of the Company as described above) purchases all of the Notes held by such Holders, the Company will have the right, upon not less than 30 nor more than 60 days’ prior notice, given not more than 30 days following such purchase pursuant to the Change of Control Offer or Alternate Offer described above, to redeem all of the Notes that remain outstanding following such purchase at a Redemption Price equal to the Change of Control Payment, plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest, if any, on the Notes that remain outstanding, to the Redemption Date (subject to the rights of Holders of record on the relevant record date to receive interest due on an Interest Payment Date that is on or prior to the Redemption Date).

(h) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of this Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of this Indenture by virtue of such compliance.

SECTION 3.10 Reports .

Regardless of whether required by the SEC’s rules and regulations, so long as any Notes are outstanding, the Company will furnish to the Trustee and each Holder of Notes, within the time periods specified in the SEC’s rules and regulations:

(1) all quarterly and annual reports that would be required to be filed with the SEC on Forms 10-Q and 10-K if the Company were required to file such reports, and

(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports.

For the avoidance of doubt, the above information will not be required to contain (a) the separate financial information for Guarantors as contemplated by Rule 3-10 of Regulation S-X, (b) any financial statements of unconsolidated subsidiaries or 50% or less owned persons as contemplated by Rule 3-09 of Regulation S-X, (c) any information contemplated by Rule 3-16 of Regulation S-X, (d) any schedules required by Regulation S-X, or (e) in each such case, any successor provisions.

All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports. Each annual report on Form 10-K will include a report on the Company’s consolidated financial statements by the Company’s certified independent accountants. In addition, the Company will file a copy of each of the reports referred to in clauses (1) and (2) above with the SEC for public availability within the time periods specified in the rules and regulations applicable to such reports (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request.

 

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If at any time the Company is no longer subject to the periodic reporting requirements of the Exchange Act for any reason, the Company will nevertheless continue filing the reports specified in the preceding paragraph with the SEC within the time periods specified above, unless the SEC will not accept such a filing. The Company agrees that it will not take any action for the purpose of causing the SEC not to accept any such filings. If, notwithstanding the preceding, the SEC will not accept the Company’s filings for any reason, the Company will post the reports referred to in the preceding paragraph on its website within the time periods that would apply if the Company were required to file those reports with the SEC.

In addition, the Company and the Guarantors agree that, for so long as any Notes remain outstanding, at any time the Company is not required to file the reports required by the preceding paragraphs with the SEC, they will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Any and all Defaults or Events of Default arising from a failure to furnish in a timely manner any financial information required by this covenant shall be deemed cured (and the Company shall be deemed to be in compliance with this covenant) upon furnishing such financial information as contemplated by this covenant (but without regard to the date on which such financial statement or report is so furnished); provided that such cure shall not otherwise affect the rights of the Holders under Article VI if the principal of, premium, if any, on, and interest, if any, on, the Notes have been accelerated in accordance with the terms of this Indenture and such acceleration has not been rescinded or cancelled prior to such cure.

The Company will be deemed to have furnished such reports to the Trustee and the Holders of Notes if it has filed such reports with the SEC using the EDGAR filing system and such reports are publicly available.

Delivery of such reports, information and documents to the Trustee is for informational purposes only, and the Trustee’s receipt of the reports will not constitute constructive notice to either the Trustee or the Collateral Agent of any information contained therein or determinable from information contained in them, including the Company’s compliance with any of its covenants under this Indenture and the Collateral Agency Agreement (as to which the Trustee and the Collateral Agent are entitled to rely exclusively on Officers’ Certificates).

SECTION 3.11 Future Guarantors .

The Company will cause (i) each Restricted Subsidiary (other than a Receivables Subsidiary) that is not a Guarantor that Guarantees or otherwise becomes liable for any Indebtedness of the Company or another Guarantor, or (ii) each Restricted Subsidiary (other than a Foreign Subsidiary, a Receivables Subsidiary or an Immaterial Subsidiary) that owns any property or assets of a type that would constitute Collateral (excluding Excluded Property), within 30 days of any such Guarantee or obligation, in the case of clause (i), or the acquisition or creation of such Restricted Subsidiary or such Restricted Subsidiary ceasing to be an Immaterial Subsidiary, in the case of clause (ii), to execute and deliver to the Trustee a supplement to this Indenture substantially in the form of Exhibit  B pursuant to which such Restricted Subsidiary will become a Guarantor, subject to all of the provisions of Article X. Each Restricted Subsidiary that

 

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becomes a Guarantor after the date of issuance of the Notes will also become a party to the Collateral Agency Agreement and the applicable Security Documents and will take such actions as are reasonably necessary or advisable to grant the Collateral Agent for the benefit of the Holders of the Notes and, the Trustee, a first-priority Lien in any Collateral held by such Restricted Subsidiary.

SECTION 3.12 Maintenance of Office or Agency . The Company will maintain an office or agency where the Notes may be presented or surrendered for payment, where, if applicable, the Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The corporate trust office of the Trustee indicated in Section 2.3 shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the corporate trust office of the Trustee indicated in Section 12.2, and the Company hereby appoint the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind any such designation. The Company will give prompt written notice to the Trustee of any such designation or rescission and any change in the location of any such other office or agency.

SECTION 3.13 Corporate Existence . Except as otherwise provided in Article IV, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its and its Restricted Subsidiaries’ existence, rights (charter and statutory), licenses and franchises; provided , however , that the Company shall not be required to preserve any such Restricted Subsidiaries’ right, license or franchise if it shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries, taken as a whole.

SECTION 3.14 Payment of Taxes . The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all material taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary; provided , however , that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment or charge the amount, applicability or validity of which is being contested in good faith by appropriate proceedings.

SECTION 3.15 Compliance Certificate . The Company and the Guarantors shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company ending after the Issue Date an Officers’ Certificate signed by the principal executive officer, the principal accounting officer or the principal financial officer of each of the Company and the Guarantors, stating that a review of the activities of the Company and its Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to

 

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determining whether each of the Company and the Guarantors has performed its obligations under this Indenture, and further stating whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe such Default, its status and what action the Company is taking or proposes to take with respect thereto.

SECTION 3.16 Further Instruments and Acts . Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

SECTION 3.17 Statement by Officers as to Default . The Company shall, so long as any Note is outstanding, deliver to the Trustee within 30 days after the Company becomes aware of the occurrence of a Default or receives notice of such Default, as applicable, written notice of any Defaults, their status and what action the Company is taking or proposing to take in respect thereof.

ARTICLE IV

SUCCESSOR COMPANY

SECTION 4.1 Merger and Consolidation .

The Company will not consolidate or merge with or into, or sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole in one or more related transactions, to another Person, unless:

(1) either (a) the Company is the resulting, transferee or surviving Person or (b) the resultant, transferee or surviving Person (if other than the Company) is a corporation, limited liability company or limited partnership organized and existing under the laws of the United States or any state thereof or the District of Columbia and such resulting, transferee or surviving Person assumes, pursuant to a supplemental Indenture and other documentation in form and substance reasonably satisfactory to the Trustee, all of the obligations and covenants of the Company under this Indenture and the Notes;

(2) immediately before and after such transaction, no Default or Event of Default has occurred and is continuing; and

(3) except in the case of a consolidation or merger of the Company with or into a Restricted Subsidiary, or a sale, assignment, transfer, conveyance or other disposition of properties or assets to the Company or a Restricted Subsidiary, either:

(i) immediately after giving pro forma effect to such transaction as if such transaction had occurred at the beginning of the applicable four-quarter period, the Company or the resultant, transferee or surviving Person (if other than the Company) would have a Fixed Charge Coverage Ratio that is not less than the Fixed Charge Coverage Ratio of the Company immediately prior to such transaction; or

 

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(ii) immediately after giving pro forma effect to such transaction as if such transaction had occurred at the beginning of the applicable four-quarter period, the Company or the resultant transferee or surviving Person (if other than the Company) would be able to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 3.2(a);

(4) the Person formed by or surviving any such consolidation or merger (if other than the Company) shall take such action (or agree to take such action) as may be necessary to cause any property or assets that constitute Collateral owned by or transferred to such Person to be subject to a Priority Lien in the manner and to the extent required under the Security Documents; and

(5) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or disposition and such supplemental Indenture or other appropriate agreement (if any) comply with this Indenture and all conditions precedent set forth therein relating to such transaction have been satisfied.

SECTION 4.2 Successor Substituted . Upon any transaction or series of related transactions that are of the type described in, and are effected in accordance with, the foregoing paragraph, the surviving Person (if other than the Company) shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the Notes with the same effect as if such surviving Person had been named as the Company in this Indenture, and when a surviving Person duly assumes all of the obligations and covenants of the Company pursuant to this Indenture and the Notes, the predecessor Person shall be relieved of all such obligations.

In addition, the Company may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person.

SECTION 4.3 Guarantor Merger . A Guarantor may not sell or otherwise dispose of all or substantially all of its properties or assets to, or consolidate with or merge with or into, another Person (regardless of whether such Guarantor is the resulting, transferee or surviving Person) other than the Company or another Guarantor, unless:

(1) immediately after giving effect to such transaction, no Default or Event of Default exists; and

(2) either:

(a) the Person acquiring the properties or assets in any such sale or other disposition or the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) unconditionally assumes, pursuant to a supplemental Indenture and other documentation, all the obligations of such Guarantor under this Indenture, its Subsidiary Guarantee and the Security Documents to which it is party; or

(b) such sale or other disposition does not violate Section 3.5.

 

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ARTICLE V

REDEMPTION OF NOTES

SECTION 5.1 Redemption . The Notes may be redeemed at the Company’s option as provided in this Article V. The Notes will not be subject to mandatory redemption sinking fund requirements. The Company may purchase Notes in the open market or privately negotiated transactions at any time or from time to time.

SECTION 5.2 Optional Redemption .

(a) Except as described below in this Section 5.2, the Notes are not redeemable at the Company’s option until October 15, 2020.

(b) On or after October 15, 2020, the Company may on any one or more occasions redeem all or a part of the Notes, upon notice as provided herein, at the Redemption Prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, on the Notes redeemed, to the applicable Redemption Date, if redeemed during the twelve-month period beginning on October 15 of the years indicated below, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant Interest Payment Date:

 

Year

   Percentage  

2020

     105.375

2021

     102.688

2022

     100.000

(c) At any time on or after April 15, 2019 and prior to October 15, 2020, concurrently with or within 35 days after (but not prior to) the consummation of a transaction that constitutes a Company Sale, the Company or any acquirer may (together with any other concurrent redemption pursuant to another provision described herein) redeem all, but not less than all, of the outstanding Notes, upon notice as provided herein, at a Redemption Price equal to (i) 105.375% of the principal amount of the Notes redeemed if the Company Sale is consummated on or after April 15, 2019 and on or prior to October 15, 2019, or (ii) 108.063% of the principal amount of the Notes redeemed if the Company Sale is consummated after October 15, 2019 and prior to October 15, 2020), plus in each case accrued and unpaid interest, if any, to, but not including, the Redemption Date (subject to the right of Holders of Notes on the relevant record date to receive interest due on the relevant Interest Payment Date falling on or prior to the Redemption Date).

(d) At any time or from time to time prior to October 15, 2020, the Company may also redeem all or a part of the Notes, upon notice as provided herein, at a Redemption Price equal to the Make-Whole Price, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant Interest Payment Date. The notice of redemption with respect to the foregoing redemption need not set forth the Make-Whole Price but only the manner of calculation thereof. The Company will notify the Trustee of the Make-Whole Price with respect to any such redemption promptly after the calculation, and the Trustee shall not be responsible for such calculation.

 

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(e) At any time prior to October 15, 2020, the Company may, on any one or more occasions, redeem up to 35% of the aggregate principal amount of Notes issued under this Indenture, upon notice as provided in this Indenture, with an amount of cash not greater than the net cash proceeds from one or more Equity Offerings at a Redemption Price equal to 110.750% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to the Redemption Date (subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant Interest Payment Date); provided that:

(1) at least 65% of the aggregate principal amount of Notes originally issued under this Indenture on the Issue Date (excluding Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and

(2) the redemption occurs within 180 days of the date of the closing of such Equity Offering.

(f) The Notes are also subject to redemption as provided in Section 3.9(g).

SECTION 5.3 Election to Redeem; Notice to Trustee . In case of any redemption at the election of the Company, the Company shall, not later than five Business Days prior to giving notice of any redemption pursuant to Section 5.5 (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such Redemption Date and of the principal amount of Notes to be redeemed and, in the case of any redemption of less than all Notes, shall deliver to the Trustee such documentation and records as shall enable the Trustee to select the Notes to be redeemed pursuant to Section 5.4. Any such notice may be cancelled at any time prior to notice of such redemption being given to any Holder and shall thereby be void and of no effect.

SECTION 5.4 Selection by Trustee of Notes to Be Redeemed . If less than all the Notes are to be redeemed at any time pursuant to an optional redemption, the particular Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the outstanding Notes not previously called for redemption, on a pro rata basis (or, in the case of Notes issued in global form based on such method as DTC or its nominee or successor may require or, where such nominee or successor is the Trustee, such method that most nearly approximates pro rata selection as the Trustee deems fair and appropriate, unless otherwise required by law). Any partial redemption may provide for the selection for redemption of portions of the principal of the Notes in denominations of $2,000 or larger integral multiples of $1,000; provided , however , that no such partial redemption shall reduce the portion of the principal amount of a Note not redeemed to less than $2,000.

The Trustee shall promptly notify the Company of any Notes selected for redemption other than in accordance with DTC’s procedures and, in the case of any Notes selected for partial redemption, the method it has chosen for the selection of Notes and the principal amount thereof to be redeemed.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.

 

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SECTION 5.5 Notice of Redemption . Notice of redemption shall be given in the manner provided for in Section 12.2, not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Notes to be redeemed, except that redemption notices may be given more than 60 days prior to a Redemption Date if the notice is issued in connection with a Legal Defeasance or Covenant Defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Article VIII. At the Company’s request, the Trustee shall give notice of redemption in the Company’s name and at the Company’s expense; provided , however , that the Company shall deliver to the Trustee, at least five Business Days prior to the giving of such notice (unless a shorter period shall be satisfactory to the Trustee), a Company Order requesting that the Trustee give such notice at the Company’s expense and setting forth the information to be stated in such notice as provided in the following items.

All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price, if then determinable, and otherwise the method for its determination and the amount of accrued interest to the Redemption Date payable as provided in Section 5.7, if any,

(3) if less than all outstanding Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption,

(4) in case any Note is to be redeemed in part only, the notice which relates to such Note shall state the portion of the principal amount thereof to be redeemed and that on and after the Redemption Date, upon surrender of such Note, the Holder will receive, without charge, a new Note or Notes of authorized denominations for the principal amount thereof remaining unredeemed,

(5) that, subject to the satisfaction of any condition precedent specified in such notice, on the Redemption Date the Redemption Price (and accrued interest, if any, to the Redemption Date payable as provided in Section 5.7) will become due and payable upon each such Note, or the portion thereof, to be redeemed, and, unless the Company defaults in making the redemption payment, that interest, if any, on Notes called for redemption (or the portion thereof) will cease to accrue on and after said date,

(6) the place or places where such Notes are to be surrendered for payment of the Redemption Price and accrued interest, if any,

(7) the name and address of the Paying Agent,

(8) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price,

 

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(9) the CUSIP, Common Code and ISIN numbers, if applicable, and may state that no representation is made as to the accuracy or correctness of the CUSIP, Common Code and ISIN numbers, if applicable, if any, listed in such notice or printed on the Notes, and

(10) the Section of this Indenture, pursuant to which the Notes are to be redeemed.

Any redemption or notice of redemption may, at the Company’s discretion, be subject to one or more conditions precedent specified in the notice of redemption.

SECTION 5.6 Deposit of Redemption Price . Prior to 11:00 a.m., New York City time, on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company or any of the Company’s Restricted Subsidiaries is acting as its own Paying Agent, segregate and hold in trust as provided in Section 2.4) an amount of money sufficient to pay the Redemption Price of and accrued interest on, all the Notes which are to be redeemed on that date, other than Notes or portions of Notes called for redemption that are beneficially owned by the Company and have been delivered by the Company to the Trustee for cancellation.

SECTION 5.7 Notes Payable on Redemption Date . Notice of redemption having been given as aforesaid, the Notes or portions of Notes so to be redeemed shall, subject to satisfaction of any conditions to such redemption as more fully described below, on the Redemption Date, become due and payable at the Redemption Price therein specified (together with accrued interest, if any, to the Redemption Date), and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Notes shall cease to bear interest and the only right of the Holders thereof will be to receive payment of the Redemption Price and unpaid interest on such Notes to the Redemption Date. Any redemption or notice of redemption may, at the Company’s discretion, be subject to one or more conditions precedent and, in the case of a redemption with the net cash proceeds of an Equity Offering, be given prior to and conditioned on the completion of the related Equity Offering. In the Company’s discretion, any Redemption Date for any redemption that is subject to one or more conditions precedent may be delayed for up to 30 days until such time as any or all such conditions precedent are satisfied. Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date, provided , however , that installments of interest whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holder of such Note, or one or more predecessor Notes, registered as such as of the relevant record date.

If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the unpaid principal (including premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Notes.

SECTION 5.8 Notes Redeemed in Part . Any Note which is to be redeemed only in part (pursuant to the provisions of this Article) shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 3.12 (with, if the Company or the Trustee so require, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly

 

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authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Note at the expense of the Company, a new Note or Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered; provided , that each such new Note will be in a principal amount of $2,000 or larger integral multiple of $1,000.

ARTICLE VI

DEFAULTS AND REMEDIES

SECTION 6.1 Events of Default . An “ Event of Default ” wherever used herein, means any one of the following events in relation to the Notes (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(1) a default in payment when due of interest on the Notes for 30 days;

(2) default in the payment of principal of or premium, if any, on any Note when due (at its Stated Maturity, upon optional redemption, upon required purchase, upon declaration of acceleration or otherwise);

(3) the failure by the Company for 30 days to comply with any of its obligations under Article IV or any of its obligations in Sections 3.5 and 3.9 to offer to purchase or purchase Notes;

(4) the failure by the Company for 180 days after written notice as provided below to comply with any of its obligations in Section 3.10;

(5) failure by the Company for (i) 30 days after notice as provided below to comply with any of the covenants (other than those described in clauses (3) or (4) above) described under Section 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, or 3.11 or (ii) 60 days after notice as provided below to comply with any other agreements in this Indenture;

(6) default under any mortgage, Indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, which default:

(a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness (for purposes of this provision, a “ payment default ”); or

(b) results in the acceleration of such Indebtedness prior to its express maturity; and

 

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(c) in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates without duplication $40.0 million or more;

(7) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $40.0 million (excluding amounts covered by insurance), which judgments are not paid, discharged or stayed for a period of 60 days;

(8) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries) would constitute a Significant Subsidiary in an involuntary case or proceeding under any applicable Bankruptcy Law or (B) a decree or order adjudging the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries) would constitute a Significant Subsidiary a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the last audited consolidated financial statements for the Company and its Restricted Subsidiaries) would constitute a Significant Subsidiary, under any applicable Bankruptcy Law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the last audited consolidated financial statements for the Company and its Restricted Subsidiaries) would constitute a Significant Subsidiary, or of any substantial part of its or their property, or ordering the winding up or liquidation of its or their affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days;

(9) the commencement by the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the last audited consolidated financial statements for the Company and its Restricted Subsidiaries) would constitute a Significant Subsidiary of a voluntary case or proceeding under any applicable Bankruptcy Law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it or them to the entry of a decree or order for relief in respect of the Company or in an involuntary case or proceeding under any applicable Bankruptcy Law or to the commencement of any bankruptcy or insolvency case or proceeding against it or them, or the filing by it or them of a petition or answer or consent seeking reorganization or relief under any applicable Bankruptcy Law, or the consent by it or them to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the last audited consolidated financial statements for the Company and its Restricted Subsidiaries) would constitute a Significant Subsidiary or of any substantial part of its or their property, or the making by it or them of an assignment for the benefit of creditors, or the admission by it or them in writing of its or their inability to pay its or their debts generally as they become

 

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due, or the taking of corporate action by the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the last audited consolidated financial statements for the Company and its Restricted Subsidiaries) would constitute a Significant Subsidiary in furtherance of any such action;

(10) except as permitted by this Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any such Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee (other than by reason of the termination of this Indenture or the release of any such Subsidiary Guarantee in accordance with this Indenture); and

(11) the occurrence of any of the following:

(a) except as permitted by this Indenture or the relevant Security Documents, any Security Document ceases for any reason to be fully enforceable in any material respect; provided that it will not be an Event of Default under this clause (11)(a) if the sole result of the failure of one or more Security Documents to be fully enforceable in any material respect is that any Lien purported to be granted under such Security Documents on Collateral, individually or in the aggregate, having a Fair Market Value of not more than $20.0 million ceases to be an enforceable and perfected first-priority Lien;

(b) except as permitted by this Indenture or the relevant Security Documents, any Lien for the benefit of the Holders of the Notes purported to be granted under any Security Document on Collateral, individually or in the aggregate, having a Fair Market Value in excess of $20.0 million ceases to be an enforceable and perfected first-priority Lien in any material respect, subject only to Permitted Collateral Liens, and such condition continues for 30 days after written notice by the Collateral Agent of failure to comply with such requirement; provided that it will not be an Event of Default under this clause if such condition results from the action or inaction of the Trustee or the Collateral Agent; or

(c) the Company or any Restricted Subsidiary of the Company, or any Person acting on behalf of any of them, denies or disaffirms, in writing, any material obligation of the Company or such Restricted Subsidiary set forth in or arising under any Security Document for the benefit of the Holders of the Notes.

However, a Default under clauses (4) and (5) of this Section 6.1 will not constitute an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes notify the Company in writing and, in the case of a notice given by the Holders, the Trustee of the default and the Company does not cure such Default within the time specified in clauses (4) and (5) of this Section 6.1 after receipt of such notice. In the case of an Event of Default specified in clause (6) of the first paragraph under this caption, such Event of Default and all consequences thereof (excluding, however, any resulting payment default) will be annulled, waived and rescinded with respect to the Notes, automatically and without any action by the Trustee or the Holders of the Notes, if within 30 days after such Event of Default first arose the Company delivers

 

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an Officers’ Certificate to the Trustee stating that (1) the Indebtedness or Guarantee that is the basis for such Event of Default has been paid or discharged, (2) the holders of the Indebtedness have rescinded or waived the acceleration giving rise to such Event of Default or (3) the Default that is the basis for such Event of Default has been otherwise cured; provided , however , that in no event shall an acceleration of the principal amount of the Notes as described above be annulled, waived or rescinded upon the happening of any such events.

SECTION 6.2 Acceleration . If an Event of Default (other than an Event of Default described in Section 6.1(8) and (9)) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the outstanding Notes by notice to the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of and accrued and unpaid interest, if any, on all the Notes to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default described in Section 6.1(8) and (9) occurs and is continuing, the principal of and accrued and unpaid interest, if any, on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Without limiting the generality of the foregoing, it is understood and agreed that if the Notes are accelerated or otherwise become due prior to their Maturity Date, in each case, in respect of any Event of Default (including, but not limited to, Sections 6.1(8) or (9) (including the acceleration of claims by operation of law)), the then applicable premium applicable with respect to an optional redemption of the Notes (which, for all purposes of the paragraphs under “Events of Default,” shall be understood to include the applicable Redemption Price, including the Make-Whole Price, if then applicable) will also be due and payable as though the Notes were optionally redeemed and shall constitute part of the Obligations, in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of each Holder’s lost profits as a result thereof. Any premium payable above shall be presumed to be the liquidated damages sustained by each Holder as the result of the early redemption and the Company agrees that it is reasonable under the circumstances currently existing. The premium shall also be payable in the event the Notes (and/or the Indenture) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other means. THE COMPANY EXPRESSLY WAIVES (TO THE FULLEST EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING PREMIUM IN CONNECTION WITH ANY SUCH ACCELERATION. The Company expressly agrees (to the fullest extent it may lawfully do so) that: (A) the premium is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (B) the premium shall be payable notwithstanding the then prevailing market rates at the time payment is made; (C) there has been a course of conduct between Holders and the Company giving specific consideration in this transaction for such agreement to pay the premium; and (D) the Company shall be estopped hereafter from claiming differently than as agreed to in this paragraph. The Company expressly acknowledge that its agreement to pay the premium to Holders as herein described is a material inducement to Holders to purchase the Notes.

SECTION 6.3 Other Remedies . Subject to the Collateral Agency Agreement, if an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes, this Indenture or the Subsidiary Guarantees, the Collateral Agency Agreement or the Notes Documents.

 

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The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Noteholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

SECTION 6.4 Waiver of Past Defaults . The Holders of a majority in principal amount of the outstanding Notes by written notice to the Trustee (with a copy to the Company, but the applicable waiver or rescission shall be effective when the notice is given to the Trustee) may (a) waive, by their consent (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), an existing Default or Event of Default and its consequences except (i) a Default or Event of Default in the payment of the principal of or interest on a Note or (ii) a Default or Event of Default in respect of a provision that under Section 9.2 cannot be amended without the consent of each Noteholder affected and (b) rescind any acceleration with respect to the Notes and its consequences if (1) such rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the principal of and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived. When a Default or Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any consequent right.

SECTION 6.5 Control by Majority . The Holders of a majority in principal amount of the outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or the Collateral Agent or of exercising any trust or power conferred on the Trustee or the Collateral Agent, as the case may be. However, the Trustee or the Collateral Agent, as the case may be, may refuse to follow any direction that conflicts with law or this Indenture, the Notes or the Subsidiary Guarantees or, subject to Sections 7.1 and 7.2, that the Trustee or the Collateral Agent determines is unduly prejudicial to the rights of other Noteholders or would involve the Trustee or the Collateral Agent in personal liability; provided , however , that the Trustee or the Collateral Agent may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any such action hereunder, the Trustee or the Collateral Agent shall be entitled to indemnification or security satisfactory to it against all losses and expenses caused by taking or not taking such action.

SECTION 6.6 Limitation on Suits . Subject to Section 6.7, a Noteholder may not pursue any remedy with respect to the Notes Documents unless:

(1) such Holder has previously given the Trustee written notice that an Event of Default is continuing;

(2) Holders of at least 25% in principal amount of the outstanding Notes have requested in writing the Trustee to pursue the remedy;

 

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(3) such Holders have offered the Trustee security or indemnity satisfactory to it against any loss, liability or expense;

(4) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and

(5) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

A Noteholder may not use this Indenture to prejudice the rights of another Noteholder or to obtain a preference or priority over another Noteholder (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Noteholders).

SECTION 6.7 Rights of Holders to Receive Payment . Notwithstanding any other provision of this Indenture (including Section 6.6), the contractual right of any Holder to receive payment of principal of or interest or premium, if any, on the Notes held by such Holder, on or after the respective due dates expressed or provided for in the Notes, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

SECTION 6.8 Collection Suit by Trustee . If an Event of Default specified in clause (1) or (2) of Section 6.1 occurs and is continuing, the Trustee may recover judgment in its own name and as Trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.7.

SECTION 6.9 Trustee May File Proofs of Claim . The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Noteholders allowed in any judicial proceedings relative to the Company or its Subsidiaries or its or their respective creditors or properties and, unless prohibited by law or applicable regulations, may be entitled and empowered to participate as a member of any official committee of creditors appointed in such matter and may vote on behalf of the Holders in any election of a Trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.7.

No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

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SECTION 6.10 Priorities .

(a) Subject to the Collateral Agency Agreement, if the Trustee or the Collateral Agent collects any money or property pursuant to this Article VI, it shall pay out (or in the case of the Collateral Agent, it shall pay to the Trustee to pay out) the money in the following order:

FIRST: to the Trustee, the Collateral Agent and their agents and attorneys for amounts due to them under this Indenture, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the Collateral Agent and the costs and expenses of collection;

SECOND: to Holders of Notes for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and

THIRD: to the Company or to such party as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10.

SECTION 6.11 Undertaking for Costs . In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in outstanding principal amount of the Notes.

ARTICLE VII

TRUSTEE AND COLLATERAL AGENT

SECTION 7.1 Duties of Trustee and Collateral Agent .

(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(b) Except during the continuance of an Event of Default:

(1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, the Collateral Agency Agreement, the Notes Documents and the Intercreditor Agreement and no implied covenants or obligations shall be read into this Indenture, the Collateral Agency Agreement, the Notes Documents or the Intercreditor Agreement against the Trustee; and

 

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(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates, opinions or orders furnished to the Trustee and conforming to the requirements of this Indenture, the Collateral Agency Agreement, the Notes Documents and the Intercreditor Agreement, the Notes or the Subsidiary Guarantees, as applicable. However, in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture, the Collateral Agency Agreement, the Notes Documents and the Intercreditor Agreement, the Notes or the Subsidiary Guarantees, as the case may be (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(1) this paragraph does not limit the effect of paragraph (b) of this Section;

(2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts;

(3) the Trustee shall be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5; and

(4) no provision of this Indenture, the Collateral Agency Agreement and Notes Documents, the Intercreditor Agreement, the Notes or the Subsidiary Guarantees shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or thereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity or security against such risk or liability is not reasonably assured to it.

(d) Every provision of this Indenture, the Collateral Agency Agreement, the Notes Documents and the Intercreditor Agreement that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.

(e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.

(f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(g) Every provision of this Indenture, the Collateral Agency Agreement, the Notes Documents and the Intercreditor Agreement relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 7.1.

 

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(h) Unless otherwise specifically provided in this Indenture, the Collateral Agency Agreement, the Notes Documents and the Intercreditor Agreement, any demand, request, direction or notice from the Company shall be sufficient if signed by two Officers of the Company.

SECTION 7.2 Rights of Trustee . Subject to Section 7.1:

(a) The Trustee may conclusively rely on any document (whether in its original, facsimile or other electronic form) believed by it in good faith to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document, but such entity, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if such entity shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company, and such entity shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on an Officers’ Certificate or Opinion of Counsel.

(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. Neither the Trustee nor the Collateral Agent shall be responsible for the misconduct or negligence of the collateral agent appointed by the Company pursuant to an agreement dated the date hereof among Corporation Service Company, as collateral agent, UMB Bank, N.A, as secured party, and the Company, as debtor.

(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers.

(e) The Trustee may consult with counsel of its selection, and the advice or Opinion of Counsel with respect to legal matters relating to this Indenture, the Collateral Agency Agreement, the Notes Documents and the Intercreditor Agreement, the Notes or the Subsidiary Guarantees shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder or under the Collateral Agency Agreement, the Notes Documents and the Intercreditor Agreement, the Notes or the Subsidiary Guarantees in good faith and in accordance with the advice or opinion of such counsel.

(f) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer has actual knowledge thereof or unless written notice of any event which is in fact such a Default or Event of Default is received by the Trustee at the corporate trust office specified in Section 12.2, and such notice references the Notes and this Indenture.

(g) The rights, privileges, protections, immunities and benefits given to the Trustee, including its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in its capacity hereunder, and to each agent, custodian and other Person employed to act hereunder.

 

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(h) The Trustee shall not be under any obligation to exercise any of the rights or powers vested in it by this Indenture, the Collateral Agency Agreement, the Notes Documents, the Intercreditor Agreement, the Notes or the Subsidiary Guarantees at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby.

(i) The Trustee shall not be deemed to have knowledge of any fact or matter unless such fact or matter is actually known to a Trust Officer.

(j) Whenever in the administration of this Indenture, the Collateral Agency Agreement, the Notes Documents, the Intercreditor Agreement, the Notes or the Subsidiary Guarantees the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder or thereunder, the Trustee (unless other evidence be herein specifically prescribed) may request and may in good faith conclusively rely upon an Officers’ Certificate.

(k) In no event shall the Trustee be responsible or liable for any special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit), irrespective of whether such entity has been advised of the likelihood of such loss or damage and regardless of the form of action.

(l) The parties hereto acknowledge, in accordance with Section 326 of the Patriot Act, that the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The Company and the Guarantors agree that they will provide the Trustee with all such information as it may reasonably request in order to satisfy the requirements or its obligations under the Patriot Act.

(m) Any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution.

(n) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

(o) The Trustee may request that the Company and Subsidiary Guarantors deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

(p) The Trustee shall not have a duty to inquire as to the performance of the Company with respect to (i) the covenants, agreements or other terms and conditions set forth herein or in any Notes Document, (ii) the occurrence of any Default or Event of Default, (iii) the creation, perfection or priority of any Lien purported to be created by the Notes Documents, (iv) the value or the sufficiency of any Collateral or (v) the satisfaction of any condition set forth herein or in any Notes Documents, other than to confirm receipt of items expressly required to be delivered to the Trustee.

 

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SECTION 7.3 Individual Rights of Trustee . The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, the Guarantors or their Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent or Registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. In addition, the Trustee shall be permitted to engage in transactions with the Company; provided , however , that if the Trustee acquires any conflicting interest, the Trustee must eliminate such conflict within 90 days of acquiring such conflicting interest or resign.

SECTION 7.4 Trustee s and Collateral Agent s Disclaimer . Neither the Trustee nor the Collateral Agent shall be responsible for or makes any representation as to the validity or adequacy of this Indenture, the Subsidiary Guarantees or the Notes, shall be accountable for the Company’s use of the proceeds from the sale of the Notes, shall be responsible for the use or application of any money received by any Paying Agent other than the Trustee or any money paid to the Company pursuant to the terms of this Indenture or shall be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication.

SECTION 7.5 Notice of Defaults . If a Default or Event of Default occurs and is continuing and if a Trust Officer has actual knowledge thereof, the Trustee shall send to each Noteholder notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of or interest on any Note (including payments pursuant to the optional redemption or required repurchase provisions of such Note), the Trustee may withhold the notice if and so long as the Trustee in good faith determines that withholding the notice is in the interests of Noteholders.

SECTION 7.6 [Reserved] .

SECTION 7.7 Compensation and Indemnity . The Company and the Guarantors shall, jointly and severally, pay to each of the Trustee and Collateral Agent from time to time reasonable compensation for its services hereunder and under the Notes and the Subsidiary Guarantees. Such compensation shall not be limited by any law on compensation of a Trustee of an express trust. The Company and the Guarantors shall reimburse the Trustee and the Collateral Agent upon request for all reasonable out-of-pocket expenses incurred or made by it, including, but not limited to, costs of collection, costs of preparing reports, certificates and other documents, costs of preparation and sending of notices to Noteholders. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s and the Collateral Agent’s agents, counsel, accountants and experts. The Company and the Guarantors shall, jointly and severally, indemnify the Trustee and the Collateral Agent against any and all loss, liability, damages, claims or expense (including reasonable attorneys’ fees and expenses) incurred by the Trustee without willful misconduct or negligence on its part or incurred by the Collateral Agent without willful misconduct or gross negligence, as the case may be, as found by non-appealable order of a court of competent jurisdiction, in connection with the acceptance and administration of this trust and the performance of their respective duties hereunder and under the Notes and the Subsidiary Guarantees, including the costs and expenses of enforcing this Indenture (including this Section 7.7), the Notes and the Subsidiary Guarantees and of defending itself against any claims (whether asserted by any Noteholder, the Company, any Guarantor or otherwise). The Trustee and the Collateral Agent shall notify the Company promptly of any claim for which it may seek

 

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indemnity of which it has received written notice. Failure by the Trustee or the Collateral Agent to so notify the Company shall not relieve the Company of its obligations hereunder except to the extent the Company is prejudiced thereby. The Company and the Guarantors shall defend the claim and the Trustee and the Collateral Agent shall provide reasonable cooperation at the Company’s expense in the defense. The Trustee and the Collateral Agent may have separate counsel and the Company shall pay the fees and expenses of such counsel; provided that the Company shall not be required to pay the fees and expenses of such separate counsel if it engages counsel satisfactory to the Trustee and the Collateral Agent and assumes the Trustee’s or the Collateral Agent’s defense, and, in the reasonable judgment of outside counsel to the Trustee and the Collateral Agent, there is no conflict of interest between the Company and the Trustee and the Collateral Agent in connection with such defense.

To secure the Company’s payment Obligations in this Section 7.7, the Trustee and the Collateral Agent shall have a lien prior to the Notes on all money or property held or collected by the Trustee and the Collateral Agent other than money or property held in trust to pay principal of and interest on particular Notes. Such lien shall survive the satisfaction and discharge of this Indenture. The Trustee’s and the Collateral Agent’s right to receive payment of any amounts due under this Section 7.7 shall not be subordinate to any other liability or Indebtedness of the Company.

The Company’s and Guarantors’ payment obligations pursuant to this Section shall survive the discharge of this Indenture and the resignation or removal of the Trustee and/or the Collateral Agent. Without prejudice to any other rights available to the Trustee and the Collateral Agent under applicable law, when the Trustee incurs expenses after the occurrence of a Default specified in clause (8) or clause (9) of Section 6.1, the expenses are intended to constitute expenses of administration under any Bankruptcy Law.

SECTION 7.8 Replacement of Trustee . The Trustee may resign at any time by so notifying the Company in writing. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the removed Trustee in writing and may appoint a successor Trustee with the Company’s written consent, which consent will not be unreasonably withheld. The Company shall remove the Trustee if:

(1) the Trustee fails to comply with Section 7.10 hereof;

(2) the Trustee is adjudged bankrupt or insolvent;

(3) a receiver or other public officer takes charge of the Trustee or its property; or

(4) the Trustee otherwise becomes incapable of acting.

If the Trustee resigns or is removed by the Company or by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor as described in the preceding paragraph, or if a vacancy exists in the office of the Trustee for any other reason, the Company shall promptly appoint a successor entity.

 

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A Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor entity shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall send a notice of its succession to Noteholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.7.

If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of at least 10% in principal amount of the Notes may petition, at the Company’s expense, any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10, any Noteholder, who has been a bona fide Holder of a Note for at least six months, may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this Section 7.8, the Company’s obligations under Section 7.7 shall continue for the benefit of the retiring Trustee.

SECTION 7.9 Successor Trustee by Merger . If the Trustee or the Collateral Agent consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee or Collateral Agent.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee or the Collateral Agent shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee or the Collateral Agent may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; provided that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Notes in the name of any predecessor Trustee shall only apply to its successor or successors by merger, consolidation or conversion.

SECTION 7.10 Eligibility; Disqualification . This Indenture shall always have a Trustee that satisfies the requirements of the TIA § 310(a)(1), (2) and (5) in every respect. The Trustee shall have a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition.

SECTION 7.11 Preferential Collection of Claims Against the Company . The Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) the extent indicated.

SECTION 7.12 Application for Instruction from the Company . Any application by the Trustee or the Collateral Agent for written instructions from the Company may, at the option of the Trustee or the Collateral Agent, set forth in writing any action proposed to be taken or omitted by the Trustee or the Collateral Agent under this Indenture and the date on or after which such

 

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action shall be taken or such omission shall be effective. The Trustee or the Collateral Agent shall not be liable for any action taken by, or omission of, the Trustee or the Collateral Agent in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than three Business Days after the date any Officer of the Company actually receives such application, unless any such Officer shall have consented in writing to any earlier date) unless prior to taking any such action (or the effective date in the case of an omission), the Trustee or the Collateral Agent shall have received written instructions in response to such application specifying the action to be taken or omitted.

SECTION 7.13 Duties and Rights of the Collateral Agent . The duties, rights, privileges, protections and immunities of the Collateral Agent are provided in the Collateral Agency Agreement, which duties, rights, privileges, protections and immunities are incorporated herein by reference.

ARTICLE VIII

DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 8.1 Discharge of Liability on Notes; Defeasance .

(a) Subject to Section 8.1(c), when

(i) (x) all Notes that have been authenticated (other than Notes replaced or paid pursuant to Section 2.8 and Notes for whose payment money has been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust), have been delivered to the Trustee for cancellation or (y) all outstanding Notes not theretofore delivered to the Trustee for cancellation have become due and payable or will become due and payable within one year by reason of the giving of a notice of redemption or otherwise, and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee, as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient (in the case of a deposit in U.S. Obligations or a combination of cash and U.S. Obligations in the opinion of an accounting, appraisal or investment banking firm of national standing), without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation for principal and interest on, the Notes to the date of Stated Maturity or redemption;

(ii) in respect of clause (i)(y), no Default has occurred and is continuing on the date of the deposit (other than an Event of Default resulting from the borrowing of funds to be applied to such deposit and any similar deposit relating to other Indebtedness) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound (other than the Indenture);

 

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(iii) the Company has paid or caused to be paid all sums payable by it under this Indenture; and

(iv) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of such Notes at Stated Maturity or on the Redemption Date, as the case may be,

then the Trustee shall acknowledge satisfaction and discharge of this Indenture (and the Company’s and the Guarantors’ obligations under the other Notes Documents will terminate) on demand of the Company (accompanied by an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent specified herein relating to the satisfaction and discharge of this Indenture have been complied with) and at the cost and expense of the Company. If Government Securities shall have been deposited in connection with such satisfaction and discharge, then as a further condition to such satisfaction and discharge, the Trustee shall have received a certificate from an accounting, appraisal or investment banking firm of national standing to the effect set forth in Section 8.2(1). The Collateral will be released from the Liens securing the Notes, as provided in the Collateral Agency Agreement, upon a satisfaction and discharge in accordance with the provisions described in this Section 8.1.

(b) Subject to Sections 8.1(c) and 8.2, the Company at any time may terminate (i) all of its obligations under the Notes and this Indenture (“ Legal Defeasance ”), and after giving effect to such Legal Defeasance, any omission to comply with such obligations shall no longer constitute a Default or Event of Default or (ii) its obligations under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.8, 3.9, 3.10, 3.11, 3.14 and 3.15 and clause (3) of the first paragraph of Section 4.1), and the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply with such covenants shall no longer constitute a Default or an Event of Default under Section 6.1(3), Section 6.1(4), Section 6.1(5) (to the extent applicable to any defeased covenants), Section 6.1(6), Section 6.1(7), Section 6.1(8) (with respect to Significant Subsidiaries), Section 6.1(9) (with respect to Significant Subsidiaries), and the events specified in such Sections shall no longer constitute an Event of Default (the preceding clause (ii) being referred to as the “ Covenant Defeasance ”), but except as specified above, the remainder of this Indenture and the Notes shall be unaffected thereby. The Company may exercise its Legal Defeasance option notwithstanding its prior exercise of its Covenant Defeasance option. If the Company exercises its Legal Defeasance or its Covenant Defeasance option, the Subsidiary Guarantees in effect at such time shall terminate.

Upon satisfaction of the conditions set forth herein (including the receipt by the Trustee of an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent to the discharge of such obligations have been satisfied) and upon request and expense of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates.

(c) Notwithstanding the provisions of Sections 8.1(a) and (b) to the extent relating to a Legal Defeasance, the Company’s Obligations in Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.8, 2.9, 2.10, 2.11, 3.12, 3.13, 3.14, 7.7 and 7.8 and in this Article VIII shall survive until the Notes have been paid in full. Thereafter, and in the case of the satisfaction of discharge of this Indenture pursuant to Section 8.1(a), the Company’s obligations in Sections 7.7, 8.4 and 8.5 shall survive.

 

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SECTION 8.2 Conditions to Defeasance .

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, and premium, if any, on and interest on the outstanding Notes on the stated maturity or on the applicable Redemption Date, as the case may be, and the Company must specify whether the Notes are being defeased to their stated maturity or to a particular Redemption Date;

(2) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit (and any similar concurrent deposit relating to other Indebtedness), and the granting of Liens to secure such borrowings);

(5) such deposit will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture and the agreements governing any other Indebtedness being defeased, discharged or replaced) to which the Company or any of the Guarantors is a party or by which the Company or any of the Guarantors is bound, or if such breach, violation or default would occur, which is not waived as of, and for all purposes, on and after, the date of such deposit;

 

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(6) the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of the Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and

(7) the Company must deliver to the Trustee an Officers’ Certificate, stating that all conditions precedent set forth in clauses (1) through (6) of this paragraph have been complied with; and

(8) the Company must deliver to the Trustee an Opinion of Counsel, stating that all conditions precedent set forth in clauses (2), (3) and (5) of this paragraph have been complied with; provided that the opinion with respect to the condition precedent set forth in clause (5) may be limited to a review of instruments certified in an Officers’ Certificate as being all the material instruments (other than this Indenture) to which the Company is a party or by which the Company is bound.

SECTION 8.3 Application of Trust Money . The Trustee shall hold in trust all money or Government Securities (including proceeds thereof) deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from Government Securities through the Paying Agent and in accordance with this Indenture and the Notes to the Holders of the Notes of all sums due in respect of the payment of principal of, and accrued interest on, the Notes.

SECTION 8.4 Repayment to the Company . The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money, Government Securities or other securities held by them upon payment of all the Obligations under this Indenture.

Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal of or interest on the Notes that remains unclaimed by the Holders thereof for two years, and, thereafter, Noteholders entitled to the money must look only to the Company for payment as unsecured general creditors unless an abandoned property law designates another Person, and the Trustee and the Paying Agent shall have no further liability with respect to such money.

SECTION 8.5 Indemnity for Government Securities . The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited Government Securities or the principal and interest received on such Government Securities. This Section 8.5 will survive as provided in Section 8.2(c) herein and the resignation or removal of the Trustee.

SECTION 8.6 Reinstatement . If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with this Article VIII by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company and each Guarantor under this Indenture, the Notes and the Subsidiary Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until such time as the Trustee or Paying Agent is permitted to apply all such money or Government Securities in accordance with this Article VIII; provided , however , that, if the Company or the Guarantors have

 

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made any payment of principal or interest on any Notes because of the reinstatement of their obligations, the Company or Guarantors, as the case may be, shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

The Trustee’s rights under this Article VIII shall survive termination of this Indenture.

ARTICLE IX

AMENDMENTS

SECTION 9.1 Without Consent of Holders . The Company, the Guarantors, the Trustee and the Collateral Agent (if applicable) may amend or supplement this Indenture, the Notes and the Subsidiary Guarantees without notice to or consent of any Noteholder:

(1) to cure any ambiguity, omission, mistake, defect or inconsistency;

(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(3) to provide for the assumption of the Company’s or any Guarantor’s obligations to Holders of the Notes in the case of a merger or consolidation or sale of all or substantially all of the Company’s or such Guarantor’s properties or assets, including the addition of any co-issuer of the Notes;

(4) to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights of any such Holders under this Indenture, including to comply with requirements of the SEC or the depositary in order to maintain the transferability of the Notes pursuant to Rule 144A or Regulation S;

(5) to add any additional Guarantor or to release any Guarantor from its Subsidiary Guarantee, to evidence or provide for the acceptance of appointment of a successor trustee or to add any additional Events of Default, in each case, as provided in this Indenture;

(6) to conform the text of this Indenture, such Notes, the Subsidiary Guarantees or the Security Documents to any provision of the “Description of the Notes” in the Offering Memorandum to the extent that such provision in this “Description of the Notes” was intended to set forth, verbatim or in substance, a provision of this Indenture, the Notes, the Subsidiary Guarantees or the Security Documents (which intent will be certified to the Trustee in an Officers’ Certificate);

(7) to provide for the issuance of additional Notes and related Subsidiary Guarantees (and the grant of security for the benefit of the additional Notes and related guarantees) in accordance with the limitations set forth in this Indenture;

 

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(8) to evidence or provide for the acceptance of appointment under this Indenture of a successor trustee or evidence and provide for a successor or replacement Collateral Agent under the Security Documents;

(9) to make, complete or confirm any grant of Collateral permitted or required by this Indenture, any of the Security Documents or any release of Collateral that becomes effective as set forth in this Indenture, any of the Security Documents;

(10) to add additional secured parties to the extent Liens securing obligations held by such parties are permitted under this Indenture, any of the Security Documents;

(11) to mortgage, pledge, hypothecate or grant a security interest for the benefit of the Trustee and the Holders of the Notes as additional security for the payment and performance of the Company’s and any Guarantor’s obligations under this Indenture, in any property, or assets, including any of which are required to be mortgaged, pledged or hypothecated, or in which a security interest is required to be granted to the Trustee or the Collateral Agent in accordance with the terms of this Indenture or otherwise;

(12) to provide for the succession of any parties to the Security Documents (and other amendments that are administrative or ministerial in nature) in connection with an amendment, renewal, extension, substitution, refinancing, restructuring, replacement, supplementing or other modification from time to time of any agreement in accordance with the terms of this Indenture and the relevant Security Document; and

(13) to make any change not materially adverse to the Holders of the Notes in order to facilitate entry into the ABL Facility or Junior Lien Documents

SECTION 9.2 With Consent of Holders . The Company, the Guarantors and the Trustee may amend or supplement the Notes Documents without notice to any Noteholder but with the consent of the Holders of a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes). Subject to the provisions of Section 6.4, any past default or compliance with the provisions of this Indenture, the Notes or the Subsidiary Guarantees may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes), in each case in addition to any required consent of holders of other Priority Lien Obligations required with respect to any amendment or waiver under any Notes Document. However, without the consent of each Noteholder affected, an amendment, supplement or waiver may not:

(1) reduce the principal amount of the Notes whose Holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes (except provisions relating to minimum required notice of optional redemption); provided , however , that any purchase or repurchase of Notes, including pursuant to Sections 3.5 or 3.9 shall not be deemed a redemption of the Notes;

 

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(3) reduce the rate of or extend the time for payment of interest on any Note;

(4) waive a Default or Event of Default in the payment of principal of, or interest or premium, if any, on, the Notes (except a rescission of acceleration of the Notes by the Holders of a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration);

(5) make any Note payable in money other than that stated in such Note;

(6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, on, or interest on the Notes; provided , however , that any purchase or repurchase of Notes, including pursuant to Sections 3.5 or 3.9, shall not be deemed be a payment of principal of, or premium or interest on, the Notes;

(7) waive a redemption payment with respect to any Note; provided , however , that any purchase or repurchase of Notes, including pursuant to Sections 3.5 or 3.9, shall not be deemed a redemption of the Notes; or

(8) make any change in the preceding amendment, supplement and waiver provisions.

In addition, the consent of Holders representing at least two-thirds of the aggregate principal amount of outstanding Notes will be required to release the Liens for the benefit of the Holders of the Notes on all or substantially all of the Collateral, other than in accordance with the Notes Documents. It shall not be necessary for the consent of the Holders under this Section 9.2 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

After an amendment or supplement under this Section 9.2 becomes effective, the Company shall send to Noteholders a notice briefly describing such amendment or supplement. The failure to give such notice to all Noteholders, or any defect therein, shall not impair or affect the validity of an amendment or supplement under this Section.

SECTION 9.3 Revocation and Effect of Consents and Waivers . A consent to an amendment, supplement or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. Any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective or otherwise in accordance with any related solicitation documents. After an amendment, supplement or waiver becomes effective, it shall bind every Noteholder unless it makes a change described in any of clauses (1) through (8) of Section 9.2, and in that case the amendment, supplement, waiver or other action shall bind each Noteholder

 

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who has consented to it and every subsequent Noteholder that evidences the same debt as the consenting Holder’s Notes. An amendment, supplement or waiver under Section 9.2 shall become effective upon receipt by the Trustee of the requisite amount of consents, and in relation to any Notes evidenced by Global Notes, such consents need not be in written form and may be evidenced by any electronic transmissions that comport with the applicable procedures of DTC.

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Noteholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Noteholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall become valid or effective more than 120 days after such record date.

SECTION 9.4 Notation on or Exchange of Notes . If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determine, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.

SECTION 9.5 Trustee and Collateral Agent to Sign Amendments . The Trustee and, as applicable, the Collateral Agent, shall sign any amendment or supplement authorized pursuant to this Article IX if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee, and, as applicable, the Collateral Agent. If it does, the Trustee or the Collateral Agent, as applicable, may but need not sign it. In signing any amendment or supplement the Trustee and the Collateral Agent shall be entitled to receive indemnity satisfactory to it and shall be provided with, and (subject to Sections 7.1 and 7.2) shall be fully protected in conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment or supplement is authorized or permitted by this Indenture or the Notes Documents, as applicable, and that such amendment or supplement is the legal, valid and binding obligation of the Company and any Guarantors, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof.

ARTICLE X

GUARANTEE

SECTION 10.1 Guarantee . Subject to the provisions of this Article X, each Guarantor hereby fully, unconditionally and irrevocably Guarantees, as primary obligor and not merely as surety, jointly and severally with each other Guarantor, to each Holder of the Notes, to the extent lawful, and the Trustee and the Collateral Agent the full and punctual payment when due, whether at final maturity, by acceleration, by redemption or otherwise, of the Obligations of the Company under the Notes Documents. Each Guarantor agrees that such Obligations will rank equally in right of payment with other Indebtedness of such Guarantor, except to the extent such other Indebtedness is subordinate to such Obligations. Each Guarantor further agrees (to the extent permitted by law) that such Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it will remain bound under this Article X notwithstanding any extension or renewal of any Obligation.

 

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Each Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Notes or the Obligations.

Each Guarantor further agrees that its Subsidiary Guarantee constitutes a guarantee of payment when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder to any security held for payment of the Obligations.

Except as set forth in Section 10.2, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Obligations in full), including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by: (a) the failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Notes or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes or any other agreement; (d) the release of any security held by any Holder for the Obligations or any of them; (e) the failure of any Holder to exercise any right or remedy against any other Guarantor; (f) any change in the ownership of the Company; (g) any default, failure or delay, willful or otherwise, in the performance of the Obligations; or (h) any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law or equity.

Each Guarantor agrees that its Subsidiary Guarantee shall remain in full force and effect until payment in full of all the Obligations or such Guarantor is released from its Subsidiary Guarantee as provided in Section 10.2. Each Guarantor further agrees that its Subsidiary Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal or interest on any of the Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Company or otherwise.

In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Company to pay any of the Obligations when and as the same shall become due, whether at final maturity, by acceleration, by redemption or otherwise, each Guarantor hereby promises to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Trustee or the Trustee on behalf of the Holders an amount equal to the sum of (i) the unpaid amount of such Obligations then due and owing and (ii) accrued and unpaid interest on such Obligations then due and owing (but only to the extent not prohibited by law).

 

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Each Guarantor further agrees that, as between such Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Obligations Guaranteed hereby may be accelerated as provided in this Indenture for the purposes of its Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations Guaranteed hereby and (y) in the event of any such declaration of acceleration of such Obligations, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of this Subsidiary Guarantee.

Each Guarantor also agrees to pay any and all costs and expenses (including attorneys’ fees and expenses) incurred by the Trustee, the Collateral Agent or the Holders in enforcing any rights under this Section.

The Subsidiary Guarantee of a Guarantor shall be evidenced by the execution and delivery by the Guarantor of this Indenture or a supplement to this Indenture pursuant to which such Guarantor becomes a Guarantor. Neither the Company nor the Guarantors shall be required to make a notation on the Notes to reflect any Subsidiary Guarantee or any release, termination or discharge thereof, and any such notation shall not be a condition to the validity of any Subsidiary Guarantee.

SECTION 10.2 Limitation on Liability; Termination, Release and Discharge .

(a) Any term or provision of this Indenture to the contrary notwithstanding, the obligations of each Guarantor hereunder will be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor (including any Guarantees under the Credit Facilities) and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the Obligations of such other Guarantor under its Subsidiary Guarantee or pursuant to its contribution Obligations under this Indenture, result in the Obligations of such Guarantor under its Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under Federal or state law and not otherwise being void or voidable under any similar laws affecting the rights of creditors generally.

(b) Each Subsidiary Guarantee by a Guarantor will be automatically released and discharged without the consent of any Holders in accordance with the following:

(1) in connection with any sale or other disposition of all or substantially all of the properties or assets of such Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, if the sale or other disposition does not violate Section 3.5;

(2) in connection with any sale or other disposition of all of the Capital Stock of such Guarantor to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, if the sale or other disposition does not violate Section 3.5;

(3) if the Company designates such Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture;

 

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(4) upon Legal Defeasance or Covenant Defeasance upon satisfaction and discharge of this Indenture pursuant to Article VIII; or

(5) upon the liquidation or dissolution of such Guarantor; provided that no Default or Event of Default has occurred and is continuing.

Upon the Company’s request and at its expense, the Trustee will provide evidence of the release of any Subsidiary Guarantee, provided the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in this Section 10.2 relating to the release of such Subsidiary Guarantee have been complied with.

Any released Guarantor will again provide a Subsidiary Guarantee if required to do so pursuant to Section 3.11.

SECTION 10.3 Right of Contribution . Each Guarantor hereby agrees that to the extent that any Guarantor shall have paid more than its proportionate share of any payment made on the obligations under the Subsidiary Guarantees, such Guarantor shall be entitled to seek contribution from and against the Company or any other Guarantor who has not paid its proportionate share of such payment, based on the respective net assets of all the Guarantors at the time of such payment, determined in accordance with GAAP. The provisions of this Section 10.3 shall in no respect limit the obligations and liabilities of each Guarantor to the Trustee and the Holders, and each Guarantor shall remain liable to the Trustee and the Holders for the full amount Guaranteed by such Guarantor hereunder.

SECTION 10.4 No Subrogation . Notwithstanding any payment or payments made by each Guarantor hereunder, no Guarantor shall be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Company or any other Guarantor or Guarantee or right of offset held by the Trustee or any Holder for the payment of the Obligations, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Guarantor in respect of payments made by such Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the Company on account of the Obligations are paid in full. If any amount shall be paid to any Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by such Guarantor in trust for the Trustee and the Holders, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Trustee in the exact form received by such Guarantor (duly indorsed by such Guarantor to the Trustee, if required), to be applied against the Obligations.

ARTICLE XI

COLLATERAL AND SECURITY

SECTION 11.1 Security Interest .

(a) The due and punctual payment of the principal of, premium on, if any, and interest if any, on the Notes and the Obligations of Guarantors under the Subsidiary Guarantees, when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of, premium on, if any, and interest, if any (to the extent permitted by law), on the Notes and

 

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Subsidiary Guarantees under and performance of all other obligations of the Company and the Guarantors to the Holders of Notes or the Trustee under the Note Documents, according to the terms hereunder or thereunder (collectively, the “ Notes Obligations ”), shall be secured by Liens on the Collateral as provided in the Security Documents. The Company and each of the Guarantors consent and agree to be bound by the terms of the Security Documents to which they are parties, as the same may be in effect from time to time, and agree to perform their obligations thereunder in accordance therewith, and hereby agree that the Collateral Agent shall hold the Collateral on behalf of and for the benefit of all of the Holders of Notes and the other holders of Priority Lien Obligations.

(b) Each Holder of Notes, by its acceptance thereof and of the Subsidiary Guarantees, consents and agrees to the terms of the Collateral Agency Agreement and the other Security Documents (including, without limitation, the provisions providing for foreclosure and release of Collateral and amendments to the Security Documents) as the same may be in effect or may be amended from time to time in accordance with their terms and authorizes and appoints UMB Bank, N.A. as the Trustee and as the Collateral Agent. The Trustee hereby authorizes and appoints UMB Bank, N.A. as Collateral Agent and each Holder of Notes and the Trustee direct the Collateral Agent to enter into the Security Documents (including any amendments thereto contemplated by the Collateral Agency Agreement and any security documents to secure additional Priority Lien Debt in accordance with the Collateral Agency Agreement) and to perform its obligations and exercise its rights thereunder in accordance therewith, subject to the terms and conditions thereof, including, without limitation, the limitations on duties of the Collateral Agent provided in the Collateral Agency Agreement. The Trustee, the Collateral Agent and each Holder of Notes, by accepting the Notes and the Subsidiary Guarantees, acknowledges that, as more fully set forth in the Security Documents, the Collateral as now or hereafter constituted shall be held for the benefit of all the holders of Priority Lien Obligations, subject to the Collateral Agency Agreement, and the Lien of this Indenture and the Security Documents is subject to and qualified and limited in all respects by the Collateral Agency Agreement and the Security Documents and actions that may be taken thereunder.

(c) Subject to the provisions of Article VI and Article VII of this Indenture and the terms of the Security Documents (including any consent of the Holders required thereunder), the Trustee may direct, on behalf of the Holders of Notes, the Collateral Agent to take all actions it deems necessary or appropriate in order to enforce any of the terms of the Security Documents and the Collateral Agency Agreement and collect and receive any and all amounts payable in respect of the Notes Obligations of the Company or any Guarantor hereunder.

SECTION 11.2 Real Estate Mortgages and Filings.

(a) With respect to any Material Real Property owned by the Company or a Guarantor on the Issue Date, the following items will be delivered to the Collateral Agent within 120 days thereafter:

(1) the Company or the applicable Guarantor shall deliver to the Collateral Agent, as mortgagee or beneficiary, as applicable, for the ratable benefit of itself and the Holders of the Notes and any future Priority Lien Debt, fully executed counterparts of a Mortgage (together with applicable real estate subordination and priority agreements

 

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related thereto), together with confirmation from the title insurance company insuring the lien of such Mortgage of completion (or reasonably satisfactory arrangements for the completion) of all recordings and filings of such Mortgage (and payment of any taxes or fees in connection therewith) as may be necessary to create a valid, perfected Lien with the priority required by the Collateral Agency Agreement, subject to Permitted Liens, against the property purported to be covered thereby as security for the Priority Lien Obligations;

(2) the Collateral Agent shall have received mortgagee’s title insurance policies in favor of the Collateral Agent, and its successors and/or assigns, in the form necessary, with respect to the property purported to be covered by the applicable Mortgages, to insure that the interests created by the Mortgages constitute valid Liens thereon (with the priority required by the Collateral Agency Agreement) free and clear of all Liens, defects and encumbrances other than Permitted Liens, provided, however, unless delivered to the collateral agent in respect of any other Priority Lien Debt, no such title insurance policies will be required to be delivered with respect to any Mortgage where the property encumbered thereby consists primarily of easements, rights of way, licenses and other similar possessory and use instruments. All such title policies shall be in amounts equal to 110% of the estimated Fair Market Value of the Premises covered thereby, and such policies shall include, to the extent available at a commercially reasonable premium, all endorsements as shall be reasonably required in transactions of similar size and purpose and shall be accompanied by evidence of the payment in full by the Company or the applicable Guarantor of all premiums thereon (or that satisfactory arrangements for such payment have been made);

(3) an Opinion of Counsel, from counsel with respect to the Mortgages and fixture filings, that the applicable Mortgage (i) has been duly authorized, executed and delivered by the Company or applicable Guarantor, (ii) is an enforceable agreement against the Company or applicable Guarantor, as the case may be, and (iii) is in form sufficient to create a valid Lien with respect to the Material Real Estate Property described in the Mortgage;

(4) the Company shall, or shall cause the Guarantors to, deliver to the title company such filings, surveys (or any updates or affidavits that the title company may reasonably require in connection with the issuance of the title insurance), fixture filings and such other documents, instruments, certificates, agreements and/or other documents as reasonably required to perfect the Collateral Agent’s security interest; and

(5) the title insurance company shall have received, with respect to the applicable Mortgage, such affidavits, certificates, information (including publicly-available financial data) and instruments of indemnification (including a so-called “gap” indemnification) as shall be reasonably requested by the title insurance company to issue the mortgagee’s title insurance policies contemplated above.

 

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(b) With respect to any Material Real Property acquired by the Company or a Guarantor after the Issue Date which is required to be mortgaged to the Collateral Agent within 120 days of the date of acquisition:

(1) the Company or the applicable Guarantor shall deliver to the Collateral Agent, as mortgagee or beneficiary, as applicable, for the ratable benefit of itself and the Holders of the Notes and any future Priority Lien Debt, fully executed counterparts of Mortgages (together with applicable real estate subordination and priority agreements related thereto), in accordance with the requirements of the Indenture and/or the Security Documents duly executed by such the Company or such Guarantor, together with confirmation from the title insurance company insuring the lien on such Mortgage of the completion (or reasonably satisfactory arrangements for the completion) of all recordings and filings of such Mortgage (and payment of any taxes or fees in connection therewith) as may be necessary to create a valid, perfected Lien with the priority required by the Collateral Agency Agreement, subject to Permitted Liens, against the property purported to be covered thereby as security for the Priority Lien Obligations;

(2) the Collateral Agent shall have received mortgagee’s title insurance policies in favor of the Collateral Agent, and its successors and/or assigns, in the form necessary, with respect to the property purported to be covered by the applicable Mortgages, to insure that the interests created by the Mortgages constitute valid Liens thereon (with the priority required by the Collateral Agency Agreement) free and clear of all Liens, defects and encumbrances other than Permitted Liens, provided, however, unless delivered to the collateral agent in respect of any other Priority Lien Debt, no such title insurance policies will be required to be delivered with respect to any Mortgage where the property encumbered thereby consists primarily of easements, rights of way, licenses and other similar possessory and use instruments. All such title policies shall be in amounts equal to 110% of the estimated Fair Market Value of the Premises covered thereby, and such policies shall include, to the extent available at a commercially reasonable premium, all endorsements as shall be reasonably required in transactions of similar size and purpose and shall be accompanied by evidence of the payment in full by the Company or such Guarantor of all premiums thereon (or that satisfactory arrangements for such payment have been made); and

(3) the Company shall, or shall cause the Guarantors to, deliver to the title company such filings, surveys (or any updates or affidavits that the title company may reasonably require in connection with the issuance of the title insurance policies), fixture filings and such other documents, instruments, certificates, agreements and/or other documents necessary to comply with clauses (1) and (2) above and to perfect the Collateral Agent’s security interest and (with the priority required by the Collateral Agency Agreement) Lien in such acquired covered Premises, together with local counsel opinions in the jurisdiction where each property subject to the Mortgage is located, with respect to the Mortgage, fixture filings and other matters reasonably requested by the Collateral Agent.

 

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SECTION 11.3 After Acquired Collateral; Further Assurances ; Other Agreements with respect to Collateral .

(a) Subject to the provisions of the Security Documents, upon the acquisition by the Company or any Guarantor after the Issue Date of any assets (other than Excluded Property), including, but not limited to, any Material Real Property or any equipment or fixtures which constitute accretions, additions or technological upgrades to the equipment or fixtures or any other tangible assets that, in any such case, form part of the Collateral, the Company or such Guarantor shall execute and deliver (i) with regard to any Material Real Property, the items described under Section 11.2(b) above within the time periods specified therein, and (ii) to the extent required by the Security Documents, any information, documentation, financing statements or other certificates and opinions of counsel as may be necessary to vest in the Collateral Agent a perfected security interest, subject only to Permitted Liens, in such after-acquired property and to have such after-acquired property added to the Collateral, and thereupon all provisions of the Indenture relating to the Collateral shall be deemed to relate to such after-acquired property to the same extent and with the same force and effect; provided, however , that if granting such security interest requires the consent of a third party, the Company or such Guarantor, as the case may be, shall use commercially reasonable efforts to obtain such consent. If the Company or Guarantor is unable to obtain such consent after using its commercially reasonable efforts, the Company or Guarantor shall deliver an Officers’ Certificate to the Collateral Agent certifying it was unable to obtain such consent after using commercial reasonable efforts, and the Collateral Agent may conclusively rely on such Officers’ Certificate without any investigation or inquiry.

(b) The Company and the Guarantors shall execute any and all further documents, financing statements, agreements and instruments, and take all further action that may be required under applicable law, or that the Collateral Agent or the Trustee may reasonably request, in order to grant, preserve, protect and perfect the validity and priority of the security interests and Liens created or intended to be created by the Security Documents in the Collateral. In addition, to the extent required under the Indenture or any of the Security Documents, from time to time, the Company and the Guarantors will reasonably promptly secure the obligations under the Indenture and Security Documents by pledging or creating, or causing to be pledged or created, perfected security interests and Liens with respect to the Collateral perfected to the extent required by the Security Documents. Such security interests and Liens will be created under the Security Documents and, to the extent necessary, other security agreements and other instruments and documents in form and substance reasonably satisfactory to the Collateral Agent. Without limiting the foregoing, at any time and from time to time, the Company and each of the Guarantors shall promptly execute, acknowledge and deliver such Security Documents, instruments, certificates, financing statements, notices and other documents, and take such other actions as shall be reasonably required, or that the Collateral Agent may reasonably request, to create, perfect, protect, assure or enforce the Liens and benefits intended to be conferred, in each case as contemplated by the Security Documents for the benefit of the Priority Lien Secured Parties; provided, that no such Security Document, instrument or other document shall be materially more burdensome upon the Company and the Guarantors than the Priority Lien Documents executed and delivered (or required to be executed and delivered after the date of this Indenture) by the Company and the Guarantors in connection with the Issue Date.

(c) Notwithstanding anything to the contrary herein, neither the Company nor any of the Guarantors shall be required to take any actions under any laws outside of the United States to grant, perfect or provide for the enforcement of any security interest. The Company and the Guarantors shall be required to deliver to the Collateral Agent originals of the certificates of title or ownership for the motor vehicles (and any other equipment covered by certificates of title or ownership) owned by it, with the Collateral Agent listed as lienholder therein; provided, however , that such requirement shall not apply with respect to any such titled vehicles and other

 

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equipment that individually have a book value (as determined by the Company in good faith) of less than $25,000. Moreover, delivery of certificates of title or ownership documentation to the Collateral Agent as described above shall be done, with respect to the motor vehicles and other equipment owned by the Company and the Guarantors as of the Issue Date, as promptly as reasonable practicable but in no event later than 12 months after the Issue Date, and with respect to motor vehicles and other equipment acquired by the Company and the Guarantors after the Issue Date, within 90 days after such acquisition.

(d) The Company will deliver to the Trustee copies of all documents delivered to the Collateral Agent pursuant to the Security Documents.

(e) To the extent any grant of security required hereby would require the execution and delivery of a Security Document, the Company or such Guarantor shall execute and deliver such Security Document, together with related certificates and opinions with respect thereto, on substantially the same terms as the Security Documents covering Collateral owned by the Company and Guarantors on the Issue Date.

(f) Unless an Event of Default shall have occurred and be continuing and subject to certain terms and conditions, the Company and the Guarantors are entitled to exercise any voting and other consensual rights pertaining to all Capital Stock pledged pursuant to the Security Documents and to remain in possession and retain exclusive control over the Collateral (other than as set forth in the Security Documents), to operate the Collateral, to alter or repair the Collateral and to collect, invest and dispose of any interest or income thereon.

(g) Except as provided in the Security Documents, the Company and the Guarantors shall maintain the Collateral that is material to the conduct of their respective businesses in good and insurable operating order, condition and repair, and shall pay all real estate and other taxes (except such as are contested in good faith and by appropriate negotiations or proceedings), and maintain in full force and effect all material permits, except, in each case, where the failure to effect such payment or maintain such permits is not adverse in any material respect to the Holders of Notes.

(h) The Company will not, will not permit any of its Restricted Subsidiaries to, (i) take or omit to take any action which would materially adversely affect or impair the Liens in favor of the Collateral Agent for the benefit of the Holders of the Notes and any future Priority Lien Debt with respect to the Collateral, (ii) grant to any Person, or permit any Person to retain (other than the Collateral Agent), any Liens in the Collateral, other than Permitted Liens or (iii) enter into any agreement that requires the proceeds received from any sale of Collateral to be applied to repay, redeem, defease or otherwise acquire or retire any Indebtedness of any Person in a manner that conflicts with the Indenture, the Notes, the Subsidiary Guarantees or the Security Documents. The Company and each Guarantor will, at its sole cost and expense, execute and deliver all such agreements and instruments as necessary, or as the Trustee or the Collateral Agent reasonably requests, to more fully or accurately describe the assets and property intended to be Collateral or the Obligations intended to be secured by the Security Documents.

 

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SECTION 11.4 Information Regarding Collateral .

(a) The Company will furnish to the Collateral Agent, with respect to the Company or any Guarantor, promptly (and in any event within 30 days of such change) written notice of any change in such Person’s (i) legal name, (ii) jurisdiction of organization or formation, (iii) type of legal entity or (iv) Organizational Identification Number. The Company and the Guarantors agree not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code and any other applicable laws that are required pursuant to the Security Documents in order to maintain the perfection and priority of the Collateral Agent’s Lien in the Collateral and for the Collateral to be made subject to the Lien of the Collateral Agent under the Security Documents in the manner and to the extent required by the Indenture or any of the Security Documents and shall take all necessary action so that such Lien is perfected with the same priority as immediately prior to such change to the extent required by the Security Documents. The Company also agrees promptly to notify in writing the Collateral Agent if any material portion of the Collateral is damaged, destroyed or condemned.

(b) Each year, within 120 days after the end of the preceding fiscal year, the Company shall deliver to each of the Trustee and the Collateral Agent a certificate of a financial officer setting forth the information required pursuant to the schedules required by the Security Documents or confirming that there has been no change in such information since the date of the prior annual financial statements and an Opinion of Counsel as to continuation of perfected security interests. The Trustee and the Collateral Agent will have no obligation to maintain or monitor the perfection of liens.

SECTION 11.5 The Collateral Agency Agreement .

This Article XI and the provisions of each other Security Document are subject to the terms, conditions and benefits set forth in the Collateral Agency Agreement. The Company and each Guarantor consents to, and agrees to be bound by, the terms of the Collateral Agency Agreement, as the same may be in effect from time to time, and to perform its obligations thereunder in accordance with the terms therewith. Each Holder of Notes, by its acceptance of the Notes (a) agrees that it will be bound by, and will take no actions contrary to, the provisions of the Collateral Agency Agreement and (b) authorizes and instructs the Collateral Agent on behalf of each Holder to enter into the Collateral Agency Agreement as Collateral Agent on behalf of such Holders.

SECTION 11.6 Release of Liens in Respect of Notes .

The Liens on the Collateral securing the Notes will automatically and without the need for any further action by any Person be released:

(1) in whole or in part, as applicable, as to all or any portion of property subject to such Liens which has been taken by eminent domain, condemnation or other similar circumstances;

(2) in whole upon satisfaction and discharge of the Indenture or a Legal Defeasance or Covenant Defeasance pursuant to Article VIII;

(3) in part, as to any property constituting Collateral that (a) is sold, transferred or otherwise disposed of by either of the Company or any Guarantor (other than to the Company or another Restricted Subsidiary) in a transaction not prohibited by this Indenture or the Security Documents at the time of such sale, transfer or disposition or (b) is owned or at any time acquired by a Guarantor that has been released from its Subsidiary Guarantee in accordance with this Indenture, concurrently with the release of such Subsidiary Guarantee;

 

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(4) in whole or in part, as applicable, with the requisite consent of Holders the Notes as described in Section 9.2; or

(5) in accordance with the applicable provisions of the Security Documents and the Collateral Agency Agreement.

To the extent required by the Indenture for the release of properties that constitute Collateral, the Company and each Guarantor will furnish to the Trustee and the Collateral Agent, prior to each proposed release of such Collateral pursuant to the Security Documents and this Indenture, an Officer’s Certificate and an Opinion of Counsel to the effect that such release is permitted by this Indenture and the Security Documents. Upon compliance by the Company or any Guarantor, as the case may be, with the conditions precedent set forth above, the Trustee or the Collateral Agent shall, upon request from and at the expense of the Company or the Guarantors, as applicable, promptly cause to be released and reconveyed to the Company or the Guarantors, as the case may be, the released Collateral.

SECTION 11.7 Collateral Agent .

(a) The Collateral Agent will hold (directly or through co-trustees or agents) and, subject to the terms of the Collateral Agency Agreement, will be entitled to enforce all Liens on the Collateral created by the Security Documents.

(b) Except as provided in the Collateral Agency Agreement or as directed by an Act of Required Priority Lien Debtholders (as defined in the Collateral Agency Agreement) in accordance with the Collateral Agency Agreement, the Collateral Agent will not be obligated:

(1) to act upon directions purported to be delivered to it by any Person;

(2) to foreclose upon or otherwise enforce any Lien; or

(3) to take any other action whatsoever with regard to any or all of the Security Documents, the Liens created thereby or the Collateral

SECTION 11.8 Maintenance of Insurance .

(a) The Company and the Guarantors will maintain insurance with respect to the Collateral, covering casualty, hazard, theft, malicious mischief, flood and other risks, with insurers, in such amounts, and with such coverages and deductibles as are at the time of placing such insurance customary for companies similarly situated and which are available at commercially reasonable rates. All proceeds under each policy covering Collateral shall be payable to the Collateral Agent as a lender loss payee. From time to time upon request, the Company shall deliver to the Collateral Agent the originals or certified copies of its insurance policies. Each policy shall include satisfactory endorsements that (i) provide for not less than 30 days prior notice to the

 

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Collateral Agent of termination, lapse or cancellation of such insurance, (ii) with respect to insurance covering Collateral, name the Collateral Agent as lender’s loss payee, and (iii) specify that the interest of the Collateral Agent shall not be impaired or invalidated by any act or negligence of the Company or any Guarantor or the owner of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by the policy. If the Company fails to provide and pay for any insurance, the Collateral Agent may, at its option, but shall not be required to, procure the insurance and charge the Company therefor. The Company agrees to deliver to the Collateral Agent, promptly as rendered, copies of all reports made to insurance companies.

(b) In addition to the insurance required under clause (a) with respect to Collateral, maintain insurance with insurers, with respect to the properties and business of the Company and the Guarantors, of such type (including product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are at the time of placing such insurance customary for companies similarly situated and which are available at commercially reasonable rates.

ARTICLE XII

MISCELLANEOUS

SECTION 12.1 TIA Not Applicable . The Holders, by accepting the Notes, and the parties hereto expressly agree that the Trust Indenture Act of 1939, as amended, is not applicable to this Indenture or the Notes.

SECTION 12.2 Notices . Any notice or other communication shall be in writing in the English language and delivered in person, sent by facsimile, other electronic means, delivered by commercial courier service or mailed by first-class mail, postage prepaid, addressed as follows:

if to the Company or to any Guarantor:

Basic Energy Services, Inc.

801 Cherry Street, Suite 2100

Fort Worth, Texas 76102

Attention: David Schorlemer

if to the Trustee or the Collateral Agent, at its corporate trust office in Houston, Texas, which corporate trust office for purposes of this Indenture is at the date hereof located at:

UMB Bank, N.A.

Attention: Corporate Trust Services

5555 San Felipe Street, Suite 870

Houston, Texas 77056

The Company, any Guarantor, the Trustee or the Collateral Agent may by written notice to the others may designate additional or different addresses for subsequent notices or other communications.

 

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Any notice or other communication to the Company or the Guarantors shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is acknowledged, if transmitted by electronic scan or facsimile; and five calendar days after mailing if sent by U.S. Postal Service registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee). Any notice or other communication to the Trustee or the Collateral Agent shall be deemed delivered upon receipt by a Trust Officer. Notices given by publication will be deemed given on the first date on which publication is made.

Any notice or other communication to a Noteholder shall be mailed to the Noteholder at the Noteholder’s address as it appears in the Notes Register, or in any case where DTC or its nominee is the Noteholder, any notice or other communication shall be given in accordance with DTC’s applicable procedures. Any notice or other communication to a Noteholder shall be sufficiently given if so mailed within the time prescribed or otherwise delivered in accordance with the applicable procedures of DTC.

Failure to send a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders. If a notice or communication is given in the manner provided above, it is duly given, whether or not the addressee receives it, except that notices to the Trustee shall be effective only upon receipt.

In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

SECTION 12.3 Communication by Holders with other Holders . Noteholders may communicate pursuant with other Noteholders with respect to their rights under this Indenture or the Notes.

SECTION 12.4 Certificate and Opinion as to Conditions Precedent . Upon any request or application by the Company to the Trustee or the Collateral Agent to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee or the Collateral Agent, as applicable:

(1) an Officers’ Certificate in form reasonably satisfactory to the Trustee or the Collateral Agent, as the case may be, stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(2) an Opinion of Counsel in form reasonably satisfactory to the Trustee or the Collateral Agent, as the case may be, stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

SECTION 12.5 Statements Required in Certificate or Opinion . Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

(1) a statement that the individual making such certificate or opinion has read such covenant or condition;

 

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(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

In giving such Opinion of Counsel, counsel may rely as to factual matters on an Officers’ Certificate or on certificates of public officials.

SECTION 12.6 When Notes Disregarded . In determining whether the Holders of the required aggregate principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, any Guarantor or any Affiliate of any of them shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer actually knows are so owned shall be so disregarded. Also, subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination.

SECTION 12.7 Rules by Trustee, Paying Agent and Registrar . The Trustee may make reasonable rules for action by, or at meetings of, Noteholders. The Registrar and the Paying Agent may make reasonable rules for their functions.

SECTION 12.8 Legal Holidays . A “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected.

SECTION 12.9 GOVERNING LAW . THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 12.10 No Personal Liability of Directors, Officers, Employees, Stockholders ; Etc. . No director, officer, employee, manager, incorporator, member, partner or stockholder or other owner of Capital Stock of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes Documents, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of a Note by accepting the Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

 

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SECTION 12.11 Successors . All agreements of the Company and each Guarantor in this Indenture and the Notes shall bind their respective successors. All agreements of the Trustee and the Collateral Agent in this Indenture shall bind their respective successors.

SECTION 12.12 Multiple Originals . The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. The exchange of copies of this Indenture and of signature pages by facsimile of PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signature of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

SECTION 12.13 Table of Contents; Headings . The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

SECTION 12.14 Force Majeure . In no event shall the Trustee or the Collateral Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

SECTION 12.15 Waiver of Jury Trial . EACH OF THE COMPANY, THE GUARANTORS, THE TRUSTEE AND THE COLLATERAL AGENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.

SECTION 12.16 Consent to Jurisdiction . To the fullest extent permitted by applicable law, the Company and the Guarantors hereby irrevocably submit to the jurisdiction of any competent Federal or state court located in the Borough of Manhattan in The City of New York, New York in any suit, action or proceeding based on or arising out of or relating to this Indenture or any Notes and irrevocably agree, that all claims in respect of such suit, action or proceeding may be determined in any such court. The Company and the Guarantors irrevocably waive, to the fullest extent permitted by law, any objection which they may have to the laying of the venue of any such suit, action or proceeding brought in an inconvenient forum.

 

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IN WITNESS WHEREOF , the parties have caused this Indenture to be duly executed all as of the date and year first written above.

 

COMPANY :
BASIC ENERGY SERVICES, INC.
    By:   /s/ T.M. “Roe” Patterson
    Name:   T.M. “Roe” Patterson
    Title:   President and Chief Executive Officer

 

GUARANTORS :
BASIC ENERGY SERVICES LP, LLC
    By:   /s/ Jerry Tufly
    Name:   Jerry Tufly
    Title:   President

 

BASIC ENERGY SERVICES GP, LLC
    By:   /s/ T.M. “Roe” Patterson
    Name:   T.M. “Roe” Patterson
    Title:   President and Chief Executive Officer

 

BASIC ENERGY SERVICES, L.P.
  By:   Basic Energy Services GP, LLC,
    its General Partner
    By:   /s/ T.M. “Roe” Patterson
    Name:   T.M. “Roe” Patterson
    Title:   President and Chief Executive Officer


TAYLOR INDUSTRIES, LLC
    By:   /s/ T.M. “Roe” Patterson
    Name:   T.M. “Roe” Patterson
    Title:   Chief Executive Officer
BASIC ESA, INC.
BASIC MARINE SERVICES, INC.
CHAPARRAL SERVICE, INC.
FIRST ENERGY SERVICES COMPANY
LEBUS OIL FIELD SERVICE CO.
GLOBE WELL SERVICE, INC.
SCH DISPOSAL, L.L.C.
JS ACQUISITION LLC
JETSTAR HOLDINGS, INC.
ACID SERVICES, LLC
JETSTAR ENERGY SERVICES, INC.
SLEDGE DRILLING CORP.
PERMIAN PLAZA, LLC
XTERRA FISHING & RENTAL TOOLS CO.
PLATINUM PRESSURE SERVICES, INC.
ADMIRAL WELL SERVICE, INC.
MAVERICK COIL TUBING SERVICES, LLC
MAVERICK SOLUTIONS, LLC
MAVERICK STIMULATION COMPANY, LLC
MAVERICK THRU-TUBING SERVICES, LLC
MCM HOLDINGS, LLC
MSM LEASING, LLC
THE MAVERICK COMPANIES, LLC

 

    By:   /s/ T.M. “Roe” Patterson
    Name:   T.M. “Roe” Patterson
    Title:   President


UMB BANK, N.A. ,

as Trustee

By:   /s/ Shazia Flores
Name:   Shazia Flores
Title:   Vice President

 

UMB BANK, N.A. ,

as Collateral Agent

By:   /s/ Shazia Flores
Name:   Shazia Flores
Title:   Vice President


EXHIBIT A

[FORM OF FACE OF INITIAL NOTE]

[Restricted Notes Legend]

[Depository Legend, if applicable]

 

No. [          ]      

Principal Amount $[                              ], as

revised by the Schedule of Increases and

Decreases in Global Note attached hereto

 

CUSIP NO.                     

ISIN:                     

10.75% Senior Secured Notes due 2023

Basic Energy Services, Inc., a Delaware corporation, promises to pay to [                      ], or registered assigns, the principal sum of [                      ] Dollars, as revised by the Schedule of Increases and Decreases in Global Note attached hereto, on October 15, 2023.

Interest Payment Dates: April 15 and October 15

Record Dates: April 1 and October 1

Additional provisions of this Note are set forth on the other side of this Note.

 

BASIC ENERGY SERVICES, INC.
By:    
Name:  
Title:  

 

A-1


TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the Notes described in the within-mentioned Indenture.

UMB BANK, N.A.,

as Trustee,

By:                                                            

Authorized Signatory

     
      Dated:                     

 

 

A-2


[FORM OF REVERSE SIDE OF NOTE]

Basic Energy Services, Inc.

10.75% Senior Secured Notes due 2023

1. Interest

Basic Energy Services, Inc., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “ Company ”), promises to pay interest on the principal amount of this Note at the rate per annum shown above.

The Company will pay interest semiannually on April 15 and October 15 of each year commencing April 15, 2019. Interest on the Notes will accrue from the most recent date to which interest has been paid on the Notes or, if no interest has been paid, from October 2, 2018. The Company shall pay interest on overdue principal, and it shall pay interest on overdue installments of interest, at the rate borne by the Notes to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

2. Method of Payment

By no later than 11:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on any Note is due and payable, the Company shall irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest. The Company will pay interest (except Defaulted Interest) to the Persons who are registered Holders of Notes at the close of business on the April 1 or October 1 next preceding the Interest Payment Date even if Notes are cancelled, repurchased or redeemed after the record date and on or before the Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal, premium, if any, and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of Notes represented by a Global Note (including principal, premium, if any, and interest) will be made by the transfer of immediately available funds to the accounts specified by The Depository Trust Company or any successor depositary. The Company will make all payments in respect of a Definitive Note (including principal, premium, if any, and interest) by mailing a check to the registered address of each Holder thereof; provided , however , that payments on the Notes may also be made, at the Company’s option, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if the Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 15 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

3. Paying Agent and Registrar

Initially, UMB Bank, N.A. (the “ Trustee ”) will act as Trustee, Paying Agent and Registrar. The Company may appoint and change any Paying Agent or Registrar without notice to any Noteholder. The Company or any of its Restricted Subsidiaries may act as Paying Agent or Registrar.

4. Indenture

The Company has issued the Notes under an Indenture dated as of October 2, 2018 (as it may be amended or supplemented from time to time in accordance with the terms thereof, the “ Indenture ”), between the Company and the Trustee. The terms of the Notes include those stated in the Indenture. Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all terms and provisions of the Indenture, and Noteholders are referred to the Indenture for a statement of those terms. In the event of a conflict between the Indenture and this Note, the Indenture shall govern.

 

A-3


The Notes are senior secured obligations of the Company. The aggregate principal amount of Notes that may be authenticated and delivered under the Indenture is unlimited, subject to compliance with the covenants in the Indenture. This Note is one of the 10.75% Senior Secured Notes due 2023 referred to in the Indenture. The Notes include (i) $300,000,000 aggregate principal amount of the Company’s 10.75% Senior Secured Notes due 2023 issued under the Indenture on October 2, 2018 (herein called “ Initial Notes ”) and (ii) if and when issued, additional 10.75% Senior Secured Notes due 2023 of the Company that may be issued from time to time under the Indenture subsequent to October 2, 2018 (herein called “ Additional Notes ”) as provided in Section 2.1(a) of the Indenture. The Initial Notes and Additional Notes are treated as a single class of securities under the Indenture.

5. Redemption

The Notes will be subject to Redemption as set forth in Article V of the Indenture.

The Company and its Subsidiaries may acquire Notes by means other than a redemption or required repurchase, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws.

6. Guarantees; Security

The Notes will be fully and unconditionally guaranteed by the Guarantors, and the Notes and the Subsidiary Guarantees will be secured by first-priority liens on the Collateral, pursuant to the Security Documents. Reference is made to the Indenture and the Notes Documents for terms relating to such security, including the release, termination and discharge thereof. Enforcement of the Security Documents is subject to the Collateral Agency Agreement.

7. Repurchase Provisions

(a) If a Change of Control occurs, unless the Company has exercised its right to redeem all of the Notes as described under paragraph 5 above or another of the exceptions set forth in Section 3.9 of the Indenture applies, each Holder will have the right to require the Company to repurchase from each Holder all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date) as provided in, and subject to the terms of, the Indenture.

(b) If the Company or any Restricted Subsidiary consummates an Asset Sale, the Company may be obligated to make an Asset Sale Offer to all Holders and all holders of certain other Priority Lien Debt, on the terms and subject to the conditions in Section 3.5.

 

A-4


8. Denominations; Transfer; Exchange

The Notes are in registered form without coupons in denominations of principal amount of $2,000 and whole multiples of $1,000 in excess thereof. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay a sum sufficient to cover any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange of any Note (A) for a period (1) of 15 days before giving notice of any redemption of Notes or (2) beginning 15 days before an Interest Payment Date and ending on such Interest Payment Date or (B) selected for redemption, except the unredeemed portion of any Note being redeemed in part.

9. Persons Deemed Owners

The registered Holder of this Note shall be treated as the owner of it for all purposes.

10. Unclaimed Money

If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company for payment as unsecured general creditors unless an abandoned property law designates another Person and not to the Trustee for payment.

11. Defeasance

Subject to certain exceptions and conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee money or Government Securities for the payment of principal and interest on the Notes to redemption or final maturity, as the case may be.

12. Amendment, Supplement, Waiver

Subject to certain exceptions set forth in the Indenture, (i) the Notes Documents may be amended or supplemented by the Company, the Guarantors and the Trustee with the consent of the Holders of a majority in principal amount of the then outstanding Notes and (ii) any default (other than with respect to nonpayment or in respect of a provision that cannot be amended without the consent of each Noteholder affected) or noncompliance with any provision may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes, in each case in addition to any required consent of holders of other Priority Lien Obligations required with respect to any amendment or waiver under any Notes Document. Without the consent of any Noteholder, the Company, the Guarantors and the Trustee may amend or supplement the Indenture, the Notes or the Subsidiary Guarantees in certain respects as provided in the Indenture.

 

A-5


13. Defaults and Remedies

If an Event of Default (other than an Event of Default with respect to certain bankruptcy events as provided in the Indenture) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the outstanding Notes by notice to the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare all the Notes to be due and payable immediately, including any premium thereon as specified in the Indenture. If an Event of Default with respect to certain bankruptcy events as provided in the Indenture occurs and is continuing, the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.

Noteholders may not enforce the Indenture or the Notes or other Notes Documents except as provided in the Indenture. Subject to the provisions of the Indenture relating to the duties of the Trustee if an Event of Default exists, the Trustee may refuse to enforce the Indenture or the Notes unless it receives indemnity or security satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Noteholders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interests.

14. Trustee Dealings with the Company

Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

15. No personal liability of directors, officers, employees and stockholders

No director, officer, employee, manager, incorporator, member, partner or stockholder or other owner of Capital Stock of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, the Indenture or the Subsidiary Guarantees, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of a Note by accepting the Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

16. Authentication

This Note shall not be valid until an authorized signatory of the Trustee (or an Authenticating Agent acting on its behalf) manually signs the certificate of authentication on the other side of this Note.

17. Abbreviations

Customary abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (= tenants in common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with rights of survivorship and not as tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gift to Minors Act).

 

A-6


18. CUSIP, Common Code and ISIN Numbers

The Company has caused CUSIP and ISIN numbers to be printed on the Notes, and the Trustee may use CUSIP, Common Code and ISIN numbers, if applicable, in notices of redemption or purchase as a convenience to Noteholders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption or purchase and reliance may be placed only on the other identification numbers placed thereon.

19. Governing Law

This Note shall be governed by, and construed in accordance with, the laws of the State of New York.

20. Copies of Indenture

The Company will furnish to any Noteholder upon written request and without charge to the Noteholder a copy of the Indenture, which has in it the text of this Note and a copy of the other Notes Documents. Requests may be made to:

Basic Energy Services, Inc.

801 Cherry Street, Suite 2100

Fort Worth, Texas 76102

Attention: David Schorlemer

21. Patriot Act

The parties hereto acknowledge that in accordance with Section 326 of the Patriot Act, the Trustee is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to the Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the Patriot Act.

 

A-7


ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to:

 

                                                                                                                                                                                                                     

(Print or type assignee’s name, address and zip code)

 

                                                                                                                                                                                                                     

(Insert assignee’s Social Note or Tax I.D. No.)

and irrevocably appoint                      agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

 

                                                                                                                                                                                                                     

 

Date:                                        Your Signature:                                 

Signature Guarantee                                                                                                                                                                                     

(Signature must be guaranteed)

 

                                                                                                                                                                                                                     

Sign exactly as your name appears on the other side of this Note.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.

In connection with any transfer or exchange of any of the Notes evidenced by this certificate occurring prior to the date that is one year (or 40 days in the case of any Regulation S Notes) after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Notes are being:

CHECK ONE BOX BELOW:

 

  (1)

☐ acquired for the undersigned’s own account, without transfer; or

 

  (2)

☐ transferred to the Company or any Subsidiary thereof; or

 

  (3)

☐ transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the “ Securities Act ”); or

 

A-8


  (4)

☐ transferred pursuant to an effective registration statement under the Securities Act; or

 

  (5)

☐ transferred pursuant to and in compliance with Regulation S under the Securities Act; or

 

  (6)

☐ transferred pursuant to another available exemption from the registration requirements of the Securities Act.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; provided , however , that if box (5) or (6) is checked, the Company may require, prior to registering any such transfer of the Notes, in its sole discretion, such legal opinions, certifications and other information as the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, such as the exemption provided by Rule 144 under the Securities Act.

 

                                                                   
      Signature

Signature Guarantee:

 

                                                                                                                     
(Signature must be guaranteed)       Signature
           

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.

TO BE COMPLETED BY PURCHASER IF BOX (3) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

 

                                                                   
      Dated:

 

A-9


[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES AND DECREASES IN GLOBAL NOTE

The following increases or decreases in this Global Note have been made:

 

Date of

increase/

decrease

  

Amount of

decrease in

Principal Amount

of this Global

Note

  

Amount of

increase in

Principal Amount

of this Global

Note

  

Principal Amount
of this Global
Note following
such decrease or
increase

  

Signature of
authorized
signatory of
Trustee or Notes
Custodian

 

A-10


OPTION OF HOLDER TO ELECT PURCHASE

If you elect to have this Note purchased by the Company pursuant to Section 3.5 or 3.9 of the Indenture, check either box:

☐        3.5         ☐         3.9

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 3.5 or Section 3.9 of the Indenture, state the amount in principal amount (must be in denominations of $2,000 or an integral multiple of $1,000 in excess thereof): $                                                                                        and specify the denomination or denominations (which shall not be less than the minimum authorized denomination) of the Notes to be issued to the Holder for the portion of the within Note not being repurchased (in the absence of any such specification, one such Note will be issued for the portion not being repurchased): $                                      .

 

Date:                                            Your Signature:                                                              

(Sign exactly as your name appears on the other side of the Note)

Signature Guarantee                                                                                                                                                                    

(Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.

 

A-11


EXHIBIT B

FORM OF INDENTURE SUPPLEMENT TO ADD GUARANTORS

This Supplemental Indenture, dated as of [                           ], 20          (this “ Supplemental Indenture ” or “ Subsidiary Guarantee ”), is among [name of future Guarantor] (the “ Guarantor ”), Basic Energy Services, Inc. (together with its successors and assigns, the “ Company ”), each other then existing Guarantor under the Indenture referred to below, and UMB Bank, N.A., as Trustee (in such capacity, the “ Trustee ”) and Collateral Agent (in such capacity, the “ Collateral Agent ”) under the Indenture referred to below.

W I T N E S S E T H:

WHEREAS, the Company, the Guarantors and the Trustee have heretofore executed and delivered an Indenture, dated as of October 2, 2018 (as amended, supplemented, waived or otherwise modified, the “ Indenture ”), providing for the issuance of an aggregate principal amount of $300,000,000 of 10.75% of Senior Secured Notes due 2023 of the Company (the “ Notes ”);

WHEREAS, Section 3.11 of the Indenture provides that after the Issue Date, the Company is required to cause certain of its Restricted Subsidiaries to execute and deliver to the Trustee a supplemental indenture pursuant to which such Restricted Subsidiary will unconditionally Guarantee, on a joint and several basis with the other Guarantors, the full and prompt payment of the principal of, premium, if any, and interest on the Notes; and

WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee, the Guarantors and the Company are authorized to execute and deliver this Supplemental Indenture to amend or supplement the Indenture, without the consent of any Noteholder;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guarantor, the Company, the other Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

ARTICLE I

Definitions

SECTION 1.1 Defined Terms . As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

ARTICLE II

Agreement to be Bound; Subsidiary Guarantee

SECTION 2.1 Agreement to be Bound . The Guarantor hereby becomes a party to the Indenture as a Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Guarantor under the Indenture, including pursuant to Article X. The Guarantor agrees to be bound by all of the provisions of the Indenture applicable to a Guarantor and to perform all of the obligations and agreements of a Guarantor under the Indenture.

 

B -1


SECTION 2.2 Subsidiary Guarantee . The Guarantor agrees, on a joint and several basis with all the existing Guarantors, to fully, unconditionally and irrevocably Guarantee to each Holder of the Notes and the Trustee the Obligations pursuant to Article X of the Indenture.

ARTICLE III

Miscellaneous

SECTION 3.1 Notices . All notices and other communications to the Guarantor shall be given as provided in Section 12.2 of the Indenture.

SECTION 3.2 Parties . Nothing expressed or mentioned herein is intended or shall be construed to give any Person, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein or therein contained.

SECTION 3.3 Governing Law . This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 3.4 Severability Clause . In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

SECTION 3.5 Ratification of Indenture; Supplemental Indentures Part of Indenture . Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture or with respect to the recitals contained herein, all of which recitals are made solely by the other parties hereto.

SECTION 3.6 Counterparts . The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement.

SECTION 3.7 Headings . The headings of the Articles and the sections in this Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

SECTION 3.8 Trustee’s Disclaimer . The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture, but on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements

 

B-2


contained herein, for or with respect to (i) the proper authorization hereof by the Company or the Subsidiary Guarantors by action or otherwise, (ii) the due execution hereof by the Company or the Guarantors, or (iii) the consequences of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters.

 

B-3


IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.

 

[GUARANTOR],

as a Guarantor

By:    
Name:  
Title:  

 

UMB BANK, N.A., as Trustee
By:    
Name:  
Title:  

 

UMB BANK, N.A., as Collateral Agent
By:    
Name:  
Title:  

 

BASIC ENERGY SERVICES, INC.
By:    
Name:  
Title:  

 

[OTHER EXISTING GUARANTORS]
By:    
Name:  
Title:  

 

B-4

Exhibit 10.1

Execution Version

ABL CREDIT AGREEMENT

Dated as of October 2, 2018

among

BASIC ENERGY SERVICES, INC.,

as the Borrower,

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender

and an L/C Issuer,

UBS SECURITIES LLC,

as Syndication Agent,

PNC BANK NATIONAL ASSOCIATION,

as Documentation Agent and an L/C Issuer,

and

The Other Lenders Party Hereto

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

PNC CAPITAL MARKETS LLC

and

UBS SECURITIES LLC,

as Joint Lead Arrangers and Joint Bookrunners


TABLE OF CONTENTS

 

ARTICLE I


DEFINITIONS AND ACCOUNTING TERMS

 

 

1.01        Defined Terms      1  
1.02    Other Interpretive Provisions      38  
1.03    Accounting Terms      39  
1.04    Rounding      39  
1.05    Times of Day      39  
1.06    Letter of Credit Amounts      39  
1.07    Currency Equivalents Generally      40  
1.08    Uniform Commercial Code      40  
1.09    LIBOR Amendment      40  

ARTICLE II

 

THE COMMITMENTS AND CREDIT EXTENSIONS

 
2.01    The Loans      41  
2.02    Borrowings, Conversions and Continuations of Loans      41  
2.03    Letters of Credit      43  
2.04    Swing Line Loans      52  
2.05    Prepayments      55  
2.06    Termination or Reduction of Commitments      56  
2.07    Repayment of Loans      56  
2.08    Interest      57  
2.09    Fees      58  
2.10    Computation of Interest and Fees      58  
2.11    Evidence of Debt      58  
2.12    Payments Generally; Administrative Agent’s Clawback      59  
2.13    Sharing of Payments by Lenders      61  
2.14    Increase in Commitments      62  
2.15    Cash Collateral      63  
2.16    Defaulting Lenders      64  
2.17    Protective Advances      65  
2.18    Overadvances      66  

ARTICLE III

 

TAXES, YIELD PROTECTION AND ILLEGALITY

 
3.01    Taxes      66  
3.02    Illegality      70  
3.03    Inability to Determine Rates      71  
3.04    Increased Costs; Capital Adequacy      71  
3.05    Compensation for Losses      73  
3.06    Mitigation Obligations; Replacement of Lenders      73  
3.07    Survival      74  

 

ii


ARTICLE IV

 

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 
4.01        Conditions of Initial Credit Extension      74  
4.02    Conditions to all Credit Extensions      78  

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

 
5.01    Existence, Qualification and Power      78  
5.02    Authorization; No Contravention      79  
5.03    Governmental Authorization; Other Consents      79  
5.04    Binding Effect      79  
5.05    Financial Statements; No Material Adverse Effect      80  
5.06    Litigation      80  
5.07    No Default      80  
5.08    Ownership of Property; Liens; Investments      80  
5.09    Environmental Compliance      80  
5.10    Insurance      81  
5.11    Taxes      82  
5.12    ERISA Compliance      82  
5.13    Subsidiaries; Equity Interests; Loan Parties      82  
5.14    Margin Regulations; Investment Company Act      83  
5.15    Disclosure      83  
5.16    Compliance with Laws      83  
5.17    Intellectual Property; Licenses, Etc      84  
5.18    Solvency      84  
5.19    Casualty, Etc.      84  
5.20    Labor Matters      84  
5.21    Collateral Documents      84  
5.22    Sanctions Concerns      84  
5.23    EEA Financial Institutions      84  
5.24    Indenture Compliance      84  

ARTICLE VI

 

AFFIRMATIVE COVENANTS

 
6.01    Financial Statements; Borrowing Base Certificate      85  
6.02    Certificates; Other Information      87  
6.03    Notices      89  
6.04    Payment of Obligations      89  
6.05    Preservation of Existence, Etc.      90  
6.06    Maintenance of Properties      90  
6.07    Maintenance of Insurance      90  
6.08    Compliance with Laws      91  
6.09    Books and Records      91  
6.10    Inspection Rights      91  
6.11    Use of Proceeds      92  
6.12    Covenant to Guarantee Obligations and Give Security      92  
6.13    Compliance with Environmental Laws      94  
6.14    Preparation of Environmental Reports      94  
6.15    Further Assurances      95  
6.16    Compliance with Terms of Leaseholds      95  
6.17    Material Contracts      95  
6.18    Administration of Deposit Accounts      96  
6.19    Designation and Conversion of Restricted and Unrestricted Subsidiaries; Covenants With Respect to Unrestricted Subsidiaries      96  

 

iii


ARTICLE VII

 

NEGATIVE COVENANTS

 
7.01        Liens      97  
7.02    Indebtedness      99  
7.03    Investments      101  
7.04    Fundamental Changes      102  
7.05    Dispositions      102  
7.06    Restricted Payments      103  
7.07    Change in Nature of Business      104  
7.08    Transactions with Affiliates      104  
7.09    Burdensome Agreements      104  
7.10    Use of Proceeds      105  
7.11    Consolidated Fixed Charge Coverage Ratio      105  
7.12    Amendments of Organization Documents      105  
7.13    Accounting Changes      105  
7.14    Prepayments, Etc. of Indebtedness      105  
7.15    Amendment, Etc. of Indebtedness      106  
7.16    Sanctions      106  

ARTICLE VIII

 

EVENTS OF DEFAULT AND REMEDIES

 
8.01    Events of Default      106  
8.02    Remedies upon Event of Default      108  
8.03    Application of Funds      109  

ARTICLE IX

 

ADMINISTRATIVE AGENT

 
9.01    Appointment and Authority      110  
9.02    Rights as a Lender      111  
9.03    Exculpatory Provisions      111  
9.04    Reliance by Administrative Agent      112  
9.05    Delegation of Duties      113  
9.06    Resignation of Administrative Agent      113  
9.07    Non-Reliance on Administrative Agent and Other Lenders      114  
9.08    No Other Duties, Etc.      114  
9.09    Administrative Agent May File Proofs of Claim; Credit Bidding      115  
9.10    Collateral and Guaranty Matters      116  
9.11    Secured Cash Management Agreements and Secured Hedge Agreements      117  
9.12    Certain ERISA Matters      117  

 

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ARTICLE X

 

MISCELLANEOUS

 
10.01    Amendments, Etc.      118  
10.02    Notices; Effectiveness; Electronic Communications      120  
10.03    No Waiver; Cumulative Remedies; Enforcement      122  
10.04    Expenses; Indemnity; Damage Waiver      123  
10.05    Payments Set Aside      125  
10.06    Successors and Assigns      126  
10.07    Treatment of Certain Information; Confidentiality      130  
10.08    Right of Setoff      131  
10.09    Interest Rate Limitation      132  
10.10    Counterparts; Integration; Effectiveness      132  
10.11    Survival of Representations and Warranties      132  
10.12    Severability      133  
10.13    Replacement of Lenders      133  
10.14    Governing Law; Jurisdiction; Etc.      134  
10.15    Waiver of Jury Trial      135  
10.16    No Advisory or Fiduciary Responsibility      135  
10.17    Electronic Execution of Assignments and Certain Other Documents      136  
10.18    USA PATRIOT Act      136  
10.19    Keepwell      136  
10.20    Credit Inquiries      137  
10.21    Performance of Borrower’s Obligations      137  
10.22    Waivers by Borrower      137  
10.23    ENTIRE AGREEMENT      137  
10.24    Acknowledgement and Consent to Bail-In of EEA Financial Institutions      138  

 

v


SCHEDULES

 

1.01   Commitments and Applicable Percentages
1.01(a)   Existing Letters of Credit
5.13   Subsidiaries and Other Equity Investments; Loan Parties
6.12   Guarantors
6.18   Deposit Accounts
7.01   Existing Liens
7.02   Existing Indebtedness
7.03   Investments
7.09   Burdensome Agreements
10.02   Administrative Agent’s Office, Certain Addresses for Notices

EXHIBITS

 

Form of

  

A

   Revolving Credit Loan Notice

B

   Swing Line Loan Notice

C

   Note

D

   Compliance Certificate

E-1

   Assignment and Assumption

E-2

   Administrative Questionnaire

F

   Notice of Loan Prepayment

G

   Secured Party Designation Notice

H

   Letter of Credit Report

I-1 –I-4

   U.S. Tax Compliance Certificates

J

   Borrowing Base Certificate

 

vi


ABL CREDIT AGREEMENT

This ABL CREDIT AGREEMENT (“ Agreement ”) is entered into as of October 2, 2018 among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), and BANK OF AMERICA, N.A., as Administrative Agent, a Swing Line Lender and an L/C Issuer.

PRELIMINARY STATEMENTS:

The Borrower has requested that the Lenders provide a revolving credit facility in the initial amount of $150,000,000, and the Lenders have agreed to lend, and the L/C Issuers have agreed to issue letters of credit, in each case on the terms and subject to the conditions set forth herein.

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

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms . As used in this Agreement, the following terms shall have the meanings set forth below:

Acceptable Senior Notes Refinancing ” means the payment in full of the Senior Notes, including the entire outstanding principal amount thereof and interest, fees, premiums, and other applicable amounts due with respect thereto pursuant to a refinancing with Indebtedness that satisfies the requirements of Section 7.02(g)(ii).

Account ” has the same meaning as defined in the UCC, including all rights to payment for goods sold or leased, or for services rendered.

Account Debtor ” means a Person obligated under an Account, Chattel Paper or General Intangible.

Acquisition ” means the acquisition, directly or indirectly, by any Person of (a) at least a majority of the Equity Interests of another Person, (b) all or substantially all of the assets of another Person or (c) all or substantially all of a line of business or division of another Person, in each case (i) whether or not involving a merger or a consolidation with such other Person and (ii) whether in one transaction or a series of related transactions.

Acquisition Consideration ” means, in connection with any Acquisition, the total cash and noncash consideration (including the fair market value of all Equity Interests issued or transferred to the sellers thereof, all indemnities, earnouts and other contingent payment obligations to, and the aggregate amounts paid or to be paid under noncompete, consulting and other affiliated agreements with, the sellers thereof, all write-downs of property and reserves for liabilities with respect thereto and all assumptions of debt, liabilities and other obligations in connection therewith) paid by or on behalf of the Borrower and its Subsidiaries for such Acquisition.


Administrative Agent ” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

Administrative Questionnaire ” means an Administrative Questionnaire in substantially the form of Exhibit E-2 or any other form approved by the Administrative Agent.

Affiliate ” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

Aggregate Commitments ” means the Commitments of all the Lenders. As of the Closing Date, the Aggregate Commitments are $150,000,000.

Agreement ” means this ABL Credit Agreement.

Anti-Terrorism Law ” means any law relating to terrorism or money laundering, including the Patriot Act.

Applicable Fee Rate ” means, at any time, a per annum rate equal to (a) 0.500% if average daily Revolving Credit Usage was less than 50% of the Aggregate Commitments during the previous calendar quarter, or (b) 0.375% if average daily Revolving Credit Usage was equal to or greater than 50% of the Aggregate Commitments during such quarter.

Applicable Percentage ” means, with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Commitment at such time, subject to adjustment as provided in Section 2.16. If the commitment of each Lender to make Loans and the obligation of each L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02, or if the Commitments have expired, then the Applicable Percentage of each Lender in respect of the Aggregate Commitments shall be determined based on the Applicable Percentage of such Lender in respect of the Aggregate Commitments most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 1.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

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Applicable Rate ” means (i) from the Closing Date to April 1, 2019, 1.00% per annum for Base Rate Loans and 2.00% per annum for LIBOR Loans and Letter of Credit Fees and (ii) thereafter, the applicable percentage per annum set forth below for each fiscal quarter (each an “ Applicable Quarter ”) determined by reference to the average daily Availability as a percentage of the Borrowing Base during the fiscal quarter immediately preceding such Applicable Quarter (as to each Applicable Quarter, the “ Reference Quarter ”) as determined by the Administrative Agent based on the Borrowing Base Certificates delivered by the Borrower to the Administrative Agent:

Applicable Rate

 

Pricing Level

   Average Daily
Availability as a
Percentage of the
Borrowing Base
  LIBOR Rate   Base Rate   Letter of Credit
Fees

1

   >66.66%   1.75%   0.75%   1.75%

2

   £  66.66% but > 33.33%   2.00%   1.00%   2.00%

3

   £ 33.33%   2.25%   1.25%   2.25%

Any increase or decrease in the Applicable Rate for any Applicable Quarter resulting from a change in the average daily Availability for the applicable Reference Quarter shall become effective as of the first day of the first calendar month in the Applicable Quarter. If the Administrative Agent is unable to calculate average daily Availability for any Reference Quarter due to Borrower’s failure to deliver any Borrowing Base Certificate when required pursuant to Section  6.01(e) , then, at the option of the Administrative Agent or the Required Lenders, Pricing Level 3 shall apply during the Applicable Quarter until the first day of the calendar month following delivery of such Borrowing Base Certificate.

Approved Fund ” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

Arrangers ” means MLPFS, PNC Capital Markets LLC and UBS Securities LLC, each in its capacity as joint lead arranger and joint bookrunner.

Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section  10.06(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit E-1 or any other form (including an electronic documentation form generated by use of an electronic platform) approved by the Administrative Agent.

Attributable Indebtedness ” means, on any date, (a) in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease or other agreement or instrument were accounted for as a Capitalized Lease and (c) all Synthetic Debt of such Person.

Audited Financial Statements ” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2017, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

Availability ” means the Borrowing Base minus Total Outstandings.

 

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Availability Period ” means the period from and including the Closing Date to the earliest of (i) the Maturity Date, (ii) the date of termination of the Commitments pursuant to Section  2.06 , and (iii) the date of termination of the commitment of each Lender to make Revolving Credit Loans and of the obligation of each L/C Issuer to make L/C Credit Extensions pursuant to Section  8.02 .

Availability Reserve ” means the sum (without duplication) of (a) the Bank Product Reserve; (b) the Rent and Charges Reserve, (c) the Dilution Reserve; (d) all accrued Royalties, whether or not then due and payable by any Loan Party; (e) the aggregate amount of liabilities secured by Liens upon the Collateral that are senior to Administrative Agent’s Liens (but imposition of any such reserve shall not waive an Event of Default arising therefrom); and (f) such additional reserves, in such amounts and with respect to such matters, as Administrative Agent in its Permitted Discretion may elect to impose from time to time; provided that unless an Event of Default exists and is continuing (in which case no notice shall be required and any changes shall take effect immediately), no change in respect of a new category of additional reserves shall take effect until the third (3rd) Business Day following delivery by Administrative Agent of written notification to Borrower of such new category (during which period Administrative Agent shall be available to discuss any such proposed new reserve category with Borrower and Borrower may take such action as may be required to eliminate the event, condition or matter that is the basis for such new category).

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.

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 of America ” means Bank of America, N.A. and its successors.

Bank Product ” means any of the following products, services or facilities extended to the Borrower or a Subsidiary of the Borrower by a Lender or any of its Affiliates: (a) services under Cash Management Agreements; (b) products under Swap Contracts; and (c) other banking products or services, other than Letters of Credit.

Bank Product Reserve ” means the aggregate amount of reserves established by Administrative Agent from time to time in its Permitted Discretion in respect of Secured Bank Product Obligations; provided that no Bank Product Reserve will be established in respect of the P-Card Agreements so long as the Treasury Management Control Agreement remains in effect.

Base Rate ” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the Prime Rate, and (c) LIBOR for a 30 day interest period as of such day plus 1.00%; provided that in no event shall the Base Rate be less than zero.

Base Rate Loan ” means a Revolving Credit Loan that bears interest based on the Base Rate.

 

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Beneficial Ownership Certification ” means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation, in form and substance satisfactory to Administrative Agent.

Beneficial Ownership Regulation ” means 31 C.F.R. § 1010.230.

Benefit Plan ” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

BER ” means Basic Energy Receivables, LLC, a Delaware limited liability company.

BER Holdco ” means BER Holdco, LLC, a Delaware limited liability company.

BESI ” means Basic Energy Services International, LLC, a Delaware limited liability company.

Borrower ” has the meaning specified in the introductory paragraph hereto.

Borrower Materials ” has the meaning specified in Section  6.02 .

Borrowing ” means a Revolving Credit Borrowing or a Swing Line Borrowing, as the context may require.

Borrowing Base ” means, on any date of determination, an amount equal to the lesser of (a) the Aggregate Commitments; or (b) the sum, without duplication, of the following:

(i) 85% of the Value of Eligible Accounts, plus

(ii) the lesser of (A) 80% of the Value of Eligible Unbilled Accounts or (B) $30,000,000, minus

(iii) the Availability Reserve.

No Borrowing Base calculation shall include Collateral acquired in a Permitted Acquisition or otherwise outside the ordinary course of business until completion of applicable field examinations satisfactory to Administrative Agent (which shall not be included in the limits provided in Section  6.10(b) ).

Borrowing Base Certificate ” means a certificate substantially in the form of Exhibit J or in such other form as is reasonably satisfactory to the Administrative Agent, by which Borrower certifies the calculation of the Borrowing Base.

 

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Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any LIBOR Loan, means any such day that is also a London Banking Day.

Capital Expenditures ” means, with respect to any Person for any period, any expenditure in respect of the purchase or other acquisition of any fixed or capital asset; provided that Capital Expenditures shall not include any such expenditures relating to Capitalized Leases, purchase money obligations or Synthetic Lease Obligations, in each case, permitted pursuant to Section  7.02(f) or any such expenditures incurred in connection with Permitted Acquisitions permitted pursuant to Section  7.03(g) . For purposes of this definition, the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment or with insurance proceeds shall be included in Capital Expenditures only to the extent of the amount by which such purchase price exceeds the credit granted by the seller of such equipment for the equipment being traded in at such time or the amount of such insurance proceeds, as the case may be.

Capitalized Leases ” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

Cash Collateralize ” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent, L/C Issuers or the Swing Line Lenders (as applicable) and the Lenders, as collateral for L/C Obligations, Obligations in respect of Swing Line Loans, or obligations of Lenders to fund participations in respect of either thereof (as the context may require), (a) cash or deposit account balances, (b) backstop letters of credit entered into on terms, from issuers and in amounts satisfactory to the Administrative Agent and the applicable L/C Issuer, and/or (c) if the L/C Issuers or Swing Line Lenders benefitting from such collateral shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to (x) the Administrative Agent and (y) the L/C Issuers or the Swing Line Lenders (as applicable). “ Cash Collateral ” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

Cash Dominion Trigger Period ” means the period (a) commencing on the day that (i) an Event of Default occurs, or (ii) Availability is less than the greater of (x) 12.5% of the Borrowing Base or (y) $18,750,000, and (b) continuing until, during each of the preceding 30 consecutive days, no Event of Default has existed and Availability has at all times exceeded the greater of (i) 12.5% of the Borrowing Base or (ii) $18,750,000.

Cash Equivalents ” means any of the following types of Investments, to the extent owned by the Borrower or any of its Restricted Subsidiaries free and clear of all Liens (other than Liens created under the Collateral Documents and other Liens permitted hereunder):

(a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;

 

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(b) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than 180 days from the date of acquisition thereof;

(c) commercial paper issued by any Person organized under the laws of any state of the United States of America and rated at least “ Prime-1 ” (or the then equivalent grade) by Moody’s or at least “ A-1 ” (or the then equivalent grade) by S&P, in each case with maturities of not more than 180 days from the date of acquisition thereof; and

(d) Investments, classified in accordance with GAAP as current assets of the Borrower or any of its Restricted Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are comprised of least 95% of Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition.

Cash Management Agreement ” means any agreement to provide cash management services, including treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements.

Cash Management Bank ” means any Person in its capacity as a party to a Cash Management Agreement that, (a) at the time it enters into a Cash Management Agreement, is a Lender or an Affiliate of a Lender, or (b) at the time it (or its Affiliate) becomes a Lender, is a party to a Cash Management Agreement, in each case, in its capacity as a party to such Cash Management Agreement (even if such Person ceases to be a Lender or such Person’s Affiliate ceased to be a Lender); provided , however , that for any of the foregoing to be included as a “Secured Cash Management Agreement” on any date of determination by the Administrative Agent, the applicable Cash Management Bank (other than the Administrative Agent or an Affiliate of the Administrative Agent) must have delivered a Secured Party Designation Notice to the Administrative Agent prior to such date of determination.

CERCLA ” means the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. § 9601 et seq .).

CERCLIS ” means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency.

CFC ” means a Person that is a controlled foreign corporation under Section 957 of the Code.

Change in Law ” means the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority, provided that

 

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notwithstanding anything herein 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 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, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

Change of Control ” means an event or series of events by which:

(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) 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 35% or more of the equity securities of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower 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); or

(b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower 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; or

(c) the passage of 30 days from the date upon which any Person or two or more Persons acting in concert 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 the Borrower, or control over the equity securities of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such Person or Persons have the right to acquire pursuant to any option right) representing 35% or more of the combined voting power of such securities; or

(d) a “change of control” or any comparable term under, and as defined in, any of the Senior Notes Documents or any other significant debt shall have occurred.

Closing Date ” means the first date all the conditions precedent in Section  4.01 are satisfied or waived in accordance with Section  10.01 .

 

-8-


Code ” means the Internal Revenue Code of 1986, as amended, and any successor statute.

Collateral ” means all of the “ Collateral ” referred to in the Collateral Documents and all of the other property that is or is intended under the terms of the Collateral Documents to be subject to Liens in favor of the Administrative Agent for the benefit of the Secured Parties; but, for the avoidance of doubt, Collateral shall not include any equity interest in the Loan Parties or any of their Subsidiaries.

Collateral Documents ” means, collectively, the Security Agreement, Security Agreement Supplements, security agreements, pledge agreements, landlord’s agreements, control agreements or other similar agreements delivered to the Administrative Agent pursuant to Section  4.01 and Section  6.12 , and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Secured Parties.

Collateral Rights Agreement ” means that certain Collateral Rights Agreement dated as of the Closing Date among the Administrative Agent, the Senior Notes Trustee and the Loan Parties, in form and substance satisfactory to the Administrative Agent.

Commitment ” means, as to each Lender, its obligation to (a) make Revolving Credit Loans to the Borrower pursuant to Section  2.01 , (b) purchase participations in L/C Obligations, and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 1.01 under the caption “ Commitment ” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with 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.

Compliance Certificate ” means a certificate substantially in the form of Exhibit  D .

Connection Income Taxes ” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

Consolidated EBITDA ” means, at any date of determination, an amount equal to Consolidated Net Income of the Borrower and its Restricted Subsidiaries on a consolidated basis for the most recently completed Measurement Period plus (a) without duplication, the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges, (ii) the provision for federal, state, local and foreign income taxes payable, (iii) depreciation and amortization expense (including amortization of intangibles, but excluding amortization of prepaid cash expenses that were paid in a prior Measurement Period), (iv) impairment (other than any impairment in respect of Collateral) and other expenses reducing such Consolidated Net Income which do not represent a cash item in such period or any future period, (v) stock-based compensation expenses which do not represent a cash item in such period or any future period (in each case of or by the Borrower and its Restricted Subsidiaries for such Measurement Period), (vi) the write-off of unamortized deferred financing, legal and accounting costs in connection with the refinancing of the Receivables Facility Agreement and the Term Loan

 

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Agreement on the Closing Date, (vii) prepayment premiums, redemption premiums, fees, and other amounts expensed in connection with the redemption or prepayment of the Receivables Facility Agreement and the Term Loan Agreement on the Closing Date; (viii) any reasonable and customary fees, expenses, charges or losses (other than depreciation or amortization expense) related to any public or private sale of Qualified Capital Stock of the Company or options, warrants or rights with respect to its Qualified Capital Stock (other than sales made to any Subsidiary of the Borrower and sales of Disqualified Capital Stock) made for cash after Closing Date, Material Acquisitions, Material Dispositions or the incurrence of Indebtedness permitted to be incurred under this Agreement (including a refinancing thereof), in each case regardless of whether successful, and including such fees, expenses, charges or losses related to (a) the offering of the Senior Notes and the Indebtedness under this Agreement and (b) any amendment or other modification of the Senior Notes or the Loan Documents and, in each case, deducted (and not added back) in computing such Consolidated Net Income; provided that the amounts added pursuant to this clause subclause (viii), together with any amounts added pursuant to subclause (ix) below, shall not in the aggregate exceed, in any Measurement Period, 15% of Consolidated EBITDA for such Measurement Period (prior to giving effect to the addbacks pursuant to this subclause (viii) and subclause (ix)), and (ix) the amount of any restructuring charge or reserve, integration cost or other business optimization expense during such Measurement Period and severance costs; provided that the amounts added pursuant to this clause subclause (ix), together with any amounts added pursuant to subclause (viii) above, shall not in the aggregate exceed, in any Measurement Period, 15% of Consolidated EBITDA for such Measurement Period (prior to giving effect to the addbacks pursuant to subclause (viii) and this subclause (ix)), and minus (b) the following to the extent included in calculating such Consolidated Net Income: (i) federal, state, local and foreign income tax credits and (ii) all non-cash items increasing Consolidated Net Income (in each case of or by the Borrower and its Restricted Subsidiaries for such Measurement Period). Consolidated EBITDA shall be calculated for each Measurement Period, on a Pro Forma Basis, after giving effect to, without duplication, any Material Acquisition (as defined below) and any Material Disposition (as defined below) and, at the Borrower’s election, any other Acquisition or Disposition, in each case, made during each period commencing on the first day of such period to and including the date of such transaction (the “ Reference Period ”) as if such Acquisition or Disposition and any related incurrence or repayment of Indebtedness occurred on the first day of the Reference Period. As used in this definition, “Material Acquisition” means any Acquisition with Acquisition Consideration of $3,000,000 or more and “Material Disposition” means any Disposition resulting in net sale proceeds of $10,000,000 or more.

Consolidated Fixed Charge Coverage Ratio ” means the ratio, determined on a consolidated basis for the Borrower and its Restricted Subsidiaries for the most recent Measurement Period of (a) Consolidated EBITDA minus Capital Expenditures (except those financed with borrowed money other than Revolver Loans or Equity Proceeds) and cash taxes paid, to (b) Consolidated Fixed Charges. Notwithstanding anything herein to the contrary, for the purposes of calculating the Consolidated Fixed Charge Coverage Ratio and the components thereof, all Unrestricted Subsidiaries and their Subsidiaries (including their assets, liabilities, income, losses, cash flows, and the elements thereof) shall be excluded, except for any cash dividends or distributions actually paid by any Unrestricted Subsidiary or any of its Subsidiaries to a Loan Party, which shall be deemed to be income to such Loan Party when actually received by it.

 

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Consolidated Fixed Charges ” means the sum of Consolidated Interest Charges (other than payment-in-kind or amortization of fees and other non-cash items treated as interest in accordance with GAAP), scheduled principal payments and voluntary prepayments made on borrowed money (including purchase money Indebtedness, Attributable Indebtedness and the deferred purchase price of property or services), and Restricted Payments made.

Consolidated Interest Charges ” means, for any Measurement 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, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense under Capitalized Leases that is treated as interest in accordance with GAAP, in each case, of or by the Borrower and its Restricted Subsidiaries on a consolidated basis for the most recently completed Measurement Period.

Consolidated Net Income ” means, at any date of determination, the net income (or loss) of the Borrower and its Restricted Subsidiaries on a consolidated basis for the most recently completed Measurement Period; provided that Consolidated Net Income shall exclude (a) extraordinary gains and extraordinary losses for such Measurement Period, (b) the net income of any Restricted Subsidiary during such Measurement Period to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of such income is not permitted by operation of the terms of its Organization Documents or any agreement, instrument or Law applicable to such Restricted Subsidiary during such Measurement Period, except that the Borrower’s equity in any net loss of any such Restricted Subsidiary for such Measurement Period shall be included in determining Consolidated Net Income, (c) any income (or loss) for such Measurement Period of any Person if such Person is not a Restricted Subsidiary, except that the Borrower’s equity in the net income of any such Person for such Measurement Period shall be included in Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such Measurement Period to the Borrower or a Restricted Subsidiary as a dividend or other distribution (and in the case of a dividend or other distribution to a Restricted Subsidiary, such Restricted Subsidiary is not precluded from further distributing such amount to the Borrower as described in clause (b) of this proviso), and (d) the effects of non-cash adjustments in such Person’s consolidated financial statements pursuant to GAAP resulting from the application of “fresh start accounting” implemented in accordance with FASB ASC 852.

Consolidated Tangible Assets ” means, with respect to any Person as of any date, the amount which, in accordance with GAAP, would be set forth under the caption “Total Assets” (or any like caption) on a consolidated balance sheet of such Person and its consolidated Subsidiaries, less all assets that are considered to be intangible assets under GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trademarks, patents, franchises, licenses, unamortized deferred charges, unamortized debt discount and capitalized research and development costs.

Contractual Obligation ” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

 

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Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “ Controlling ” and “ Controlled ” have meanings correlative thereto.

Credit Extension ” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.

Debtor Relief Laws ” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

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

Default Rate ” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate applicable to Base Rate Loans plus (iii) 2% per annum; provided , however , that with respect to a LIBOR Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus 2% per annum.

Defaulting Lender ” means, subject to Section  2.16(b) , 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 the Administrative Agent and the 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, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any L/C Issuer, any Swing Line Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swing Line Loans) within two (2) Business Days of the date when due, (b) has notified the Borrower, the Administrative Agent, the applicable L/C Issuer or the applicable Swing Line Lender 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, 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 the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the 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 the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (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

 

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business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) becomes subject to 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 the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section  2.16(b) ) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrower, each L/C Issuer, each Swing Line Lender and each other Lender promptly following such determination.

Designated Jurisdiction ” means any country or territory that is the target of a Sanction.

Dilution Percent ” means the percent, determined for the Borrower’s most recent fiscal quarter, equal to (a) bad debt write-downs or write-offs, discounts, returns, promotions, credits, credit memos and other dilutive items with respect to Accounts, divided by (b) gross sales.

Dilution Reserve ” means the aggregate amount of reserves in an amount equal to the Value of the Eligible Accounts multiplied by 1.0% for each percentage point (or portion thereof) that the Dilution Percent exceeds 5.0%.

Disqualified Capital Stock ” means any Equity Interest which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable for any consideration other than solely an Equity Interest in such Person (which would constitute Qualified Capital Stock), pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof for any consideration other than solely an Equity Interest in such Person (which would constitute Qualified Capital Stock) at the option of the holder thereof, in whole or in part on or prior to the date that is 181 days after the earlier of the Maturity Date and payment in full of the Obligations, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interests referred to in (a) above, or (c) contains any repurchase obligation on or prior to the date that is 181 days after the earlier of the Maturity Date and payment in full of the Obligations.

Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

Dollar ” and “ $ ” mean lawful money of the United States.

 

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

Dominion Account ” means a special account established by the Borrower or any Guarantor at Bank of America or another bank acceptable to the Administrative Agent, over which the Administrative Agent has exclusive control for withdrawal purposes.

Earn Out Obligation ” means those contingent obligations of the Borrower or any Guarantor incurred in favor of a seller (or other third party entitled thereto) under or with respect to any Permitted Acquisition.

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.

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

Eligible Account ” means an Account owing to a Loan Party that arises in the ordinary course of business from the sale or lease of inventory or rendition of services, is invoiced and payable in Dollars and is deemed by the Administrative Agent, in its Permitted Discretion, to be an Eligible Account. Without limiting the foregoing, no Account shall be an Eligible Account if (a) it is unpaid for more than 60 days after the original due date, or more than 90 days after the original invoice date; (b) 50% or more of the Accounts owing by the Account Debtor are not Eligible Accounts under the foregoing clause; (c) when aggregated with other Accounts owing by the Account Debtor or affiliated Account Debtors, it exceeds 20% of the aggregate Eligible Accounts (or such higher percentage as the Administrative Agent may establish for the Account Debtor from time to time) to the extent the obligations owing by such Account Debtor are in excess of such percentage; (d) any representation or warranty contained herein or in the Security Agreement with respect to such Account has been breached, or any covenant contained herein or in the Security Agreement with respect to such Account has been breached; (e) it is owing by a creditor or supplier, or is otherwise subject to a potential offset, counterclaim, dispute, deduction, discount, recoupment, reserve, defense, chargeback, credit or allowance (but ineligibility shall be limited to the amount thereof); (f) an Insolvency Proceeding has been commenced by or against the Account Debtor; or the Account Debtor has failed, has suspended or ceased doing business, is liquidating, dissolving or winding up its affairs, is not Solvent, or is subject to Sanctions or any specially designated nationals list maintained by OFAC; or such Loan Party is not able to bring suit or enforce remedies against the Account Debtor through judicial process; (g) the Account Debtor is organized or has its principal offices or assets outside the United States or Canada, unless the Account is supported by a letter of credit (delivered to and directly drawable by the

 

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Administrative Agent) or credit insurance satisfactory in all respects to the Administrative Agent; (h) it is owing by a Governmental Authority, unless the Account Debtor is the United States or any department, agency or instrumentality thereof and the Account has been assigned to the Administrative Agent in compliance with the federal Assignment of Claims Act; (i) it is not subject to a duly perfected, first priority Lien in favor of the Administrative Agent, or is subject to any other Lien other than Liens that are permitted by Section  7.01(c) ; (j) the goods giving rise to it have not been delivered to the Account Debtor, the services giving rise to it have not been accepted by the Account Debtor, or it otherwise does not represent a final sale; (k) it is evidenced by Chattel Paper or an Instrument of any kind, or has been reduced to judgment; (l) it arises from a sale of goods other than inventory, from a sale to an Affiliate, from a sale on a cash-on-delivery, credit card, bill-and-hold, sale-or-return, sale-on-approval, consignment, or other repurchase or return basis, or from a sale for personal, family or household purposes; (m) it represents a progress billing or retainage, or relates to services for which a performance, surety or completion bond or similar assurance has been issued; or (n) it includes a billing for interest, fees or late charges, but ineligibility shall be limited to the extent thereof. In calculating delinquent portions of Accounts under clauses (a) and (b), credit balances more than 90 days old will be excluded.

Eligible Assignee ” means any Person that meets the requirements to be an assignee under Section  10.06(b)(iii) and (v) (subject to such consents, if any, as may be required under Section  10.06(b)(iii) ).

Eligible Unbilled Account ” means an Account owing to a Loan Party which would qualify as an Eligible Account except that the invoice with respect thereto has not yet been submitted to the Account Debtor, so long as the period following the date on which such Loan Party recognizes such Account in its books and records and prior to the date of the issuance of the invoice with respect thereto is less than 30 days.

Environmental Laws ” means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

Environmental Liability ” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

Environmental Permit ” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

 

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Equity Interests ” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination ( provided , however, that debt securities that are or by their terms may be convertible or exchangeable into or for Equity Interests shall not constitute Equity Interests prior to conversion or exchange thereof).

Equity Proceeds ” means cash proceeds from the issuance of Qualified Capital Stock.

ERISA ” means the Employee Retirement Income Security Act of 1974.

ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

ERISA Event ” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any 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; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (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 the Borrower or any ERISA Affiliate.

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 in Section  8.01 .

Excluded Property ” shall have the meaning set forth in the Security Agreement.

Excluded Swap Obligation ” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor 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 (determined after giving effect to Section 10.19

 

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and any other “keepwell, support or other agreement” for the benefit of such Guarantor and any and all guarantees of such Guarantor’s Swap Obligations by other Loan Parties) at the time the Guaranty of such Guarantor, or a grant by such Guarantor of a 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 excluded in accordance with the first sentence of this definition.

Excluded Taxes ” means, with respect to any Recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) Taxes imposed on or measured by its overall net income (however denominated), franchise Taxes , and branch profits Taxes, in each case, (i) imposed as a result of such Recipient 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) in the case of a Lender, any United States withholding Tax that is imposed on amounts payable to or for the account of such Lender pursuant to the Laws in effect on the date on which (i) such Lender acquires an interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section  10.13 ), or (ii) such Lender designates a new Lending Office, except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such withholding Tax pursuant to Section  3.01(a) , (c) Taxes attributable to such Recipient’s failure to comply with Section  3.01(e) , and (d) any U.S. federal withholding Taxes imposed by FATCA.

Existing Letters of Credit ” means those certain Letters of Credit that (a) were issued by Bank of America prior to the Closing Date and were cash collateralized pursuant to that certain Cash Collateral Agreement dated as of September 29, 2017, between the Borrower and Bank of America, (b) are outstanding on the Closing Date and (c) are listed on Schedule 1.01(a) .

FASB ASC ” means the Accounting Standards Codification of the Financial Accounting Standards Board.

FATCA ” means Sections 1471 through 1474 of the Code, 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), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

Federal Funds Rate ” means, for any day, (a) the weighted average per annum interest rate on overnight federal funds transactions with members of the Federal Reserve System on the applicable day (or the preceding Business Day, if the applicable day is not a Business Day), as published by the Federal Reserve Bank of New York on the next Business Day; or (b) if the rate is not so published, the average per annum rate (rounded up to the nearest 1/8 of 1%) charged to Bank of America on the applicable day on such transactions, as determined by the Administrative Agent; provided , that in no event shall the Federal Funds Rate be less than zero.

Fee Letter ” means the letter agreement, dated September 17, 2018, among the Borrower, the Administrative Agent and MLPFS.

 

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Financial Covenant Trigger Period ” means the period (a) commencing on the day that Availability is less than the greater of 12.5% of the Borrowing Base or $18,750,000, and (b) continuing until, during each of the preceding 30 consecutive days, Availability has at all times exceeded the greater of 12.5% of the Borrowing Base or $18,750,000.

Foreign Lender ” means any Lender that is not a U.S. Person.

FRB ” means the Board of Governors of the Federal Reserve System of the United States.

Fronting Exposure ” means, at any time there is a Defaulting Lender, (a) with respect to the L/C Issuers, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, (b) with respect to the Swing Line Lenders, such Defaulting Lender’s Applicable Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof and (c) with respect to the Administrative Agent, such Defaulting Lender’s Applicable Percentage of Protective Advances other than Protective Advances as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

Fund ” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

GAAP ” means generally accepted accounting principles in the United States set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession) including, without limitation, the FASB Accounting Standards Codification, that are applicable to the circumstances as of the date of determination, consistently applied and subject to Section  1.03 .

Governmental Authority ” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

Guarantee ” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or

 

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performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “ Guarantee ” as a verb has a corresponding meaning.

Guarantors ” means, collectively, (a) the Domestic Subsidiaries of the Borrower listed on Schedule 6.12 and each other Domestic Subsidiary of the Borrower that shall be required to execute and deliver a guaranty or guaranty supplement pursuant to Section  6.12 and (b) with respect to the payment and performance by each Specified Loan Party of its obligations under its Guaranty with respect to all Swap Obligations, the Borrower.

Guaranty ” means the Guaranty made by the Guarantors in favor of the Secured Parties, together with each other guaranty and guaranty supplement delivered pursuant to Section  6.12 .

Hazardous Materials ” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

Hedge Bank ” means any Person in its capacity as a party to Swap Contract that, (a) at the time it enters into an interest rate Swap Contract not prohibited under Article VI or VII , is a Lender or an Affiliate of a Lender, or (b) at the time it (or its Affiliate) becomes a Lender, is a party to Swap Contract not prohibited under Article VI or VII, in each case, in its capacity as a party to such Swap Contract (even if such Person ceases to be a Lender or such Person’s Affiliate ceased to be a Lender); provided , in the case of a Secured Hedge Agreement with a Person who is no longer a Lender (or Affiliate of a Lender), such Person shall be considered a Hedge Bank only through the stated termination date (without extension or renewal) of such Secured Hedge Agreement and provided further that for any of the foregoing to be included as a “Secured Hedge Agreement” on any date of determination by the Administrative Agent, the applicable Hedge Bank (other than the Administrative Agent or an Affiliate of the Administrative Agent) must have delivered a Secured Party Designation Notice to the Administrative Agent prior to such date of determination.

Immaterial Domestic Subsidiary ” means any Domestic Subsidiary that (i) does not own any Collateral, (ii) generates less than 2.5% of Consolidated EBITDA for the Measurement Period most recently ended for which financial statements of the Borrower are available, and (iii) owns net assets that have an aggregate fair market value of less than 2.5% of Consolidated Tangible Assets of the Borrower as of the end of the fiscal quarter most recently ended.

 

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Indebtedness ” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b) the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

(c) net obligations of such Person under any Swap Contract;

(d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and not past due for more than 90 days after the date on which such trade account was created);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; provided that, if such indebtedness is limited in recourse, then the amount of such indebtedness for purposes of this Agreement will not exceed the fair market value of such property;

(f) all Attributable Indebtedness with respect to Capitalized Leases and Synthetic Lease Obligations of such Person and all Synthetic Debt of such Person;

(g) all Disqualified Capital Stock; and

(h) all Guarantees of such Person in respect of any of the foregoing.

(i) For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.

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 the Borrower under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

Indemnitees ” has the meaning specified in Section  10.04(b) .

Information ” has the meaning specified in Section  10.07 .

 

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Insolvency Proceeding ” means any case or proceeding commenced by or against a Person under any state, federal or foreign law for, or any agreement of such Person to, (a) the entry of an order for relief under the Bankruptcy Code of the United States, or any other insolvency, debtor relief or debt adjustment law; (b) the appointment of a receiver, trustee, liquidator, administrator, conservator or other custodian for such Person or any part of its property; or (c) an assignment or trust mortgage for the benefit of creditors.

Interest Payment Date ” means, (a) as to any LIBOR Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date and (b) as to any Base Rate Loan or Swing Line Loan, the first day of each April, July, October and January and the Maturity Date.

Interest Period ” means, as to each LIBOR Loan, the period commencing on the date such LIBOR Loan is disbursed or converted to or continued as a LIBOR Loan and ending on the date one, two or three months thereafter (in each case, subject to availability), as selected by the Borrower in its Revolving Credit Loan Notice; provided that:

(a) any Interest Period that would otherwise 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;

(b) any 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) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(c) no Interest Period shall extend beyond the Maturity Date.

Investment ” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person, or (c) an Acquisition. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

IP Rights ” has the meaning specified in Section  5.17 .

IRS ” means the United States Internal Revenue Service.

ISP ” means, with respect to any Letter of Credit, the “ International Standby Practices 1998 ” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

Issuer Documents ” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by an L/C Issuer and the Borrower (or any Subsidiary) or in favor of an L/C Issuer and relating to such Letter of Credit.

 

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Laws ” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

L/C Advance ” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage.

L/C Borrowing ” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Revolving Credit Borrowing.

L/C Credit Extension ” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

L/C Issuer ” means each of Bank of America, UBS AG, Stamford Branch, and PNC Bank National Association, in its capacity as an issuer of Letters of Credit hereunder, or any additional issuer of Letters of Credit hereunder selected by the Borrower and acceptable to the Administrative Agent.

L/C Issuer Sublimit ” means, as to the initial Lenders, (a) $16,666,666.67, in the case of Bank of America, (b) $16,666,666.67, in the case of UBS AG, Stamford Branch, and (c) $16,666,666.66, in the case of PNC Bank National Association; provided that Bank of America shall remain the L/C Issuer with respect to the Existing Letters of Credit until their respective expiry dates as set forth on Schedule 1.01(a) hereof, upon which expiry each such Letter of Credit, to the extent renewal is requested, will be allocated by the Administrative Agent pro rata among the L/C Issuers so as to correspond, to the extent reasonably practicable, with each L/C Issuer’s L/C Issuer Sublimit as set forth herein. Each L/C Issuer’s L/C Issuer Sublimit may be decreased or increased from time to time with the written consent of the Borrower, the Administrative Agent and such L/C Issuer. Effective upon an additional Lender agreeing to become a L/C Issuer and issue Letters of Credit hereunder or to increase its L/C Issuer Sublimit, the definition of L/C Issuer Sublimit shall be amended to reduce the respective L/C Issuers’ L/C Issuer Sublimit by a like amount and to list such additional or increasing L/C Issuer and its exposure hereunder.

L/C Obligations ” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section  1.06 . For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “ outstanding ” in the amount so remaining available to be drawn.

 

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Lender ” has the meaning specified in the introductory paragraph hereto and, as the context requires, includes the Swing Line Lenders.

Lending Office ” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

Letter of Credit ” means any standby letter of credit issued hereunder and shall include the Existing Letters of Credit.

Letter of Credit Application ” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by an L/C Issuer.

Letter of Credit Expiration Date ” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

Letter of Credit Fee ” has the meaning specified in Section  2.03(h) .

Letter of Credit Report ” means a certificate substantially the form of Exhibit H or any other form approved by the Administrative Agent.

Letter of Credit Sublimit ” means an amount equal to $50,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

LIBOR ” means the per annum rate of interest (rounded up to the nearest 1/8th of 1%) determined by the Administrative Agent at or about 11:00 a.m. (London time) two Business Days prior to an Interest Period, for a term equivalent to such period, equal to the London interbank offered rate, or comparable or successor rate approved by the Administrative Agent, as published on the applicable Reuters screen page (or other commercially available source designated by the Administrative Agent from time to time); provided , that any comparable or successor rate shall be applied by the Administrative Agent, if administratively feasible, in a manner consistent with market practice; and provided further , that in no event shall LIBOR be less than zero.

LIBOR Loan ” means a Loan that bears interest based on LIBOR or each set of Loans bearing interest based on LIBOR having a common length and commencement of Interest Period, as context requires.

LIBOR Screen Rate ” has the meaning specified in Section  1.09 .

LIBOR Successor Rate ” has the meaning specified in Section  1.09 .

LIBOR Successor Rate Conforming Changes ” means with respect to any proposed LIBOR Successor Rate, any conforming changes to this Agreement, including changes to Base Rate, Interest Period, timing and frequency of determining rates and payments of interest and other administrative matters as may be appropriate, in the Administrative Agent’s discretion, to reflect the adoption of such LIBOR Successor Rate and to permit its administration by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or

 

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that no market practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration as the Administrative Agent determines in consultation with the Borrower). Such changes shall provide that the LIBOR Successor Rate cannot be less than zero for purposes of this Agreement.

License ” means any license or agreement under which a Loan Party is authorized to use IP Rights in connection with any manufacture, marketing, distribution or disposition of Collateral, any use of property or any other conduct of its business.

Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

Lien Waiver ” means an agreement, in form and substance reasonably satisfactory to the Administrative Agent, by which (a) for any material Collateral located on leased premises, the lessor waives or subordinates any Lien it may have on the Collateral, and agrees to permit the Administrative Agent to enter upon the premises and remove the Collateral or to use the premises to store or dispose of the Collateral; (b) for any Collateral held by a warehouseman, processor, shipper, customs broker or freight forwarder, such Person waives or subordinates any Lien it may have on the Collateral, agrees to hold any documents in its possession relating to the Collateral as agent for the Administrative Agent, and agrees to deliver the Collateral to the Administrative Agent upon request; (c) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledges the Administrative Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and agrees to deliver the Collateral to the Administrative Agent upon request or permit the Administrative Agent to take possession of the Collateral; or (d) for any Collateral subject to a licensor’s intellectual property rights, the licensor grants to the Administrative Agent the right, vis-à -vis such licensor, to enforce the Administrative Agent’s Liens with respect to the Collateral, including the right to dispose of it with the benefit of the intellectual property, whether or not a default exists under any applicable license. Notwithstanding the foregoing, a Lien Waiver shall not be required to be delivered in connection with Collateral that is temporarily (i) located on leased premises, (ii) held by a warehouseman, processor, shipper, customs broker or freight forwarder, or (iii) held by a repairman, mechanic or bailee, in each case, for a period less than 60 days.

Loan ” means an extension of credit by a Lender to the Borrower under Article II in the form of a Revolving Credit Loan or a Swing Line Loan.

Loan Documents ” means, collectively, (a) this Agreement, (b) the Notes, (c) the Guaranty, (d) the Collateral Documents, (e) the Fee Letter, (f) the Collateral Rights Agreement, (g) each Issuer Document, (h) any arrangements entered into by any L/C Issuer and the Borrower pursuant to Section  2.03(a)(iii) , and (i) any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section  2.15 of this Agreement.

Loan Parties ” means, collectively, the Borrower and each Guarantor.

 

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London Banking Day ” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

Material Adverse Effect ” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), or financial condition of the Borrower or the Borrower and its Restricted Subsidiaries taken as a whole; (b) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document, or of the ability of the Loan Parties, taken as a whole, to perform their obligations under the Loan Documents; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

Material Contract ” means, with respect to any Person, any agreement or instrument to which such Person is a party (other than the Loan Documents) (a) that is deemed to be a material contract under any securities law applicable to such Person, including the Securities Act of 1933, (b) that relates to Indebtedness of such Person with an aggregate principal amount in excess of $10,000,000 or (c) for which breach, termination, nonperformance or failure to renew could reasonably be expected to have a Material Adverse Effect.

Material Loan Party ” shall mean (a) the Borrower and (b) any Restricted Subsidiary that (i) owns any Collateral, (ii) generates more than 5.0% of Consolidated EBITDA for the Measurement Period most recently ended for which financial statements of the Borrower are available or (iii) owns net assets that have an aggregate fair market value of 5.0% or more of Consolidated Tangible Assets of the Borrower as of the end of the previous fiscal quarter.

Maturity Date ” means October 2, 2023; provided , however , that if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day; provided further , that if an Acceptable Senior Notes Refinancing has not been completed by July 3, 2023, then the “Maturity Date” shall be July 3, 2023.

Measurement Period ” means, at any date of determination, (a) the most recently completed four fiscal quarters of the Borrower if a Monthly Financial Reporting Trigger Period is not then in effect and has not been in effect for the preceding 30 days or (b) at any other time, the most recently completed twelve calendar months.

Minimum Collateral Amount ” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances provided to reduce or eliminate Fronting Exposure during any period when a Lender constitutes a Defaulting Lender, an amount equal to 105% of the Fronting Exposure of the L/C Issuer with respect to Letters of Credit issued and outstanding at such time, (b) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section  2.15(a)(i) or (a)(ii) , an amount equal to 105% of the Outstanding Amount of all L/C Obligations, and (c) otherwise, an amount determined by the Administrative Agent and the L/C Issuer in their reasonable discretion.

MLPFS ” means Merrill Lynch, Pierce, Fenner & Smith Incorporated.

Monthly Financial Reporting Trigger Period ” means the period (a) commencing on the day that Availability is less than the greater of (i) 15% of the Borrowing Base or (ii) $22,500,000, and (b) continuing until, during each of the preceding 30 consecutive days, Availability has at all times exceeded the greater of (i) 15% of the Borrowing Base or (ii) $22,500,000.

 

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Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto.

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

Multiple Employer Plan ” means a Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

Non-Consenting Lender ” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section  10.01 and (b) has been approved by the Required Lenders.

Non-Defaulting Lender ” means, at any time, each Lender that is not a Defaulting Lender at such time.

Note ” means a promissory note made by the Borrower in favor of a Lender evidencing Revolving Credit Loans or Swing Line Loans, as the case may be, made by such Lender, substantially in the form of Exhibit  C .

Notice of Loan Prepayment ” means a notice of prepayment with respect to a Loan, which shall be substantially in the form of Exhibit F or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer.

NPL ” means the National Priorities List under CERCLA.

Obligations ” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, Letter of Credit, Protective Advance, Secured Cash Management Agreement or Secured Hedge Agreement, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding; provided that Obligations of a Guarantor shall exclude any Excluded Swap Obligations with respect to such Guarantor.

OFAC ” means the Office of Foreign Assets Control of the United States Department of the Treasury.

 

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Organization Documents ” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

Other Taxes ” means all present or future stamp, court or documentary, intangible, recording, filing 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  3.06(b) ).

Outstanding Amount ” means (a) with respect to Revolving Credit Loans and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Revolving Credit Loans and Swing Line Loans, as the case may be, occurring on such date; and (b) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.

Overadvance ” means the amount by which Total Outstandings exceed the Borrowing Base at any time.

Participant ” has the meaning specified in Section  10.06(d) .

Participant Register ” has the meaning specified in Section  10.06(d) .

Patriot Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).

 

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Payment Conditions ” means, in the case of Acquisitions, prepayments of Indebtedness and Restricted Payments, that no Default or Event of Default has occurred and is continuing or would result therefrom and the following:

(a) with respect to Acquisitions and prepayments of Indebtedness, either:

(i) Availability shall be higher than the greater of (A) 20% of the Borrowing Base and (B) $30,000,000, in each case on a pro forma basis for each day during the consecutive 30-day period immediately preceding such transaction and after giving effect thereto as though such Acquisition or prepayment of Indebtedness (and any Loans being requested to fund any part thereof) had been made on the first day of such 30-day period; or

(ii) both (A) the Pro Forma Consolidated Fixed Charge Coverage Ratio after giving effect to such transaction shall be greater than 1.00 to 1.00 for the most recently reported Measurement Period, and (B) Availability shall be higher than the greater of (1) 15% of the Borrowing Base and (2) $22,500,000, in the case of this subclause (B) on a pro forma basis for each day during the consecutive 30-day period immediately preceding such transaction and after giving effect thereto as though such Acquisition or prepayment of Indebtedness (and any Loans being requested to fund any part thereof) had been made on the first day of such 30-day period;

(b) with respect to Restricted Payments, either:

(i) Availability shall be higher than the greater of (A) 22.5% of the Borrowing Base and (B) $33,750,000, in each case on a pro forma basis for each day during the consecutive 30-day period immediately preceding such Restricted Payment and after giving effect thereto as though such Restricted Payment (and any Loans being requested to fund any part thereof) had been made on the first day of such 30-day period; or

(ii) both (A) the Pro Forma Consolidated Fixed Charge Coverage Ratio after giving effect to such transaction shall be greater than 1.00 to 1.00 for the most recently reported Measurement Period, and (B) Availability shall be higher than the greater of (1) 17.5% of the Borrowing Base and (2) $26,250,000, in the case of this subclause (B) on a pro forma basis for each day during the consecutive 30-day period immediately preceding such Restricted Payment and after giving effect thereto as though such Restricted Payment (and any Loans being requested to fund any part thereof) had been made on the first day of such 30-day period.

(c) in any case under (a) or (b) above, delivery to Administrative Agent at least three (3) Business Days and not more than five (5) Business Days prior to the date of the proposed Acquisition, prepayment of Indebtedness, or Restricted Payment of a certificate of the Borrower signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower giving notice of the intent to consummate such Acquisition, prepayment of Indebtedness, or Restricted Payment and certifying compliance with the applicable foregoing conditions (including calculations of Availability for the applicable days and, if applicable, of the Pro Forma Consolidated Fixed Charge Coverage Ratio).

PBGC ” means the Pension Benefit Guaranty Corporation.

 

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P-Card Agreements ” means, collectively, (i) that certain Bank of America Corporate Purchasing Card Agreement between Bank of America, N.A. and Basic Energy Services L.P., dated on or around July 21, 2005 and (ii) that certain Commercial Prepaid Card Purchase Agreement between Bank of America, N.A. and Basic Energy Services L.P., dated on or around March 14, 2006, each as may be amended, supplemented or modified from time to time.

Pension Act ” means the Pension Protection Act of 2006.

Pension Funding Rules ” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

Pension Plan ” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by the Borrower and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

Permitted Acquisition ” means, with respect to the Borrower or any Guarantor, (i) any Acquisition by such Person for which the Acquisition Consideration consists solely of Qualified Capital Stock or Equity Proceeds or any combination of Qualified Capital Stock and Equity Proceeds of the Borrower, so long as no Default or Event of Default exists at the time of such Acquisition and the Acquisition could not reasonably be expected to cause a Default or Event of Default immediately after giving effect thereto, or (ii) any other Acquisition by such Person that satisfies each of the following requirements:

(a) no Default or Event of Default exists and the Acquisition could not reasonably be expected to cause a Default or Event of Default immediately after giving effect thereto;

(b) the Acquisition is not hostile;

(c) the lines of business of the Person to be (or the property of which is to be) so purchased or otherwise acquired shall be substantially the same lines of business as one or more of the principal businesses of the Borrower and its Subsidiaries in the ordinary course;

(d) the requirements of Section  6.12 are satisfied;

(e) the Payment Conditions are satisfied before and after giving effect thereto; and

(f) the Borrower shall have delivered to the Administrative Agent and each Lender, at least five Business Days prior to the date on which any such Acquisition is to be consummated, a certificate of a Responsible Officer, in form and substance reasonably satisfactory to the Administrative Agent and the Required Lenders, certifying that all of the foregoing requirements have been satisfied or will be satisfied on or prior to the date on which such Acquisition is consummated.

 

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Permitted Discretion ” means a determination made in good faith and in the exercise of commercially reasonable (from the perspective of a secured asset-based lender) business judgment.

Permitted Water Subsidiary ” means a Restricted Subsidiary with respect to which the following requirements are satisfied:

(a) substantially all the assets of such Restricted Subsidiary consist of water disposal wells, water processing equipment or facilities or water transportation pipelines or related assets (other than vehicles);

(b) less than 50.0% of the economic or voting power of the Equity Interests of such Restricted Subsidiary are held by Persons other than Loan Parties;

(c) the operations and policies of such Restricted Subsidiary are controlled by the Borrower;

(d) the requirements of Section 6.12 are satisfied with respect to such Restricted Subsidiary substantially contemporaneously with the acquisition or formation of such Restricted Subsidiary; and

(e) the Organizational Documents of such Restricted Subsidiary are in form and substance reasonably satisfactory to the Administrative Agent.

Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

Plan ” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of the Borrower or any ERISA Affiliate or any such Plan to which the Borrower or any ERISA Affiliate is required to contribute on behalf of any of its employees.

Platform ” has the meaning specified in Section  6.02 .

Prime Rate ” means the rate of interest announced by Bank of America from time to time as its prime rate. Such rate is set by Bank of America on the basis of various factors, including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such rate. Any change in such rate publicly announced by Bank of America shall take effect at the opening of business on the day specified in the announcement.

Pro Forma Basis ” means on a basis in accordance with GAAP and Regulation S X and otherwise reasonably satisfactory to the Administrative Agent.

Pro Forma Consolidated Fixed Charge Coverage Ratio ” means the Consolidated Fixed Charge Coverage Ratio, redetermined on a pro forma basis to include the prepayment of Indebtedness or Restricted Payment, as applicable, as a Consolidated Fixed Charge.

 

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Protective Advances ” has the meaning specified in Section  2.17 .

PTE ” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

Public Lender ” has the meaning specified in Section  6.02 .

Qualified Capital Stock ” of any Person means any capital stock of such person that is not Disqualified Capital Stock; provided that such capital stock shall not be deemed Qualified Capital Stock to the extent sold or owed to a Subsidiary of such person or financed, directly or indirectly, using funds (1) borrowed from such person or any Subsidiary of such person until and to the extent such borrowing is repaid or (2) contributed, extended, guaranteed or advanced by such person or any Subsidiary of such person (including, without limitation, in respect of any employee stock ownership or benefit plan). Unless otherwise specified, Qualified Capital Stock refers to Qualified Capital Stock of Borrower.

Qualified ECP Guarantor ” means, at any time, each Loan Party with total assets exceeding $10,000,000 or that qualifies at such time as an “eligible contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an “eligible contract participant” at such time under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

Receivables Facility Agent ” means UBS AG, Stamford Branch, as administrative agent under the Receivables Facility Agreement.

Receivables Facility Agreement ” means the Credit and Security Agreement dated as of September 29, 2017 (as amended and supplemented to date) among BER, Basic Energy Services, L.P., the Borrower, UBS AG, Stamford Branch, as administrative agent, and the lenders party thereto.

Recipient ” means (a) any Lender, (b) any L/C Issuer and (c) the Administrative Agent, as applicable.

Register ” has the meaning specified in Section  10.06(c) .

Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

Removal Effective Date ” has the meaning set forth in Section  9.06 .

Rent and Charges Reserve ” means the aggregate of (a) all past due rent and other amounts owing by a Loan Party to any landlord, warehouseman, processor, repairman, mechanic, shipper, freight forwarder, broker or other Person who possesses any Collateral or could assert a Lien on any Collateral; and (b) a reserve at least equal to three months rent and other charges that could be payable to any such Person, unless it has executed a Lien Waiver. Rent payable under Capitalized Leases will not be included in the Rent and Charges Reserve.

 

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Reportable Event ” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

Request for Credit Extension ” means (a) with respect to a Revolving Credit Borrowing, conversion or continuation of Revolving Credit Loans, a Revolving Credit Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.

Required Lenders ” means, as of any date of determination, two or more unaffiliated Lenders holding more than 50% of the sum of the (a) Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “ held ” by such Lender for purposes of this definition) and (b) aggregate unused Commitments; provided that the unused Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

Resignation Effective Date ” has the meaning set forth in Section  9.06 .

Responsible Officer ” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party, solely for purposes of the delivery of incumbency certificates pursuant to Section  4.01 , the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II , any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. To the extent requested by the Administrative Agent, each Responsible Officer will provide an incumbency certificate and to the extent requested by the Administrative Agent, appropriate authorization documentation, in form and substance satisfactory to the Administrative Agent.

Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of any Person or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to any Person’s stockholders, partners or members (or the equivalent of any thereof), or any option, warrant or other right to acquire any such dividend or other distribution or payment.

Restricted Subsidiary ” means any direct or indirect Domestic Subsidiary of the Borrower that is not an Unrestricted Subsidiary.

 

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Revolving Credit Borrowing ” means a borrowing consisting of simultaneous Revolving Credit Loans of the same Type and, in the case of LIBOR Loans, having the same Interest Period made by each of the Lenders pursuant to Section  2.01 .

Revolving Credit Loan ” has the meaning specified in Section  2.01 .

Revolving Credit Loan Notice ” means a notice of (a) a Revolving Credit Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of LIBOR Loans, pursuant to Section  2.02(a) , which, if in writing, shall be substantially in the form of Exhibit A , or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system, including electronic mail, as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.

Revolving Credit Usage ” means the sum of (a) the Outstanding Amount of Revolving Credit Loans, plus (b) the Outstanding Amount of L/C Obligations.

Robota ” means Robota Energy Equipment, LLC, a Texas limited liability company.

Royalties ” means all royalties, fees, expense reimbursement and other amounts payable by a Loan Party under a License.

S&P ” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

Sanction ” means any sanction administered or enforced by the United States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.

Scheduled Unavailability Date ” has the meaning specified in Section  1.09 .

SEC ” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

Secured Bank Product Obligations ” means all debt, obligations and other liabilities owing under Secured Cash Management Agreements and Secured Hedge Agreements; provided that Secured Bank Product Obligations of a Loan Party shall not include the Excluded Swap Obligations of such Loan Party.

Secured Cash Management Agreement ” means any Cash Management Agreement that is entered into by and between the Borrower or any Subsidiary and any Cash Management Bank which has delivered a Secured Party Designation Notice.

Secured Hedge Agreement ” means any interest rate Swap Contract permitted under Article VII that is entered into by and between the Borrower or any Subsidiary and any Hedge Bank which has delivered a Secured Party Designation Notice.

 

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Secured Parties ” means, collectively, the Administrative Agent, the Lenders, the L/C Issuers, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section  9.05 , and the other Persons the Obligations owing to which are or are purported to be secured by the Collateral under the terms of the Collateral Documents.

Secured Party Designation Notice ” means a notice from any Lender or an Affiliate of a Lender, substantially in the form of Exhibit G , (a) describing the Secured Cash Management Agreement or Secured Hedge Agreement and setting forth the maximum amount to be secured by the Collateral and the methodology to be used in calculating such amount and (b) agreeing to be bound by Section  9.11 .

Security Agreement ” means that certain Security Agreement dated as of the Closing Date, as amended and supplemented from time to time, executed by each of the Loan Parties in favor of the Administrative Agent.

Security Agreement Supplement ” means the form of supplement attached to the Security Agreement as Annex I .

Senior Notes ” means those certain 10.75% Senior Secured Notes due 2023 of the Borrower in the aggregate principal amount of $300,000,000.

Senior Notes Collateral Account ” has the meaning specified in Section  6.18 .

Senior Notes Collateral Agency Agreement ” means the “Collateral Agency Agreement” as defined in the Senior Notes Indenture.

Senior Notes Documents ” means the “Note Documents” as defined in the Senior Notes Indenture.

Senior Notes Indenture ” means the Indenture for the Senior Notes dated as of October ___, 2018 between the Borrower and the Senior Notes Trustee.

Senior Notes Trustee ” means UMB Bank, N.A., in its capacity as trustee under the Senior Notes Indenture or as collateral agent under the Senior Notes Collateral Agency Agreement.

Solvent ” and “ Solvency ” mean, with respect to any Person on any date of determination, after taking into account all other payments made by, and indemnification payments from, and reimbursement and contribution obligations of, any other Persons with respect thereto, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

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Specified Loan Party ” means any Loan Party that is not an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to Section  10.19 ).

Subsidiary ” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “ Subsidiary ” or to “ Subsidiaries ” shall refer to a Subsidiary or Subsidiaries of the Borrower.

Super Majority Lenders ” means, as of any date of determination, two or more unaffiliated Lenders holding more than 66 2/3% of the sum of the (a) Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for purposes of this definition) and (b) aggregate unused Commitments; provided that the unused Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Super Majority Lenders.

Swap Contract ” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement.

Swap Obligations ” means with respect to any Guarantor 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.

Swap Termination Value ” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for

 

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any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

Swing Line Borrowing ” means a borrowing of a Swing Line Loan pursuant to Section  2.04 .

Swing Line Lender ” means Bank of America, in its capacity as provider of Swing Line Loans, and, at the request of the Borrower and subject to the consent of the Administrative Agent in its sole discretion, any other swing line lender that agrees to act as a provider of Swing Line Loans, or, in each case, any successor swing line lender hereunder acceptable to the Administrative Agent.

Swing Line Loan ” has the meaning specified in Section  2.04(a) .

Swing Line Loan Notice ” means a notice of a Swing Line Borrowing pursuant to Section  2.04(b) , which, if in writing, shall be substantially in the form of Exhibit B or such other form as approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.

Swing Line Sublimit ” means, with respect to each Swing Line Lender, an amount equal to the lesser of (a) the amount set forth on Schedule 1.01 with respect to such Lender as its Swing Line Sublimit (as updated from time to time) and (b) the Aggregate Commitments. The Swing Line Sublimits are part of, and not in addition to, the Aggregate Commitments.

Synthetic Debt ” means, with respect to any Person as of any date of determination thereof, all obligations of such Person in respect of transactions entered into by such Person that are intended to function primarily as a borrowing of funds (including any minority interest transactions that function primarily as a borrowing) but are not otherwise included in the definition of “ Indebtedness ” or as a liability on the consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP.

Synthetic Lease Obligation ” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

Taxes ” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

Term Loan Agent ” means U.S. Bank National Association, as administrative agent and collateral agent for those lenders party to the Term Loan Agreement, together with its successors and assigns.

 

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Term Loan Agreement ” means that certain Amended and Restated Term Loan Credit Agreement dated as of December 23, 2016, as amended and supplemented from time to time, among the Borrower, U.S. Bank National Association, as administrative agent, and each lender from time to time party thereto.

Total Outstandings ” means (a) the aggregate Outstanding Amount of all Loans (including Protective Advances) and all L/C Obligations less (b) the amount of L/C Obligations which are Cash Collateralized pursuant to Section  2.15(b) .

Total Swing Line Sublimit ” means an amount equal to the lesser of (a) $15,000,000 and (b) the Aggregate Commitments. The Total Swing Line Sublimit is a part of, and not in addition to, the Aggregate Commitments.

Treasury Management Control Agreement ” means that certain Treasury Management Services Security and Control Agreement dated as of September 14, 2016 between Bank of America, N.A. and Basic Energy Services L.P., as may be amended, modified or supplemented from time to time.

Type ” means, with respect to a Loan, its character as a Base Rate Loan or a LIBOR Loan.

UCC ” means the Uniform Commercial Code as in effect in the State of New York; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “ UCC ” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

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

Unreimbursed Amount ” has the meaning specified in Section  2.03(c)(i) .

Unrestricted Subsidiary ” means any Subsidiary which the Borrower has designated in writing to the Administrative Agent to be an Unrestricted Subsidiary pursuant to Section  6.19(b) and each Subsidiary thereof.

U.S. Loan Party ” means any Loan Party that is organized under the laws of one of the states of the United States of America and that is not a CFC.

U.S. Person ” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code.

U.S. Tax Compliance Certificate ” has the meaning specified in Section  3.01(e)(ii) .

Value ” means, for an Account, its face amount, net of any returns, rebates, discounts (calculated on the shortest terms), credits, allowances or Taxes (including sales, excise or other taxes) that have been or could properly be claimed by the Account Debtor or any other Person.

 

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Weekly BBC Trigger Period ” means the period (a) commencing on the day that (i) an Event of Default occurs, or (ii) Availability is less than the greater of (x) 12.5% of the Borrowing Base or (y) $18,750,000 and (b) continuing until, during each of the preceding 30 consecutive days, no Event of Default has existed and Availability has at all times exceeded the greater of (i) 12.5% of the Borrowing Base or (ii) $18,750,000.

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.

1.02 Other Interpretive Provisions . With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a) The definitions of terms herein shall apply equally to 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. The words “ include ,” “ includes ” and “ including ” shall be deemed to be followed by the phrase “ without limitation .” The word “ will ” shall be construed to have the same meaning and effect as the word “ shall .” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including the Loan Documents and any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, modified, extended, restated, replaced or supplemented from time to time (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “ hereto ,” “ herein ,” “ hereof ” and “ hereunder ,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory rules, regulations, orders and provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified, extended, restated, replaced or supplemented from time to time, and (vi) 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, including cash, securities, accounts and contract rights.

(b) In the computation of periods of time from a specified date to a later specified date, the word “ from ” means “ from and including ;” the words “ to ” and “ until ” each mean “ to but excluding ;” and the word “ through ” means “ to and including .”

(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

 

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1.03 Accounting Terms . (a)  Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.

(b) Changes in GAAP . If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Without limiting the foregoing, leases shall continue to be classified and accounted for on a basis consistent with that reflected in the Audited Financial Statements for all purposes of this Agreement, notwithstanding any change in GAAP relating thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided for above.

(c) Consolidation of Variable Interest Entities . All references herein to consolidated financial statements of the Borrower and its Subsidiaries or to the determination of any amount for the Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Borrower is required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein.

1.04 Rounding . Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.05 Times of Day . Unless otherwise specified, all references herein to times of day shall be references to Central time (daylight or standard, as applicable).

1.06 Letter of Credit Amounts . Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided , however , that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

 

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1.07 Currency Equivalents Generally .

(a) Any amount specified in this Agreement (other than in Articles II and IX ) or any of the other Loan Documents to be in Dollars shall also include the equivalent of such amount in any currency other than Dollars, such equivalent amount thereof in the applicable currency to be determined by the Administrative Agent at such time on the basis of the Spot Rate (as defined below) for the purchase of such currency with Dollars. For purposes of this Section  1.07 , the “ Spot Rate ” for a currency means the rate determined by the Administrative Agent to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 10:00 a.m. on the date two Business Days prior to the date of such determination; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency.

(b) The Administrative Agent does not warrant or accept responsibility for, nor shall the Administrative Agent have any liability with respect to, the administration, submission or any other matter related to any rate used in determining LIBOR or with respect to any comparable or successor rate thereto.

1.08 Uniform Commercial Code . Terms relating to Collateral used and not otherwise defined herein that are defined in the UCC shall have the meanings set forth in the UCC, as applicable and as the context requires.

1.09 LIBOR Amendment . Notwithstanding anything to the contrary in this Agreement or any other Loan Documents, if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Borrower or Required Lenders notify the Administrative Agent (with, in the case of the Required Lenders, a copy to the Borrower) that the Borrower or the Required Lenders (as applicable) have determined, that:

(a) adequate and reasonable means do not exist for ascertaining LIBOR for any applicable Interest Period, because the LIBOR quote on the applicable screen page (or other source) used by the Administrative Agent to determine LIBOR (“ LIBOR Screen Rate ”) is not available or published on a current basis and such circumstances are unlikely to be temporary; or

(b) the administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date (“ Scheduled Unavailability Date ”) after which LIBOR or the LIBOR Screen Rate shall no longer be made available, or used for determining the interest rate of loans; or

(c) syndicated loans currently being executed, or that include language similar to that contained in this Section, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace LIBOR;

 

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then, reasonably promptly after such determination by the Administrative Agent or receipt by the Administrative Agent of such notice, as applicable, the Administrative Agent and the Borrower may amend this Agreement to replace LIBOR with an alternate benchmark rate (including any mathematical or other adjustments to the benchmark (if any) incorporated therein), giving due consideration to any evolving or then existing convention for similar Dollar denominated syndicated credit facilities for such alternative benchmarks (“ LIBOR Successor Rate ”), together with any proposed LIBOR Successor Rate Conforming Changes and the amendment shall be effective at 5:00 p.m. on the fifth Business Day after the Administrative Agent posts the amendment to all Lenders and Borrowers unless, prior to such time, the Required Lenders notify the Administrative Agent that they do not accept the amendment.

If no LIBOR Successor Rate has been determined and the circumstances under clause (a) above exist or the Scheduled Unavailability Date has occurred, the Administrative Agent will promptly notify the Borrower and the Lenders. Thereafter, (i) the obligation of Lenders to make or maintain LIBOR Loans shall be suspended (to the extent of the affected LIBOR Loans or Interest Periods), and (ii) the LIBOR component shall no longer be used in determining Base Rate. Upon receipt of such notice, the Borrower may revoke any pending request for funding, conversion or continuation of a LIBOR Loan (to the extent of the affected LIBOR Loans or Interest Periods) or, failing that, will be deemed to have requested a Base Rate Loan.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01 The Loans . Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “ Revolving Credit Loan ”) to the Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided, however, that after giving effect to any Revolving Credit Borrowing, (i) the Total Outstandings shall not exceed the Borrowing Base, and (ii) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment. Within the limits of the Borrowing Base, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section  2.01 , prepay under Section  2.05 , and reborrow under this Section  2.01 . Revolving Credit Loans may be Base Rate Loans or LIBOR Loans, as further provided herein; provided , however , any Revolving Credit Borrowings made on the Closing Date or any of the three (3) Business Days following the Closing Date shall be made as Base Rate Loans unless the Borrower delivers a funding indemnity letter acceptable to the Administrative Agent not less than three (3) Business Days prior to the date of such Revolving Credit Borrowing.

2.02 Borrowings, Conversions and Continuations of Loans . (a) Each Revolving Credit Borrowing, each conversion of Revolving Credit Loans from one Type to the other, and each continuation of LIBOR Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by: (i) telephone or (ii) a Revolving Credit Loan Notice. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of LIBOR Loans or of any conversion of LIBOR Loans to Base Rate Loans, and (ii)

 

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on the requested date of any Borrowing of Base Rate Loans. Each telephonic notice by the Borrower pursuant to this Section  2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Revolving Credit Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Each Borrowing of, conversion to or continuation of LIBOR Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as provided in Sections 2.03(c) and 2.04(c) , each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Revolving Credit Loan Notice and each telephonic notice shall specify (i) whether the Borrower is requesting a Revolving Credit Borrowing, a conversion of Revolving Credit Loans from one Type to the other, or a continuation of LIBOR Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Revolving Credit Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Revolving Credit Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the Revolving Credit Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable LIBOR Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of LIBOR Loans in any such Revolving Credit Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. Notwithstanding anything to the contrary herein, a Swing Line Loan may not be converted to a LIBOR Loan.

(b) Following receipt of a Revolving Credit Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the Revolving Credit Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in Section  2.02(a) . In the case of a Revolving Credit Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 12:00 noon on the Business Day specified in the applicable Revolving Credit Loan Notice. Upon satisfaction of the applicable conditions set forth in Section  4.02 (and, if such Borrowing is the initial Credit Extension, Section  4.01 ), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower; provided , however , that if, on the date a Revolving Credit Loan Notice with respect to a Revolving Credit Borrowing is given by the Borrower, there are L/C Borrowings outstanding, then the proceeds of such Revolving Credit Borrowing, first , shall be applied to the payment in full of any such L/C Borrowings, and second , shall be made available to the Borrower as provided above.

(c) Except as otherwise provided herein, a LIBOR Loan may be continued or converted only on the last day of an Interest Period for such LIBOR Loan. During the existence of a Default, no Loans may be requested as, converted to or continued as LIBOR Loans without the consent of the Required Lenders.

 

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(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for LIBOR Loans upon determination of such interest rate. At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

(e) After giving effect to all Revolving Credit Borrowings, all conversions of Revolving Credit Loans from one Type to the other, and all continuations of Revolving Credit Loans as the same Type, there shall not be more than five (5) Interest Periods in effect with respect to LIBOR Loans.

2.03 Letters of Credit . (a)  The Letter of Credit Commitment . (i) Subject to the terms and conditions set forth herein, (A) each L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section  2.03 , (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Borrower or its Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with Section  2.03(b) , and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (w) the Total Outstandings shall not exceed the Borrowing Base, (x) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, (y) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit, and (z) the aggregate amount of all outstanding Letters of Credit issued by any L/C Issuer shall not exceed such L/C Issuer’s L/C Issuer Sublimit, except with respect to the Existing Letters of Credit which shall be reallocated upon renewal or extension pro rata among the respective L/C Issuers in accordance with the definition of “L/C Issuer Sublimit” in Section  1.01 hereof so as to comply, to the extent reasonably practicable, with this Section  2.03(a)(i) ; provided, further, that upon each request of the Borrower after the Closing Date for the issuance of a new Letter of Credit or for the amendment or extension of any Letter of Credit first issued after the Closing Date (specifically excluding any renewal or extension of any Existing Letter of Credit) (any such new Letter of Credit or amendment or extension of a post-Closing Date Letter of Credit, a “ New Letter of Credit ”), such New Letter of Credit shall be allocated to one or more of the L/C Issuers, to the extent reasonably practicable, to maintain the allocation of the New Letters of Credit, taken as a whole, among the L/C Issuers in accordance with the definition of “L/C Issuer Sublimit” in Section  1.01 hereof. Each request by the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto and deemed L/C Obligations, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.

 

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(ii) No L/C Issuer shall issue any Letter of Credit if:

(A) subject to Section  2.03(b)(iii) , the expiry date of the requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or

(B) the expiry date of the requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date.

(iii) No L/C Issuer shall be under any obligation to issue any 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 the applicable L/C Issuer from issuing the Letter of Credit, or any Law applicable to the applicable L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such L/C Issuer shall prohibit, or request that such L/C Issuer refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon the applicable L/C Issuer with respect to the Letter of Credit any restriction, reserve or capital requirement (for which such L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the applicable L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such L/C Issuer in good faith deems material to it;

(B) the issuance of the Letter of Credit would violate one or more policies of the applicable L/C Issuer applicable to letters of credit generally;

(C) except as otherwise agreed by the Administrative Agent and the applicable L/C Issuer, the Letter of Credit is in an initial stated amount less than $500,000;

(D) the Letter of Credit is to be denominated in a currency other than Dollars;

(E) any Lender is at that time a Defaulting Lender, unless the applicable L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to such L/C Issuer (in its sole discretion) with the Borrower or such Lender to eliminate such L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section  2.16(a)(iv )) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which such L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion; or

(F) the Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.

 

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(iv) No L/C Issuer shall amend any Letter of Credit if such L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof.

(v) Each L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) such L/C Issuer would have no obligation at such time to issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed amendment to the Letter of Credit.

(vi) Each L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and each L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by any L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “ Administrative Agent ” as used in Article IX included the L/C Issuers with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuers.

(b) Procedures for Issuance and Amendment of Letters of Credit ; Auto-Extension Letters of Credit . (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the applicable L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower. Such Letter of Credit Application may be sent by fax transmission, by United States mail, by overnight courier, by electronic transmission using the system provided by the applicable L/C Issuer, by personal delivery or by any other means acceptable to such L/C Issuer. Such Letter of Credit Application must be received by the applicable L/C Issuer and the Administrative Agent not later than 10:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the applicable L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the applicable L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the applicable L/C Issuer may reasonably require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the applicable L/C Issuer (1) the Letter of Credit to be amended; (2) the proposed date of amendment thereof (which shall be a Business Day); (3) the nature of the proposed amendment; and (4) such other matters as the applicable L/C Issuer may require. Additionally, the Borrower shall furnish to the applicable L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as such L/C Issuer or the Administrative Agent may reasonably require.

 

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(ii) Promptly after receipt of any Letter of Credit Application, the applicable L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, such L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the applicable L/C Issuer has received written notice from any Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, such L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with such L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Letter of Credit.

(iii) If the Borrower so requests in any applicable Letter of Credit Application, the applicable L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such Auto-Extension Letter of Credit must permit such L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the applicable L/C Issuer, the Borrower shall not be required to make a specific request to such L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the applicable L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided , however , that such L/C Issuer shall not permit any such extension if (A) such L/C Issuer has determined that it would not be permitted, or would have no obligation at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section  2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section  4.02 is not then satisfied, and in each such case directing such L/C Issuer not to permit such extension.

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the applicable L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

 

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(c) Drawings and Reimbursements; Funding of Participations . (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the applicable L/C Issuer shall notify the Borrower and the Administrative Agent thereof. Not later than 10:00 a.m. on the date of any payment by the applicable L/C Issuer under a Letter of Credit (each such date, an “ Honor Date ”), the Borrower shall reimburse such L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse the applicable L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “ Unreimbursed Amount ”), and the amount of such Lender’s Applicable Percentage thereof. In such event, the Borrower shall be deemed to have requested a Revolving Credit Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section  2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Commitments and the conditions set forth in Section  4.02 (other than the delivery of a Revolving Credit Loan Notice). Any notice given by the applicable L/C Issuer or the Administrative Agent pursuant to this Section  2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii) Each Lender shall upon any notice pursuant to Section  2.03(c)(i) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the applicable L/C Issuer at the Administrative Agent’s Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 12:00 noon on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section  2.03(c)(iii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to such L/C Issuer.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Revolving Credit Borrowing of Base Rate Loans because the conditions set forth in Section  4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the applicable L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the account of such L/C Issuer pursuant to Section  2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section  2.03 .

(iv) Until each Lender funds its Revolving Credit Loan or L/C Advance pursuant to this Section  2.03(c) to reimburse the applicable L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of such L/C Issuer.

 

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(v) Each Lender’s obligation to make Revolving Credit Loans or L/C Advances to reimburse the applicable L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section  2.03(c) , shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against such L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , however , that each Lender’s obligation to make Revolving Credit Loans pursuant to this Section  2.03(c) is subject to the conditions set forth in Section  4.02 (other than delivery by the Borrower of a Revolving Credit Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the applicable L/C Issuer for the amount of any payment made by such L/C Issuer under any Letter of Credit, together with interest as provided herein.

(vi) If any Lender fails to make available to the Administrative Agent for the account of the applicable L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section  2.03(c) by the time specified in Section  2.03(c)(ii) , then, without limiting the other provisions of this Agreement, such L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to such L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by such L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by such L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Credit Loan included in the relevant Revolving Credit Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of such L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this Section  2.03(c)(vi) shall be conclusive absent manifest error.

(d) Repayment of Participations . (i) At any time after the applicable L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section  2.03(c) , if the Administrative Agent receives for the account of such L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Administrative Agent.

(ii) If any payment received by the Administrative Agent for the account of the applicable L/C Issuer pursuant to Section  2.03(c)(i) is required to be returned under any of the circumstances described in Section  10.05 (including pursuant to any settlement entered into by such L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of such L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

 

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(e) Obligations Absolute . The obligation of the Borrower to reimburse each L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), any L/C Issuer or any other Person, whether in connection with this Agreement or such Letter of Credit, the transactions contemplated hereby or any agreement or instrument relating thereto, or any unrelated transaction;

(iii) any draft, demand, endorsement, certificate or other document presented under or in connection with such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv) waiver by any L/C Issuer of any requirement that exists for such L/C Issuer’s protection and not the protection of the Borrower or any waiver by any L/C Issuer which does not in fact materially prejudice the Borrower;

(v) honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;

(vi) any payment made by any L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under, such Letter of Credit if presentation after such date is authorized by the UCC or the ISP, as applicable;

(vii) any payment by any L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by any L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

(viii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any of its Subsidiaries.

The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the applicable L/C Issuer. The Borrower shall be conclusively deemed to have waived any such claim against the applicable L/C Issuer and its correspondents unless such notice is given as aforesaid.

 

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(f) Role of L/C Issuers . Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, no L/C Issuer shall have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided , however , that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuers, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuers shall be liable or responsible for any of the matters described in clauses (i) through (viii) of Section  2.03(e) ; provided , however , that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against any L/C Issuer, and any L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves, as determined by a final nonappealable judgment of a court of competent jurisdiction, were caused by such L/C Issuer’s willful misconduct or gross negligence or such L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, any L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and such L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. Each L/C Issuer may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication (“ SWIFT ”) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.

(g) Applicability of ISP . Unless otherwise expressly agreed by the applicable L/C Issuer and the Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), the rules of the ISP shall apply to each Letter of Credit. Notwithstanding the foregoing, no L/C Issuer shall be responsible to the Borrower for, and each L/C Issuer’s rights and remedies against the Borrower shall not be impaired by, any action or inaction of any L/C Issuer required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where such L/C Issuer or the beneficiary is located, the practice stated in the ISP or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade—International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

 

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(h) Letter of Credit Fees . The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance, subject to Section  2.16 , with its Applicable Percentage a Letter of Credit fee (the “ Letter of Credit Fee ”) for each Letter of Credit equal to the Applicable Rate times the daily amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section  1.06 . Letter of Credit Fees shall be (i) due and payable on the first day of each April, July, October and January, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Administrative Agent or the Required Lenders while any Event of Default exists (or automatically upon the occurrence of an Event of Default under Section  8.01(a) or Section  8.01(f) ), all Letter of Credit Fees shall accrue at the Default Rate.

(i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuers . The Borrower shall pay directly to the applicable L/C Issuer for its own account a fronting fee with respect to each Letter of Credit, equal to 0.125% per annum on the stated amount of each Letter of Credit issued by it, which fee shall be payable upon the issuance of such Letter of Credit and at the time of each renewal or extension of each Letter of Credit, computed on the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section  1.06 . In addition, the Borrower shall pay directly to the applicable L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

(j) Conflict with Issuer Documents . In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

 

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(k) L/C Issuer Reports to the Administrative Agent . Unless otherwise agreed by the Administrative Agent, each L/C Issuer shall, in addition to its notification obligations set forth elsewhere in this Section, provide the Administrative Agent a Letter of Credit Report, as set forth below:

(i) reasonably prior to the time that such L/C Issuer issues, amends, renews, increases or extends a Letter of Credit, the date of such issuance, amendment, renewal, increase or extension and the stated amount of the applicable Letters of Credit after giving effect to such issuance, amendment, renewal or extension (and whether the amounts thereof shall have changed);

(ii) on each Business Day on which such L/C Issuer makes a payment pursuant to a Letter of Credit, the date and amount of such payment;

(iii) on any Business Day on which the Borrower fails to reimburse a payment made pursuant to a Letter of Credit required to be reimbursed to such L/C Issuer on such day, the date of such failure and the amount of such payment;

(iv) on any other Business Day, such other information as the Administrative Agent shall reasonably request as to the Letters of Credit issued by such L/C Issuer; and

(v) for so long as any Letter of Credit issued by an L/C Issuer is outstanding, such L/C Issuer shall deliver to the Administrative Agent (A) on the last Business Day of each calendar month, (B) at all other times a Letter of Credit Report is required to be delivered pursuant to this Agreement, and (C) on each date that (1) an L/C Credit Extension occurs or (2) there is any expiration, cancellation and/or disbursement, in each case, with respect to any such Letter of Credit, a Letter of Credit Report appropriately completed with the information for every outstanding Letter of Credit issued by such L/C Issuer.

(l) Letters of Credit Issued for Subsidiaries . Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrower shall be obligated to reimburse the applicable L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.

2.04 Swing Line Loans . (a)  The Swing Line . Subject to the terms and conditions set forth herein, each Swing Line Lender may in its sole discretion, in reliance upon the agreements of the other Lenders set forth in this Section  2.04 , make loans (each such loan, a “ Swing Line Loan ”) to the Borrower from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of its Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of Revolving Credit Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s Commitment; provided , however , that (i) after giving effect to any Swing Line Loan, (A) the Total Outstandings shall not exceed the Borrowing Base at such time, (B) the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans at such time shall not exceed such Lender’s Commitment and (C) the aggregate Outstanding Amount of all Swing Line Loans at any time shall not exceed the Total Swing Line Sublimit, and provided further that the Borrower shall

 

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not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan, (ii) no Swing Line Lender shall be under any obligation to make any Swing Line Loan if it shall determine (which determination shall be conclusive and binding absent manifest error) that it has, or by such Credit Extension may have, Fronting Exposure and (iii) no Swing Line Lender shall make any Swing Line Loan unless the conditions specified in Section  4.02 have been satisfied on and as of the date the applicable Swing Line Loan is to be made. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section  2.04 , prepay under Section  2.05 , and reborrow under this Section  2.04 . Each Swing Line Loan shall bear interest only at a rate based on the Base Rate. Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Swing Line Loan.

(b) Borrowing Procedures . Each Swing Line Borrowing shall be made upon the Borrower’s irrevocable notice to the applicable Swing Line Lender and the Administrative Agent, which may be given by: (i) telephone or (ii) a Swing Line Loan Notice. Each such notice must be received by the applicable Swing Line Lender and the Administrative Agent not later than 12:00 noon on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the applicable Swing Line Lender and the Administrative Agent of a written Swing Line Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower. Promptly after receipt by the applicable Swing Line Lender of any telephonic Swing Line Loan Notice, the applicable Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the applicable Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof. Unless the applicable Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 1:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing such Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section  2.04(a) , or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the applicable Swing Line Lender will, not later than 2:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrower.

(c) Refinancing of Swing Line Loans . (i) Each Swing Line Lender at any time in its sole and absolute discretion may request, on behalf of the Borrower (which hereby irrevocably authorizes each Swing Line Lender to so request on its behalf), that each Lender make a Base Rate Loan in an amount equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Revolving Credit Loan Notice for purposes hereof) and in accordance with the requirements of Section  2.02 , without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Aggregate Commitments and the conditions set forth in Section  4.02 . The applicable Swing Line Lender shall furnish the Borrower with a copy of the applicable Revolving Credit Loan Notice promptly after delivering such notice to the Administrative Agent. Each Lender shall make an amount equal

 

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to its Applicable Percentage of the amount specified in such Revolving Credit Loan Notice available to the Administrative Agent in immediately available funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swing Line Loan) for the account of the applicable Swing Line Lender at the Administrative Agent’s Office not later than 12:00 noon on the day specified in such Revolving Credit Loan Notice, whereupon, subject to Section  2.04(c)(ii) , each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such amount. The Administrative Agent shall remit the funds so received to the applicable Swing Line Lender.

(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Revolving Credit Borrowing in accordance with Section  2.04(c)(i) , the request for Base Rate Loans submitted by the applicable Swing Line Lender as set forth herein shall be deemed to be a request by such Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s payment to the Administrative Agent for the account of the applicable Swing Line Lender pursuant to Section  2.04(c)(i) shall be deemed payment in respect of such participation.

(iii) If any Lender fails to make available to the Administrative Agent for the account of the applicable Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section  2.04(c) by the time specified in Section  2.04(c)(i) , the applicable Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the applicable Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the applicable Swing Line Lender in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the applicable Swing Line Lender in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Revolving Credit Loan included in the relevant Revolving Credit Borrowing or funded participation in the relevant Swing Line Loan, as the case may be. A certificate of the applicable Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

(iv) Each Lender’s obligation to make Revolving Credit Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section  2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the applicable Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, (C) the existence of an Overadvance or (D) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided , however , that each Lender’s obligation to make Revolving Credit Loans pursuant to this Section  2.04(c) is subject to the conditions set forth in Section  4.02 . No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein.

 

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(d) Repayment of Participations . (i) At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the applicable Swing Line Lender receives any payment on account of such Swing Line Loan, such Swing Line Lender will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by such Swing Line Lender.

(ii) If any payment received by the applicable Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by such Swing Line Lender under any of the circumstances described in Section  10.05 (including pursuant to any settlement entered into by such Swing Line Lender in its discretion), each Lender shall pay to the applicable Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the applicable Swing Line Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

(e) Interest for Account of Swing Line Lender . Each Swing Line Lender shall be responsible for invoicing the Borrower for interest on such Swing Line Lender’s Swing Line Loans ( provided that any failure of a Swing Line Lender to provide an invoice for interest on Swing Line Loans shall not release the Borrower from its obligation to pay such interest). Until each Lender funds its Base Rate Loan or risk participation pursuant to this Section  2.04 to refinance such Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the applicable Swing Line Lender.

(f) Payments Directly to Swing Line Lender . The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the applicable Swing Line Lender.

2.05 Prepayments . (a)  Optional . (i) The Borrower may, upon notice to the Administrative Agent pursuant to delivery to the Administrative Agent of a Notice of Loan Prepayment, at any time or from time to time voluntarily prepay Revolving Credit Loans in whole or in part without premium or penalty subject to Section  3.05 ; provided that (A) such notice must be received by the Administrative Agent not later than 10:00 a.m. (1) three Business Days prior to any date of prepayment of LIBOR Loans and (2) on the date of prepayment of Base Rate Loans; (B) any prepayment of LIBOR Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (C) any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if LIBOR Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a LIBOR Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05. Subject to Section  2.16 , each such prepayment shall be applied to the Revolving Credit Loans of the Lenders in accordance with their respective Applicable Percentages.

 

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(ii) The Borrower may, upon notice to the applicable Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (A) such notice must be received by the applicable Swing Line Lender and the Administrative Agent not later than 12:00 noon on the date of the prepayment, and (B) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of principal shall be accompanied by all accrued interest on the amount prepaid.

(b) Mandatory . Subject to Section  2.18 , if for any reason an Overadvance exists at any time, the Borrower shall immediately prepay Revolving Credit Loans, Swing Line Loans and L/C Borrowings and/or Cash Collateralize the L/C Obligations (other than the L/C Borrowings) in an aggregate amount equal to such excess.

2.06 Termination or Reduction of Commitments . The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, the Letter of Credit Sublimit or the Total Swing Line Sublimit, or from time to time permanently reduce the Aggregate Commitments, the Letter of Credit Sublimit or the Total Swing Line Sublimit; provided that (i) any such notice shall be received by the Administrative Agent not later than 10:00 a.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof and (iii) the Borrower shall not terminate or reduce (A) the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Borrowing Base, (B) the Letter of Credit Sublimit if, after giving effect thereto, the Outstanding Amount of L/C Obligations not fully Cash Collateralized hereunder would exceed the Letter of Credit Sublimit, or (C) the Total Swing Line Sublimit if, after giving effect thereto and to any concurrent prepayments hereunder, the Outstanding Amount of Swing Line Loans would exceed the Total Swing Line Sublimit or the Outstanding Amount of Swing Line Loans owing to any Swing Line Lender would exceed such Swing Line Lender’s Swing Line Sublimit. The Administrative Agent will promptly notify the Lenders of any termination or reduction of the Letter of Credit Sublimit, Swing Line Sublimit or the Aggregate Commitments under this Section  2.06 . Upon any reduction of the Aggregate Commitments, the Commitment of each Lender shall be reduced by such Lender’s Applicable Percentage of such reduction amount. Upon any reduction of the Total Swing Line Sublimit, each Swing Line Lender’s Swing Line Sublimit shall be reduced pro rata by an amount equal to such reduction amount. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

2.07 Repayment of Loans . (a)  Revolving Credit Loans . The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of all Revolving Credit Loans outstanding on such date.

 

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(b) Swing Line Loans . The Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the date ten (10) Business Days after such Loan is made and (ii) the Maturity Date.

(c) Protective Advances . The Borrower shall repay each Protective Advance on the earlier to occur of (i) written demand therefor by the Administrative Agent and (ii) the Maturity Date.

(d) Dominion Account . During any Cash Dominion Trigger Period if the Administrative Agent elects to implement cash dominion, the ledger balance in each Dominion Account as of the end of a Business Day shall be applied to the Obligations at the beginning of the next Business Day. If a credit balance results from such application, it shall not accrue interest in favor of the Loan Parties and shall be made available to the Borrower as long as no Default or Event of Default exists. At all times when a Cash Dominion Trigger Period is not in effect, Borrower shall have unrestricted access to amounts in Deposit Accounts.

2.08 Interest . (a) Subject to the provisions of Section  2.08(b) , (i) each LIBOR Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to LIBOR for such Interest Period plus the Applicable Rate; (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

(b) (i) If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(ii) If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Administrative Agent or the Required Lenders such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iii) Upon the request of the Administrative Agent or the Required Lenders, while any Event of Default exists or automatically upon the occurrence of an Event of Default under Section  8.01(a) or Section  8.01(f) , the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

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2.09 Fees . In addition to certain fees described in Sections 2.03(h) and (i) :

(a) Commitment Fee . The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the Applicable Fee Rate times the actual daily amount by which the Aggregate Commitments exceed the Revolving Credit Usage, subject to adjustment as provided in Section  2.16 . The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the first day of each April, July, October and January, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Fee Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Fee Rate separately for each period during such quarter that such Applicable Fee Rate was in effect.

(b) Other Fees . (i) The Borrower shall pay to MLPFS and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

(ii) The Borrower shall pay to the Administrative Agent for the benefit of the Lenders such fees as shall have been separately agreed upon in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

2.10 Computation of Interest and Fees . (a) All computations of interest for Base Rate Loans (excluding Base Rate Loans determined by reference to LIBOR) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section  2.12(a) , bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

2.11 Evidence of Debt . (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

 

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Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

(b) In addition to the accounts and records referred to in Section  2.11(a) , each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

2.12 Payments Generally; Administrative Agent s Clawback . (a)  General . All payments to be made by the Borrower shall be made free and clear and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 1:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 1:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected on computing interest or fees, as the case may be.

(b) (i) Funding by Lenders; Presumption by Administrative Agent . Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of LIBOR Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 p.m. (noon) on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section  2.02 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section  2.02 ) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall

 

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pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

(ii) Payments by Borrower; Presumptions by Administrative Agent . Unless the Administrative Agent shall have received notice from the Borrower prior to the time at which any payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuers hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuers, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the L/C Issuers, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or such L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

(c) Failure to Satisfy Conditions Precedent . If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II , and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

(d) Obligations of Lenders Several . The obligations of the Lenders hereunder to make Revolving Credit Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section  10.04(c) are several and not joint. The failure of any Lender to make any Loan, to fund any such participation or to make any payment under Section  10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section  10.04(c) .

(e) Funding Source . Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

 

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(f) Insufficient Funds . If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, L/C Borrowings, interest and fees then due hereunder, such funds shall be applied (i)  first , toward payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii)  second , toward payment of principal and L/C Borrowings then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and L/C Borrowings then due to such parties.

2.13 Sharing of Payments by Lenders . If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of (a) Obligations due and payable to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender at such time to (ii) the aggregate amount of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time obtained by all the Lenders at such time or (b) Obligations owing (but not due and payable) to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing (but not due and payable) to such Lender at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Parties at such time) of payment on account of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time obtained by all of the Lenders at such time then, in each case under clause (a) and (b) above, the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Revolving Credit Loans and subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of Obligations then due and payable to the Lenders or owing (but not due and payable) to the Lenders, as the case may be, provided that:

(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(ii) the provisions of this Section shall not be construed to apply to (A) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (B) the application of Cash Collateral provided for in Section  2.15 , or (C) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than an assignment to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this Section shall apply).

The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

 

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2.14 Increase in Commitments .

(a) Request for Increase . Provided there exists no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Borrower may from time to time request an increase in the Aggregate Commitments to an amount up to but not exceeding (giving effect to all such increases) $50,000,000; provided that (i) any such request for an increase shall be in a minimum amount of $10,000,000 (or such lesser amount that permits compliance with Section  2.14(e)(iv) and (ii) the Borrower may make a maximum of five (5) such requests. At the time of sending such notice, the Borrower (in consultation with the Administrative Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders).

(b) Lender Elections to Increase . Each Lender shall notify the Administrative Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal to, greater than, or less than its Applicable Percentage of such requested increase. Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.

(c) Notification by Administrative Agent; Additional Lenders . The Administrative Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made hereunder. Subject to the approval of the Administrative Agent, the L/C Issuers and the Swing Line Lenders (which approvals shall not be unreasonably withheld), the Borrower may also invite additional Eligible Assignees to become Lenders pursuant to a joinder agreement in form and substance satisfactory to the Administrative Agent and its counsel, which invitation may be made concurrently with the notice required by Section  2.14(a) .

(d) Effective Date and Allocations . If the Aggregate Commitments are increased in accordance with this Section, the Administrative Agent and the Borrower shall determine the effective date (the “ Revolving Credit Increase Effective Date ”) and the final allocation of such increase. The Administrative Agent shall promptly notify the Borrower and the Lenders of the final allocation of such increase and the Revolving Credit Increase Effective Date.

(e) Conditions to Effectiveness of Increase . Any such increase shall be subject to the following additional conditions: (i) the Borrower shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Revolving Credit Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of such Loan Party (x) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (y) in the case of the Borrower, certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Loan Documents are true and correct on and as of the Revolving Credit Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section  2.14 , the representations and warranties contained in subsections (a) and (b) of Section  5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b),

 

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respectively, of Section  6.01 , and (B) no Default or Event of Default shall have occurred and be continuing as of the date of such notice given in accordance with Section  2.14(a) and both immediately before and after giving effect thereto as of the Revolving Credit Increase Effective Date; (ii) the increase in Aggregate Commitments shall be on the same terms and conditions as this Agreement (except with respect to upfront or similar fees payable to the Lenders providing such increase and arrangement fees), including benefiting from the same guarantees and secured by the same liens and Collateral; (iii) the increase in Aggregate Commitments, to the extent arising from the admission of an Eligible Assignee as a Lender, shall be effected pursuant to one or more joinder agreements executed and delivered by the Borrower, the new Lender(s) and the Administrative Agent, each of which shall be in form and substance reasonably satisfactory to the Agent; (iv) neither the funding of such increase (assuming that the Aggregate Commitments as so increased are fully drawn) nor the existence of the Liens securing the same would exceed 95% of any applicable limitation under the Senior Notes Indenture or any other agreement governing material Indebtedness for borrowed money of the Borrower and its Subsidiaries; (v) the Borrower shall pay all reasonable and documented fees and expenses in connection with the increase in Aggregate Commitments, including payments required pursuant to Section  3.05 in connection with the increase; and (vi) the Borrower shall have delivered all customary agreements, certificates, opinions and other customary documents reasonably requested by the Administrative Agent in connection with such increase. Borrower shall prepay any Revolving Credit Loans outstanding on the Revolving Credit Increase Effective Date (and pay any additional amounts required pursuant to Section  3.05 ) to the extent necessary to keep the outstanding Revolving Credit Loans ratable with any revised Applicable Percentages arising from any nonratable increase in the Commitments under this Section, and Borrower may use advances from Lenders having new or increased Commitments for such prepayment.

(f) Conflicting Provisions . This Section shall supersede any provisions in Section  2.13 or 10.01 to the contrary.

2.15 Cash Collateral .

(a) Certain Credit Support Events . Upon the request of the Administrative Agent or any L/C Issuer (i) if the applicable L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, the Borrower shall, in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations. At any time that there shall exist a Defaulting Lender, immediately upon the request of the Administrative Agent, the L/C Issuers or the Swing Line Lenders, the Borrower shall deliver to the Administrative Agent Cash Collateral in an amount not less than the applicable Minimum Collateral Amount (determined in the case of Cash Collateral provided pursuant to clause (ii) above, after giving effect to Section  2.16(a)(iv) and any Cash Collateral provided by the Defaulting Lender).

(b) Voluntary Cash Collateralization of Letters of Credit . Upon prior notice to the Administrative Agent and any L/C Issuer, Borrower or any other Loan Party may, in its discretion and at any time, Cash Collateralize all or a portion of the Outstanding Amount of L/C Obligations.

 

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(c) Grant of Security Interest . All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked deposit accounts at Bank of America which, in the case of Cash Collateral provided by any Loan Party, shall be interest bearing deposit accounts. The Borrower shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral. The Borrower, and to the extent provided by any Lender, such Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuers and the Lenders (including the Swing Line Lenders), and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section  2.15(d) . If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Borrower or the relevant Defaulting Lender will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.

(d) Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section  2.15 or Sections  2.03 , 2.04 , 2.05 , 2.06 , 2.16 or 8.02 in respect of Letters of Credit or Swing Line Loans shall be held and applied to the satisfaction of the specific L/C Obligations, Swing Line Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.

(e) Release . Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section  10.06(b)(vi) )), or (ii) the Administrative Agent’s good faith determination that there exists excess Cash Collateral; provided, however, (w) any such release shall be without prejudice to, and any disbursement or other transfer of Cash Collateral shall be and remain subject to, any other Lien conferred under the Loan Documents and the other applicable provisions of the Loan Documents, (x) that Cash Collateral furnished by or on behalf of a Loan Party shall not be released during the continuance of a Default or Event of Default (and following application as provided in this Section  2.15 may be otherwise applied in accordance with Section  8.03 ), and (y) the Person providing Cash Collateral and the L/C Issuers or Swing Line Lenders, as applicable, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

2.16 Defaulting Lenders . Notwithstanding anything to the contrary contained in this Agreement:

(a) Waivers and Amendments . A Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section  10.01 .

 

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(b) Reallocation of Payments and Applicable Percentages . For purposes of determining Lenders’ obligations or rights to fund, participate in or receive collections with respect to Loans and Letters of Credit (including existing Swingline Loans, Protective Advances and L/C Obligations), the Administrative Agent may in its discretion reallocate Applicable Percentages by excluding a Defaulting Lender’s Commitments and Loans from the calculation of thereof.

(c) Payments; Fees . The Administrative Agent may, in its discretion, receive and retain any amounts payable to a Defaulting Lender under the Loan Documents, and a Defaulting Lender shall be deemed to have assigned to the Administrative Agent such amounts until all Obligations owing to the Administrative Agent, non-Defaulting Lenders and other Secured Parties have been paid in full. The Administrative Agent may use such amounts to cover the Defaulting Lender’s defaulted obligations, to Cash Collateralize such Lender’s Fronting Exposure, to readvance the amounts to the Borrower or to repay Obligations. A Lender shall not be entitled to receive any fees accruing hereunder while it is a Defaulting Lender and its unfunded Commitment shall be disregarded for purposes of calculating the commitment fee under Section  2.09(a) . If any L/C Obligations owing to a Defaulted Lender are reallocated to other Lenders, fees attributable to such L/C Obligations under Section  2.03(h) shall be paid to such Lenders. The Administrative Agent shall be paid all fees attributable to L/C Obligations that are not reallocated

(d) Defaulting Lender Cure . If the Borrower, the Administrative Agent, Swing Line Lenders and the L/C Issuers agree in writing in their sole discretion that a Defaulting Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Revolving Credit Loans and funded and unfunded participations in Letters of Credit, Swing Line Loans and Protective Advances to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section  2.16(b) ), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided , further , that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

2.17 Protective Advances . The Administrative Agent shall be authorized, in its discretion, at any time that any condition in Section  4.02 is not satisfied, to make Base Rate Loans (“ Protective Advances ”) (a) up to an aggregate amount of $10,000,000 outstanding at any time, if the Administrative Agent deems such Loans necessary or desirable to preserve or protect Collateral, or to enhance the collectability or repayment of Obligations, as long as such Loans do not cause Total Outstandings to exceed the aggregate Commitments; or (b) to pay any other amounts chargeable to the Loan Parties under any Loan Documents, including interest, costs, fees and expenses. Lenders shall participate in Protective Advances outstanding from time to time in accordance with their respective Applicable Percentages. The Required Lenders may at any time revoke the Administrative Agent’s authority to make further Protective Advances under clause (a) by written notice to the Administrative Agent. Absent such revocation, the Administrative Agent’s

 

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determination that funding of a Protective Advance is appropriate shall be conclusive. No funding of a Protective Advance shall constitute a waiver by the Administrative Agent or the Lenders of any Event of Default relating thereto. No Loan Party shall be a beneficiary of this Section  2.17 nor authorized to enforce any of its terms.

2.18 Overadvances . Any Overadvance shall be repaid by Borrower on demand by the Administrative Agent, and shall constitute an Obligation secured by the Collateral, entitled to all benefits of the Loan Documents. The Administrative Agent may require the Lenders to fund Base Rate Loans that cause or constitute an Overadvance and to forbear from requiring the Borrower to cure an Overadvance, as long as the total Overadvance does not exceed 10% of the Borrowing Base and does not continue for more than 30 consecutive days without the consent of Required Lenders. In no event shall Loans be required that would cause Total Oustandings to exceed the aggregate Commitments. No funding or sufferance of an Overadvance shall constitute a waiver by the Administrative Agent or the Lenders of the Event of Default caused thereby. No Obligor shall be a beneficiary of this Section  2.18 nor authorized to enforce any of its terms.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes . (a)  Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes . (i) Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall to the extent permitted by applicable Laws be made free and clear of and without reduction or withholding for any Taxes. If, however, applicable Laws require an applicable withholding agent to withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance with such Laws as determined by the Borrower or the Administrative Agent, as the case may be, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

(ii) If any applicable withholding agent shall be required by applicable Law to withhold or deduct any Taxes, including both United States federal backup withholding and withholding Taxes, from any payment, then (A) such withholding agent shall withhold or make such deductions as are determined by such withholding agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) such withholding agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with applicable Law, and (C) if such Tax subject to withholding or deduction is an Indemnified Tax, the sum payable by the Borrower shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(b) Payment of Other Taxes by the Borrower . Without limiting the provisions of subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of any Other Taxes.

 

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(c) Tax Indemnifications . (i) Without limiting the provisions of subsection (a) or (b) above, the Borrower shall, and does hereby, indemnify each Recipient and shall make payment in respect thereof within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) withheld or deducted by the Borrower or the Administrative Agent or paid by the applicable Recipient and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. The Borrower shall also, and does hereby, indemnify the Administrative Agent, and shall make payment in respect thereof within 10 days after demand therefor, for any amount which a Lender or an L/C Issuer for any reason fails to pay indefeasibly to the Administrative Agent as required by clause (ii) of this subsection. A certificate as to the amount of any such payment or liability delivered to the Borrower by a Recipient (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or an L/C Issuer, shall be conclusive absent manifest error.

(ii) Without limiting the provisions of subsection (a) or (b) above, each Lender and each L/C Issuer shall, and does hereby, indemnify the Administrative Agent, and shall make payment in respect thereof within 10 days after demand therefor, against any and all Taxes and any and all related losses, claims, liabilities, penalties, interest and expenses (including the fees, charges and disbursements of any counsel for the Administrative Agent) incurred by or asserted against the Administrative Agent by any Governmental Authority as a result of the failure by such Lender or such L/C Issuer, as the case may be, to deliver, or as a result of the inaccuracy, inadequacy or deficiency of, any documentation required to be delivered by such Lender or such L/C Issuer, as the case may be, to the Administrative Agent pursuant to subsection (e). Each Lender and each L/C Issuer hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender or such L/C Issuer, as the case may be, under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii).

(d) Evidence of Payments . Upon request by the Borrower or the Administrative Agent, as the case may be, after any payment of Taxes by the Borrower or the Administrative Agent to a Governmental Authority as provided in this Section  3.01 , the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.

(e) Status of Lenders; Tax Documentation . (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the

 

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Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section  3.01(e)(ii)(A) , (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii) Without limiting the generality of the foregoing,

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding Tax;

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(2) executed originals of IRS Form W-8ECI;

(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit I-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “ U.S. Tax Compliance Certificate ”) and (y) executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E (as applicable); or

 

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(4) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E (as applicable), a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-2 or Exhibit I-3 , IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-4 on behalf of each such direct and indirect partner.

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Recipient under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Recipient were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Recipient shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by Law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Recipient has complied with such Recipient’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(f) Treatment of Certain Refunds . Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender or an L/C Issuer, or have any obligation to pay to any Lender or any L/C Issuer, any refund of Taxes withheld or deducted from funds paid for the account of such Lender or such L/C Issuer, as the case may be. If the Administrative Agent, any Lender or any L/C Issuer determines, in its sole

 

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discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses incurred by the Administrative Agent, such Lender or such L/C Issuer, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent, such Lender or such L/C Issuer, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent, such Lender or such L/C Issuer in the event the Administrative Agent, such Lender or such L/C Issuer is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require the Administrative Agent, any Lender or any L/C Issuer to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other Person.

(g) FATCA Grandfathering . For purposes of determining U.S. withholding Taxes imposed under FATCA, from and after the date of this Agreement, the Borrower and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) this Agreement as not qualifying as a “grandfathered obligation” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).

(h) Survival . Each party’s obligations under this Section  3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender or an L/C Issuer, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.

3.02 Illegality . If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to LIBOR, or to determine or charge interest rates based upon LIBOR, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue LIBOR Loans or to convert Base Rate Loans to LIBOR Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the LIBOR component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the LIBOR component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all LIBOR Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the LIBOR component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain

 

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such LIBOR Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon LIBOR, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the LIBOR component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon LIBOR. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

3.03 Inability to Determine Rates . The Administrative Agent will promptly notify the Borrower and the Lenders if, in connection with any Loan or request with respect to a Loan, (a) the Administrative Agent determines that (i) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable Loan amount or Interest Period, or (ii) adequate and reasonable means do not exist for determining LIBOR for the Loan or Interest Period (including with respect to calculation of the Base Rate); or (b) the Administrative Agent or the Required Lenders determine for any reason that LIBOR for the Interest Period does not adequately and fairly reflect the cost to Lenders of funding or maintaining the Loan. Thereafter, the Lenders’ obligations to make or maintain affected LIBOR Loans and utilization of the LIBOR component (if affected) in determining Base Rate shall be suspended until the Administrative Agent determines (or is instructed by the Required Lenders) to withdraw the notice. Upon receipt of such notice, the Borrower may revoke any pending request for funding, conversion or continuation of a LIBOR Loan or, failing that, will be deemed to have requested a Base Rate Loan, and the Administrative Agent may (or shall upon request by the Required Lenders) immediately convert any affected LIBOR Loan to a Base Rate Loan and/or disregard the use of LIBOR in determining Base Rate.

3.04 Increased Costs; Capital Adequacy . (a)  Increased Costs Generally . If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, liquidity, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in calculating LIBOR) or any L/C Issuer;

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii) impose on any Lender or any L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or LIBOR Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Loan the interest on which is determined by reference to LIBOR (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or such L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount

 

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of any sum received or receivable by such Lender or such L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or such L/C Issuer, the Borrower will pay to such Lender or such L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or such L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements . If any Lender or any L/C Issuer determines that any Change in Law affecting such Lender or such L/C Issuer or any Lending Office of such Lender or such Lender’s or such L/C Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or such L/C Issuer’s capital or on the capital of such Lender’s or such L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swing Line Loans held by, such Lender, or the Letters of Credit issued by such L/C Issuer, to a level below that which such Lender or such L/C Issuer or such Lender’s or such L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such L/C Issuer’s policies and the policies of such Lender’s or such L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or such L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or such L/C Issuer or such Lender’s or such L/C Issuer’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement . A certificate of a Lender or an L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or such L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or such L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

(d) Delay in Requests . Failure or delay on the part of any Lender or any L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s or such L/C Issuer’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or an L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender or such L/C Issuer, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof).

(e) Reserves on LIBOR Loans . The Borrower shall pay to each Lender, (i) as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “ Eurocurrency liabilities ”), additional interest on the unpaid principal amount of each LIBOR Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive) and (ii) as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the

 

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funding of the Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 days from receipt of such notice.

3.05 Compensation for Losses . Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any LIBOR Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any LIBOR Loan on the date or in the amount notified by the Borrower; or

(c) any assignment of a LIBOR Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section  10.13 ;

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section  3.05 , each Lender shall be deemed to have funded each LIBOR Loan made by it at LIBOR for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such LIBOR Loan was in fact so funded.

3.06 Mitigation Obligations; Replacement of Lenders . (a)  Designation of a Different Lending Office . If any Lender requests compensation under Section  3.04 , or the Borrower is required to pay any additional amount to any Lender, any L/C Issuer, or any Governmental Authority for the account of any Lender or any L/C Issuer pursuant to Section  3.01 , or if any Lender gives a notice pursuant to Section  3.02 , then such Lender or such L/C Issuer shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or such L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section  3.01 or 3.04 , as the case may be, in the future, or eliminate the need for the notice pursuant to Section  3.02 , as applicable, and (ii) in each case, would not subject such Lender or such L/C Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or such L/C Issuer, as the case may be. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or any L/C Issuer in connection with any such designation or assignment.

 

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(b) Replacement of Lenders . If any Lender requests compensation under Section  3.04 , or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section  3.01 , the Borrower may replace such Lender in accordance with Section  10.13 .

3.07 Survival . All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01 Conditions of Initial Credit Extension . The obligation of each L/C Issuer and each Lender to make its initial Credit Extension hereunder (including the deemed issuance of the Existing Letters of Credit) is subject to satisfaction of the following conditions precedent:

(a) The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and each of the Lenders:

(i) executed counterparts of this Agreement and the Guaranty, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower;

(ii) a Note executed by the Borrower in favor of each Lender requesting a Note;

(iii) the Collateral Rights Agreement, duly executed by each of the parties thereto;

(iv) the Security Agreement, duly executed by each Loan Party, together with:

(A) proper Financing Statements in form appropriate for filing under the Uniform Commercial Code of all jurisdictions that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created under the Security Agreement, covering the Collateral described in the Security Agreement,

(B) UCC and Lien searches and other evidence satisfactory to the Administrative Agent that Liens in favor of the Administrative Agent are the only Liens upon the Collateral, except Liens permitted under Section  7.01 ,

(C) evidence of the completion of all other actions, recordings and filings of or with respect to the Security Agreement that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created thereby,

 

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(D) the Account Control Agreements and the Securities Account Control Agreement (in each case, as defined in the Security Agreement) required pursuant to the Security Agreement and duly executed by the appropriate parties, and

(E) evidence that all other action that the Administrative Agent may deem necessary or desirable in order to perfect the Liens created under the Security Agreement has been taken (including receipt of duly executed payoff letters and UCC-3 termination statements);

(v) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party or is to be a party;

(vi) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that the Borrower and each Guarantor is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect;

(vii) a favorable written opinion of each of (i) Thompson & Knight LLP, counsel to the Loan Parties, (ii) Bryan Cave LLP, Colorado counsel to the Loan Parties, (iii) Lynch, Chappell & Alsup, New Mexico counsel to the Loan Parties and (iv) the Law Offices of Morris Laing, as Kansas counsel to the Loan Parties, in each case addressed to the Administrative Agent and each Lender, as to the matters concerning the Loan Parties and the Loan Documents as the Required Lenders may reasonably request;

(viii) a certificate signed by a Responsible Officer of the Borrower certifying (A) that the conditions specified in Sections 4.02(a) and (b)  have been satisfied, (B) that, after giving effect to the issuance or deemed issuance of any Letters of Credit on the Closing Date, any additional Credit Extension on the Closing Date, the payment by Borrower of all fees and expenses due hereunder and all payments due on the Closing Date, (y) Availability hereunder plus unrestricted cash on hand of the Loan Parties is not less than $100,000,000 and (z) Availability hereunder is not less than $60,000,000, and (C) that attached to such certificate are true and correct calculations evidencing satisfaction of the conditions described in clause (B) above;

(ix) a Borrowing Base Certificate as of August 31, 2018;

(x) a financial forecast of the Borrower and its Subsidiaries on a consolidated basis prepared by management of the Borrower, including consolidated balance sheets and statements of income or operations and cash flows of the Borrower and its Subsidiaries on an annual basis for each of the Borrower’s fiscal years 2018 through and including 2023;

 

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(xi) for the fiscal quarter ended June 30, 2018, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal quarter, all in reasonable detail, certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;

(xii) certificates attesting to the Solvency of each Material Loan Party before and after giving effect to entering into this Agreement and any repayment or incurrence of Indebtedness on the Closing Date and the payment of fees and expenses in connection therewith, from its chief financial officer;

(xiii) evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect, together with the certificates of insurance, naming the Administrative Agent, on behalf of the Lenders, as an additional insured or loss payee, as the case may be, under all insurance policies maintained with respect to the assets and properties of the Loan Parties that constitute Collateral;

(xiv) duly executed payoff letters from the Receivables Facility Agent in respect of the Receivables Facility Agreement and from the Term Loan Agent in respect of the Term Loan Agreement together with all related release instruments and attachments thereto, in each case in form and substance reasonably satisfactory to the Administrative Agent;

(xv) evidence that the following transactions shall have been (or shall concurrently be) consummated, in each case on terms and conditions reasonably satisfactory to the Administrative Agent:

(A) the Borrower shall have issued the Senior Notes pursuant to the Senior Notes Indenture which result in aggregate gross proceeds to the Borrower of not less than $297,126,000;

(B) all principal, premium, if any, interest, fees and other amounts due or outstanding under the Receivables Facility Agreement, shall have been paid in full, the commitments thereunder terminated and all guarantees and security in support thereof discharged and released, and the Administrative Agent shall have received reasonably satisfactory evidence thereof;

(C) the Receivables Transfer Agreement dated as of September 29, 2017, among Basic Energy Services, L.P., Basic Energy Receivables, LLC and the other parties party thereto shall have been terminated, and the Administrative Agent shall have received reasonably satisfactory evidence thereof;

(D) BER shall have reassigned to the Loan Parties all of the Accounts which it had purchased from the Loan Parties and transferred to the Loan Parties all collections with respect thereto; and

 

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(E) all principal, premium, interest, fees and other amounts due or outstanding under the Term Loan Agreement shall have been paid in full, the commitments thereunder terminated and all guarantees and security in support thereof discharged and released, and the Administrative Agent shall have received reasonably satisfactory evidence thereof;

(xvi) if applicable, a duly executed Letter of Credit Application for each Letter of Credit requested to be issued on the Closing Date, together with all other documents and information pertaining to such requested Letter of Credit issuance as the L/C Issuer or the Administrative Agent may require; and

(xvii) such other assurances, certificates, documents, consents or opinions as the Administrative Agent, the L/C Issuers, the Swing Line Lenders or any Lender reasonably may require.

(b) (i) All fees required to be paid to the Administrative Agent, MLPFS and any L/C Issuer on or before the Closing Date shall have been paid and (ii) all fees required to be paid to the Administrative Agent on behalf of the Lenders on or before the Closing Date shall have been paid.

(c) Unless waived by the Administrative Agent, the Borrower shall have paid all reasonable and documented fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings ( provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).

(d) (i) All accrued but unpaid letter of credit fees, and other amounts outstanding with respect to the Existing Letters of Credit shall have been paid in full; provided that, for the avoidance of doubt, the Existing Letters of Credit issued by Bank of America and outstanding on the Closing Date shall remain outstanding as Letters of Credit hereunder and shall be subject to and governed by the terms and conditions hereof and (ii) that certain Cash Collateral Agreement dated as of September 29, 2017 between the Borrower and Bank of America relating to the Existing Letters of Credit shall have been terminated.

(e) All consents, licenses, approvals, waivers, acknowledgements and other agreements required in connection with the execution, delivery and performance by such Loan Party, and the validity against such Loan Party, of the Loan Documents to which it is a party shall be in full force and effect.

(f) The Borrower shall have provided, in form and substance satisfactory to the Administrative Agent and each Lender, all documentation and other information as the Administrative Agent or any Lender deems appropriate in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including the Patriot Act and Beneficial Ownership Regulation. If the Borrower or any other Loan Party qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, it shall deliver a Beneficial Ownership Certification to the Administrative Agent and the Lenders upon request.

 

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Without limiting the generality of the provisions of the last paragraph of Section  9.03 , for purposes of determining compliance with the conditions specified in this Section  4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

4.02 Conditions to all Credit Extensions . The obligation of each Lender to honor any Request for Credit Extension (other than a Revolving Credit Loan Notice requesting only a conversion of Revolving Credit Loans to the other Type, or a continuation of LIBOR Loans) is subject to the following conditions precedent:

(a) The representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects on and as of the date of such Credit Extension, except to the extent that (i) such representations and warranties are qualified by materiality or reference to “Material Adverse Effect”, in which case such representations and warranties shall be true and correct in all respects, and (ii) that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (without duplication of any materiality qualification applicable thereto) as of such earlier date; provided that for purposes of this Section  4.02 , the representations and warranties contained in Sections 5.05(a) and (b)  shall be deemed to refer to the most recent statements furnished pursuant to Sections 6.01(a) and (b) , respectively.

(b) No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

(c) The Administrative Agent and, if applicable, the applicable L/C Issuer or the applicable Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.

Each Request for Credit Extension (other than a Revolving Credit Loan Notice requesting only a conversion of Revolving Credit Loans to the other Type or a continuation of LIBOR Loans) submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b)  have been satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Administrative Agent and the Lenders that:

5.01 Existence, Qualification and Power . Each Loan Party and each of its Restricted Subsidiaries (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power

 

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and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. As of the Closing Date, all information included in any Beneficial Ownership Certification is true and complete in all respects.

5.02 Authorization; No Contravention . The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is or is to be a party have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, under, or require any payment to be made under any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Restricted Subsidiaries, except for conflicts, breaches or contraventions that could not reasonably be expected to result in a Material Adverse Effect, (c) violate any Law or any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (d) result in the creation or imposition of any Lien on any property of the Borrower or any Restricted Subsidiary except Liens created under the Loan Documents.

5.03 Governmental Authorization; Other Consents . No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (c) the perfection or continuance of the Liens created under the Collateral Documents (including the first priority nature thereof) or (d) the exercise by the Administrative Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, except for the authorizations, approvals, actions, notices and filings which (i) have been duly obtained, taken, given or made and are in full force and effect, (ii) are required by the Loan Documents or (iii) in the case of any authorization, approval, action, notice or filing from or with a Person other than a Governmental Authority, the failure to have could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.04 Binding Effect . This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms except as such enforcement may be limited by bankruptcy, insolvency or similar Laws of general application relating to the enforcement of creditors’ rights and by general principles of equity.

 

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5.05 Financial Statements; No Material Adverse Effect . (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show or describe all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.

(b) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

(c) The consolidated forecasted balance sheet, statements of income and cash flows of the Borrower and its Subsidiaries delivered pursuant to Section  4.01 or Section  6.01(c) were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrower’s best estimate of its future financial condition and performance, recognizing that there are industry-wide risks normally associated with the types of business conducted by the Borrower and its Subsidiaries and that the Borrower does not warrant that such forecasts and estimates will ultimately prove to have been accurate.

5.06 Litigation . There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or (b) either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect.

5.07 No Default . Neither any Loan Party nor any Restricted Subsidiary thereof is in default under or with respect to, or a party to, any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

5.08 Ownership of Property; Liens; Investments . Each Loan Party and each of its Restricted Subsidiaries has good title to, or valid leasehold interests in, all of their respective property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

5.09 Environmental Compliance . (a) The Loan Parties and their respective Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof the Borrower has reasonably concluded that such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

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(b) None of the properties currently owned or operated or, to the knowledge of any Loan Party, formerly owned or operated, by any Loan Party or any of its Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or is adjacent to any such property. Except as in accordance in all material respects with the requirements of all Environmental Laws: (i) there are no and never have been any underground or above-ground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or operated by any Loan Party or any of its Subsidiaries or, to the best of the knowledge of the Loan Parties, on any property formerly owned or operated by any Loan Party or any of its Subsidiaries and (ii) Hazardous Materials have not been released, discharged or disposed of on any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries. Except as could not, individually or in the aggregate, reasonably be expected to cause a Material Adverse Effect, there is no asbestos or asbestos-containing material on any property currently owned or operated by any Loan Party or any of its Subsidiaries.

(c) Neither any Loan Party nor any of its Subsidiaries is undertaking, and has not completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law except for any investigations, assessments or remedial or response actions not reasonably expected to result in any material liability to any Loan Party or any of its Subsidiaries. All Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in accordance with the requirements of all Environmental Laws in all material respects and in a manner not reasonably expected to result in material liability to any Loan Party or any of its Subsidiaries.

(d) The Borrower and each of its Subsidiaries have obtained all Environmental Permits necessary for the ownership and operation of its properties and assets and the conduct of its business except where the failure to do so could, either individually or in the aggregate, reasonably be expected to result in material liability to any Loan Party or any of its Subsidiaries. Except where the failure to do so could not, either individually or in the aggregate, reasonably be expected to cause a Material Adverse Effect, the Borrower and each of its Subsidiaries have been and are in compliance with all terms and conditions of such Environmental Permits. There are no pending or, to the knowledge of the Borrower, threatened, claims against the Borrower or any Subsidiary under any Environmental Laws and neither the Borrower nor any Subsidiary has received any written notice of alleged non-compliance with applicable Environmental Laws or Environmental Permits which could, in each case, either individually or in the aggregate, reasonably be expected to (i) cause a Material Adverse Effect or (ii) result in material liability to any Loan Party or any of its Subsidiaries.

5.10 Insurance . The properties of the Borrower and its Restricted Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts (after giving effect to any self-insurance compatible with the following standards), with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Restricted Subsidiary operates.

 

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5.11 Taxes . The Borrower and its Restricted Subsidiaries have filed all federal, state and other material Tax returns and reports required to be filed, and have paid all federal, state and other material Taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed Tax assessment against the Borrower or any Restricted Subsidiary that would, if made, have a Material Adverse Effect. Neither any Loan Party nor any Subsidiary thereof is party to any Tax sharing agreement.

5.12 ERISA Compliance .

(a) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

(b) Except as could not, either individually or in the aggregate, reasonably be expected to cause a Material Adverse Effect: (i) no ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) the Borrower and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither the Borrower nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) neither the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan; and (vii) the Borrower and each ERISA Affiliate have maintained each Plan (other than a Multiemployer Plan) in compliance with the applicable provisions of ERISA, the Code and other federal or state laws.

5.13 Subsidiaries; Equity Interests; Loan Parties . As of the Closing Date, no Loan Party has any Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13 , and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule  5.13 free and clear of all Liens except those permitted under Section  7.01 . As of the Closing Date, no Loan Party has any equity investments in any other corporation or entity other

 

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than those specifically disclosed in Part (b) of Schedule 5.13 . Set forth on Part (c) of Schedule 5.13 is a complete and accurate list of all Loan Parties, showing as of the Closing Date (as to each Loan Party) the jurisdiction of its incorporation, the address of its principal place of business and its U.S. taxpayer identification number or, in the case of any non-U.S. Loan Party that does not have a U.S. taxpayer identification number, its unique identification number issued to it by the jurisdiction of its incorporation. As of the Closing Date, each of BER, BER Holdco, Robota and BESI is an Immaterial Domestic Subsidiary.

5.14 Margin Regulations; Investment Company Act . (a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than 25% of the value of the assets (either of the Borrower only or of the Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of Section  7.01 or Section  7.05 or subject to any restriction contained in any agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section  8.01(e) will be margin stock.

(b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

5.15 Disclosure . The Borrower has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries or any other Loan Party is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case as modified or supplemented by other information so furnished), when taken as a whole, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projections, budgets, estimates and other forward looking statements, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time, recognizing that there are industry-wide risks normally associated with the types of business conducted by the Borrower and its Subsidiaries and that the Borrower does not warrant that such projections, budgets, estimates and other forward looking statements will ultimately prove to have been accurate.

5.16 Compliance with Laws . Each Loan Party and each Restricted Subsidiary thereof is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

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5.17 Intellectual Property; Licenses, Etc . The Borrower and each of its Restricted Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “ IP Rights ”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person to the extent such conflict could reasonably be expected to have a Material Adverse Effect. To the best knowledge of the Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Borrower or any of its Restricted Subsidiaries infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of the Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

5.18 Solvency . Each Material Loan Party is, individually and together with its Subsidiaries on a consolidated basis, Solvent.

5.19 Casualty, Etc . Neither the businesses nor the properties of any Loan Party or any of its Restricted Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

5.20 Labor Matters . There are no collective bargaining agreements or Multiemployer Plans covering the employees of the Borrower or any of its Restricted Subsidiaries as of the Closing Date and neither the Borrower nor any Restricted Subsidiary has suffered any strikes, walkouts, work stoppages or other material labor difficulty within the last five years.

5.21 Collateral Documents . The provisions of the Collateral Documents are effective to create in favor of the Administrative Agent for the benefit of the Secured Parties a legal, valid and enforceable first priority Lien (subject to Liens permitted by Section  7.01 ) on all right, title and interest of the respective Loan Parties in the Collateral described therein. Except for filings completed prior to the Closing Date and as contemplated hereby and by the Collateral Documents and for such other action completed on or prior to the Closing Date, no filing or other action will be necessary to perfect or protect such Liens.

5.22 Sanctions Concerns . No Loan Party, nor any Subsidiary, nor, to the knowledge of the Loan Parties and their Subsidiaries, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity that is, or is owned or controlled by any individual or entity that is, (a) currently the subject or target of any Sanctions or (b) located, organized or resident in a Designated Jurisdiction.

5.23 EEA Financial Institutions . No Loan Party is an EEA Financial Institution.

5.24 Indenture Compliance . None of (a) the execution or performance of the Loan Documents, (b) the incurrence of any Obligations by the Loan Parties or (c) the granting of any Liens securing the Obligations violates the Senior Notes Indenture, including Section 3.2 thereof, or the other Senior Notes Documents. The Borrower further represents that the Aggregate Commitments and Obligations constitute “Permitted Debt” under the Senior Notes Indenture. The

 

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Administrative Agent may condition Borrowings, Letters of Credit, Commitment increases and other credit accommodations under the Loan Documents from time to time upon the Administrative Agent’s receipt of evidence that the Aggregate Commitments and Obligations continue to constitute “Permitted Debt” under the Senior Notes Indenture at such time.

ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01 , 6.02 , 6.03 and 6.11 ) cause each Restricted Subsidiary to:

6.01 Financial Statements; Borrowing Base Certificate . Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

(a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower (or, if earlier, 15 days after the date required to be filed with the SEC (without giving effect to any extension permitted by the SEC)) (commencing with the fiscal year ending December 31, 2018), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit other than with respect to, or resulting from, (i) an upcoming maturity date or (ii) any potential inability to satisfy any financial covenant on a future date or for a future period;

(b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (or, if earlier, 5 days after the date required to be filed with the SEC (without giving effect to any extension permitted by the SEC)) (commencing with the fiscal quarter ending September 30, 2018), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;

 

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(c) if there are any Unrestricted Subsidiaries as of the end of any fiscal period covered by the financial statements referred to in Section  6.01(a) or (b) , concurrently with the delivery of such financial statements, internally prepared consolidating financial statements reconciling the financial condition of the Borrower’s Restricted Subsidiaries and Unrestricted Subsidiaries, in a format reasonably acceptable to the Administrative Agent, certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as presenting fairly in all material respects the financial condition and results of operations of the Restricted Subsidiaries and Unrestricted Subsidiaries of the Borrower in accordance with GAAP;

(d) if a Monthly Financial Reporting Trigger Period is in effect, as soon as available, but in any event within 30 days after the end of each month, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such month, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such month and for the portion of the Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding month of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;

(e) as soon as available, but in any event not later than 45 days after the end of each fiscal year of the Borrower, a financial forecast of the Borrower and its Subsidiaries on a consolidated and, if there are any Unrestricted Subsidiaries, consolidating basis prepared by management of the Borrower, in form satisfactory to the Administrative Agent and the Required Lenders, including consolidated and, if there are any Unrestricted Subsidiaries, consolidating balance sheets and statements of income or operations and cash flows of the Borrower and its Subsidiaries on a quarterly basis for the immediately following fiscal year (including the fiscal year in which the Maturity Date occurs);

(f) a Borrowing Base Certificate prepared as of the end of the applicable period, as soon as available, but in any event (i) when no Weekly BBC Trigger Period is in effect, not later than 15 days after the end of each month and (ii) when a Weekly BBC Trigger Period is in effect, not later than 3 Business Days after the end of each week. All calculations of Availability in any Borrowing Base Certificate shall originally be made by the Borrower and certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower, provided that the Administrative Agent may from time to time review and adjust any such calculation (A) to reflect its reasonable estimate of declines in value of any Collateral, due to collections received in the Dominion Accounts or otherwise; and (B) to the extent the calculation is not made in accordance with this Agreement or does not accurately reflect the Availability Reserve.

As to any information contained in materials furnished pursuant to Section  6.02(d) , the Borrower shall not be separately required to furnish such information under Section  6.01(a) or (b)  above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in Sections 6.01(a) and (b)  above at the times specified therein.

 

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6.02 Certificates; Other Information . Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:

(a) concurrently with the delivery of the financial statements referred to in Section  6.01(a) , a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default under the financial covenants set forth herein or, if any such Default shall exist, stating the nature and status of such event;

(b) concurrently with the delivery of the financial statements referred to in Sections  6.01(a) , (b) and (c) , a duly completed Compliance Certificate, including a calculation of the Consolidated Fixed Charge Coverage Ratio whether or not the financial covenant is being tested at such time, signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower (which delivery may, unless the Administrative Agent, or a Lender requests executed originals, be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes);

(c) promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of any Loan Party by independent accountants in connection with the accounts or books of any Loan Party or any of its Subsidiaries, or any audit of any of them;

(d) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, or with any national securities exchange, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;

(e) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or of any of its Restricted Subsidiaries pursuant to the terms of the Senior Notes Indenture or any other indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section  6.01 or any other clause of this Section  6.02 ;

(f) as soon as available, but in any event within 30 days after the end of each fiscal year of the Borrower, a report summarizing the insurance coverage (specifying type, amount and carrier) in effect for each Loan Party and its Restricted Subsidiaries and containing such additional information as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably specify;

(g) promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Restricted Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof;

 

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(h) not later than five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of all material notices, requests and other documents (including amendments, waivers and other modifications) received under or pursuant to the Senior Notes Indenture or any other instrument, indenture, loan or credit or similar agreement and, from time to time upon request by the Administrative Agent, such information and reports regarding the Senior Notes Indenture and such other instruments, indentures and loan and credit and similar agreements as the Administrative Agent may reasonably request;

(i) promptly after the assertion or occurrence thereof, notice of any action or proceeding against or of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that could reasonably be expected to have a Material Adverse Effect; and

(j) promptly, such additional information regarding the business, financial, legal or corporate affairs of any Loan Party or any Subsidiary thereof, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request, including without limitation, information for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act and the Beneficial Ownership Regulation.

Documents required to be delivered pursuant to Section  6.01(a) or (b)  or Section  6.02(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.02 ; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender upon its request to the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent and each Lender (by fax transmission or e-mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions ( i.e. , soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers will make available to the Lenders and the L/C Issuers materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “ Borrower Materials ”) by posting the Borrower Materials on IntraLinks, Debt Domain, Syndtrak, ClearPar, or another similar electronic system (the “ Platform ”) and (b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such

 

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Borrower Materials shall be clearly and conspicuously marked “ PUBLIC ” which, at a minimum, shall mean that the word “ PUBLIC ” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “ PUBLIC ,” the Borrower shall be deemed to have authorized the Administrative Agent, the Arrangers, the L/C Issuers and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes of United States federal and state securities laws ( provided , however , that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section  10.07 ); (y) all Borrower Materials marked “ PUBLIC ” are permitted to be made available through a portion of the Platform designated “ Public Side Information ;” and (z) the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are not marked “ PUBLIC ” as being suitable only for posting on a portion of the Platform not designated “ Public Side Information” .

6.03 Notices . Promptly notify the Administrative Agent and each Lender:

(a) of the occurrence of any Default;

(b) (i) the breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Restricted Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Restricted Subsidiary and any Governmental Authority; (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Restricted Subsidiary, including pursuant to any applicable Environmental Laws, (iv) or any other matter, in each case, that has resulted or could reasonably be expected to result in a Material Adverse Effect;

(c) the commencement of, or any material development in, any investigation, litigation or proceeding affecting the Borrower or any Restricted Subsidiary pursuant to any applicable Environmental Laws which could, either individually or in the aggregate, reasonably be expected to result in material liability to any Loan Party or any of its Restricted Subsidiaries;

(d) of the occurrence of any ERISA Event; and

(e) of any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiary thereof, including any determination by the Borrower referred to in Section  2.10(b) .

Each notice pursuant to Section  6.03 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section  6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

6.04 Payment of Obligations . Pay and discharge as the same shall become due and payable, all its material obligations and liabilities, including (a) all Tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Restricted Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property, unless the

 

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same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Restricted Subsidiary; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.

6.05 Preservation of Existence, Etc .. (a) Preserve, renew and maintain in full force and effect the Borrower’s and the Material Loan Parties’ legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section  7.04 or 7.05 ; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

6.06 Maintenance of Properties . (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.

6.07 Maintenance of Insurance . (a) Maintain insurance with respect to the Collateral, covering casualty, hazard, theft, malicious mischief, flood and other risks, in amounts, with endorsements and with insurers (with a Best’s Financial Strength Rating of at least A+, unless otherwise approved by the Administrative Agent in its discretion) satisfactory to the Administrative Agent. All proceeds under each policy covering Collateral shall be payable to the Administrative Agent as a lender loss payee. From time to time upon request, the Borrower shall deliver to the Administrative Agent the originals or certified copies of its insurance policies. Unless the Administrative Agent shall agree otherwise, each policy shall include satisfactory endorsements that (i) provide for not less than 30 days prior notice to the Administrative Agent of termination, lapse or cancellation of such insurance, (ii) with respect to insurance covering Collateral, name the Administrative Agent as loss payee, and (iii) specify that the interest of the Administrative Agent shall not be impaired or invalidated by any act or negligence of any Loan Party or the owner of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by the policy. If the Borrower fails to provide and pay for any insurance, the Administrative Agent may, at its option, but shall not be required to, procure the insurance and charge the Borrower therefor. The Borrower agrees to deliver to the Administrative Agent, promptly as rendered, copies of all reports made to insurance companies. While no Event of Default exists, the Loan Parties may settle, adjust or compromise any insurance claim, as long as the proceeds are delivered to the Administrative Agent. If an Event of Default exists, only the Administrative Agent shall be authorized to settle, adjust and compromise such claims.

(b) In addition to the insurance required under clause (a) with respect to Collateral, maintain insurance with insurers (with a Best’s Financial Strength Rating of at least A+, unless otherwise approved by the Administrative Agent in its discretion) satisfactory to the Administrative Agent, with respect to the properties and business of the Loan Parties, of such type (including product liability, workers’ compensation, larceny, embezzlement, or other criminal misappropriation insurance), in such amounts, and with such coverages and deductibles as are at the time of placing such insurance customary for companies similarly situated and which are available at commercially reasonable rates.

 

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6.08 Compliance with Laws . Comply in all material respects with the requirements of all Laws (including Anti-Terrorism Laws) and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply (other than failure to comply with Anti-Terrorism Laws) therewith could not reasonably be expected to have a Material Adverse Effect.

6.09 Books and Records . (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Restricted Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Restricted Subsidiary, as the case may be.

6.10 Inspection Rights . (a) Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, that when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice.

(b) Subject to the reimbursement limitations contained in the next sentence, at any time upon the Administrative Agent’s request, the Loan Parties will allow the Administrative Agent (or its designee) to conduct field examinations to ensure the adequacy of Collateral included in any Borrowing Base and related reporting and control systems, and prepared on a basis reasonably satisfactory to the Administrative Agent, such field examinations to include, without limitation, information required by applicable Law. The Borrower shall reimburse the Administrative Agent for all reasonable and documented charges, costs and expenses (including a reasonable per diem field examination charge and out of pocket expenses) related thereto with respect to no more than one such field examination during each calendar year; provided that if Availability is at any time less than the greater of (i) $33,750,000 and (ii) 22.5% of the Borrowing Base, the Borrower shall reimburse the Administrative Agent for all reasonable charges, costs and expenses (including a reasonable per diem field examination charge and out of pocket expenses) related to a second such field examination during such calendar year (without any obligation on the part of the Administrative Agent to conduct such examination); and provided , further , that when an Event of Default exists, there shall be no limitation on the number or frequency of field examinations that shall be at the sole expense of the Borrower. For the purposes of clarity, any field examination commenced when an Event of Default exists may be completed at the Borrower’s sole expense notwithstanding the cessation of such Event of Default. The Secured Parties shall have no duty to any Loan Party to make any inspection, nor to share any results of any inspection, appraisal or report with any Loan Party. The Borrower acknowledge that all inspections, appraisals and reports are prepared by the Administrative Agent and/or the Lenders are for their purposes, and the Borrower shall not be entitled to rely upon them.

 

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6.11 Use of Proceeds . Use the proceeds of the Credit Extensions (i) to refinance certain existing indebtedness on the Closing Date and (ii) for working capital and other general corporate purposes, including the financing of Permitted Acquisitions, Investments permitted by Section 7.03 and any other use permitted by the Loan Documents in each case not in contravention of any Law or of any Loan Document.

6.12 Covenant to Guarantee Obligations and Give Security . (a) With respect to (x) any Person that becomes a direct or indirect Subsidiary after the Closing Date (other than a CFC, a Subsidiary that is held directly or indirectly by a CFC, any Immaterial Domestic Subsidiary created or acquired after the Closing Date and any Unrestricted Subsidiary), (y) any Immaterial Domestic Subsidiary (including BER, BER Holdco, Robota and BESI) that ceases to be an Immaterial Domestic Subsidiary and (z) any Subsidiary that is designated as a Restricted Subsidiary in accordance with Section  6.19(c) , then the Borrower shall, at the Borrower’s expense:

(i) within 15 days after such formation, acquisition, ceasing to be an Immaterial Domestic Subsidiary or designation as a Restricted Subsidiary (or such longer period as may be agreed by the Administrative Agent in its sole discretion), cause such Subsidiary, and cause each direct and indirect parent of such Subsidiary (if it has not already done so), to duly execute and deliver to the Administrative Agent a guaranty or guaranty supplement, in form and substance satisfactory to the Administrative Agent, guaranteeing the other Loan Parties’ obligations under the Loan Documents,

(ii) within 15 days after such formation, acquisition, ceasing to be an Immaterial Domestic Subsidiary or designation as a Restricted Subsidiary (or such longer period as may be agreed by the Administrative Agent in its sole discretion), cause such Subsidiary and each direct and indirect parent of such Subsidiary (if it has not already done so) to duly execute and deliver to the Administrative Agent a Security Agreement Supplement and other security and pledge agreements, as specified by and in form and substance satisfactory to the Administrative Agent (including delivery of other instruments of the type specified in Section  4.01(a)(iv) ), securing payment of all the Obligations of such Subsidiary or such parent, as the case may be, under the Loan Documents and constituting Liens on all such property (other than Excluded Properties) purported to be subject to such Collateral Document,

(iii) within 15 days after such formation, acquisition, ceasing to be an Immaterial Domestic Subsidiary or designation as a Restricted Subsidiary (or such longer period as may be agreed by the Administrative Agent in its sole discretion), cause such Subsidiary and each direct and indirect parent of such Subsidiary (if it has not already done so) to take whatever action (including the filing of Uniform Commercial Code financing statements, the giving of notices and the endorsement of notices on title documents) may be necessary or advisable in the opinion of the Administrative Agent to vest in the Administrative Agent (or in any representative of the Administrative Agent designated by it) valid and subsisting Liens on the properties purported to be subject to the Security Agreement Supplement and security and pledge agreements delivered pursuant to this Section  6.12 , enforceable against all third parties in accordance with their terms, and

 

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(iv) within 60 days after such formation, acquisition, ceasing to be an Immaterial Domestic Subsidiary or designation as a Restricted Subsidiary (or such longer period as may be agreed by the Administrative Agent in its sole discretion), deliver to the Administrative Agent, upon the request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Administrative Agent and the other Secured Parties, of counsel for the Loan Parties reasonably acceptable to the Administrative Agent as to the matters contained in clauses (i), (ii) and (iii) above, and as to such other matters as the Administrative Agent may reasonably request;

provided that, notwithstanding anything to the contrary in this Section  6.12(a) , with respect to the formation or acquisition of a Permitted Water Subsidiary, the requirements of this Section  6.12(a) with respect to such Permitted Water Subsidiary shall be satisfied substantially concurrently with such formation or acquisition.

(b) Upon the acquisition of any property by any Loan Party of a type that is intended to be Collateral, if such property, in the judgment of the Administrative Agent, shall not already be subject to a perfected security interest in favor of the Administrative Agent for the benefit of the Secured Parties, then the Borrower shall, at the Borrower’s expense:

(i) within 15 days after such acquisition (or such longer period as may be agreed by the Administrative Agent in its sole discretion), furnish to the Administrative Agent a description of the property so acquired in detail satisfactory to the Administrative Agent,

(ii) within 15 days after such acquisition (or such longer period as may be agreed by the Administrative Agent in its sole discretion), (A) cause the applicable Loan Party to duly execute and deliver to the Administrative Agent Security Agreement Supplements and other security and pledge agreements, as specified by and in form and substance satisfactory to the Administrative Agent, securing payment of all the Obligations of the applicable Loan Party under the Loan Documents and constituting Liens on all such personal properties and (B) cause the applicable Loan Party to take whatever action (including the filing of Uniform Commercial Code financing statements, the giving of notices and the endorsement of notices on title documents) may be necessary or advisable in the opinion of the Required Lenders to vest in the Administrative Agent (or in any representative of the Administrative Agent designated by it) valid and subsisting Liens on such property, enforceable against all third parties, and

(iii) within 60 days after such acquisition (or such longer period as may be agreed by the Administrative Agent in its sole discretion), deliver to the Administrative Agent, upon the request of the Administrative Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Administrative Agent and the other Secured Parties, of counsel for the Loan Parties reasonably acceptable to the Administrative Agent as to the matters contained in clause (ii) above and as to such other matters as the Administrative Agent may reasonably request.

 

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(c) At any time upon request of the Administrative Agent, promptly execute and deliver any and all further instruments and documents and take all such other action as the Administrative Agent may reasonably deem necessary or desirable in obtaining the full benefits of, or (as applicable) in perfecting and preserving the Liens of, such guaranties, Security Agreement Supplements and other security and pledge agreements.

(d) Upon (i) BER, (ii) BER Holdco, (iii) Robota, (iv) BESI or (v) any other Domestic Subsidiary that is a Restricted Subsidiary becoming a guarantor of the Senior Notes, such Person shall be deemed to be a “Guarantor” for purposes of this Agreement and the Borrower shall promptly cause such Person to duly execute and deliver to the Administrative Agent a guaranty or guaranty supplement, in form and substance satisfactory to the Administrative Agent, guaranteeing the other Loan Parties’ obligations under the Loan Documents and to deliver such other Loan Documents and take such other actions specified in clause (a) above within the time frames specified therein.

(e) Notwithstanding the foregoing, if, as of the end of any fiscal quarter, the Immaterial Domestic Subsidiaries collectively (i) generated more than 5% of Consolidated EBITDA for the Measurement Period most recently ended for which financial statements of the Borrower are available or (ii) own net assets that have an aggregate fair market value equal to or greater than 5.0% of Consolidated Tangible Assets of the Borrower, then in each case the Borrower shall cause one or more of such Immaterial Domestic Subsidiaries to execute a joinder agreement (or agreements) such that after giving effect thereto, (A) all such remaining Immaterial Domestic Subsidiaries that are not Guarantors generated less than 5% of Consolidated EBITDA for such Measurement Period and (B) the total net assets owned by all such remaining Immaterial Domestic Subsidiaries that are not Guarantors will have an aggregate fair market value of less than 5.0% of the Consolidated Tangible Assets of the Borrower.

6.13 Compliance with Environmental Laws . Comply, and cause all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and renew all Environmental Permits necessary for its operations and properties; and conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws in all material respects; provided, however, that neither the Borrower nor any of its Restricted Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

6.14 Preparation of Environmental Reports . At the request of the Required Lenders during the existence of any Default, provide to the Lenders within 60 days (or such longer period as the Administrative Agent may agree in its sole discretion) after such request, at the expense of the Borrower, an environmental site assessment report for any of its properties described in such request, prepared by an environmental consulting firm acceptable to the Administrative Agent, indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance, removal or remedial action in connection with any Hazardous Materials on such properties. Without limiting the generality of the foregoing, if the Administrative Agent

 

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determines at any time that a material risk exists that any such report will not be provided within the time referred to above, the Administrative Agent may retain an environmental consulting firm to prepare such report at the expense of the Borrower, and the Borrower hereby grants and agrees to cause any Restricted Subsidiary that owns any property described in such request to grant at the time of such request to the Administrative Agent, the Lenders, such firm and any agents or representatives thereof an irrevocable non-exclusive license, subject to the rights of tenants, to enter onto their respective properties to undertake such an assessment.

6.15 Further Assurances . Promptly upon the reasonable request by the Administrative Agent, or any Lender through the Administrative Agent, (a) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (i) carry out more effectively the purposes of the Loan Documents, (ii) to the fullest extent permitted by applicable Law, subject any Loan Party’s or any of its Restricted Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (iii) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (iv) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Restricted Subsidiaries is or is to be a party, and cause each of its Restricted Subsidiaries to do so.

6.16 Compliance with Terms of Leaseholds . Make all payments and otherwise perform all obligations in respect of all leases of real property to which the Borrower or any of its Restricted Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled, notify the Administrative Agent of any default by any party with respect to such leases and cooperate with the Administrative Agent in all respects to cure any such default, and cause each of its Restricted Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, could not be reasonably likely to have a Material Adverse Effect.

6.17 Material Contracts . Perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect, enforce each such Material Contract in accordance with its terms, take all such action to such end as may be from time to time requested by the Administrative Agent and, upon request of the Administrative Agent, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Loan Party or any of its Restricted Subsidiaries is entitled to make under such Material Contract, and cause each of its Restricted Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

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6.18 Administration of Deposit Accounts . Schedule 6.18 sets forth all deposit accounts maintained by the Loan Parties, including all Dominion Accounts. The Loan Parties shall take all actions necessary to establish Administrative Agent’s control of each such deposit account (other than an account exclusively used for payroll, payroll taxes or employee benefits and one or more deposit accounts established for the benefit of the Senior Notes Trustee containing solely proceeds of collateral for the Senior Notes (and not proceeds of the Collateral or any Loans) (each, a “ Senior Notes Collateral Account ”)), except for a deposit account containing not more than $250,000 at any time; provided that such deposit accounts over which Administrative Agent does not have control shall not contain more than $2,000,000 in the aggregate as of any date. The applicable Loan Party shall be the sole account holder of each deposit account and shall not allow any other Person (other than Administrative Agent or, solely in respect of any Senior Notes Collateral Account, the Senior Notes Trustee) to have control over a deposit account or any property deposited therein. The Borrower shall promptly notify the Administrative Agent of any opening or closing of a deposit account by any Loan Party and, with the consent of Administrative Agent, will amend Schedule 6.18 to reflect same.

6.19 Designation and Conversion of Restricted and Unrestricted Subsidiaries ; Covenants With Respect to Unrestricted Subsidiaries .

(a) Unless designated as an Unrestricted Subsidiary in accordance with Section  6.19(b) , any Person that becomes a Subsidiary of the Borrower or any of its Restricted Subsidiaries shall be classified as a Restricted Subsidiary.

(b) The Borrower may designate, by written notification thereof to the Administrative Agent, any Restricted Subsidiary, including a newly formed or newly acquired Subsidiary, as an Unrestricted Subsidiary if (i) prior, and immediately after giving effect, to such designation (including after giving effect to the reclassification of any Investments in, Indebtedness of, and/or Liens on the assets of, such Subsidiary), no Default or Event of Default exists, (ii) such designation is deemed to be an Investment in an Unrestricted Subsidiary in an amount equal to the fair market value as of the date of such designation of the Borrower’s direct and indirect ownership interest in such Subsidiary and such Investment would be permitted to be made at the time of such designation under Section  7.03 , (iii) immediately after giving effect to such designation, the Total Outstandings shall not exceed the lesser of (x) the aggregate Commitments of the Lenders and (y) the Borrowing Base (after giving effect to the removal from the Borrowing Base of any of such Restricted Subsidiary’s Accounts which were included in the Borrowing Base immediately prior to such designation), and (iv) such Subsidiary is not a “restricted subsidiary” or guarantor with respect to the Senior Notes Documents nor a Permitted Water Subsidiary. Except as provided in this Section  6.19(b) , no Restricted Subsidiary may be designated or redesignated as an Unrestricted Subsidiary.

(c) The Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if after giving effect to such designation, (i) the representations and warranties of the Loan Parties and such Restricted Subsidiary contained in each of the Loan Documents with respect to such Restricted Subsidiary are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct as of such date), (ii) no Default would be caused by such designation, and (iii) the applicable Loan Party and such Restricted Subsidiary each comply with the applicable requirements under Section  6.12 , at which time such Subsidiary shall cease to be an “Unrestricted Subsidiary” and shall become a “Restricted Subsidiary” for purposes of this Agreement and the other Loan Documents without any amendment, modification or other

 

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supplement to any of the foregoing. Any such designation shall be treated as a recovery of the applicable Loan Party’s Investment in such Unrestricted Subsidiary in an amount equal to the lesser of the fair market value at such time of the applicable Loan Party’s direct and indirect ownership interest in such Subsidiary or the amount of the applicable Loan Party’s Investment previously made in (and not previously recovered from) such Unrestricted Subsidiary.

(d) The Loan Parties:

(i) will cause the management, business and affairs of the Borrower and its Restricted Subsidiaries to be conducted in such a manner (including, without limitation, by keeping separate books of account, furnishing separate balance sheets and income statements of Unrestricted Subsidiaries to creditors and potential creditors thereof (to the extent required hereunder) and by not permitting assets of Unrestricted Subsidiaries to be commingled with those of the Loan Parties) so that each Unrestricted Subsidiary will be treated as an entity separate and distinct from the Borrower and its Restricted Subsidiaries;

(ii) will cause each Unrestricted Subsidiary to refrain from maintaining its assets in such a manner that would make it costly or difficult to segregate, ascertain or identify as its individual assets from those of any other Loan Party;

(iii) will not, and will not permit any other Loan Party to, incur, assume, guarantee or be or become liable for any Indebtedness of any of the Unrestricted Subsidiaries except to the extent permitted by this Agreement; and

(iv) the Loan Parties will not permit any Unrestricted Subsidiary to hold any Equity Interest in, or any Indebtedness of, any Loan Party or any Restricted Subsidiary.

ARTICLE VII

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the Borrower shall not, nor shall it permit any Restricted Subsidiary to, directly or indirectly:

7.01 Liens . Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or sign or file or suffer to exist under the Uniform Commercial Code of any jurisdiction a financing statement that names the Borrower or any of its Restricted Subsidiaries as debtor, or assign any accounts or other right to receive income, other than the following:

(a) Liens pursuant to any Loan Document;

(b) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased except as contemplated by Section  7.02(d) , (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is permitted by Section  7.02(d) ;

 

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(c) Liens for Taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

(d) carriers’, landlord’s, warehousemen’s, mechanics’, materialmen’s, repairmen’s, laborer’s, or other like Liens arising in the ordinary course of business which do not secure Indebtedness for borrowed money and which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;

(e) pledges or deposits in the ordinary course of business in connection with workers’ compensation, self-insurance obligations, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

(f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

(h) Liens securing judgments for the payment of money not constituting an Event of Default under Section  8.01(h) ;

(i) Liens securing Indebtedness permitted under Section  7.02(f) , including such Liens outstanding on the date hereof; provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition;

(j) Leases with respect to the assets or properties of any of the Borrower or any Restricted Subsidiary, in each case entered into in the ordinary course of such Person’s business so long as such leases do not apply to Collateral or are subordinate in all respects to the Liens granted and evidenced by the Collateral Documents and do not, individually or in the aggregate, (i) interfere in any material respect with the ordinary conduct of the business of the Borrower or any Restricted Subsidiary or (ii) materially impair the use (for its intended purposes) or the value of the property subject thereto;

(k) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Borrower or any Restricted Subsidiary in the ordinary course of business in accordance with the past practices of such Person;

(l) Liens on property of the Borrower and the Guarantors not constituting Collateral securing Indebtedness permitted under Section  7.02(g) ;

 

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(m) Liens on property of a Person not constituting Collateral existing at the time such Person is acquired or merged into or consolidated with the Borrower or any Guarantor or becomes a Restricted Subsidiary of the Borrower; provided that such Liens were not created in contemplation of such merger, consolidation or Investment and do not extend to any assets other than those of the Person merged into or consolidated with the Borrower or such Guarantor or acquired by the Borrower or such Guarantor, and the applicable Indebtedness secured by such Lien is permitted under Section  7.02(j) ;

(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 in connection with any letter of intent or purchase agreement with respect to a Permitted Acquisition; and

(p) other Liens securing Indebtedness outstanding in an aggregate principal amount not to exceed $2,000,000, provided that no such Liens shall extend to or cover any Collateral.

7.02 Indebtedness . Create, incur, assume or suffer to exist any Indebtedness, except:

(a) obligations (contingent or otherwise) existing or arising under any interest rate Swap Contract, provided that (i) such obligations are (or were) entered into by such Person to hedge against (including cap, collar, or exchange) interest rates or foreign exchange rates, which are incurred in the ordinary course of business and not for speculative purposes and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

(b) Indebtedness among the Borrower and its wholly owned Restricted Subsidiaries, which Indebtedness shall (i) be on terms (including subordination terms) acceptable to the Administrative Agent and (ii) be otherwise permitted under the provisions of Section  7.03 ;

(c) Indebtedness under the Loan Documents;

(d) Indebtedness outstanding on the date hereof and listed on Schedule 7.02 and any refinancings, renewals or extensions, in whole or in part, of the foregoing; provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal, or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing, refunding, renewal, or extension, (ii) the stated maturity date of such refinancing, refunding, renewing or extending Indebtedness is no earlier than six months after the Maturity Date, and (iii) the refinanced debt is retired in full on the issuance date of the refinancing debt;

(e) Guarantees of the Borrower or any Restricted Subsidiary in respect of Indebtedness otherwise permitted hereunder of the Borrower or any Guarantor;

 

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(f) Indebtedness in respect of Capitalized Leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section  7.01(i) ; provided , however , that the aggregate amount of all such Indebtedness at any one time outstanding (including any such Indebtedness outstanding on the date hereof) shall not exceed the greater of (i) $90,000,000 and (ii) 15% of Consolidated Tangible Assets of the Borrower and its Restricted Subsidiaries as of the end of the fiscal quarter most recently ended;

(g) (i) the Senior Notes in an aggregate principal amount not to exceed $300,000,000 issued by the Borrower, and (ii) any refinancings, refundings, renewals or extensions thereof, provided with respect to this clause (ii) that (A) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal, or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing, refunding, renewal, or extension, (B) immediately prior to and after giving effect to the issuance of such Indebtedness, there would be no Default under this Agreement, (C) such Indebtedness’ scheduled maturity is no earlier than ninety-one (91) days after the Maturity Date, (D) such Indebtedness does not require any scheduled repayments, defeasance or redemption (or sinking fund therefor) of any principal amount thereof prior to maturity; provided that , for the avoidance of doubt, this clause (D) shall not prohibit customary high yield indenture provisions requiring offers to repurchase in connection with asset sales (such offer not exceeding 100% of the outstanding principal balance of such Indebtedness) or any change of control (such offer not exceeding 101% of the outstanding principal balance of such Indebtedness) and provisions regarding prepayment from the net cash proceeds of certain debt issuances, casualty events, extraordinary receipts, tax receipts and equity issuances, in each case, only to the extent not required to be applied first to the Obligations pursuant to the terms of the Loan Documents, (E) no indenture or other agreement governing such Indebtedness contains (1) maintenance financial covenants or (2) covenants or events of default that are more restrictive in any material respect on the Borrower or any of its Restricted Subsidiaries than then applicable market terms and conditions for comparable issuers and issuances, and (F) if secured, such Indebtedness shall not be secured by any of the Collateral and the administrative agent or trustee therefor shall have entered into a Collateral Rights Agreement with the Administrative Agent in form and substance satisfactory to it.

(h) Indebtedness in respect of workers’ compensation claims, self-insurance obligations, performance bonds, surety appeal or similar bonds and completion guarantees provided by the Borrower or a Restricted Subsidiary in the ordinary course of its business;

(i) Indebtedness in respect of (i) self-insurance obligations or completion, bid, performance, appeal or surety bonds issued for the account of the Borrower or any wholly-owned Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Borrower or any wholly-owned Restricted Subsidiary with respect to letters of credit supporting such self-insurance, completion, bid, performance, appeal or surety obligations (in each case other than for an obligation for money borrowed) or (ii) obligations represented by letters of credit for the account of the Borrower or any wholly-owned Restricted Subsidiary, as the case may be, in order to provide security for workers’ compensation claims;

(j) indemnification, adjustment of purchase price, earn-out or similar obligations (including without limitation any Earn Out Obligations), in each case, incurred or assumed in connection with any Permitted Acquisition or disposition of any business or assets of the Borrower or any wholly-owned Restricted Subsidiary or Equity Interests of a wholly-owned Restricted

 

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Subsidiary, other than guarantees of Indebtedness incurred by any person acquiring all or any portion of such business, assets or Equity Interests for the purpose of financing or in contemplation of any such Permitted Acquisition; provided that (i) any amount of such obligations included on the face of the balance sheet of the Borrower or any wholly-owned Restricted Subsidiary shall not be permitted under this clause (j)  unless such obligation arises with respect to a Permitted Acquisition approved by all Lenders and (ii) in the case of a disposition, the maximum aggregate liability in respect of all such obligations outstanding under this clause (j)  shall at no time exceed the gross proceeds actually received by the Borrower and the wholly-owned Restricted Subsidiaries in connection with such disposition;

(k) Indebtedness of any Person that becomes a Restricted Subsidiary of the Borrower as a result of a Permitted Acquisition in an aggregate principal amount not to exceed $15,000,000 at any time outstanding; provided that such Indebtedness is existing at the time such Person becomes a Restricted Subsidiary of the Borrower and was not incurred solely in contemplation of such Person’s becoming a Restricted Subsidiary of the Borrower;

(l) endorsements of negotiable instruments for collection in the ordinary course of business; and

(m) unsecured Indebtedness not otherwise permitted under this Section  7.02 in an aggregate principal amount not to exceed $5,000,000 at any time outstanding.

7.03 Investments . Make or hold any Investments, except:

(a) Investments held by the Borrower and its Restricted Subsidiaries in the form of Cash Equivalents;

(b) advances to officers, directors and employees of the Borrower and its Restricted Subsidiaries in an aggregate amount not to exceed $250,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;

(c) (i) Investments by the Borrower and its Restricted Subsidiaries in their respective Restricted Subsidiaries outstanding on the date hereof, (ii) additional Investments by the Borrower and its Restricted Subsidiaries in Loan Parties, including, for the avoidance of doubt, Investments in Permitted Water Subsidiaries so long as such Permitted Water Subsidiary is a Guarantor at the time of such Investment, (iii) additional Investments by Restricted Subsidiaries of the Borrower that are not Loan Parties in other Restricted Subsidiaries that are not Loan Parties and (iv) so long as no Default has occurred and is continuing or would result from such Investment, additional Investments by the Loan Parties in wholly-owned Restricted Subsidiaries that are not Loan Parties in an aggregate amount invested from the date hereof not to exceed $1,000,000;

(d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;

(e) Guarantees permitted by Section  7.02 ;

 

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(f) Investments existing on the date hereof (other than those referred to in Section  7.03(c)(i) ) and identified on Schedule 7.03 or otherwise set forth on Schedule 7.03 ;

(g) the Borrower and the Guarantors may (by purchase or merger) consummate Permitted Acquisitions; provided that, in the case of a merger or consolidation, the Borrower or a Guarantor, as applicable, is the surviving entity;

(h) the Borrower may make loans to senior management of Borrower and the Guarantors for purposes of purchasing the capital stock of Borrower in an aggregate principal amount not to exceed $250,000 at any one time outstanding;

(i) scheduled payments of Earn Out Obligations; provided that the Payment Conditions with respect to Acquisitions are satisfied before and after giving effect to such payment; and

(j) other Investments not exceeding (i) $2,500,000 in the aggregate in any fiscal year of the Borrower and (ii) $5,000,000 in the aggregate following the Closing Date.

7.04 Fundamental Changes . Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:

(a) (i) the Borrower may merge with one or more of its Restricted Subsidiaries, provided that the Borrower shall be the continuing or surviving Person, and (ii) any of its Restricted Subsidiaries may merge with any of its other Restricted Subsidiaries provided that if any of such Restricted Subsidiaries is a Guarantor, a Guarantor shall be the surviving Person;

(b) any Guarantor may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another Guarantor;

(c) any Restricted Subsidiary that is not a Guarantor may dispose of all or substantially all its assets (including any Disposition that is in the nature of a liquidation) (i) to the Borrower or another Restricted Subsidiary that is not a Loan Party or (ii) to a Loan Party; and

(d) the Borrower or any Guarantor may merge or consolidate with any Person in accordance with Section  7.03(g) .

7.05 Dispositions . Make any Disposition or enter into any agreement to make any Disposition, except:

(a) Dispositions of (i) obsolete or worn out property and (ii) equipment that is no longer useful in the ordinary course of business, in each case, whether now owned or hereafter acquired;

(b) Dispositions of inventory in the ordinary course of business;

(c) Dispositions of property by any Restricted Subsidiary to the Borrower, to any wholly-owned Restricted Subsidiary or to any Permitted Water Subsidiary; provided that if the transferor of such property is a Guarantor, the transferee thereof must either be the Borrower or a Guarantor;

 

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(d) Dispositions permitted by Section  7.04 ;

(e) Dispositions by the Borrower and its Restricted Subsidiaries not otherwise permitted under this Section  7.05 ; provided that (i) at the time of such Disposition, no Default shall exist or would result from such Disposition, (ii) the aggregate book value of all property Disposed of in reliance on this clause (f) in any fiscal year shall not exceed $25,000,000 (or such greater amount as may be approved by the Administrative Agent in its Permitted Discretion), (iii) the assets subject to such Disposition do not constitute Collateral, and (iv) at least 75% of the purchase price for such asset shall be paid to the Borrower or such Restricted Subsidiary in cash; and

(f) sales or non-exclusive grants of licenses or sublicenses to use the patents, trade secrets, know-how and other intellectual property, and licenses, leases or subleases of other assets, of the Borrower or any wholly-owned Restricted Subsidiary to the extent not materially interfering with the business of the Borrower or any Restricted Subsidiary.

provided , however , that any Disposition pursuant to Section  7.05(a) through Section  7.05(f) (other than Dispositions to a Loan Party) shall be for fair market value.

7.06 Restricted Payments . Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:

(a) each Restricted Subsidiary (other than a Permitted Water Subsidiary) may make Restricted Payments to the Borrower, any Restricted Subsidiaries of the Borrower that are Guarantors and any other Person that owns a direct Equity Interest in such Restricted Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;

(b) the Borrower and each Restricted Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person;

(c) the Borrower and each Restricted Subsidiary may purchase, redeem or otherwise acquire its common Equity Interests with the proceeds received from the substantially concurrent issue of new common Equity Interests;

(d) so long as the applicable Payment Conditions are satisfied before and after giving effect thereto, the Borrower or any Permitted Water Subsidiary may (i) declare or pay cash dividends to its stockholders or equity holders and (ii) purchase, redeem or otherwise acquire for cash Equity Interests issued by it;

(e) so long as no Default shall have occurred and be continuing at the time of any such action or would result therefrom, the redemption, repurchase or other acquisition or retirement for value of Equity Interests of the Borrower held by officers, directors or employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates), either (i) upon any such individual’s death, disability, retirement, severance or termination of

 

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employment or service or (ii) pursuant to any equity subscription agreement, stock option agreement, stockholders’ agreement or similar agreement; provided , in any case, that the aggregate cash consideration paid for all such redemptions, repurchases or other acquisitions or retirements shall not exceed $2,000,000 during any calendar year (with unused amounts in any calendar year being carried forward to the next succeeding calendar year);

(f) so long as no Default shall have occurred and be continuing at the time of any such action or would result therefrom, (i) repurchases, redemptions or other acquisitions or retirements for value of Equity Interests deemed to occur upon the exercise of stock options, warrants, rights to acquire Equity Interests or other convertible securities to the extent such Equity Interests represent a portion of the exercise or exchange price thereof and (ii) any repurchases, redemptions or other acquisitions or retirements for value of Equity Interests made in lieu of withholding Taxes in connection with any exercise or exchange of stock options, warrants or other similar rights;

(g) the payment of cash in lieu of fractional Equity Interests; and

(h) so long as no Default shall have occurred and be continuing at the time of any such action or would result therefrom, payments or distributions to dissenting stockholders pursuant to applicable Law in connection with a merger, consolidation or transfer of assets that complies with the provisions of Section  7.04 .

7.07 Change in Nature of Business . Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Restricted Subsidiaries on the Closing Date, any other business or businesses in the oilfield services industry and other businesses reasonably related or ancillary thereto.

7.08 Transactions with Affiliates . Enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Restricted Subsidiary as would be obtainable by the Borrower or such Restricted Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate; provided that the foregoing restriction shall not apply to (a) transactions solely between or among the Loan Parties, (b) compensation to, and the terms of any employment contracts with, individuals who are officers, managers or directors of the Loan Parties in the ordinary course of business, provided that, to the extent such approval is required, such compensation is approved by such Loan Party’s board of directors (or equivalent governing body), (c) any issuances of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements, stock options and stock ownership plans in each case, as permitted by this Agreement or (d) Restricted Payments permitted pursuant to Section  7.06 .

7.09 Burdensome Agreements . Enter into or permit to exist any Contractual Obligation (other than this Agreement, any other Loan Document or any Senior Notes Document) that (a) limits the ability (i) of any Restricted Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise transfer property to or invest in the Borrower or any Guarantor, except for any agreement in effect (A) on the date hereof and set forth on Schedule 7.09 or (B) at the time any Person becomes a Restricted Subsidiary of the Borrower, so long as such agreement was not entered into solely in contemplation of such Person becoming a Restricted

 

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Subsidiary of the Borrower, (ii) of any Restricted Subsidiary to Guarantee the Obligations or (iii) of the Borrower or any Restricted Subsidiary to create, incur, assume or suffer to exist Liens on its property to secure the Obligations; provided , however, that (x) this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section  7.02(f) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness or customary restrictions on assignment, encumbrances or subletting in leases and other contracts and (y) this clause (iii) and the preceding clause (i) shall not prohibit customary restrictions and conditions contained in agreements relating to the sale of a Loan Party or an asset pending such sale, provided that such restrictions and conditions apply only to such Loan Party or such asset that is to be sold and such sale is permitted under this Agreement; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure the Obligations.

7.10 Use of Proceeds . Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

7.11 Consolidated Fixed Charge Coverage Ratio . Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any Measurement Period to be less than 1.00 to 1.00 while a Financial Covenant Trigger Period is in effect, commencing with the most recent Measurement Period for which financial statements were, or were required to be, delivered hereunder prior to the commencement of the Financial Covenant Trigger Period.

7.12 Amendments of Organization Documents . Amend any of its Organization Documents in a manner which could materially and adversely affect the interests of the Administrative Agent or the Lenders.

7.13 Accounting Changes . Make any change in (a) its accounting policies or reporting practices, except as required by GAAP, or (b) its fiscal year.

7.14 Prepayments, Etc. of Indebtedness . Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Indebtedness, except (a) the prepayment of the Credit Extensions in accordance with the terms of this Agreement, (b) regularly scheduled payments of principal of Indebtedness set forth on Schedule 7.02 , (c) mandatory prepayments or redemptions of the Senior Notes as required under the Senior Notes Indenture as in effect on the date hereof, (d) refinancings, refundings, extensions or renewals of Indebtedness to the extent such refinancing, refunding, extension or renewal is permitted by Sections 7.02(d) or 7.02(g)(ii) , as applicable, (e) the conversion to or exchange for Equity Interests of convertible or exchangeable debt securities, and customary payments in cash in lieu of fractional shares in connection therewith, and (f) other prepayments or redemptions with respect to Indebtedness not otherwise permitted pursuant to this Section  7.14 ; provided that, in the case of this clause (f), the applicable Payment Conditions are satisfied before and after giving effect thereto.

 

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7.15 Amendment, Etc. of Indebtedness .

(a) Amend, modify or change in any manner any term or condition of the Senior Notes or the Senior Notes Documents or any Indebtedness set forth on Schedule 7.02 , except for (i) any refinancing, refunding, renewal or extension thereof permitted by Sections 7.02(d) or 7.02(g)(ii) , as applicable, (ii) with respect to the Senior Notes and the Senior Notes Documents, (A) any amendments or modifications made to (1) cure any ambiguity, defect or inconsistency, or (2) evidence or provide for the acceptance of appointment by a successor trustee or effect any similar immaterial administrative modifications, or (B) any other amendment, modification or change thereto, provided that (x) the terms of such amendment, modification or change satisfy the requirements of the proviso of Section  7.02(g)(ii) and (y) such amendment, modification or change could not materially and adversely affect the interests of the Administrative Agent or the Lenders under the Loan Documents.

(b) Fail to maintain the Loan Parties’ ability to incur the full amount of the Aggregate Commitments and Obligations as “Permitted Debt” under the Senior Notes Indenture with an additional ten percent (10%) available thereunder for increases in the Aggregate Commitments (and the ability to incur Liens securing the same).

7.16 Sanctions . Directly or indirectly, use any Credit Extension or the proceeds of any Credit Extension, or lend, contribute or otherwise make available such Credit Extension or the proceeds of any Credit Extension to any Person, to fund any activities of or business with any Person, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as Lender, Arranger, Administrative Agent, L/C Issuer, Swing Line Lender, or otherwise) of Sanctions.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

8.01 Events of Default . Any of the following shall constitute an Event of Default:

(a) Non-Payment . The Borrower or any other Loan Party fails to (i) pay when and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation or deposit any funds as Cash Collateral in respect of L/C Obligations, or (ii) pay within three days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) pay within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants . (i) The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section  6.01 , 6.02(a) , 6.02(b) , 6.03(a) , 6.03(b) , 6.05 , 6.07 , 6.10 , 6.11 , 6.12 , 6.14 , 6.19 or Article VII or (ii) the Borrower fails to perform or observe any term, covenant or agreement contained in Section  6.02 (other than Section  6.02(a) and 6.02(b) ) or Section  6.03 (other than Section  6.03(a) and 6.03(b) ) and such failure continues for 5 days; or

(c) Other Defaults . Any Loan Party fails to perform or observe any other covenant or agreement (not specified in Section  8.01(a) or (b)  above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or

 

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(d) Representations and Warranties . Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or

(e) Cross-Default . (i) Any Loan Party or any Restricted Subsidiary thereof (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $15,000,000 (including the Senior Notes), or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness (other than secured Indebtedness that becomes due as a result of the voluntary sale or transfer, casualty or condemnation of the assets securing such Indebtedness) or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event under this clause (B) is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Loan Party or such Subsidiary as a result thereof is greater than $15,000,000; or

(f) Insolvency Proceedings, Etc . Any Loan Party or any Restricted Subsidiary thereof institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

(g) Inability to Pay Debts; Attachment . (i) Any Loan Party or any Restricted Subsidiary thereof becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

 

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(h) Judgments . There is entered against any Loan Party or any Restricted Subsidiary thereof (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding $5,000,000 (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “ A ” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(i) ERISA . (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect or the imposition of a Lien on the assets of a Loan Party, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan and such failure to pay has resulted or could reasonably be expected to result in a Material Adverse Effect or the imposition of a Lien on the assets of a Loan Party; or

(j) Invalidity of Loan Documents . Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or

(k) Change of Control . There occurs any Change of Control; or

(l) Collateral Documents . Any Collateral Document after delivery thereof pursuant to Section  4.01 or 6.12 shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected first priority Lien (subject to Liens permitted by Section  7.01 ) on Collateral consisting of Accounts of the type included in the Borrowing Base or other Collateral having an aggregate fair market value in excess of $5,000,000 that is purported to be covered thereby unless such occurrence results solely from action of the Administrative Agent or any Lender and involves no Default by the Borrower or any Guarantor hereunder or under any Collateral Document.

8.02 Remedies upon Event of Default . If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

(a) declare the commitment of each Lender to make Loans and any obligation of each L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;

 

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(c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and

(d) exercise on behalf of itself, the Lenders and the L/C Issuers all rights and remedies available to it, the Lenders and the L/C Issuers under the Loan Documents or applicable Law or equity;

provided , however , that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of each L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

8.03 Application of Funds . After the exercise of remedies provided for in Section  8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section  8.02 ), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.15 and 2.16 , be applied by the Administrative Agent in the following order:

First , to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III ) payable to the Administrative Agent in its capacity as such and to the payment of Protective Advances;

Second , to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the L/C Issuers (including fees, charges and disbursements of counsel to the respective Lenders and L/C Issuers arising under the Loan Documents and amounts payable under Article III ), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

Third , to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations arising under the Loan Documents, ratably among the Lenders and the L/C Issuers in proportion to the respective amounts described in this clause Third payable to them;

Fourth , to payment of that portion of the Obligations constituting unpaid principal of the Loans, L/C Borrowings and Secured Bank Product Obligations up to the amount of the Bank Product Reserve existing therefor and to the Administrative Agent, for the account of the applicable L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Sections  2.03 and 2.15 , in each case, ratably among the Administrative Agent, the Lenders, the L/C Issuers, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth held by them;

 

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Fifth , to payment of all other Obligations ratably among the Secured Parties; and

Last , the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

Subject to Section  2.03(c) and 2.15 , amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fourth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above. Excluded Swap Obligations with respect to any Guarantor shall not be paid with amounts received from such Guarantor or its assets, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve the allocation to Obligations otherwise set forth above in this Section.

Notwithstanding the foregoing, Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements shall be excluded from the application described above if the Administrative Agent has not received a Secured Party Designation Notice, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. Each Cash Management Bank or Hedge Bank not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article IX hereof for itself and its Affiliates as if a “Lender” party hereto.

ARTICLE IX

ADMINISTRATIVE AGENT

9.01 Appointment and Authority . (a) Each Secured Party hereby irrevocably appoints, designates and authorizes Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuers, and the Borrower shall not have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

(b) The Administrative Agent shall also act as the “ collateral agent ” under the Loan Documents, and each of the Lenders (including in its capacities as a potential Hedge Bank and a potential Cash Management Bank) and each of the L/C Issuers hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and such L/C Issuer for

 

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purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as “ collateral agent ” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section  9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article IX and Article X (including Section  10.04(c) , as though such co-agents, sub-agents and attorneys-in-fact were the “ collateral agent ” under the Loan Documents) as if set forth in full herein with respect thereto.

9.02 Rights as a Lender . The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of banking, trust, financial, advisory, underwriting or other business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders or to provide notice to or consent of the Lenders with respect thereto.

9.03 Exculpatory Provisions . The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, each of the Administrative Agent and its Related Parties:

(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and

(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty or responsibility to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

 

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(d) Neither the Administrative Agent nor any of its Related Parties shall be liable for any action taken or not taken by the Administrative Agent under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby or thereby (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02 ) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Borrower, a Lender or an L/C Issuer.

(e) Neither the Administrative Agent nor any of its Related Parties have any duty or obligation to any Lender or participant or any other Person to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

9.04 Reliance by Administrative Agent . The Administrative Agent shall be entitled to rely upon, and shall be fully protected in relying upon and shall not incur any liability for relying upon, any notice, request, certificate, communication, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall be fully protected in relying and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or such L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or such L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. For purposes of determining compliance with the conditions specified in Section  4.01 , each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objections.

 

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9.05 Delegation of Duties . The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

9.06 Resignation of Administrative Agent .

(a) Notice . The Administrative Agent may at any time give notice of its resignation to the Lenders, the L/C Issuers and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “ Resignation Effective Date ”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the L/C Issuers, appoint a successor Administrative Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b) Defaulting Lender . If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable Law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the Required Lenders give notice of removal (or such earlier day as shall be agreed by the Required Lenders) (the “ Removal Effective Date ”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c) Effect of Resignation or Removal . With effect from the Resignation Effective Date or the Removal Effective Date (as applicable), (i) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuers under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be

 

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made by or to each Lender and each L/C Issuer directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section  3.01(h) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section  10.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.

(d) Swing Line Lender . Any resignation or removal by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as a Swing Line Lender. If Bank of America resigns as a Swing Line Lender, it shall retain all the rights of a Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section  2.04(c) . Upon the appointment by the Borrower of a successor Swing Line Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Swing Line Lender and (ii) the retiring Swing Line Lender shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents.

9.07 Non-Reliance on Administrative Agent and Other Lenders . Each Lender and each L/C Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and each L/C Issuer also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

9.08 No Other Duties, Etc. . Anything herein to the contrary notwithstanding, none of the Arrangers, Syndication Agent or Documentation Agent listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or an L/C Issuer hereunder.

 

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9.09 Administrative Agent May File Proofs of Claim; Credit Bidding . In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuers and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuers and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuers and the Administrative Agent under Sections 2.03(h) and (i) , 2.09 and 10.04 ) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and each L/C Issuer to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuers, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections  2.09 and 10.04 .

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or any L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or any L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or any L/C Issuer or in any such proceeding.

The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Obligations (including accepting some or all of the Collateral in satisfaction of some or all of the Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code of the United States, including under Sections 363, 1123 or 1129 of the Bankruptcy Code of the United States, or any similar Laws in any other jurisdictions to which a Loan Party is subject, (b) at any other sale or foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable Law. In connection with any such credit bid and purchase, the Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that would vest upon the liquidation of such claims in an amount proportional to the

 

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liquidated portion of the contingent claim amount used in allocating the contingent interests) in the asset or assets so purchased (or in the Equity Interests or debt instruments of the acquisition vehicle or vehicles that are used to consummate such purchase). In connection with any such bid (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles to make a bid, (ii) to adopt documents providing for the governance of the acquisition vehicle or vehicles ( provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or Equity Interests thereof shall be governed, directly or indirectly, by the vote of the Required Lenders, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in clauses (a) through (h) of Section  10.01 of this Agreement, and (iii) to the extent that Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Obligations assigned to the acquisition vehicle exceeds the amount of debt credit bid by the acquisition vehicle or otherwise), such Obligations shall automatically be reassigned to the Lenders pro rata and the Equity Interests and/or debt instruments issued by any acquisition vehicle on account of the Obligations that had been assigned to the acquisition vehicle shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action.

9.10 Collateral and Guaranty Matters . Each of the Lenders (including in its capacities as a potential Cash Management Bank and a potential Hedge Bank) and each of the L/C Issuers irrevocably authorize the Administrative Agent, at its option and in its discretion,

(a) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than (A) contingent indemnification obligations and (B) obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank of Hedge Bank shall have been made) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the applicable L/C Issuer shall have been made), (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, (iii) any property owned by a Restricted Subsidiary that is designated as an Unrestricted Subsidiary in accordance with Section  6.19 , or (iv) if approved, authorized or ratified in writing in accordance with Section  10.01 ;

(b) to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Restricted Subsidiary as a result of a transaction permitted hereunder (including designation of such Person as an Unrestricted Subsidiary in accordance with Section  6.19 ); and

(c) to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section  7.01(i) .

Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section  9.10 . Subject in each case to this Section  9.10 , upon any Loan Party’s request, the Administrative Agent, shall (and is hereby irrevocably authorized by each Lender (including in its

 

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capacity as a Secured Party) and each of the L/C Issuers to), at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section  9.10 .

The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.

9.11 Secured Cash Management Agreements and Secured Hedge Agreements . Except as otherwise expressly set forth herein, no Cash Management Bank or Hedge Bank that obtains the benefit of the provisions of Section  8.03 , the Guaranty or any Collateral by virtue of the provisions hereof, of the Guaranty or any Collateral Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) (or to notice of or to consent to any amendment, waiver or modification of the provisions hereof or of the Guaranty or any Collateral Document) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements except to the extent expressly provided herein and unless the Administrative Agent has received a Secured Party Designation Notice of such Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. The Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements in the case of termination of the Aggregate Commitments and repayment in full of all Obligations hereunder.

9.12 Certain ERISA Matters .

(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:

(i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement,

 

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(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,

(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or

(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).

ARTICLE X

MISCELLANEOUS

10.01 Amendments, Etc. . No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Administrative Agent, the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

(a) waive any condition set forth in Section  4.01 (other than Section  4.01(b)(i) or (c) ), or, in the case of the initial Credit Extension, Section  4.02 , without the written consent of each Lender;

 

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(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section  8.02 ) without the written consent of such Lender;

(c) postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to any Lender without the written consent of such Lender;

(d) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this Section  10.01 ) any fees or other amounts payable hereunder or under any other Loan Document (including interest accruing at the Default Rate pursuant to Section  2.03(c)(iii) or Section  2.08(b) ) without the written consent of each Lender entitled to such amount;

(e) change Section  8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

(f) change (i) any provision of this Section  10.01 or (ii) the definitions of “ Required Lenders ” or “ Super Majority Lenders ” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder without the written consent of each Lender;

(g) release all or substantially all of the Collateral in any transaction or series of related transactions, without the written consent of each Lender;

(h) change the definition of “ Borrowing Base ” to increase any of the advance rates or dollar sublimits contained therein, without the written consent of each Lender;

(i) change (i) the definition of “ Borrowing Base ” to add any new categories of eligible assets or (ii) the definition of any defined term used in the definition of “ Borrowing Base ” in a manner that increases Availability, in each case, without the written consent of the Super Majority Lenders; or

(j) release all or substantially all of the value of the Guaranty, without the written consent of each Lender, except to the extent the release of any Subsidiary from the Guaranty is permitted pursuant to Section  9.10 (in which case such release may be made by the Administrative Agent acting alone);

and provided , further , that (i) no amendment, waiver or consent shall, unless in writing and signed by the applicable L/C Issuer in addition to the Lenders required above, affect the rights or duties of the applicable L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lenders in addition to the Lenders required above, affect the rights or duties of the Swing Line Lenders under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required

 

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above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to the other affected Lenders shall require the consent of such Defaulting Lender.

Notwithstanding anything to the contrary herein, (i) the Administrative Agent may, with the prior written consent of the Borrower only, amend, modify or supplement this Agreement or any of the other Loan Documents to cure any ambiguity, omission, mistake, defect or inconsistency and (ii) this Agreement may be amended to add an L/C Issuer, remove an L/C Issuer or modify the L/C Issuer Sublimit of any Issuing Bank, provided that no such modification shall result in an increase of the L/C Sublimit, without the consent of the Borrower, the Administrative Agent and such L/C Issuer (and the consent of the Required Lenders shall not be required).

If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the consent of each Lender and that has been approved by the Required Lenders, the Borrower may replace such Non-Consenting Lender in accordance with Section  10.13 ; provided that such amendment, waiver, consent or release can be effected as a result of the assignment contemplated by such Section (together with all other such assignments required by the Borrower to be made pursuant to this paragraph).

10.02 Notices; Effectiveness; Electronic Communications . (a)  Notices Generally . Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax transmission or e-mail transmission as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to the Borrower, the Administrative Agent, the L/C Issuers or the Swing Line Lenders, to the address, fax number, e-mail address or telephone number specified for such Person on Schedule 10.02 ; and

(ii) if to any other Lender, to the address, fax number, e-mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).

 

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Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by fax transmission 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). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below shall be effective as provided in such subsection (b).

(b) Electronic Communications . Notices and other communications to the Administrative Agent, the Lenders, the Swing Line Lenders and the L/C Issuers hereunder may be delivered or furnished by electronic communication (including e-mail, FPML messaging and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender, Swing Line Lenders or the L/C Issuers pursuant to Article II if such Lender, Swing Line Lender or L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent, each Swing Line Lender, each L/C Issuer or the Borrower may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address 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 e-mail or other written acknowledgement) and (ii) notices and other communications posted to an Internet or intranet website shall be deemed received by the intended recipient upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail address or other written acknowledgement) indicating that such notice or communication is available and identifying the website address therefor; provided that for both clauses (i) and (ii), if such notice or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient.

(c) The Platform . THE PLATFORM IS PROVIDED “ AS IS ” AND “ AS AVAILABLE .” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to the Borrower, any Lender, any L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower Materials or notices through the Platform, any other electronic platform or electronic messaging services, or through the Internet.

 

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(d) Change of Address, Etc . Each of the Borrower, the Administrative Agent, each L/C Issuer and each Swing Line Lender may change its address, fax number or telephone number or e-mail address for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, fax number or telephone number or e-mail address for notices and other communications hereunder by notice to the Borrower, the Administrative Agent, the L/C Issuers and the Swing Line Lenders. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, fax number and e-mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “ Private Side Information ” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “ Public Side Information ” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States federal or state securities laws.

(e) Reliance by Administrative Agent, L/C Issuers and Lenders . The Administrative Agent, the L/C Issuers and the Lenders shall be entitled to rely and act upon any notices (including, without limitation, telephonic or electronic notices, Revolving Credit Loan Notices, Notice of Loan Prepayment and Swing Line Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, each L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

10.03 No Waiver; Cumulative Remedies; Enforcement . No failure by any Lender, any L/C Issuer or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section  8.02 for the benefit of all the Lenders and all the L/C Issuers; provided , however , that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its

 

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capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) the L/C Issuers or the Swing Line Lenders from exercising the rights and remedies that inure to their respective benefit (solely in their respective capacities as an L/C Issuer or a Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section  10.08 (subject to the terms of Section  2.13 ), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided , further , that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section  8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section  2.13 , any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

10.04 Expenses; Indemnity; Damage Waiver .

(a) Costs and Expenses . The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by any L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, any Lender or any L/C Issuer (including the fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or any L/C Issuer), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit. Expenses being reimbursed by the Loan Parties under this Section  10.04(a ) include, without limiting the generality of the foregoing, fees, costs and expense incurred in connection with (i) collateral monitoring, collateral reviews, appraisals and insurance reviews and (ii) field examinations and the preparation of reports based on the fees charged by a third party retained by the Administrative Agent or the internally allocated fees for each Person employed by the Administrative Agent with respect to each field examination. All expenses of protecting, storing, warehousing, insuring, handling, maintaining and shipping any Collateral, all Taxes payable with respect to any Collateral (including any sale thereof), and all other payments required to be made by the Administrative Agent to any Person to realize upon any Collateral, shall be borne and paid by the Borrower. The Administrative Agent shall not be liable or responsible in any way for the safekeeping of any Collateral, for any loss or damage thereto (except for reasonable care in its custody while Collateral is in the Administrative Agent’s actual possession), for any diminution in the value thereof, or for any act or default of any warehouseman, carrier, forwarding agency or other Person whatsoever, but the same shall be at Borrower’s sole risk.

 

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(b) Indemnification by the Borrower . The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and each L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an “ Indemnitee ”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee) incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower or any other Loan Party) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section  3.01 ), (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by any L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party or any of the Borrower’s or such Loan Party’s directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction or (z) arose out of any claim, actions, suits, inquiries, litigation, investigation or proceeding that does not involve an act or omission of the Borrower, any other Loan Party or any of their Affiliates and that is brought solely by an Indemnitee against another Indemnitee; provided that the Arrangers, Swing Line Lenders, L/C Issuers, and Administrative Agent shall remain indemnified in such capacities.

(c) Reimbursement by Lenders . To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the applicable L/C Issuer, the applicable Swing Line Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the applicable L/C Issuer, the applicable Swing Line Lender or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against

 

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the Administrative Agent (or any such sub-agent), such L/C Issuer or such Swing Line Lender in its capacity as such or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), such L/C Issuer or such Swing Line Lender in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section  2.12(d) .

(d) Waiver of Consequential Damages, Etc . To the fullest extent permitted by applicable Law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

(e) Payments . All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

(f) Survival . The agreements in this Section and the indemnity provisions of Section  10.02(e) shall survive the resignation of the Administrative Agent , the L/C Issuers and the Swing Line Lenders, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

10.05 Payments Set Aside . To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, any L/C Issuer or any Lender, or the Administrative Agent, any L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, such L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and each L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the L/C Issuers under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

 

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10.06 Successors and Assigns . (a)  Successors and Assigns Generally . The provisions of this Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section  10.06(b) , (ii) by way of participation in accordance with the provisions of Section  10.06(d) , or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section  10.06(e) (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuers and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders . Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment(s) and the Loans (including for purposes of this Section  10.06(b) , participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts .

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “ Trade Date ” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed);

(ii) Proportionate Amounts . 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 and the other Loan Documents with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not apply to the Swing Line Lenders’ rights and obligations in respect of Swing Line Loans;

 

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(iii) Required Consents . No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;

(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of a Lender or an Approved Fund with respect to a Lender; and

(C) the consent of the L/C Issuers and the Swing Line Lenders shall be required for any assignment.

(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided , however , that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(v) No Assignment to Certain Persons . No such assignment shall be made (A) to the Borrower or any of the Borrower’s Affiliates or Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural person.

(vi) Certain Additional Payments . In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, any L/C Issuer or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swing Line Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

 

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Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01 , 3.04 , 3.05 and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section  10.06(d) .

(c) Register . The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being solely for U.S. Tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d) Participations . Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “ Participant ”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders and the L/C Issuers shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section  10.04(c) without regard to the existence of any participations.

 

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Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section  10.01 (other than those in the proviso in Section  10.01(d) ) that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01 , 3.04 and 3.05 (subject to the requirements and limitations therein, including the requirements under Section  3.01(e) (it being understood that the documentation required under Section  3.01(e) shall be delivered to the Lender who sells the participation)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 3.06 and 10.13 as if it were an assignee under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Sections 3.01 or 3.04 , with respect to any participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section  3.06 with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section  10.08 as though it were a Lender; provided that such Participant agrees to be subject to Section  2.13 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “ Participant Register ”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(e) Certain Pledges . Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(f) Resignation as L/C Issuer or Swing Line Lender after Assignment . Notwithstanding anything to the contrary contained herein, if at any time Bank of America or any other Lender assigns all of its Commitment and Revolving Credit Loans pursuant to Section  10.06(b) , Bank of America or such other Lender may, (i) upon 30 days’ notice to the Borrower

 

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and the Lenders, resign as an L/C Issuer and/or (ii) upon 30 days’ notice to the Borrower, resign as a Swing Line Lender. In the event of any such resignation as an L/C Issuer or a Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer with respect to its L/C Issuer Sublimit or successor Swing Line Lender hereunder; provided , however , that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America or such other Lender as an L/C Issuer or a Swing Line Lender, as the case may be. If Bank of America or another Lender resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of an L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as an L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section  2.03(c) ). If Bank of America or another Lender resigns as a Swing Line Lender, it shall retain all the rights of a Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section  2.04(c) . Upon the appointment of a successor L/C Issuer with respect to Bank of America or another Lender’s L/C Issuer Sublimit and/or a successor Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the resigning L/C Issuer to effectively assume the obligations of such resigning L/C Issuer with respect to such Letters of Credit.

10.07 Treatment of Certain Information; Confidentiality . Each of the Administrative Agent, the Lenders and the L/C Issuers agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section  2.14(c) , (ii) any actual or prospective counterparty (or its Related Parties) to any swap or derivative transaction relating to the Borrower and its obligations, or (iii) on a confidential basis to (A) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder, (B) the provider of any Platform or other electronic delivery service used by the Administrative Agent, the L/C Issuers and/or the Swing Line Lenders to deliver Borrower Materials or notices to the Lenders or (C) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this

 

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Section or (ii) becomes available to the Administrative Agent, any Lender, any L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower. For purposes of this Section, “ Information ” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or any L/C Issuer on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Each of the Administrative Agent, the Lenders and the L/C Issuers acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States federal and state securities Laws.

The Loan Parties and their Affiliates agree that they will not in the future issue any press releases or other public disclosure using the name of the Administrative Agent or any Lender or their respective Affiliates or referring to this Agreement or any of the Loan Documents without the prior written consent of the Administrative Agent, unless (and only to the extent that) the Loan Parties or such Affiliate is required to do so under law and then, in any event the Loan Parties or such Affiliate will use commercial reasonable efforts to consult with such Person before issuing such press release or other public disclosure.

The Loan Parties consent to the publication by the Administrative Agent or any Lender of customary advertising material relating to the transactions contemplated hereby using the name, product photographs, logo or trademark of the Loan Parties.

10.08 Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender, each L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, such L/C Issuer or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to such Lender or such L/C Issuer, irrespective of whether or not such Lender or such L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of such Lender or such L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section  2.16 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the

 

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Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, each L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, such L/C Issuer or their respective Affiliates may have. Each Lender and each L/C Issuer agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

10.09 Interest Rate Limitation . Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “ Maximum Rate ”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

10.10 Counterparts; Integration; Effectiveness . This Agreement and each of the other Loan Documents may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section  4.01 , this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement or any other Loan Document, or any certificate delivered thereunder, by fax transmission or e-mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement or such other Loan Document or certificate.

10.11 Survival of Representations and Warranties . All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

 

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10.12 Severability . If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section  10.12 , if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, the applicable L/C Issuer or the applicable Swing Line Lenders, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.

10.13 Replacement of Lenders . If the Borrower is entitled to replace a Lender pursuant to the provisions of Section  3.06 , or if any Lender is a Defaulting Lender or a Non-Consenting Lender or if any other circumstance exists hereunder that gives the Borrower the right to replace a Lender as a party hereto, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section  10.06 ), all of its interests, rights (other than its existing rights to payments pursuant to Sections  3.01 and 3.04 ) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

(a) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section  10.06(b) ;

(b) such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section  3.05 ) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

(c) in the case of any such assignment resulting from a claim for compensation under Section  3.04 or payments required to be made pursuant to Section  3.01 , such assignment will result in a reduction in such compensation or payments thereafter;

(d) such assignment does not conflict with applicable Laws; and

(e) in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

 

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10.14 Governing Law; Jurisdiction; Etc. . (a) GOVERNING LAW . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION . THE BORROWER IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, THE L/C ISSUER, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) WAIVER OF VENUE . THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

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(d) SERVICE OF PROCESS . EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02 . NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

10.15 Waiver of Jury Trial . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

10.16 No Advisory or Fiduciary Responsibility . In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (a)(i) the arranging and other services regarding this Agreement provided by the Administrative Agent and any Affiliate thereof, the Arrangers and the Lenders are arm’s-length commercial transactions between the Borrower, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent and, as applicable, its Affiliates and the Lenders and their Affiliates (including the Arrangers) (collectively, solely for purposes of this Section, the “ Lenders ”), on the other hand, (ii) each of the Borrower and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (b)(i) the Administrative Agent and its Affiliates and each Lender and its Affiliates (including the Arrangers) each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary, for the Borrower, any other Loan Party or any of their respective Affiliates, or any other Person and (ii) neither the Administrative Agent, any of its Affiliates nor any Lender or any of its Affiliates (including the Arrangers) has any obligation to the Borrower, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (c) the Administrative Agent and its Affiliates and the Lenders and their Affiliates (including the Arrangers) may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, any of its Affiliates nor any Lender or its Affiliates (including the Arrangers) has any obligation to disclose any of such interests to the Borrower, any other Loan Party or any of their respective Affiliates. To the fullest extent permitted by law, each of the Borrower and each other Loan Party hereby waives and releases any claims that it may have against the Administrative Agent, any of its Affiliates or any Lender or its Affiliates (including the Arrangers) with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transactions contemplated hereby.

 

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10.17 Electronic Execution of Assignments and Certain Other Documents . The words “delivery,” “execute,” “execution,” “signed,” “signature,” and words of like import in any Loan Document or any other document executed in connection herewith shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary neither the Administrative Agent, any L/C Issuer nor any Lender is under any obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent, such L/C Issuer or such Lender pursuant to procedures approved by it and provided further without limiting the foregoing, upon the request of any party, any electronic signature shall be promptly followed by such manually executed counterpart.

10.18 USA PATRIOT Act . The Administrative Agent and the Lenders hereby notify the Borrower and the other Loan Parties that pursuant to the Patriot Act, Agent and Lenders are required to obtain, verify and record information that identifies each Loan Party, including its legal name, address, tax ID number and other information that will allow the Administrative Agent and the Lenders to identify it in accordance with the Patriot Act. The Loan Parties shall, promptly upon request, provide all documentation and other information as the Administrative Agent, any L/C Issuer or any Lender may request from time to time for purposes of complying with any “know your customer,” anti-money laundering rules and regulations, or other requirements of Applicable Law, including the Patriot Act and Beneficial Ownership Regulation.

10.19 Keepwell . Each Loan Party that is a Qualified ECP Guarantor at the time the Guaranty or the grant of the security interest under the Loan Documents, in each case, by any Specified Loan Party, becomes effective with respect to any Swap Obligation, hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide such funds or other support to each Specified Loan Party with respect to such Swap Obligation as may be needed by such Specified Loan Party from time to time to honor all of its obligations under its Guaranty and the other Loan Documents in respect of such Swap Obligation (but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP Guarantor’s obligations and undertakings under this Section  10.19 voidable under applicable Law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations and undertakings of each Qualified ECP Guarantor under this Section shall remain in full force and effect until the Obligations have been indefeasibly paid and performed in full. The Borrower intends this Section to constitute, and this Section shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support, or other agreement” for the benefit of, each Specified Loan Party for all purposes of the Commodity Exchange Act.

 

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10.20 Credit Inquiries . The Administrative Agent and the Lenders may (but shall have no obligation) to respond to usual and customary credit inquiries from third parties concerning any Loan Party or Subsidiary.

10.21 Performance of Borrower s Obligations . The Administrative Agent may, in its discretion at any time and from time to time, at the Borrower’s expense, pay any amount or do any act required of the Borrower or any other Loan Party under any Loan Documents or otherwise lawfully requested by the Administrative Agent to (a) enforce any Loan Documents or collect any Obligations; (b) protect, insure, maintain or realize upon any Collateral; or (c) defend or maintain the validity or priority of the Administrative Agent’s Liens in any Collateral, including any payment of a judgment, insurance premium, warehouse charge, finishing or processing charge, or landlord claim, or any discharge of a Lien. All payments, costs and expenses of the Administrative Agent under this Section shall be reimbursed to the Administrative Agent by the Borrower, on demand, with interest from the date incurred until paid in full, at the Default Rate applicable to Base Rate Loans. Any payment made or action taken by the Administrative Agent under this Section shall be without prejudice to any right to assert an Event of Default or to exercise any other rights or remedies under the Loan Documents.

10.22 Waivers by Borrower . To the fullest extent permitted by Applicable Law, the Borrower waives (a)  presentment, demand, protest, notice of presentment, default, non-payment, maturity, release, compromise, settlement, extension or renewal of any commercial paper, accounts, documents, instruments, chattel paper and guaranties at any time held by the Administrative Agent on which the Borrower may in any way be liable, and hereby ratifies anything the Administrative Agent may do in this regard; (b)  notice prior to taking possession or control of any Collateral; (c)  any bond or security that might be required by a court prior to allowing the Administrative Agent to exercise any rights or remedies; (d)  the benefit of all valuation, appraisement and exemption laws; (e)  any claim against an Indemnitee, on any theory of liability, for special, indirect, consequential, exemplary or punitive damages (as opposed to direct or actual damages) in any way relating to any enforcement action, Obligations, Loan Documents or transactions relating thereto; and (f)  notice of acceptance hereof. The Borrower acknowledges that the foregoing waivers are a material inducement to the Administrative Agent, the L/C Issuers and the Lenders entering into this Agreement and that they are relying upon the foregoing in their dealings with the Borrower. The Borrower has reviewed the foregoing waivers, including the waiver of jury trial in Section  10.15 , with its legal counsel and has knowingly and voluntarily waived its jury trial and other rights following consultation with legal counsel. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

10.23 ENTIRE AGREEMENT . THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

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10.24 Acknowledgement and Consent to Bail-In of EEA Financial Institutions . Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.

The provisions of this Section  10.24 are intended to comply with, and shall be interpreted in light of, Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union.

[Remainder of This Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

BASIC ENERGY SERVICES, INC.
By:   /s/ T.M. “Roe” Patterson
Name:   T.M. “Roe” Patterson
Title:   President and Chief Executive Officer

[Signature Page to Credit Agreement]


BANK OF AMERICA, N.A.,

as Administrative Agent, a Lender, an L/C

Issuer and a Swing Line Lender

By:   /s/ Lisa Huynh
Name:   Lisa Huynh
Title:   Vice President

[Signature Page to Credit Agreement]


UBS AG, STAMFORD BRANCH, as a Lender and a L/C Issuer
By:   /s/ Kenneth Chin
Name:   Kenneth Chin
Title:   Director
By:   /s/ Darlene Arias
Name:   Darlene Arias
Title:   Director

[Signature Page to Credit Agreement]


PNC BANK NATIONAL ASSOCIATION,

as a Lender and a L/C Issuer

By:   /s/ Thomas N. Tone
Name:   Thomas N. Tone
Title:   Vice President

[Signature Page to Credit Agreement]


SCHEDULE 1.01

COMMITMENTS

AND APPLICABLE PERCENTAGES

 

Lender

   Revolving Credit
Commitment
     Revolving Credit Applicable
Percentage
 

Bank of America, N.A.

   $ 50,000,000.00        33.33333334

UBS AG, Stamford Branch

   $ 50,000,000.00        33.33333333

PNC Bank National Association

   $ 50,000,000.00        33.33333333
  

 

 

    

 

 

 

TOTAL

   $ 150,000,000.00        100.000000000


SCHEDULE 1.01(a)

EXISTING LETTERS OF CREDIT

 

Beneficiary

   L/C#      Issue Date      Expiration
Date
     Amount  

Ace American Insurance

     3128685        7/29/2013        8/1/2019      $ 9,698,325.00  

Ace American Insurance

     68106482        9/15/2014        8/1/2019      $ 17,329,225.00  

WEX Bank

     68125993        5/20/2016        5/20/2019      $ 700,000.00  

Liberty Mutual Insurance

     68132622        4/11/2017        4/11/2019      $ 8,000,000.00  

National Union Fire

     68132623        4/11/2017        4/11/2019      $ 584,589.00  

Keystone National

     68133660        6/12/2017        6/12/2019      $ 3,500,000.00  


SCHEDULE 5.13

SUBSIDIARIES AND OTHER EQUITY INVESTMENTS;

LOAN PARTIES

 

  (a)

List of Subsidiaries and Equity Interests

 

Equity Holder

  

Owned Entity

  

Certificate
#

  

Number & Type
of Shares

  

Percentage
of Shares

Basic Energy Services, Inc.

   Basic Energy Services GP, LLC    002    1,000 Units of membership interest    100%

Basic Energy Services, Inc.

   Basic Energy Services LP, LLC    002    1,000 Units of membership interest    100%

Basic Energy Services GP, LLC

   Basic Energy Services, L.P.    *    0.10% GP interest    100%

Basic Energy Services, Inc.

   Basic ESA, Inc.    135 & 136    510,000 shares of common stock    100%

Basic Energy Services, L.P.

   Basic Energy Services International, LLC    *    1,000 Units of membership interest    100%

Basic ESA, Inc.

   ESA de Mexico S.A. de C.v    *    1% partes sociales    66%

Basic Energy Services, L.P.

   Basic Marine Services, Inc.    2    10 shares of common stock    100%

Basic Energy Services, L.P.

   Chaparral Service, Inc.    10    13,000 shares of common stock    100%

Basic Energy Services, L.P.

   First Energy Services Company    29    1,000 shares of common stock    100%

Basic Energy Services, L.P.

   Globe Well Service, Inc.    21    4,521 shares of common stock    100%

Basic Energy Services, L.P.

   JS Acquisition LLC    001    100 units of membership interest    100%

Basic Energy Services, L.P.

   LeBus Oil Field Service Co.    42    1,000 shares of common stock    100%

Basic Energy Services, L.P.

   Maverick Coil Tubing Services, LLC    *    Membership interests    100%

Basic Energy Services, L.P.

   Maverick Solutions, LLC    *    Membership interests    100%


Equity Holder

  

Owned Entity

  

Certificate
#

  

Number & Type
of Shares

  

Percentage
of Shares

Basic Energy Services, L.P.

   Maverick Stimulation Company, LLC    *    Membership interests    100%

Basic Energy Services, L.P.

   Maverick Thru-Tubing Services, LLC    *    Membership interests    100%

Basic Energy Services, L.P.

   MCM Holdings, LLC    *    Membership interests    100%

Basic Energy Services, L.P

   MSM Leasing, LLC    *    Membership interests    100%

Basic Energy Services, L.P

   The Maverick Companies, LLC    *    Membership interests    100%

Basic Energy Services, L.P.

   Permian Plaza, LLC    1    Membership interest    100%

Basic Energy Services, L.P.

   Platinum Pressure Services, Inc.    12    9,642,862 shares of common stock    100%

Basic Energy Services, L.P.

   SCH Disposal, L.L.C.    6    Membership interest    100%

Basic Energy Services, L.P.

   Sledge Drilling Corp.    7    650,000 shares of common stock    100%

Basic Energy Services, L.P.

   Taylor Industries, LLC    1    Membership interest    100%

Basic Energy Services, L.P.

   XTERRA Fishing & Rental Tools Co.    6    68,000 shares of common stock    100%

Basic Energy Services, L.P.

   Robota Energy Equipment, LLC    1    Membership interest    80%

Basic Energy Services, L.P.

   BER Holdco, LLC    *    Membership interest    100%

BER Holdco, LLC

   Basic Energy Receivables, LLC    *    Membership interest    100%

Basic Energy Services, LP, LLC

   Basic Energy Services, L.P.    *    99.9% Limited Partnership Interest    100%

JetStar Holdings, Inc.

   JetStar Energy Services, Inc.    C001    100 shares of common stock    100%

JS Acquisition LLC

   Acid Services, LLC    23    Membership interest    100%

JS Acquisition LLC (successor by merger to JetStar Consolidated Holdings, Inc.)

   JetStar Holdings, Inc.    C002    100 shares of common stock    100%

Platinum Pressure Services, Inc.

   Admiral Well Service, Inc.    2    100 shares of common stock    100%


Equity Holder

  

Owned Entity

  

Certificate
#

  

Number & Type
of Shares

  

Percentage
of Shares

Basic Energy Services, L.P.

   Robota Energy Equipment, LLC    *    20 units of membership interest    20%

 

*

The membership interest in each of the entities are not currently represented by certificates issued to the membership interest owner.

 

  (b)

Any Other Equity Investments. None.


  (c)

List of Loan Parties; Jurisdiction of its incorporation; Address of its principal place of business and its U.S. Taxpayer Identification Number

 

Debtor

  

Jurisdiction &
Type of
Organization

  

Organizational
ID# and
Taxpayer ID#

  

Chief Executive Office,

Sole Place of Business, or

Principal Residence

Basic Energy Services, Inc.    Delaware corporation   

3611854

54-2091194

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Acid Services, LLC    Kansas limited liability company   

2347722

48-1180455

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Admiral Well Service, Inc.    Texas corporation   

0801050244

26-3164899

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Basic Energy Services GP, LLC    Delaware limited liability company   

3611876

54-2091197

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Basic Energy Services LP, LLC    Delaware limited liability company   

3611879

54-1091195

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Basic Energy Services, L.P.    Delaware limited partnership   

2307778

75-2441819

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Basic ESA, Inc.    Texas corporation   

57139400

75-1772279

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Basic Marine Services, Inc.    Delaware corporation   

3917169

20-2274888

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Chaparral Service, Inc.    New Mexico corporation   

642181

85-0206424

   [801 Cherry Street, Suite 2100, Fort Worth, TX 76102]
First Energy Services Company    Delaware corporation   

3215172

84-1544437

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Globe Well Service, Inc.    Texas corporation   

46471700

75-1634275

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
JetStar Energy Services, Inc.    Texas corporation   

800481218

68-0605237

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
JetStar Holdings, Inc.    Delaware corporation   

3954247

74-3144248

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
JS Acquisition LLC    Delaware corporation   

4278935

26-2529500

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
LeBus Oil Field Service Co.    Texas corporation   

77931600

75-2073125

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Maverick Coil Tubing Services, LLC    Colorado limited liability company   

20001207071

84-1563281

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Maverick Solutions, LLC    Colorado limited liability company   

20031245775

20-0122876

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Maverick Stimulation Company, LLC    Colorado limited liability company   

19961105940

84-1354572

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Maverick Thru-Tubing Services, LLC    Colorado limited liability company   

20091658924

27-1501902

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102


Debtor

  

Jurisdiction &
Type of
Organization

  

Organizational
ID# and
Taxpayer ID#

  

Chief Executive Office,

Sole Place of Business, or

Principal Residence

MCM Holdings, LLC    Colorado limited liability company   

20011090566

84-1520949

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
MSM Leasing, LLC    Colorado limited liability company   

20091399908

27-0629182

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Permian Plaza, LLC    Texas limited liability company   

800859993

26-0753425

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Platinum Pressure Services, Inc.    Texas corporation   

0800888088

26-1338379

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
SCH Disposal, L.L.C.    Texas limited liability company   

704317322

75-2788335

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Sledge Drilling Corp.    Texas corporation   

800575730

20-4223140

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Taylor Industries, LLC    Texas limited liability company   

801259923

27-2417037

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
The Maverick Companies, LLC    Colorado limited liability company   

20061298717

20-5244170

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102
XTERRA Fishing & Rental Tools Co.    Texas corporation   

158550700

76-0647818

   801 Cherry Street, Suite 2100, Fort Worth, TX 76102


SCHEDULE 6.12

GUARANTORS

 

Acid Services, LLC
Admiral Well Service, Inc.
Basic Energy Services GP, LLC
Basic Energy Services LP, LLC
Basic Energy Services, L.P.
Basic ESA, Inc.
Basic Marine Services, Inc.
Chaparral Service, Inc.
First Energy Services Company
Globe Well Service, Inc.
JetStar Energy Services, Inc.
JetStar Holdings, Inc.
JS Acquisition LLC
LeBus Oil Field Service Co.
Maverick Coil Tubing Services, LLC
Maverick Solutions, LLC
Maverick Stimulation Company, LLC
Maverick Thru-Tubing Services, LLC
MCM Holdings, LLC
MSM Leasing, LLC
The Maverick Companies, LLC
Permian Plaza, LLC
Platinum Pressure Services, Inc.
SCH Disposal, L.L.C.
Sledge Drilling Corp.
Taylor Industries, LLC
XTERRA Fishing & Rental Tools Co.


SCHEDULE 6.18


SCHEDULE 7.01

EXISTING LIENS

The Texas Comptroller of Public Accounts filed a Texas State Tax Lien with the County Clerk of Tarrant County, Texas under filing instrument number D218095799 on May 4, 2018. This filing covers Texas motor vehicle and use tax for the period September 1, 2011 through December 31, 2013 in the amount of $328,775.38. The Borrower has paid said liability in full, however we are still in the process of getting authorization from the Texas Comptroller of Public Accounts to release this lien of record.

Any and all easements, right of ways or other encumbrances on title to real property of record.


SCHEDULE 7.02

EXISTING INDEBTEDNESS

None.


SCHEDULE 7.03

INVESTMENTS

None existing on the date hereof.


SCHEDULE 7.09

BURDENSOME AGREEMENTS

None.


SCHEDULE 10.02

ADMINISTRATIVE AGENT’S OFFICE, CERTAIN ADDRESSES

FOR NOTICES

Address, telephone number, fax number, and email for the Administrative Agent, an L/C Issuer and the Swing Line Lender:

Bank of America, N.A., as Administrative Agent:

Administrative Agent’s Office

(for payments and Requests for Credit Extensions):

Bank of America, N.A.

901 Main Street 14 th Floor

Mail Code: TX1-492-14-14

Dallas, TX 75202

Attention: Angie Hidalgo

Telephone: 972-338-3768

Electronic Mail: angie.hidalgo@baml.com

Account No.: 1292000883

Ref: Basic Energy Services

ABA# 026009593

Other Notices as Administrative Agent :

Bank of America, N.A.

Agency Management – Patrick Devitt

Gateway Village – 900 Building

900 W. Trade St

Mail Code: NC1-026-06-03

Charlotte, NC 28255-0001

Attention: Patrick Devitt

Telephone: (980)387-4155

Telecopier: (704)409-0016

Electronic Mail: patrick.devitt@baml.com

Bank of America, N.A., as L/C Issuer:

Bank of America, N.A.

Trade Operations

1 Fleet Way

Mail Code: PA6-580-02-30

Scranton, PA 18507

Attention: Charles Herron

Telephone: 570-496-9564

Telecopier: 800-755-8743

Electronic Mail: charles.p.herron@baml.com


Bank of America, N.A., as Swing Line Lender:

Bank of America, N.A.

901 Main Street 14 th Floor

Mail Code: TX1-492-14-14

Dallas, TX 75202

Attention: Angie Hidalgo

Telephone: 972-338-3768

Electronic Mail: angie.hidalgo@baml.com

Account No.: 1292000883

Ref: Basic Energy Services

ABA# 026009593

Address, telephone number, fax number and email for UBS AG, Stamford Branch, an L/C Issuer:

UBS AG, Stamford Branch

600 Washington Boulevard

Stamford, Connecticut 06901

Attention: Agency Group

Fax No.: (203) 719-3888

Email: Agency-UBSAmericas@ubs.com

Address, telephone number, fax number and email for PNC Bank National Association an L/C Issuer:

PNC Bank National Association

2100 Ross Avenue, Suite 1850

Dallas, Texas 75201

Attention: Thomas Tone

Telephone No.: (214) 871-1245

Fax No.: (214) 871-2015

With a copy to:

PNC Bank, National Association

PNC Firstside Center

500 First Avenue

Pittsburgh, Pennsylvania 15219

Attention: PNC Agency Services


Address, telephone number, fax number and email for the Borrower:

Basic Energy Services, Inc.

801 Cherry Street, Suite 2100

Fort Worth, TX 76102

Attention: T.M. “Roe” Patterson

Telephone No.: 817-334-4100

Fax No.: 817-334-4101

Email: john.underwood@basicenergyservices.com


EXHIBIT A

FORM OF REVOLVING CREDIT LOAN NOTICE

Date: ___________, ______

 

To:

Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain ABL Credit Agreement, dated as of October 2, 2018 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”; the terms defined therein being used herein as therein defined), among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

The undersigned hereby requests (select one):

☐ A Revolving Credit Borrowing

 

  1.

On ___________________________________ (a Business Day).

 

  2.

In the amount of $ _______________________

 

  3.

Comprised of ___________________________

[Type of Loan requested]

 

  4.

For LIBOR Loans: with an Interest Period of ____ months.

☐ A conversion or continuation of Revolving Credit Loans

A. Revolving Credit Loan(s) to be converted or continued:

 

  1.

On ___________________________________ (a Business Day).

 

  2.

In the amount of $ _______________________

 

  3.

Comprised of_________________________________

[Type of Loan]

 

  4.

For LIBOR Loans: with an Interest Period of ____ months.

B. Revolving Credit Loan(s) to be converted or continued as:

 

  1.

On ___________________________________ (a Business Day).

 

  2.

In the amount of $ _______________________

[Exhibit A to ABL Credit Agreement]


  3.

Comprised of ____________________________

[Type of Loan]

 

  4.

For LIBOR Loans: with an Interest Period of ____ months.

The Revolving Credit Borrowing requested herein complies with the requirements of Sections 2.01 and 2.02 of the Credit Agreement.

The Borrower hereby represents and warrants that the conditions specified in Sections 4.02(a) and (b) of the Credit Agreement shall be satisfied on and as of the date of the applicable Credit Extension.

Delivery of an executed counterpart of a signature page of this notice by fax transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this notice.

 

BASIC ENERGY SERVICES, INC.
By:    
Name:  
Title:  

[Exhibit A to ABL Credit Agreement]


EXHIBIT B

FORM OF SWING LINE LOAN NOTICE

Date:                  ,         

 

To:

Bank of America, N.A., as Swing Line Lender, and

Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain ABL Credit Agreement, dated as of October 2, 2018 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”; the terms defined therein being used herein as therein defined), among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

The undersigned hereby requests a Swing Line Loan:

 

  1.

On                                                       (a Business Day).

 

  2.

In the amount of $                                          .

The Swing Line Borrowing requested herein complies with the requirements of Sections 2.04(a) and (b) of the Credit Agreement.

The Borrower hereby represents and warrants that the conditions specified in Sections 4.02(a) and (b) shall be satisfied on and as of the date of the applicable Credit Extension.

Delivery of an executed counterpart of a signature page of this notice by fax transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this notice.

 

BASIC ENERGY SERVICES, INC.
By:    
Name:  
Title:  

 

 

[Exhibit B to ABL Credit Agreement]


EXHIBIT C

FORM OF NOTE

Date:                  ,         

FOR VALUE RECEIVED, the undersigned (the “ Borrower ”), hereby promises to pay to                                      or registered assigns (the “ Lender ”), in accordance with theprovisions of the Credit Agreement (as hereinafter defined), the principal amount of each Revolving Credit Loan from time to time made by the Lender to the Borrower under that certain ABL Credit Agreement, dated as of October 2, 2018 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”; the terms defined therein being used herein as therein defined), among the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

The Borrower hereby promises to pay interest on the unpaid principal amount of each Revolving Credit Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Credit Agreement. All payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent’s Office. If any amount is not paid in full when due hereunder (whether at stated maturity, by acceleration or otherwise), such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Credit Agreement.

This Note is one of the Notes referred to in the Credit Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also entitled to the benefits of the Guaranty and is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Credit Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Credit Agreement. Revolving Credit Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Revolving Credit Loans and payments with respect thereto; provided, that any failure to so attach or endorse or any error in doing so shall not limit or otherwise affect the obligation of the Borrower hereunder and under the other Loan Documents to pay any amount owing with respect to the Obligations.

The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

 

 

[Exhibit C to ABL Credit Agreement]


THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

BASIC ENERGY SERVICES, INC.
By:    
Name:  
Title:  

 

 

[Exhibit C to ABL Credit Agreement]


EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:                      ,         

To: Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain ABL Credit Agreement, dated as of October 2, 2018 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”; the terms defined therein being used herein as therein defined), among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), the Lenders from time to time party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

The undersigned hereby certifies as of the date hereof that he/she is the [Chief Executive Officer][Chief Financial Officer][Treasurer][Controller] of the Borrower, and that, as such, he/she is authorized to execute and deliver this Compliance Certificate to the Administrative Agent on the behalf of the Borrower, and that:

[Use following paragraph 1 f or fiscal year-end financial statements]

1. The Borrower has delivered the year-end audited financial statements required by Section 6.01(a) of the Credit Agreement for the fiscal year of the Borrower ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.

[Use following paragraph 1 f or fiscal quarter-end financial statements]

1. The Borrower has delivered the unaudited financial statements required by Section 6.01(b) of the Credit Agreement for the fiscal quarter of the Borrower ended as of the above date. Such financial statements fairly present in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.

[Use following paragraph 1 for month-end financial statements if a

Monthly Financial Reporting Trigger Period is in effect]

1. The Borrower has delivered the unaudited financial statements required by Section 6.01(c) of the Credit Agreement for the month ended as of the above date. Such financial statements fairly present in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence of footnotes.

 

[Exhibit D to ABL Credit Agreement]


2. The undersigned has reviewed and is familiar with the terms of the Credit Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of the Borrower during the accounting period covered by such financial statements.

3. A review of the activities of the Borrower during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Borrower performed and observed all its Obligations under the Loan Documents, and

[select one:]

[to the best knowledge of the undersigned, during such fiscal period the Borrower performed and observed each covenant and condition of the Loan Documents applicable to it, and no Default has occurred and is continuing.]

--or-

[to the best knowledge of the undersigned, the following covenants or conditions have not been performed or observed and the following is a list of each such Default and its nature and status:]

4. The representations and warranties of the Borrower and each other Loan Party contained in Article V of the Credit Agreement or any other Loan Document, or which are contained in any document furnished at any time under or in connection with any Loan Document, are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Compliance Certificate, the representations and warranties contained in Sections 5.05(a) and (b) of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to Sections 6.01(a), (b) and (c) of the Credit Agreement, respectively.

5. The financial covenant analyses and information set forth on Schedules 1 and 2 attached hereto are true and accurate on and as of the date of this Compliance Certificate.

 

 

[Exhibit D to ABL Credit Agreement]


IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate as of              ,          _.

 

BASIC ENERGY SERVICES, INC.

By:    
  Name:
  Title:

 

 

[Exhibit D to ABL Credit Agreement]


For the Quarter/Year/Month ended                                      ,          (“ Statement Date ”)

SCHEDULE 1

to the Compliance Certificate

($ in 000’s)

 

I.   Section 7.11 – Consolidated Fixed Charge Coverage Ratio.

  

A. Consolidated EBITDA for Measurement Period (Line I.B. above):

   $                 

B. Capital Expenditures for Subject Period (except those financed with borrowed money other than Revolving Credit Loans and Equity Proceeds) and cash taxes paid:

   $                 

C. Line A minus Line B:

   $                 

D. Consolidated Interest Charges (other than payment-in-kind or amortization of fees and other non-cash items treated as interest in accordance with GAAP) for the Measurement Period:

   $                 

E.  Scheduled principal payments and voluntary prepayments on borrowed money (including purchase money Indebtedness, Attributable Indebtedness and the deferred purchase price of property or services) during Measurement Period:

   $                 

F.  Restricted Payments made during Measurement Period:

   $                 

G. Consolidated Fixed Charges for the Measurement Period (Lines D plus Line E plus Line F):

   $                 

H. Consolidated Fixed Charge Coverage Ratio (Line C divided by Line G):

               to 1  

Minimum required:

     1.00 to 1  

 

 

[Exhibit D to ABL Credit Agreement]


For the Quarter/Year/Month ended                                         

(“ Statement Date ”)

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

Consolidated EBITDA

(in accordance with the definition of Consolidated EBITDA

as set forth in the Credit Agreement)

 

Consolidated

EBITDA

  

Quarter

Ended

  

Quarter

Ended

  

Quarter
Ended

  

Quarter
Ended

  

Twelve
Months
Ended

Consolidated Net Income

              

+ Consolidated Interest Charges

              

+ income taxes

              

+ depreciation expense

              

+ amortization expense

              

+ non-cash expenses

              

+ non-cash stock-based compensation expenses

              

+ costs of refinancing loans pursuant to the Term Loan Agreement and Receivables Facility Agreement

              

+ amount expensed in connection with tender for / redemption of loans pursuant to the Term Loan Agreement and Receivables Facility Agreement

              

+ (a) reasonable and customary fees, expenses, charges or losses (other than depreciation and amortization) related to any public or private sale of (i) Qualified Capital Stock or options, warrants or rights made for cash, (ii) Material Acquisitions, (iii) Material Dispositions or the (iv) incurrence of Indebtedness permitted to be incurred under the Credit Agreement (including refinancings thereof), and including fees, expenses, charges and losses related to the offering of Senior Notes and the Indebtedness incurred under the Credit Agreement, and any amendment of the Senior Notes or Loan Documents), in each case, to the extent deducted and not added back to Consolidated Net Income)

              

+(b) the amount of any restructuring charge or reserve, integration cost or other business optimization expense and severance costs during such Measurement Period (a + b not to exceed 15% of Consolidated EBITDA for such Measurement Period)

              

-income tax credits

              

-non-cash income

              

= Consolidated EBITDA

              

 

 

[Exhibit D to ABL Credit Agreement]


EXHIBIT E-1

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “ Assignment and Assumption ”) is dated as of the Effective Date set forth below and is entered into by and between [the][each] 1 Assignor identified in item 1 below ([the][each, an] “ Assignor ”) and [the][each] 2 Assignee identified in item 2 below ([the][each, an] “ Assignee ”). [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees] 3 hereunder are several and not joint.] 4 Capitalized terms used but not defined herein shall have the meanings given to them in the ABL Credit Agreement identified below (the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto (the “ Standard Terms and Conditions ”) are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including, without limitation, the Letters of Credit and the Swing Line Loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i)  above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i)  and (ii) above being referred to herein collectively as [the][an] “ Assigned Interest ”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.

 

1  

For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language. If the assignment is from multiple Assignors, choose the second bracketed language.

2  

For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language. If the assignment is to multiple Assignees, choose the second bracketed language.

3  

Select as appropriate.

4  

Include bracketed language if there are either multiple Assignors or multiple Assignees.

 

[Exhibit E-1 to ABL Credit Agreement]


1.   Assignor[s] :

                                                                                   
                                                                                   

2.   Assignee[s] :

                                                                                   
                                                                                   

       [for each Assignee, indicate [Affiliate][Approved Fund] of [ identify Lender ]]

3.   Borrower :

  

Basic Energy Services, Inc.

  

4.   Administrative Agent :

   Bank of America, N.A., as the Administrative Agent under the Credit Agreement   

5.   Credit Agreement : ABL Credit Agreement, dated as of October 2, 2018, among Basic Energy Services, Inc., as Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer

6.   Assigned Interest :

     

 

Assignor[s] 5

   Assignee[s] 6      Facility
Assigned
     Aggregate
Amount of
Commitment/Loans
for all Lenders 7
     Amount of
Commitment
/Loans
Assigned
     Percentage
Assigned of
Commitment/
Loans 8
     CUSIP
Number
 
         $        $          %     
         $        $          %     
         $        $          %     

 

[7.   Trade Date:

                                                                                 ] 9   

Effective Date (the “ Effective Date ”):                              , 20      [TO BE INSERTED BY THE ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

[signature page follows]

 

5  

List each Assignor, as appropriate.

6  

List each Assignee, as appropriate.

7  

Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

8  

Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

9  

To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

 

[Exhibit E-1 to ABL Credit Agreement]


The terms set forth in this Assignment and Assumption are hereby agreed to as of the Effective Date:

 

ASSIGNOR
[NAME OF ASSIGNOR]
By:    
Title:  
ASSIGNEE
[NAME OF ASSIGNEE]
By:    
Title:  
 

Consented to and accepted:

 

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender

and an L/C Issuer

By:    
Title:  

[UBS AG, STAMFORD BRANCH],

as L/C Issuer

By:    
Title:  
By:    
Title:  

[PNC BANK, NATIONAL ASSOCIATION],

as L/C Issuer

By:    
Title:  

[ ADDITIONAL ISSUING BANK ] 10 ,

as L/C Issuer

By:    
Title:  

 

10  

To be executed by each applicable L/C Issuer.

 

[Exhibit E-1 to ABL Credit Agreement]


[BASIC ENERGY SERVICES, INC.
By:    
Title:       ] 11

 

11  

To be added only if the consent of the Borrower is required by the terms of the Credit Agreement.

 

[Exhibit E-1 to ABL Credit Agreement]


ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties .

1.1. Assignor . [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][[the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee . [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 10.06(b)(iii), (v) [and (vi)] of the Credit Agreement (subject to such consents, if any, as may be required under Section 10.06(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by [the][such] Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire [the][such] Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, [the][any] Assignor 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 the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

[Exhibit E-1 to ABL Credit Agreement]


2. Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.

3. General Provisions . This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

[Exhibit E-1 to ABL Credit Agreement]


EXHIBIT E-2

ADMINISTRATIVE QUESTIONNAIRE

[Attached]

Exhibit E-2 to Credit Agreement


EXHIBIT F

FORM OF NOTICE OF LOAN PREPAYMENT

 

TO:

Bank of America, N.A., as [Administrative Agent][Swing Line Lender]

 

RE:

ABL Credit Agreement, dated as of October 2, 2018, among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”)

 

DATE:

[Date]

The Borrower hereby notifies the Administrative Agent that on _________________ 1 , pursuant to the terms of Section 2.05 of the Credit Agreement, the Borrower intends to prepay/repay the following Revolving Credit Loans as more specifically set forth below:

 

 

Optional prepayment of Revolving Credit Loans in the following amount(s):

 

 

LIBOR Loans: $_____________________________ 2

Applicable Interest Period: _____________________

 

 

Base Rate Loans: $_____________________________ 3

 

 

Optional prepayment of Swing Line Loans in the following amount: $_____________________________ 4

Delivery of an executed counterpart of a signature page of this notice by fax transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this notice.

[Signature page follows]

 

 

1  

Specify date of such prepayment.

2  

Any prepayment of LIBOR Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof (or if less, the entire principal amount thereof outstanding).

3  

Any prepayment of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (or if less, the entire principal amount thereof outstanding).

4  

Any prepayment of Swing Line Loans shall be in a minimum principal amount of $100,000 (or if less, the entire principal amount thereof outstanding).

[Exhibit F to ABL Credit Agreement]


BASIC ENERGY SERVICES, INC.
By:    
Name:  
Title:  

[Exhibit F to ABL Credit Agreement]


EXHIBIT G

FORM OF SECURED PARTY DESIGNATION NOTICE

 

TO:

Bank of America, N.A., as Administrative Agent

 

RE:

ABL Credit Agreement, dated as of October 2, 2018 among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, a Swing Line Lender and an L/C Issuer (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”)

 

DATE:

[Date] (the “ Effective Date ”)

[Name of Cash Management Bank/Hedge Bank] (the “Secured Party”) hereby notifies you, pursuant to the terms of the Credit Agreement, that the Secured Party meets the requirements of a [Cash Management Bank] [Hedge Bank] under the terms of the Credit Agreement and is a [Cash Management Bank] [Hedge Bank] under the Credit Agreement and the other Loan Documents. The Secured Party hereby agrees to be bound by Section 9.11 of the Credit Agreement.

[ Describe Secured Cash Management Agreement or the Secured Hedge Agreement between the applicable Loan Party and the Secured Party ]

 

 
 
 
 

The maximum amount to be secured by the Collateral under the [Secured Cash Management Agreement][Secured Hedge Agreement] described above is _____________ and the methodology used in calculating such amount is set forth below.

[ Include methodology used to calculate maximum amount of the Secured Cash Management Agreement or Secured Hedge Agreement to be secured by the Collateral ]

Delivery of an executed counterpart of a signature page of this notice by fax transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this notice.

[Exhibit G to ABL Credit Agreement]


A duly authorized officer of the undersigned has executed this notice as of the Effective Date.

 

 
as a [Cash Management Bank] [Hedge Bank]
By:    
Name:    
Title:    

[Exhibit G to ABL Credit Agreement]


EXHIBIT H

FORM OF LETTER OF CREDIT REPORT

 

TO:

Bank of America, N.A., as Administrative Agent

 

RE:

ABL Credit Agreement, dated as of October 2, 2018, among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”)

 

DATE:

[Date]

The undersigned, [insert name of L/C Issuer] (the “ L/C Issuer ”) hereby delivers this report to the Administrative Agent, pursuant to the terms of Section 2.03(k) of the Credit Agreement.

The L/C Issuer plans to issue, amend, renew, increase or extend the following Letter(s) of Credit on [insert date].

 

L/C No.

   Maximum
Face
Amount
   Current
Face
Amount
   Currency    Financials or
Performance
SBLC
   Beneficiary
Name
   Issuance
Date
   Expiry
Date
   Auto
Renewal
   Date of
Amendment
   Amount of
Amendment

[The L/C Issuer made a payment, with respect to L/C No. ________, on [insert date] in the amount of $[____________].

[The Borrower failed to reimburse the L/C Issuer for a payment made in the amount of $[insert amount of such payment] pursuant to L/C No. _______ on [insert date of such failure].]

[Exhibit H to ABL Credit Agreement]


Set forth in the table below is a description of each Letter of Credit issued by the undersigned and outstanding on the date hereof.

 

L/C No.

 

Maximum
Face
Amount

 

Current
Face
Amount

  

Currency

  

Financials
or
Performance
SBLC

  

Beneficiary

Name

  

Issuance
Date

  

Expiry
Date

  

Auto
Renewal

  

Date of
Amendment

  

Amount
of
Amendment

Delivery of an executed counterpart of a signature page of this notice by fax transmission or other electronic mail transmission (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this notice.

 

[L/C ISSUER],

as L/C Issuer

By:    
Name:  
Title:  

[Exhibit H to ABL Credit Agreement]


EXHIBIT I-1

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the ABL Credit Agreement, dated as of October 2, 2018 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”) among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

Pursuant to the provisions of Section 3.01 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E (as applicable). By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER]
By:    
Name:  
Title:  
Date:                                 ,20[      ]

[Exhibit I-1 to ABL Credit Agreement]


EXHIBIT I-2

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the ABL Credit Agreement, dated as of October 2, 2018 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”) among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

Pursuant to the provisions of Section 3.01 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E (as applicable). By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]
By:    
Name:  
Title:  
Date:                                 ,20[      ]

[Exhibit I-2 to ABL Credit Agreement]


EXHIBIT I-3

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the ABL Credit Agreement, dated as of October 2, 2018 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”) among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

Pursuant to the provisions of Section 3.01 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such participation, (iii) with respect to such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E (as applicable) or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E (as applicable) from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF PARTICIPANT]
By:    
Name:  
Title:  
Date:                                 ,20[      ]

[Exhibit I-3 to ABL Credit Agreement]


EXHIBIT I-4

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the ABL Credit Agreement, dated as of October 2, 2018 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “ Credit Agreement ”) among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swing Line Lender and an L/C Issuer.

Pursuant to the provisions of Section 3.01 of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to the Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form W-8BEN-E (as applicable) or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E (as applicable) from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement.

 

[NAME OF LENDER]
By:    
Name:  
Title:  
Date:                                 ,20[      ]

[Exhibit I-4 to ABL Credit Agreement]


EXHIBIT J

FORM OF BORROWING BASE CERTIFICATE

 

Basic Energy Services, Inc.      Date Delivered
                                   
     Current Begin Date
                                   
     Current End Date                                    
       

BORROWING BASE CERTIFICATE

Line

As of                         

 

1    Gross Accounts

  

2    Less: Total accounts not constituting Eligible Accounts

  
  

 

 

 

3    Eligible Accounts

  

4     Accounts advance rate

  

5    Accounts availability (Line 3 multiplied by Line 4)

     85.00
  

 

 

 

6    Gross unbilled Accounts

  
  

 

 

 

7    Less: Total accounts not constituting Eligible Unbilled Accounts

  
  

 

 

 

8    Eligible Unbilled Accounts

  

9    Unbilled Accounts advance rate

     80.00
  

 

 

 

10    Unbilled Accounts availability (lesser of Line 8 multiplied by Line 9 and $30,000,000)

  
  

 

 

 

11   Total collateral availability (Line 5 plus Line 10 )

  
  

 

 

 

12    Bank Product Reserve

  

13    Rent and Charges Reserve

  

14    Accrued Royalties

  

15    Dilution Reserve

  

16    Aggregate amount of liabilities secured by Liens on the Collateral senior to the Administrative Agent’s Liens

  

17    Other reserves

  
  

 

 

 

18   Total Availability Reserve ( Sum of Lines 12 through 17)

  
  

 

 

 

19    Collateral availability less Availability Reserve (Line 11 minus Line 18)

  

20    Aggregate Commitments

  
  

 

 

 

21   Borrowing Base (lesser of Line 19 and Line 20)

  
  

 

 

 

Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), by its duly authorized officer signing below, hereby certifies that (a) the information set forth in this certificate is true and correct as of the date(s) indicated herein and (b) the Borrower is in compliance with all terms and provisions contained in that certain ABL Credit Agreement (as amended, restated, supplemented or otherwise modified prior to the Effective Date, the “ Credit Agreement ”), among the Borrower, the lenders from time to time party thereto and Bank of America, NA., as administrative agent (the “ Administrative Agent ”), and the other Loan Documents (as defined in the Credit Agreement).

 

Authorized Officer:    Title:
Authorized Signature:    Date:

Note: If this certificate is being transmitted electronically, the Borrower acknowledges that by entering the name of its duly authorized officer on this certificate, such officer has reviewed this certificate in its entirety and affirmed the representations, warranties and certifications made by such officer on behalf of the Borrower herein.

[Exhibit J to ABL Credit Agreement]

Exhibit 10.2

Execution Version

 

 

 

SECURITY AGREEMENT

Dated as of October 2, 2018

among

BASIC ENERGY SERVICES , INC.

and the other Debtors parties hereto

in favor of

UMB BANK, N.A. ,

as Collateral Agent

 

 

 


TABLE OF CONTENTS

 

         

PAGE

 

ARTICLE 1 Definitions

     1  

Section 1.01

   Terms Generally      1  

Section 1.02

   Defined Terms      2  

ARTICLE 2 Grant of Security Interest

     8  

Section 2.01

   Grant of Security Interest      8  

Section 2.02

   Avoidance Limitation      8  

ARTICLE 3 Representations and Warranties

     9  

Section 3.01

   Title; No Other Liens      9  

Section 3.02

   Perfected First Priority Liens      9  

Section 3.03

   Debtor’s Legal Name; Jurisdiction of Organization; Chief Executive Office      9  

Section 3.04

   Certain Collateral      10  

Section 3.05

   Investment Property and Instruments      10  

Section 3.06

   Intellectual Property      11  

Section 3.07

   Certificates of Title      11  

Section 3.08

   Location of Collateral      11  

ARTICLE 4 Covenants and Agreements

     12  

Section 4.01

   Covenants in Priority Lien Debt Documents      12  

Section 4.02

   Maintenance of Insurance      12  

Section 4.03

   Maintenance of Collateral; Maintenance of Perfected Security Interest; Further Documentation; Filing Authorization; Further Assurances; Power of Attorney      12  

Section 4.04

   Delivery of Instruments and Documents      14  

Section 4.05

   Investment Property      15  

Section 4.06

   Collateral Accounts      17  

Section 4.07

   Intellectual Property      17  

Section 4.08

   Equipment      19  

Section 4.09

   Actions With Respect to Certain Collateral      20  

ARTICLE 5 Limitation on Perfection of Security Interest

     20  

Section 5.01

   Instruments      20  

Section 5.02

   Documents      20  

Section 5.03

   Letter of Credit Rights      21  

Section 5.04

   Fixtures      21  

Section 5.05

   Actions Outside United States      21  

ARTICLE 6 Remedial Provisions

     21  

Section 6.01

   General Interim Remedies      21  

Section 6.02

   Instruments and Payment Intangibles      22  

Section 6.03

   Pledged Equity      22  

Section 6.04

   Foreclosure      23  

 

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Section 6.05

   Application of Proceeds      24  

Section 6.06

   Waiver of Certain Rights      24  

Section 6.07

   Remedies Cumulative      25  

Section 6.08

   Reinstatement      25  

ARTICLE 7 Miscellaneous

     25  

Section 7.01

   Amendments      25  

Section 7.02

   Notices      25  

Section 7.03

   No Waiver by Course of Conduct; Cumulative Remedies; No Duty      25  

Section 7.04

   Enforcement Expenses; Indemnification      25  

Section 7.05

   Successors and Assigns      26  

Section 7.06

   Counterparts      26  

Section 7.07

   Severability      26  

Section 7.08

   Section Headings      27  

Section 7.09

   Integration      27  

Section 7.10

   GOVERNING LAW ETC      27  

Section 7.11

   Additional Debtors      27  

Section 7.12

   Termination; Releases      27  

Section 7.13

   Intercreditor Agreement      28  

Section 7.14

   Collateral Agent      28  

 

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SCHEDULES

 

Schedule 3.3(a)

   Organization & Location Information

Schedule 3.3(b)

   Notice Information

Schedule 3.4

   Certain Collateral

Schedule 3.5(a)

   Pledged Equity

Schedule 3.5(c)

   Instruments

Schedule 3.6

   Intellectual Property

ANNEXES

  

Annex I

   Security Agreement Supplement

Annex II

   Patent Security Agreement Supplement

Annex III

   Trademark Security Agreement Supplement

Annex IV

   Copyright Security Agreement Supplement

 

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SECURITY AGREEMENT

This SECURITY AGREEMENT dated as of October 2, 2018 (this “ Agreement ”), is among BASIC ENERGY SERVICES, INC., a Delaware corporation (the “ Issuer ”), the undersigned subsidiaries of the Issuer (the Issuer and such undersigned subsidiaries collectively being the “ Debtors ”), and UMB BANK, N.A. in its capacity as collateral agent (in such capacity, the “ Collateral Agent ”) for the benefit of the holders of the Secured Obligations (as defined below).

INTRODUCTION

Reference is made to (i) the Indenture dated as of October 2, 2018 (as amended, restated or otherwise modified from time to time, the “ Indenture ”), among the Issuer, the other Debtors, and UMB Bank, N.A., as indenture trustee (in such capacity, the “ Indenture Trustee ”) and collateral agent pursuant to which the Issuer is issuing its 10.75% Senior Secured Notes due 2023 (the “ Notes ”) and the other Debtors have agreed to guarantee, among other things, the full payment and performance of all of the Issuer’s obligations under the Notes and the Indenture and (ii) the Collateral Agency Agreement dated as of October 2, 2018 (as amended, restated or otherwise modified from time to time, the “ Collateral Agency Agreement ”), among the Debtors, UMB Bank, N.A., as Indenture Trustee, representatives of the other holders of the Secured Obligations (as defined below) from time to time party thereto and UMB Bank, N.A., as collateral agent (in such capacity, the “ Collateral Agent ”).

In connection with the Indenture and the Collateral Agency Agreement, the Debtors are entering into this Agreement in order to secure the Debtors’ obligations under the Priority Lien Debt Documents and all other Secured Obligations (as defined below).

The Debtors share an identity of interest as members of a combined group of companies and will derive substantial direct and indirect economic and other benefits from the issuance of the Notes and incurrence of other Secured Obligations. Therefore, in consideration of the issuance of the Notes and other extensions of credit with respect to other Secured Obligations, the Debtors jointly and severally agree with the Collateral Agent as follows:

ARTICLE 1

D EFINITIONS

Section 1.01 Terms Generally .

(a) Terms defined above and elsewhere in this Agreement shall have their specified meanings. Capitalized terms used herein but not defined herein shall have the meanings specified by the Collateral Agency Agreement and, to the extent not defined in the Collateral Agency Agreement, the Indenture. All terms used herein and defined in the UCC shall have the same definitions herein as specified therein.


(b) Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Debtor, shall refer to such Debtor’s Collateral or the relevant part thereof.

Section 1.02 Defined Terms . The following terms shall have the following meanings:

ABL Collateral ” means all of each Debtor’s right, title, and interest in and to the following property, in each case whether now owned or existing or hereafter acquired or arising:

(a) all Receivables (including unbilled accounts but excluding Accounts arising solely from the sale, assignment or other disposition of Collateral), Contracts, Chattel Paper and Inventory;

(b) all Specified ABL Collateral;

(c) all Deposit Accounts (other than Excluded Accounts) with any bank or other financial institution (including all cash, cash equivalents, financial assets, negotiable instruments and other evidence of payment, and other funds on deposit therein or credited thereto);

(d) all Securities Accounts (other than Securities Accounts that contain only the identifiable Proceeds of Collateral) with any securities intermediary (including any and all Investment Property and all funds or other property held therein or credited thereto);

(e) all Commodity Accounts (other than Commodity Accounts that contain only the identifiable Proceeds of Collateral) with any commodities intermediary (including any and all commodity contracts and all funds and other property held therein or credited thereto);

(f) all Records relating to the foregoing and all accessions to, substitutions for and replacements of the foregoing, together with all customer lists, credit files, computer files, programs, printouts and other computer materials and records related thereto; and

(g) to the extent not otherwise included, all Proceeds (including without limitation, all business interruption insurance and other insurance proceeds related to the above), Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing.

Collateral ” has the meaning specified in Section 2.01.

Collateral Account ” means, collectively, any Deposit or Securities Account that is maintained solely to hold identifiable cash and cash equivalents received from Asset Sales of Collateral, an event of loss relating to Collateral, foreclosures on or sales of Collateral or any other awards or proceeds of Collateral pursuant to the Security Documents, including earnings, revenues, rents, issues, profits and income from the Collateral received pursuant to the Security Documents, and interest earned thereon.

 

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Contracts ” means all contracts, undertakings, or agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) with any customer of any Debtor to which any Debtor now is, or hereafter will be, bound or a party, beneficiary or assignee thereof or thereto, in any event, including all contracts, undertakings, or agreements in or under which any Debtor may now or hereafter have any right, title or interest, including any agreement relating to the terms of payment or the terms of performance of any Receivable.

Control Agreement ” means an agreement, in form and substance satisfactory to the Collateral Agent, among any Debtor, a banking institution or securities intermediary, as applicable, holding such Debtor’s funds and/or securities, and the Collateral Agent with respect to collection and control of all deposits, securities and other balances held in an account maintained by such Debtor with such banking institution or securities intermediary.

Copyrights ” means all of the following now owned or hereafter acquired by any Debtor: (a) all copyright rights in any work subject to the copyright laws of the United States or any other country, whether as author, assignee, transferee or otherwise, and (b) all registrations and applications for registration of any such copyright in the United States or any other country and all extensions and renewals thereof, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office, including, without limitation, those listed in Schedule 3.6.

Copyright Licenses ” means any written agreement naming any Debtor as licensor or licensee (including, without limitation, those listed in Schedule 3.6), granting any right under any Copyright, including, without limitation, the grant of rights to manufacture, distribute, exploit and sell materials derived from any Copyright.

Copyright Security Agreement Supplement ” means a supplement to this Agreement by each applicable Debtor in favor of the Collateral Agent (for the benefit of the holders of the Secured Obligations), substantially in the form of Annex IV hereto.

Deposit Accounts ” means all “ deposit accounts ” (as defined in the UCC) now or hereafter held in the name of any Debtor.

Equipment ” means all of each Debtor’s present or future owned or leased fixtures and equipment wherever located, including drilling platforms and Rigs and remotely operated vehicles, trenchers, and other equipment used by any Debtor for the provision of construction services, well operations services, oil and gas production services, contract drilling services, fluid services or other services, trucks, vehicles, motor vehicles, rolling stock, vessels, aircraft, tanks, well service units and equipment, fracturing test tanks, pumping equipment, fluid services equipment, disposal facilities and any manuals, instructions, blueprints, computer software (including software that is imbedded in and part of the equipment) and similar items which relate to the above, together with all parts thereof and all accessions and additions thereto.

 

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Excluded Accounts ” means, collectively, (a) Collateral Accounts, (b) Deposit Accounts exclusively used for payroll, payroll taxes or employee benefits and (c) Deposit Accounts that have a balance of less than $250,000 at all times; provided that the aggregate balance of all such Deposit Accounts described under this clause (c) shall not exceed $2,000,000 in the aggregate at any time.

Excluded Property ” means the “Excluded Property” as defined in the Indenture.

Fixtures ” means any fixture or fixtures now or hereafter owned or leased by any of the Debtors, or in which any of the Debtors holds or acquires any other right, title or interest, constituting “ fixtures ” under the UCC.

Intellectual Property ” means all intellectual and similar property of any Debtor of every kind and nature now owned or hereafter acquired by any Debtor, including inventions, designs, Patents, Patent Licenses, Trademarks, Trademark Licenses, Copyrights, Copyright Licenses, domain names and domain name registrations, trade secrets, confidential or proprietary technical and business information, know-how or other data or information, software and databases and all embodiments or fixations thereof and related documentation, registrations and franchises, licenses for any of the foregoing and all license rights, and all additions, improvements and accessions to, and books and records describing or used in connection with, any of the foregoing.

Inventory ” means all of each Debtor’s present and future inventory, wherever located, including inventory, merchandise, goods and other personal property that are held by or on behalf of any Debtor for sale or lease or are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process, finished goods, returned goods, or materials or supplies of any kind, nature or description used or consumed or to be used or consumed in such Debtor’s business or in the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies, and embedded software. “Inventory” shall also include inventory in joint production with another person, inventory in which any Debtor has an interest as consignor, and inventory that is returned to or stopped in transit by any Debtor, and all combinations and products thereof; provided, that, for the avoidance of doubt, Inventory does not include Titled Equipment.

Investment Property ” means, other than any investment property constituting Excluded Property, all Equity Interests and other investment property now owned or hereafter acquired by any Debtor, including all securities, whether certificated or uncertificated.

Licenses ” means any Patent License, Trademark License, Copyright License or other license or sublicense to which any Debtor is a party, including any franchises, permits, certificates, licenses, authorizations and the like and any other requirements of any government or any commission, board, court, agency, instrumentality or political subdivision thereof.

 

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Material Real Property ” has the meaning ascribed to this term in the Indenture.

Patents ” means all of the following now owned or hereafter acquired by any Debtor:

(a) all letters patent of the United States or any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or any other country, including registrations, recordings and pending applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof, or any other country, including, without limitation, any of the foregoing referred to in Schedule 3.6, and

(b) all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein.

Patent License ” means all agreements, whether written or oral, providing for the grant by or to any Debtor of any right to manufacture, use or sell any invention covered in whole or in part by a Patent, including, without limitation, any of the foregoing referred to in Schedule 3.6).

Patent Security Agreement Supplement ” means a supplement to this Agreement by each applicable Debtor in favor of the Collateral Agent (for the benefit of the holders of the Secured Obligations), substantially in the form of Annex II hereto.

Payment Item ” each check, draft or other item of payment payable to a Debtor that constitutes proceeds of any Collateral.

Perfection Certificate ” means that certain Perfection Certificate dated as of October 2, 2018, delivered by the Debtors to the Collateral Agent.

Permitted Liens ” means any Liens that are permitted under Section 3.6 of the Indenture and each of the other Priority Lien Debt Documents (for the avoidance of doubt, no Lien shall be a Permitted Lien if it is not permitted under Section 3.6 of the Indenture or any of the other Priority Lien Debt Documents).

Permitted Prior Liens ” has the meaning ascribed to this term in the Indenture.

Permitted Titled Equipment Lien ” means a Permitted Prior Lien on Titled Equipment for which the lienholder has perfected its security interest by notation of the certificate of title with respect to such Titled Equipment.

Pledged Equity ” means, with respect to each Debtor, (a) other than any shares or equity interests constituting Excluded Property, all shares or other Equity Interests held by such Debtor in any corporations or other entities (including, without limitation, those corporations or other entities described in Schedule 3.5(a) that are directly held by such Debtor), together with all warrants to purchase, all depositary shares and all other rights of such Debtor in respect of such equity interests, (b) all certificates, instruments or other documents evidencing same and registered or held in the name of, or otherwise in the

 

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possession of, such Debtor, and (c) all present and future payments, dividend distributions, instruments, compensation, property, assets, interests and rights in connection with or related to the equity interests described in clause (a) above, and all monies due or to become due and payable to such Debtor in connection with or related to such equity interests or otherwise paid, issued or distributed in respect of or in exchange therefor (including, without limitation, all proceeds of dissolution or liquidation).

Priority Lien Obligations ” has the meaning ascribed to this term in the Collateral Agency Agreement.

Proceeds ” means all of each Debtor’s present and future (a) proceeds of the Collateral, whether arising from the collection, sale, lease, exchange, assignment, licensing, or other disposition of the Collateral, (b) any and all payments (in any form whatsoever) made or due and payable from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority (or any person acting under color of governmental authority), (c) claims against third parties for impairment, loss, damage, or impairment of the value of such property, and (d) any and all proceeds of, and all claims for, any insurance (other than business interruption insurance), indemnity, warranty or guaranty payable from time to time with respect to any of the Collateral.

Receivables ” means all of each Debtor’s present and future Accounts, Accounts from Governmental Authorities, and Payment Intangibles, including those arising from the provision of services, sale of Inventory, or renting of equipment to the customers of any Debtor, and rights to payment under all Contracts, income tax refunds, and other rights to the payment of money, together with all of the right, title and interest of any of the Debtors in and to (a) all security pledged, assigned, hypothecated or granted to or held by any of the Debtors to secure the foregoing, (b) all of any of the Debtors’ right, title and interest in and to any goods or services, the sale of which gave rise thereto, (c) all guarantees, endorsements and indemnifications on, or of, any of the foregoing, (d) all powers of attorney granted to any of the Debtors for the execution of any evidence of indebtedness or security or other writing in connection therewith, (e) all credit information, reports and memoranda relating thereto, and (f) all other writings related in any way to the foregoing.

Records ” means all of each Debtor’s present and future books, accounting records, files, computer files, computer programs, correspondence, credit files, records, ledger cards, invoices, and other records primarily related to any other items of Collateral, including without limitation all similar information stored on a magnetic medium or other similar storage device and other papers and documents in the possession or under the control of any of the Debtors or any computer bureau from time to time acting for any of the Debtors.

Rigs ” means all of each Debtor’s present and future well service rigs, contract drilling rigs and any other onshore or offshore rigs of each Debtor.

 

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Secured Obligations ” means (a) all principal, interest, premium (including any prepayment premiums, fees and make-whole amounts), fees, reimbursements, indemnifications, and other amounts now or hereafter owed by the Issuer and the other Debtors that constitute Priority Lien Obligations (including any additional obligations that are from time to time designated as Priority Lien Obligations) and (b) any increases, extensions, renewals, replacements, and rearrangements of the foregoing Priority Lien Obligations under any amendments, supplements, and other modifications of the agreements creating the foregoing obligations, in each case, whether direct or indirect, absolute or contingent.

Securities Accounts ” means all securities accounts (as defined in the UCC) now or hereafter held in the name of any Debtor.

Specified ABL Collateral ” means all General Intangibles (excluding Trademarks, Patents, Copyrights and other Intellectual Property), Investment Property, Instruments, Documents, Letter-of-Credit Rights, Commercial Tort Claims and Supporting Obligations, in each case pertaining to the property described in clause (a) of the definition of ABL Collateral.

State of Organization ” means the jurisdiction of organization of each of the Debtors as listed on Schedule 3.3(a).

Supporting Obligations ” means all supporting obligations, including letters of credit and guaranties issued in support of Documents, General Intangibles, Instruments, or Investment Property.

Titled Equipment ” means any and all Equipment represented (or required to be represented) by a certificate of title issued under the laws of a State in the United States.

Trademarks ” means all of the following now owned or hereafter acquired by any Debtor: all trademarks, service marks, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and registration applications in the United States Patent and Trademark Office, any State of the United States or any similar offices in any other country or any political subdivision thereof, and all extensions or renewals thereof, including, without limitation, any of the foregoing referred to in Schedule 3.6.

Trademark License ” means any agreement, whether written or oral, providing for the grant by or to any Debtor of any right to use any Trademark, including, without limitation, any of the foregoing referred to in Schedule 3.6.

Trademark Security Agreement Supplement ” means a supplement to this Agreement, by each applicable Debtor in favor of the Collateral Agent (for the benefit of the holders of the Secured Obligations), substantially in the form of Annex III hereto.

UCC ” means the Uniform Commercial Code as in effect on the date hereof in the State of New York, as amended from time to time, and any successor statute.

 

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ARTICLE 2

G RANT OF S ECURITY I NTEREST

Section 2.01 Grant of Security Interest . Each Debtor hereby grants to the Collateral Agent, for the benefit of the holders of the Secured Obligations, a security interest in all of such Debtor’s right, title, and interest in and to the following property, whether now owned or hereafter acquired (the “ Collateral ”) to secure the payment and performance of the Secured Obligations:

(a) all Equipment;

(b) all Fixtures related to Material Real Property;

(c) all Intellectual Property;

(d) all Investment Property (including without limitation the Pledged Equity), all Commercial Tort Claims, all Documents, all General Intangibles, all Instruments and all Letter of Credit Rights, in each case, for the avoidance of doubt, not constituting ABL Collateral;

(e) all Collateral Accounts;

(f) all Records relating to the foregoing and all additions, accessions and improvements to, all substitutions and replacements of the foregoing, and

(g) to the extent not otherwise included, all Proceeds of the foregoing, Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing;

provided, however, that notwithstanding anything to the contrary contained herein or in any other Priority Lien Debt Document, this Agreement shall not constitute nor evidence a grant of a security interest, collateral assignment or any other type of Lien in Excluded Property provided further, that the Proceeds of Excluded Property shall not constitute Excluded Property solely by virtue of being Proceeds thereof but only to the extent that such Proceeds otherwise independently constitute Excluded Property hereunder.

To the extent that the Collateral is not subject to the UCC, each Debtor collaterally assigns all of such Debtor’s right, title, and interest in and to such Collateral to the Collateral Agent, for the benefit of the holders of the Secured Obligations, to secure the payment and performance of the Secured Obligations to the full extent that such a collateral assignment is possible under the relevant Law.

Section 2.02 Avoidance Limitation . Notwithstanding Section 2.01 above, the amount of any Debtor’s Secured Obligations that are secured by its rights in Collateral subject to a Lien in favor of the Collateral Agent hereunder or under any other Security Document shall be limited to the extent, if any, required so that the Liens it has granted under this Agreement shall not be subject to avoidance under Section 548 of the Bankruptcy Code of the United States or to being set aside or annulled under any applicable Law relating to fraud on creditors. In determining the limitations, if any, on the amount of any Debtor’s Secured Obligations that are subject to the Lien on such Debtor’s Collateral hereunder pursuant to the preceding sentence, it is the intention of the parties hereto that any rights of subrogation or contribution which such Debtor may have under the Guaranty, any other agreement or applicable Law shall be taken into account.

 

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ARTICLE 3

R EPRESENTATIONS AND W ARRANTIES

To induce the Holders to purchase Notes from the Issuer under the Indenture and each other holder of Secured Obligations to extent credit under Priority Lien Debt Documents, each Debtor hereby represents and warrants to the Collateral Agent, for the benefit of the holders of the Secured Obligations, that:

Section 3.01 Title; No Other Liens . Except for the security interests granted to the Collateral Agent for the benefit of the holders of the Secured Obligations pursuant to this Agreement and the other Permitted Liens, such Debtor owns each item of the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such (a) as have been filed in favor of the Collateral Agent, for the benefit of the holders of the Secured Obligations, pursuant to this Agreement, and (b) as are permitted by the Priority Lien Debt Documents.

Section 3.02 Perfected First Priority Liens . The security interests granted pursuant to this Agreement (a) upon completion of the filing of a financing statement with respect to each Debtor describing the Collateral in the office located in the jurisdiction listed on Schedule 3.3(a) opposite such Debtor, the recording in the United States Patent and Trademark Office of the Trademark Security Agreement Supplement and the Patent Security Agreement Supplement and in the United States Copyright Office of the Copyright Security Agreement Supplement, as applicable, and the taking of all applicable actions in respect of perfection contemplated by Sections 4.04, 4.05, 4.06, 4.08 and 4.09 in respect of Collateral (in which a security interest cannot be perfected by the filing of a financing statement or such recordings in the United States Patent and Trademark Office or the United States Copyright Office), will constitute valid perfected security interests in all of the Collateral subject to Article 9 of the UCC in favor of the Collateral Agent, for the benefit of the holders of the Secured Obligations, as collateral security for such Debtor’s Secured Obligations, enforceable in accordance with the terms hereof and the UCC against all creditors of such Debtor and any Persons purporting to purchase any Collateral from such Debtor and (b) are prior to all other Liens on the Collateral except for Permitted Prior Liens (and subject to the limitations on perfection and method of perfection provided in Article 5).

Section 3.03 Debtor s Legal Name; Jurisdiction of Organization; Chief Executive Office . On the date of this Agreement, each Debtor’s exact legal name is set forth on the signature page hereof, and from and after an amendment or modification thereto, on a written notification delivered to the Collateral Agent pursuant to Section 11.4(a) of the Indenture. On the date hereof, such Debtor’s jurisdiction of organization, type of legal entity, organizational identification number from the jurisdiction of organization (if any), and the location of such Debtor’s chief executive office or sole place of business or principal residence, as the case may be, are specified on Schedule 3.3(a).

 

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Section 3.04 Certain Collateral . None of the Collateral constitutes, or is the Proceeds of, farm products and none of the Collateral has been purchased for, or will be used by any Debtor primarily for personal, family or household purposes. Except as set forth on Schedule 3.4 or Schedule 3.6 or otherwise notified to the Collateral Agent pursuant to Sections 4.07, 4.08 or 4.09, respectively:

(a) such Debtor holds no Commercial Tort Claims;

(b) such Debtor holds no interest in, title to or power to transfer, any Patents, Trademarks or Copyrights;

(c) such Debtor holds no interest in, title to or power to transfer any Intellectual Property that is registered or for which an application has been filed in the United States Patent and Trademark Office or the United States Copyright Office;

(d) such Debtor owns no vessels or aircraft.

Section 3.05 Investment Property and Instruments . (a) Each Debtor is the legal and beneficial owner of the Pledged Equity as set forth on Schedule 3.5(a). The Pledged Equity has been duly authorized and validly issued, is fully paid and non-assessable and is not subject to the rights of any person to acquire such Pledged Equity, and none of the Pledged Equity constitutes margin stock (within the meaning of Regulation U issued by the FRB). Except as set forth on Schedule 3.5(a), on the date hereof, the Pledged Equity constitutes all of the issued and outstanding shares of stock or other equity interests of each of the respective issuers thereof and no such issuer has any obligation to issue any additional shares of stock or other equity interests or rights or options thereto.

(b) Except for filings contemplated by this Agreement and as may be required in connection with any disposition of any portion of the Pledged Equity by laws affecting the offering and sale of securities generally, no consent of any Person and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any Governmental Authority is required in connection with (i) the execution, delivery, performance, validity or enforceability of this Agreement, (ii) the perfection or maintenance of the security interest created hereby (including the first or second priority nature thereof), or (iii) the exercise by the Collateral Agent of the rights provided for in this Agreement.

(c) Each of the Instruments pledged by such Debtor hereunder constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, and general principles of equity. Schedule 3.5(c) lists all of the Instruments issued to or held by each Debtor as of the date hereof.

 

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(d) Such Debtor is the record and beneficial owner of, and has good title to the Investment Property pledged by it hereunder, free of any and all Liens or options in favor of, or claims of, any other Person, except the security interest created by this Agreement and other Permitted Liens.

Section 3.06 Intellectual Property . (a) Schedule 3.6 lists all Intellectual Property necessary for the conduct of such Debtor’s business as currently conducted that is owned by such Debtor in its own name on the date hereof.

(b) On the date hereof, all material Intellectual Property of such Debtor described on Schedule 3.6 is valid, subsisting, unexpired and enforceable, has not been abandoned and does not infringe the intellectual property rights of any other Person in any material respect.

(c) Except as set forth in Schedule 3.6, on the date hereof, none of such Intellectual Property is the subject of any licensing or franchise agreement pursuant to which such Debtor is the licensor or franchisor.

(d) No holding, decision or judgment has been rendered by any Governmental Authority which would limit, cancel or question the validity of, or such Debtor’s rights in, any such Intellectual Property in any respect that could reasonably be expected to have a Material Adverse Effect.

Section 3.07 Certificates of Title . The Perfection Certificate delivered to the Collateral Agent lists each item of Titled Equipment owned by a Debtor as of the date set forth therein which is located in a state where applicable Law requires the issuance of a certificate of title for such item of Titled Equipment and, to the extent listed therein, the owner, jurisdiction of registration, make, model and serial or vehicle identification number of each item of such Titled Equipment. The Collateral Agent may conclusively rely on such Perfection Certificate.

Section 3.08 Location of Collateral . All tangible items of Collateral, other than Equipment which is located at customer job sites, being used by employees in the ordinary course of business or being refurbished or repaired, shall at all times be kept by the Debtors at the business locations set forth in the Perfection Certificate delivered to the Collateral Agent as of the date set forth therein or such other locations inside the United States as the Issuer may specify in a written notice to the Collateral Agent, except that Debtors may (a) make dispositions of Collateral in accordance with Section 4.09(b) hereof, Section 3.5 of the Indenture and similar provisions of each of the other Priority Lien Debt Documents (provided, for the avoidance of doubt, that no disposition of Collateral shall be permitted hereunder unless it is made in accordance with each of Section 4.09(b) hereof, Section 3.5 of the Indenture and similar provisions of each of the other Priority Lien Debt Documents); and (b) move Collateral to another location in the United States, upon ten (10) Business Days prior written notice to the Collateral Agent.

 

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ARTICLE 4

C OVENANTS AND A GREEMENTS

Each Debtor covenants and agrees with the Collateral Agent and the holders of the Secured Obligations that, from and after the date of this Agreement until this Agreement terminates in accordance with Section 7.12(a):

Section 4.01 Covenants in Priority Lien Debt Documents . Such Debtor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Priority Lien Debt Default and no event that is or with the passage of time or the giving of notice (or both) would be a Priority Lien Debt Default is caused by the failure to take such action or to refrain from taking such action by such Debtor or any of its Restricted Subsidiaries.

Section 4.02 Maintenance of Insurance . Such Debtor will comply with the provisions of the Indenture and the other Priority Lien Debt Documents governing the maintenance of insurance for any of its assets constituting Collateral. All policies representing liability insurance of the Debtors shall name the Collateral Agent as additional insured in a form reasonably satisfactory to the Collateral Agent and all policies representing casualty insurance of the Debtors insuring Collateral shall name the Collateral Agent as loss payee in a form reasonably satisfactory to the Collateral Agent.

Section 4.03 Maintenance of Collateral; Maintenance of Perfected Security Interest; Further Documentation; Filing Authorization; Further Assurances; Power of Attorney . (a) Such Debtor shall maintain the Collateral that is material to the conduct of their respective businesses in good and insurable operating order, condition and repair. The Debtors shall pay all real estate and other taxes (except such as are contested in good faith and by appropriate negotiations or proceedings), and maintain in full force and effect all material permits, except, in each case, where the failure to effect such payment or maintain such permits is not adverse in any material respect to the holders of the Secured Obligations.

(b) Such Debtor shall maintain the security interest created by this Agreement as a perfected first priority security interest prior to all other Liens other than Permitted Prior Liens (and subject to the limitations on perfection and method of perfection provided in Article 5) and shall defend such security interest against the claims and demands of all Persons whomsoever.

(c) Such Debtor will furnish to the Collateral Agent from time to time (as set forth in the Indenture and the other Priority Lien Debt Documents) statements, schedules and perfection certificates (or supplements thereto) further identifying and describing the assets and property of such Debtor and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail.

(d) Subject in each case to Article 5 and the Intercreditor Agreement (if applicable), each Debtor further agrees to take any other action reasonably requested by the Collateral Agent to ensure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, the security interest in any and all of the Collateral

 

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including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC, to the extent, if any, that any Debtor’s signature thereon is required therefor; (ii) causing the Collateral Agent’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of the Collateral Agent to enforce, the security interest in such Collateral; (iii) complying with any provision of any statute, regulation or treaty of the United States or any other country as to any Collateral if compliance with such provision is a condition to the attachment, perfection or priority of, or the ability of the Collateral Agent to enforce, the security interest in such Collateral; and (iv) taking all actions required by the UCC or by other law, as applicable in any relevant Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign jurisdiction.

(e) Each Debtor hereby irrevocably authorizes the Collateral Agent, as directed by an Act of Required Priority Lien Debtholders, or its designee at any time and from time to time to file in any jurisdiction in which the Uniform Commercial Code has been adopted any initial financing statements and amendments thereto that describe the Collateral and contain any other information required by the UCC for the sufficiency or filing office acceptance of any initial financing statement or amendment. Each Debtor agrees to furnish any such information to the Collateral Agent promptly upon request. Each Debtor also ratifies its authorization for the Collateral Agent or its designee to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof and in respect of this Agreement. Notwithstanding the authorization provided to the Collateral Agent in this Section  4.03(e) , each Debtor shall be responsible for filing (and in furtherance of such obligation, each Debtor is hereby authorized to file) (i) any and all financing statements, (ii) continuations thereof and (iii) amendments thereto approved or requested by the Collateral Agent and, in each case, shall promptly furnish copies of the filed statements to the Collateral Agent.

(f) During the existence of a Priority Lien Debt Default, subject to the Intercreditor Agreement:

(i) At the Collateral Agent’s request, each Debtor shall take any actions reasonably requested by the Collateral Agent with respect to such Priority Lien Debt Default, including diligently endeavoring to cure any material defect existing or claimed with respect to any Collateral, and taking all reasonably necessary and desirable steps for the defense of any legal proceedings affecting any Collateral, including the employment of counsel, the prosecution or defense of litigation, and the release or discharge of all adverse claims;

(ii) The Collateral Agent, whether or not named as a party to any legal proceedings, is authorized to take any additional steps as the Collateral Agent deems necessary or desirable for the defense of any such legal proceedings or the protection of the validity or priority of this Agreement and the liens, security interests, and assignments created hereunder, including the employment of independent counsel, the prosecution or defense of litigation, the compromise or discharge of any adverse claims made with respect to any Collateral and the payment or removal of prior liens or security interests, and the reasonable expenses of the Collateral Agent in taking such action shall be paid by the Debtors; and

 

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(iii) Each Debtor agrees that, if such Debtor fails to perform under this Agreement or any other Priority Lien Debt Document, the Collateral Agent may, but shall not be obligated to, perform such Debtor’s obligations under this Agreement or such other Priority Lien Debt Document, and any reasonable expenses incurred by the Collateral Agent in performing such Debtor’s obligations shall be paid by such Debtor. Any such performance by the Collateral Agent may be made in good faith by the Collateral Agent in reliance on any statement, invoice, or claim, without inquiry into the validity or accuracy thereof. The amount and nature of any expense of the Collateral Agent hereunder shall be conclusively established by a certificate of any officer of the Collateral Agent absent manifest error.

(g) Each Debtor hereby irrevocably constitutes and appoints the Collateral Agent (and all Persons designated by the Collateral Agent) as such Debtor’s true and lawful attorney (and agent-in-fact) for the purposes provided in this clause (g). The Collateral Agent, or the Collateral Agent’s designee, may, without notice and in either its or a Debtor’s name, but at the cost and expense of Debtors:

(i) Endorse a Debtor’s name on any Payment Item constituting Proceeds of Collateral or other Proceeds of Collateral (including proceeds of insurance) that come into the Collateral Agent’s possession or control; and

(ii) During a Priority Lien Debt Default, (A) sell or assign any Collateral upon such terms, for such amounts and at such times as the Collateral Agent deems advisable; (B) collect, liquidate and receive balances in Collateral Accounts and take control, in any manner, of proceeds of Collateral; (C) endorse any Document, Instrument, bill of lading, or other document or agreement relating to any Equipment or other Collateral; (D) use information contained in any data processing, electronic or information systems relating to Collateral; (E) make and adjust claims under insurance policies that insure Collateral; (F) take any action as may be necessary or appropriate to obtain payment under any letter of credit, banker’s acceptance or other instrument for which a Debtor is a beneficiary and that constitutes Collateral; and (G) take all other actions as Collateral Agent deems appropriate to fulfill any Debtor’s obligations under the Priority Lien Debt Documents.

Section 4.04 Delivery of Instruments and Documents . If any amount payable under or in connection with any of the Collateral is or becomes evidenced by any Instrument, such Instrument shall, to the extent required by Article 5 and subject to the Intercreditor Agreement (if applicable), be immediately delivered to the Collateral Agent, duly indorsed, to be held as Collateral pursuant to this Agreement. If any good constituting Collateral are or become covered by a negotiable Document, such Document shall, to the extent required by Article 5, be immediately delivered to the Collateral Agent to be held as Collateral pursuant to this Agreement.

 

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Section 4.05 Investment Property . With respect to Investment Property (other than Excluded Property) and Pledged Equity:

(a) If any Debtor shall at any time hold or acquire any Pledged Equity which consists of certificated securities, whether as a stock split, stock dividend, or other distribution with respect to Pledged Equity, or otherwise, such Debtor shall promptly, and in any event within thirty (30) days after receipt thereof, subject to the Intercreditor Agreement (if applicable), deliver the same to the Collateral Agent, accompanied by such instruments of transfer or assignment duly executed in blank as the Collateral Agent may from time to time specify. If any Pledged Equity now owned or hereafter acquired by any Debtor consists of uncertificated securities and is issued to such Debtor or its nominee directly by the issuer thereof, such Debtor shall immediately notify the Collateral Agent in writing thereof, and, subject to the Intercreditor Agreement (if applicable), shall take any actions reasonably requested by the Collateral to enable the Collateral Agent to obtain “control” (within the meaning of Section 8-106 of the UCC) with respect thereto. If any Pledged Equity, whether certificated securities or uncertificated securities, or other Investment Property constituting Collateral now or hereafter acquired by any Debtor is held or acquired by such Debtor or its nominee through a securities intermediary or commodity intermediary, such Debtor shall immediately notify the Collateral Agent in writing thereof and, subject to the Intercreditor Agreement (if applicable), shall take any actions reasonably requested by the Collateral Agent to enable the Collateral Agent to obtain “control” (within the meaning of Section 8-106 and/or Section 9-106 of the UCC, as applicable) with respect thereto, including the execution of Control Agreements reasonably acceptable to the Collateral Agent. To the extent that the Collateral Agent has the right pursuant to the foregoing to give entitlement orders or instructions or directions to any issuer, securities intermediary or commodity intermediary or to withhold its consent to the exercise of any withdrawal or dealing rights by any Debtor, the Collateral Agent agrees with each Debtor that the Collateral Agent shall not give any such entitlement orders or instructions or directions to any such issuer, securities intermediary or commodity intermediary, and shall not withhold its consent to the exercise of any withdrawal or dealing rights by any Debtor, unless a Priority Lien Debt Default has occurred and is continuing.

(b) So long as no Priority Lien Debt Default has occurred and is continuing, each Debtor shall be entitled:

(i) to exercise, in a manner not inconsistent with the terms hereof, the voting power with respect to the Pledged Equity of such Debtor, and for that purpose the Collateral Agent shall (if any Pledged Equity shall be registered in the name of the Collateral Agent or its nominee) execute or cause to be executed from time to time, at the expense of the Issuer, such proxies or other instruments in favor of such Debtor or its nominee, in such form and for such purposes as shall be reasonably requested by such Debtor, to enable it to exercise such voting power with respect to the Pledged Equity; and

(ii) except as otherwise provided herein or in the Indenture, to receive and retain for its own account any and all payments, proceeds, dividends, distributions, property, assets, or rights to the extent such are permitted pursuant to the terms of the Indenture, other than (x) stock or liquidating dividends or (y) other

 

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dividends or other amounts payable under or in connection with any recapitalization, restructuring, or other non-ordinary course event (the dividends and amounts in this clause (y) being “ Extraordinary Payments ”), paid, issued or distributed from time to time in respect of the Pledged Equity. During the continuation of a Priority Lien Debt Default, if any Extraordinary Payment is paid or payable, then, subject to the Intercreditor Agreement (if applicable), such sum shall be paid by each such Debtor to the Collateral Agent promptly, and in any event within ten (10) Business Days after receipt thereof, to be held by the Collateral Agent, for the benefit of the holders of the Secured Obligations, as additional collateral hereunder.

(c) Upon the occurrence and during the continuance of any Priority Lien Debt Default, all rights of each Debtor to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to Section 4.05(b) and to receive the payments, proceeds, dividends, distributions, property, assets, or rights that the Debtor would otherwise be authorized to receive and retain pursuant to Section 4.05(b) shall cease, and thereupon the Collateral Agent, at the direction of the Required Priority Lien Debtholders by an Act of Required Priority Lien Debtholders (or otherwise, as set forth in the Collateral Agency Agreement), subject to the Intercreditor Agreement (if applicable), shall be entitled to exercise all voting power with respect to the Pledged Equity and to receive and retain, as additional collateral hereunder, any and all payments, proceeds, dividends, distributions, property, assets, or rights at any time declared or paid upon any of the Pledged Equity during such a Priority Lien Debt Default and otherwise to act with respect to the Pledged Equity as outright owner thereof. In the event that the Collateral Agent, at the direction of the Required Priority Lien Debtholders by an Act of Required Priority Lien Debtholders (or otherwise, as set forth in the Collateral Agency Agreement), exercises its rights under this Section 4.05(c), it shall concurrently deliver notice thereof to the Issuer.

(d) All payments, proceeds, dividends, distributions, property, assets, instruments or rights that are received by each Debtor contrary to the provisions of this Section 4.05 shall be received and held in trust for the benefit of the Collateral Agent, for the benefit of the holders of the Secured Obligations, shall be segregated by each Debtor from other funds of such Debtor and shall be forthwith paid over to the Collateral Agent as Pledged Equity in the same form as so received (with any necessary endorsement).

(e) If such Debtor is an issuer of Pledged Equity, such Debtor agrees that (i) it will be bound by the terms of this Agreement relating to the Pledged Equity issued by it and will comply with such terms insofar as such terms are applicable to it and (ii) it will comply with instructions received by it pursuant to the terms of Section 4.05(f) with respect to the Pledged Equity issued by it. In addition, if any such Debtor is a partnership or a limited liability company, such Debtor (i) confirms that none of the terms of any equity interest issued by it provides that such equity interest is a “ security ” within the meaning of the UCC, (ii) agrees that it will take no action to cause or permit any such equity interest to become a security, (iii) agrees that it will not issue any certificate representing any such equity interest and (iv) agrees that if, notwithstanding the foregoing, any such equity interest shall be or become a security, such Debtor will (and the Debtor that holds such equity interest hereby instructs such issuing Debtor to) comply with reasonable instructions originated by the Collateral Agent without further consent by such Debtor.

 

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(f) Each Debtor hereby authorizes and instructs each issuer of any Pledged Equity pledged by such Debtor hereunder to (i) comply with any instruction received by it from the Collateral Agent in writing that (x) states that a Priority Lien Debt Default has occurred and is continuing and (y) is otherwise in accordance with the terms of this Agreement, without any other or further instructions from such Debtor, and each Debtor agrees that each such issuer shall be fully protected in so complying, and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with respect to the Pledged Equity directly to the Collateral Agent for the benefit of the holders of the Secured Obligations.

Section 4.06 Collateral Accounts . The Debtors shall request in writing and otherwise take all necessary steps to ensure that all payments constituting Proceeds of the sale of Collateral are made directly to a Collateral Account. If any Debtor receives cash or Cash Equivalents that are identifiable proceeds of any Collateral, subject to the Intercreditor Agreement (if applicable), it shall hold same in trust for the Collateral Agent, for the benefit of the holders of the Secured Obligations, and promptly (not later than the next Business Day) deposit same into a Collateral Account.

Section 4.07 Intellectual Property . With respect to Intellectual Property:

(a) Such Debtor (either itself or through licensees) will (i) continue to use each Trademark necessary to the conduct of its business in order to maintain such Trademark in full force free from any claim of abandonment for non-use, (ii) use such Trademark with the appropriate notice of registration and substantially all other notices and legends required by applicable Laws, (iii) not knowingly adopt or use any mark which is confusingly similar or a colorable imitation of such Trademark unless the Collateral Agent, for the ratable benefit of the Secured Parties, shall obtain a perfected security interest in such mark pursuant to this Agreement, and (iv) not (and not knowingly permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby such Trademark necessary to the conduct of its business may become invalidated or impaired in any way;

(b) Such Debtor (either itself or through licensees) will not do any act, or omit to do any act, whereby any Patent necessary for the conduct of its business may become forfeited, abandoned or dedicated to the public;

(c) Such Debtor (either itself or through licensees) (i) will employ each Copyright necessary for the conduct of its business and (ii) will not (and will not knowingly permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any material portion of such Copyrights may become invalidated or otherwise impaired. Such Debtor will not (either itself or through licensees) do any act whereby any material portion of such Copyrights may fall into the public domain;

 

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(d) Such Debtor (either itself or through licensees) will not do any act that knowingly uses any Intellectual Property necessary for the conduct of its business to materially infringe the intellectual property rights of any other Person;

(e) Such Debtor will notify the Collateral Agent and each Priority Lien Representative in writing immediately if it knows, or has reason to know, that any application or registration relating to any Intellectual Property necessary for the conduct of its business may become forfeited, abandoned or dedicated to the public, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office) regarding such Debtor’s ownership of, or the validity of, any such Intellectual Property or such Debtor’s right to register the same or to own and maintain the same;

(f) Whenever such Debtor, either by itself or through any agent, employee, licensee or designee, shall file or acquire a registration of any Intellectual Property or an application for the registration therefor with the United States Patent and Trademark Office, the United States Copyright Office or any similar Governmental Authority of the United States, any State thereof or any other country, such Debtor shall report such filing or acquisition to the Collateral Agent within 30 days after the date on which such filing or acquisition occurs, and any such Intellectual Property shall automatically constitute Collateral and shall be subject to the security interest created by this Agreement. Upon request of the Collateral Agent, subject to the Intercreditor Agreement (if applicable), such Debtor shall promptly execute and deliver, and have recorded, any and all agreements, instruments, documents, and papers as the Collateral Agent may reasonably request to evidence the security interest granted hereunder to the Collateral Agent for the benefit of the holders of the Secured Obligations in any Copyright, Patent or Trademark necessary for the conduct of its business and the goodwill and general intangibles of such Debtor relating thereto or represented thereby;

(g) Such Debtor will take commercially reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office and the United States Copyright Office, to maintain and pursue each application relating to any Intellectual Property necessary for the conduct of its business (and to obtain the relevant registration) and to maintain each registration of such Intellectual Property, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability; and

(h) In the event that any Intellectual Property necessary for the conduct of its business is infringed, misappropriated or diluted by a third party, such Debtor shall (i) take such actions as such Debtor shall reasonably deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such Intellectual Property is of material economic value, promptly notify the Collateral Agent in writing after it learns thereof and take such actions as such Debtor shall reasonably deem appropriate under the circumstances, including filing suit for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to recover any and all damages for infringement, misappropriation or dilution.

 

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Section 4.08 Equipment . (a) Each Debtor shall keep accurate and complete records of its Equipment, including kind, quality, quantity, cost, acquisitions and dispositions thereof, and shall submit to the Collateral Agent, on such periodic basis as the Collateral Agent may request, a current schedule thereof, in form satisfactory to the Collateral Agent. Promptly upon request, the Debtors shall deliver to the Collateral Agent evidence of their ownership or interests in any Equipment.

(b) No Debtor shall sell, lease or otherwise dispose of any Equipment without prior written notice to the Collateral Agent, other than as permitted under the Indenture.

(c) The Equipment of each Debtor is in good operating condition and repair, and all necessary replacements and repairs have been made so that the value and operating efficiency of the Equipment is preserved at all times, in each case except for (i) reasonable wear and tear and (ii) Equipment that is being repaired or replaced in the ordinary course of business. Each Debtor shall ensure that the Equipment is mechanically and structurally sound, and capable of performing the functions for which it was designed, in accordance with manufacturer specifications, except where the failure to ensure the foregoing is not adverse in any material respect to the holders of the Secured Obligations. No Debtor shall permit any Equipment to become affixed to, or located at, real property leased by such Debtor if the aggregate amount of payments due by such Debtor during any fiscal year pursuant to the term of such lease exceeds $100,000, unless the Debtor shall have delivered prior written notice thereof to the Collateral Agent and shall use commercially reasonable efforts to cause the landlord of such real property to deliver to the Collateral Agent a lien waiver to the Collateral Agent. With respect to any real property leased by any Debtor upon which any Equipment is affixed or located as of the date hereof, if the terms of the lease for such real property provide for aggregate payments by such Debtor during any fiscal year in excess of $100,000, such Debtor shall use commercially reasonable efforts to cause the landlord of such real property to deliver to the Collateral Agent a lien waiver in a form reasonably acceptable to the Collateral Agent (which will not require the expenditure of any consent fee, other than reimbursement of costs, to the landlord). If a Debtor is unable to comply with the foregoing requirements of the third and fourth sentences of this Section 4.08(c) after using commercially reasonable efforts to do so, the Debtor shall deliver an Officers’ Certificate to the Collateral Agent certifying that it is unable to comply with such requirements after using commercially reasonable efforts to do so with a brief description of such efforts. The Collateral Agent may conclusively rely on such Certificate.

(d) Subject to Section 11.3(c) of the Indenture and the terms of the Intercreditor Agreement (if applicable), with respect to any item of Titled Equipment now or hereafter owned by a Debtor and with respect to which perfection must be effected by a means other than the filing of an appropriate financing statement under the applicable Uniform Commercial Code, such Debtor agrees to take such action (or cause its Subsidiaries to take such action), including endorsing certificates of title or executing applications for transfer of title, as is reasonably required by the Collateral to enable the Collateral Agent to properly perfect and protect its Lien on such Titled Equipment and to transfer the same.

 

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Section 4.09 Actions With Respect to Certain Collateral . (a) If any Debtor shall at any time hold or acquire a Commercial Tort Claim with a value in excess of $500,000, such Debtor shall promptly notify the Collateral Agent in a writing signed by such Debtor of the brief details thereof and, subject to the Intercreditor Agreement (if applicable), grant to the Collateral Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Collateral Agent.

(b) If any Debtor shall at any time hold or acquire any vessel, aircraft, aircraft engines, or aircraft propellers, such Debtor shall promptly notify the Collateral Agent in a writing signed by such Debtor, and shall take all actions reasonably requested by the Collateral Agent, subject to the Intercreditor Agreement (if applicable), to ensure the attachment, perfection and priority of, and the ability of the Collateral Agent to enforce, a security interest therein.

(c) If any goods that constitute Collateral with a value in excess of $250,000 are at any time in the possession of a bailee, the applicable Debtor or Debtors shall promptly notify the Collateral Agent in writing thereof and, if requested by the Collateral Agent and subject to the terms of the Intercreditor Agreement (if applicable), shall promptly use all commercially reasonable efforts to obtain a landlord’s agreement from such bailee, or a similar agreement in form and substance reasonably satisfactory to the Collateral Agent.

ARTICLE 5

L IMITATION ON P ERFECTION OF S ECURITY I NTEREST

Section 5.01 Instruments . The perfection of the security interest granted in Article 2 above in Instruments will, prior to the occurrence of a Priority Lien Debt Default (and after the occurrence of a Priority Lien Debt Default unless the Collateral Agent has required that further actions are taken with respect to the perfection thereof), be effected solely by filing an appropriate financing statement under the applicable Uniform Commercial Code so long as (a) with respect to all Instruments, the aggregate face amount of all such Instruments does not exceed $500,000 and (b) with respect to any individual Instrument, the face amount thereof does not exceed $500,000. Notwithstanding the foregoing, if no Priority Lien Debt Default exists, then upon the request of any Debtor the Collateral Agent shall deliver any Instrument in its possession to that Debtor if that Debtor requires possession in order to collect such Instrument. In the event that the aggregate face amount of such Instruments exceeds $500,000 individually or in the aggregate, the Debtors shall provide prompt written notice thereof to the Collateral Agent.

Section 5.02 Documents . The perfection of the security interest granted in Article 2 above in Documents will, prior to the occurrence of a Priority Lien Debt Default (and after the occurrence of a Priority Lien Debt Default unless the Collateral Agent has required that further actions are taken with respect to the perfection thereof), be effected solely by filing an appropriate financing statement under the applicable Uniform Commercial Code so long as (a) the aggregate value of the goods covered by all such Documents does not exceed $500,000 and (b) the value of the goods covered by any individual Document does not exceed $500,000. In the event that the value of goods constituting Collateral covered by such Documents exceeds $500,000 individually or in the aggregate, the Debtors shall provide prompt written notice thereof to the Collateral Agent.

 

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Section 5.03 Letter of Credit Rights . The perfection of the security interest granted in Article 2 above in Letter-of-Credit Rights will be required only with respect to (a) solely following the occurrence of a Priority Lien Debt Default and request by the Collateral Agent, any individual Letter-of-Credit Right the face amount of which exceeds $2,500,000 and (b) any Letter-of-Credit-Rights constituting Supporting Obligations. In the event that the face amount of any individual Letter-of-Credit Right exceeds $2,500,000 or that any Letter-of-Credit-Rights constitute Supporting Obligations, the Debtors shall provide prompt written notice thereof to the Collateral Agent.

Section 5.04 Fixtures . The perfection of the security interest granted in Article 2 above in Fixtures will, prior to the occurrence of a Priority Lien Debt Default (and after the occurrence of a Priority Lien Debt Default unless the Collateral Agent has required that further actions are taken with respect to the perfection thereof), be effected by, at the option of the Collateral Agent, either (1) filing an appropriate financing statement with the appropriate Secretary of State under the applicable Uniform Commercial Code or (2) filing a Mortgage constituting an appropriate Fixture filing in the real property records of the applicable jurisdiction.

Section 5.05 Actions Outside United States . Notwithstanding anything to the contrary herein, no Debtor shall be required to take any actions under any laws outside of the United States to grant, perfect or provide for the enforcement of any security interest granted or created under this Agreement.

ARTICLE 6

R EMEDIAL P ROVISIONS

During the existence of a Priority Lien Debt Default, the Collateral Agent, subject to the Intercreditor Agreement, at the direction of the Required Priority Lien Debtholders by an Act of Required Priority Lien Debtholders (or as otherwise set forth in the Collateral Agency Agreement), exercise one or more of the remedies specified elsewhere in this Agreement or the following remedies:

Section 6.01 General Interim Remedies . (a) To the extent permitted by Law, the Collateral Agent may exercise all the rights and remedies of a secured party under the UCC.

(b) The Collateral Agent may prosecute actions in equity or at law for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted or for the enforcement of any other appropriate legal or equitable remedy without posting a bond or providing other security.

(c) The Collateral Agent may require any Debtor to promptly assemble any tangible Collateral of such Debtor and make it available to the Collateral Agent at a place to be designated by the Collateral Agent. The Collateral Agent or its designee may occupy any premises owned or leased by any Debtor where the Collateral is assembled for a reasonable period in order to effectuate the Collateral Agent’s rights and remedies hereunder or under law, without obligation to any Debtor with respect to such occupation.

 

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Section 6.02 Instruments and Payment Intangibles . Without limiting any other rights of the Collateral Agent under the Priority Lien Debt Documents, during the existence of a Priority Lien Debt Default, the Collateral Agent, at the direction of the Required Priority Lien Debtholders by an Act of Required Priority Lien Debtholders (or as otherwise set forth in the Collateral Agency Agreement), shall, establish Collateral Accounts for the purpose of collecting the payments due to the Debtors with respect to Instruments and/or Payment Intangibles that constitute Collateral and holding the proceeds thereof, and may, or may direct the Debtors to, instruct all makers and/or all obligors with respect thereto to make all payments with respect to such Collateral directly to the Collateral Agent, for the benefit of the holders of the Secured Obligations, for deposit into such Collateral Account. After such direction to the Debtors, all payments, whether of principal, interest, or other amounts with respect to Instruments and/or Payment Intangibles that constitute Collateral shall be directed to such Collateral Accounts until such direction is revoked in writing by the Collateral Agent. All such payments which may from time to time come into the possession of any Debtor shall be held in trust for the Collateral Agent for the benefit of the holders of the Secured Obligations, segregated from the other funds of such Debtor, and delivered to the Collateral Agent immediately in the form received with any necessary endorsement for deposit into such Collateral Account, such delivery in no event to be later than one Business Day after receipt thereof by the applicable Debtor. Each Debtor agrees to execute any documents reasonably requested by the Collateral Agent to create any Collateral Account and pledge it to the Collateral Agent for the benefit of the holders of the Secured Obligations. In connection with the foregoing, the Collateral Agent shall have the right at any time during the existence of a Priority Lien Debt Default to take any of the following actions, in the Collateral Agent’s own name or in the name of the applicable Debtor: compromise or extend the time for payment of any payments due with respect to any Instrument upon such terms as the Collateral Agent may reasonably determine; endorse the name of the applicable Debtor, on checks, instruments, or other evidences of payment with respect to any such Collateral; make written or verbal requests for verification of amount owing on any such Collateral from the maker thereof or obligor thereunder; open mail addressed to such Debtor which the Collateral Agent reasonably believes relates to any such Collateral, and, to the extent of checks or other payments with respect to any such Collateral, dispose of same in accordance with this Agreement; take action in the Collateral Agent’s name or the applicable Debtor’s name, to enforce collection; and take all other action necessary to carry out this Agreement and give effect to the Collateral Agent’s rights hereunder. Costs and expenses incurred by the Collateral Agent in collection and enforcement of amounts owed under any Contracts or otherwise with respect to Instruments and/or Payment Intangibles that constitute Collateral, including attorneys’ fees and out-of-pocket expenses, shall be reimbursed by the applicable Debtor to the Collateral Agent on demand.

Section 6.03 Pledged Equity . (a) Each Debtor recognizes that the Collateral Agent may be unable to effect a public sale of any or all the Pledged Equity, by reason of certain prohibitions contained in the Securities Act of 1933, as amended, and applicable state securities laws or otherwise, and may be compelled to resort to one or more private

 

22


sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Debtor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Collateral Agent shall be under no obligation to delay a sale of any of the Pledged Equity for the period of time necessary to permit the issuer thereof to register such securities for public sale under the Securities Act of 1933, as amended, or under applicable state securities laws, even if such issuer would agree to do so.

(b) Each Debtor agrees to use its commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Equity pursuant to this Section 6.03 valid and binding and in compliance with any and all other applicable Laws; provided that, notwithstanding the foregoing, each Debtor agrees to use its best efforts to obtain all Affiliate consents and approvals and cause to be done all such other acts by any Affiliate as may be necessary to make such sale or sales of all or any portion of the Pledged Equity pursuant to this Section 6.03 valid and binding and in compliance with any and all other applicable Laws. Each Debtor further agrees that a breach of any of the covenants contained in this Section 6.03 will cause irreparable injury to the Collateral Agent and the holders of the Secured Obligations, that the Collateral Agent and the holders of the Secured Obligations have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 6.03 shall be specifically enforceable against such Debtor, and such Debtor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Priority Lien Debt Default has occurred.

Section 6.04 Foreclosure . (a) The Collateral Agent may foreclose on the Collateral in any manner permitted by the courts of or in the State of New York or the jurisdiction in which any Collateral is located. If the Collateral Agent should institute a suit for the collection of the Secured Obligations and for the foreclosure of this Agreement, the Collateral Agent may at any time before the entry of a final judgment dismiss the same, and take any other action permitted by this Agreement.

(b) To the extent permitted by law, the Collateral Agent may exercise all the foreclosure rights and remedies of a secured party under the UCC. In connection therewith, the Collateral Agent may sell any Collateral at public or private sale, at the office of the Collateral Agent or elsewhere, for cash or credit and upon such other terms as the Collateral Agent deems commercially reasonable. The Collateral Agent may sell any Collateral at one or more sales, and the security interest granted hereunder shall remain in effect as to the unsold portion of the Collateral. Each Debtor agrees that to the extent permitted by law such sales may be made without notice. If notice is required by law, each Debtor hereby deems ten days advance notice of the time and place of any public or private sale reasonable notification, recognizing that if any portion of the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, shorter notice may be reasonable. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may

 

23


adjourn any sale by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was adjourned. In the event that any sale hereunder is not completed or is defective in the opinion of the Collateral Agent, the Collateral Agent shall have the right to cause subsequent sales to be made hereunder. Any statements of fact or other recitals made in any bill of sale, assignment, or other document representing any sale hereunder, including statements relating to the occurrence of a Priority Lien Debt Default, acceleration of the Secured Obligations, notice of the sale, the time, place, and terms of the sale, and other actions taken by the Collateral Agent in relation to the sale may be conclusively relied upon by the purchaser at any sale hereunder. The Collateral Agent may delegate to any agent the performance of any acts in connection with any sale hereunder, including the sending of notices and the conduct of the sale.

Section 6.05 Application of Proceeds . (a) Unless otherwise specified herein, any cash proceeds received by the Collateral Agent from the sale of, collection of, or other realization upon any part of the Collateral or any other amounts received by the Collateral Agent hereunder may be, at the discretion of the Collateral Agent (i) held by the Collateral Agent in one or more Collateral Accounts as cash collateral for the Secured Obligations or (ii) subject to the terms of the Collateral Agency Agreement and, if applicable, the Intercreditor Agreement, applied to the Secured Obligations.

(b) Amounts applied to the Secured Obligations shall be applied in the following order:

First , to the payment of the costs and expenses of exercising the Collateral Agent’s rights hereunder, whether expressly provided for herein or otherwise; and

Second , to the payment of the Secured Obligations in the order set forth in Section 3.4 of the Collateral Agency Agreement and the Priority Lien Debt Documents.

Any surplus cash collateral or cash proceeds held by the Collateral Agent after payment in full of the Secured Obligations shall be paid over to such Debtor or to whomever may be lawfully entitled to receive such surplus.

Section 6.06 Waiver of Certain Rights . To the full extent each Debtor may do so, such Debtor shall not insist upon, plead, claim, or take advantage of any law providing for any appraisement, valuation, stay, extension, or redemption, and such Debtor hereby waives and releases the same, and all rights to a marshaling of the assets of such Debtor, including the Collateral of such Debtor, or to a sale in inverse order of alienation in the event of foreclosure of the liens and security interests hereby created. Such Debtor shall not assert any right under any law pertaining to the marshaling of assets, sale in inverse order of alienation, the administration of estates of decedents or other matters whatever to defeat, reduce, or affect the right of the Collateral Agent under the terms of this Agreement.

 

24


Section 6.07 Remedies Cumulative . The Collateral Agent’s remedies under this Agreement and the Priority Lien Debt Documents to which any Debtor is a party shall be cumulative, and no delay in enforcing this Agreement and the Priority Lien Debt Documents to which any Debtor is a party shall act as a waiver of the Collateral Agent’s rights hereunder.

Section 6.08 Reinstatement . The obligations of each Debtor under this Agreement shall continue to be effective or automatically be reinstated, as the case may be, if at any time payment of any of the Secured Obligations is rescinded or otherwise must be restored or returned by the Collateral Agent upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Debtor or any other obligor or otherwise, all as though such payment had not been made.

ARTICLE 7

M ISCELLANEOUS

Section 7.01 Amendments . None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section 7.1 of the Collateral Agency Agreement.

Section 7.02 Notices . All notices, requests and demands to or upon the Collateral Agent hereunder shall be in writing and effected in the manner provided for in Section 7.5 of the Collateral Agency Agreement. All notices, requests and demands hereunder to any Debtor shall be in writing delivered by United States mail, telecopy number, personal delivery or nationally established overnight courier service set forth in Schedule 3.3(b) attached hereto or at such other address in the United States as may be specified by such Debtor in a written notice delivered to the Collateral Agent in accordance with Section 7.5 of the Collateral Agency Agreement.

Section 7.03 No Waiver by Course of Conduct; Cumulative Remedies; No Duty . No failure to exercise, nor any delay in exercising, on the part of the Collateral Agent, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Collateral Agent of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that the Collateral Agent would otherwise have on any future occasion. The rights and remedies provided herein and in the other Priority Lien Debt Document are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law. The powers conferred on the Collateral Agent under this Agreement are solely to protect the Collateral Agent’s rights under this Agreement and shall not impose any duty upon it to exercise any such powers. Except as elsewhere provided hereunder, the Collateral Agent shall have no duty as to any of the Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to the Collateral.

Section 7.04 Enforcement Expenses; Indemnification . (a) Each Debtor agrees to pay, or reimburse the Collateral Agent for, all costs and expenses incurred in connection with the enforcement, attempted enforcement, exercise, or preservation of any rights or remedies under this Agreement or the other Priority Lien Debt Document to which such Debtor is a party (including all such costs and expenses incurred during any “workout” or restructuring in respect of the Secured Obligations and during any legal proceeding, including any proceeding under any Bankruptcy Law), including all attorney fees.

 

25


(b) Each Debtor agrees, jointly and severally, to pay, and to indemnify and hold the Collateral Agent and each holder of the Secured Obligations harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.

(c) Each Debtor agrees to pay, and to indemnify and hold the Collateral Agent, each holder of the Secured Obligations, and their respective Affiliates, directors, officers, employees, counsel, agents and attorneys-in-fact (collectively the “ Indemnitees ”) harmless from, any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including the fees, charges and disbursements of any counsel for any Indemnitee) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with the execution, delivery, enforcement, performance or administration of any Guaranty, this Agreement, or any Priority Lien Debt Document to which such Debtor is a party, in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee ; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

(d) All amounts due under this Section 7.04 shall be payable upon demand therefor. The agreements in this Section shall survive repayment of the Secured Obligations and all other amounts payable under the Indenture and the other Priority Lien Debt Documents and the resignation and removal of the Collateral Agent.

Section 7.05 Successors and Assigns . This Agreement shall be binding upon the successors and assigns of each Debtor and shall inure to the benefit of the Collateral Agent and the holders of the Secured Obligations and their successors and assigns; provided that no Debtor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Collateral Agent.

Section 7.06 Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic communication (including via email PDF) shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 7.07 Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby and (b) the parties

 

26


shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 7.08 Section Headings . The Section headings used in this Agreement are included for convenience of reference only and shall not affect the interpretation of this Agreement.

Section 7.09 Integration . This Agreement, together with the other Priority Lien Debt Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.

Section 7.10 GOVERNING LAW ETC . Sections 7.12 (Governing Law), 7.13 (Consent to Jurisdiction; Waivers), and 7.14 (Waiver of Jury Trial) of the Collateral Agency Agreement are hereby incorporated by reference herein mutatis mutandis , as if set forth verbatim herein as agreements of the parties hereto.

Section 7.11 Additional Debtors . Each Restricted Subsidiary of the Issuer that is required to become a party to this Agreement after the date hereof pursuant to Section 7.17 of the Collateral Agency Agreement shall become a Debtor for all purposes of this Agreement upon execution and delivery by such Restricted Subsidiary of an instrument in the form of Annex I hereto.

Section 7.12 Termination; Releases . (a) This Agreement and the security interest created hereby shall terminate upon payment in full of all Secured Obligations (other than contingent indemnification obligations), at which time the Collateral Agent shall, subject to the Intercreditor Agreement, execute and deliver to the Debtors or the Debtors’ designee, at the Debtors’ expense, all Uniform Commercial Code termination statements and similar documents which the Debtors shall reasonably request from time to time to evidence such termination, shall deliver to the Debtors or the Debtors’ designee all Collateral then in its possession, and shall authorize the Issuer to remove the Collateral Agent as an additional insured or loss payee under the Debtor’s insurance policies. Any execution and delivery of termination statements or documents pursuant to this Section 7.12(a) shall be without recourse to or warranty by the Collateral Agent.

(b) Any Debtor other than the Issuer shall automatically be released from its obligations hereunder and the security interest granted hereby in the Collateral of such Debtor shall be automatically released as set forth in the Collateral Agency Agreement, the Indenture and the other Priority Lien Debt Documents. If any of the Collateral shall be sold, transferred or otherwise disposed of by any Debtor in a transaction permitted by the Permitted Lien Debt Documents the security interest created hereby in any Collateral that is so sold, transferred or otherwise disposed of shall automatically terminate and be released upon the closing of such sale, transfer or other disposition, as set forth in the Collateral Agency Agreement, Indenture and the other Priority Lien Debt Documents; provided , however , that such security interest will continue to attach to all Proceeds of such

 

27


sales or other dispositions. In connection with any of the foregoing, subject to the Intercreditor Agreement (if applicable), the Collateral Agent, upon receipt of an Officers’ Certificate stating that such termination is in compliance with the applicable provisions of the Priority Lien Debt Documents and that the Debtor is not required by the Priority Lien Debt Documents to grant any lien upon such property, shall deliver to the Debtors any Collateral then in its possession and shall execute and deliver to the Debtors or the Debtors’ designee, at the Debtors’ expense, all Uniform Commercial Code termination statements and similar documents that the Debtors shall reasonably request from time to time to evidence such termination. Any execution and delivery of termination statements or documents pursuant to this Section 7.12(b) shall be without recourse to or warranty by the Collateral Agent.

(c) Each Debtor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement originally filed in connection herewith without the prior written consent of the Collateral Agent subject to such Debtor’s rights under Section 9-509(d)(2) of the UCC.

(d) The Collateral Agent shall have no liability whatsoever to any other Priority Lien Secured Party as the result of any release of Collateral by it in accordance with (or which the Collateral Agent in good faith believed to be in accordance with) this Section 7.12.

Section 7.13 Intercreditor Agreement . Notwithstanding anything herein to the contrary, (i) the Liens and security interests granted to the Collateral Agent pursuant to this Agreement and (ii) the exercise of any right or remedy by the Collateral Agent hereunder or the application of Proceeds (including insurance proceeds) of any Collateral, are subject to the provisions of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the terms of this Agreement, the terms of the Intercreditor Agreement shall govern.

Section 7.14 Collateral Agent . The rights, privileges, immunities and protections of the Collateral Agent are contained in the Collateral Agency Agreement, which rights, privileges, immunities and protections are incorporated herein by reference. This Agreement is subject to the terms and conditions of the Collateral Agency Agreement.

[Signature pages follow.]

 

28


EXECUTED as of the date first above written.

 

UMB BANK, N.A.,
as Collateral Agent
By:   /s/ Shazia Flores
Name:   Shazia Flores
Title:   Vice President

[Signature Page to Security Agreement]


ACID SERVICES, LLC

ADMIRAL WELL SERVICE, INC.

BASIC ESA, INC.

BASIC MARINE SERVICES, INC.

CHAPARRAL SERVICE, INC.

FIRST ENERGY SERVICES COMPANY

GLOBE WELL SERVICE, INC.

JETSTAR ENERGY SERVICES, INC

JETSTAR HOLDINGS, INC.

JS ACQUISITION LLC

LEBUS OIL FIELD SERVICE CO.

MAVERICK COIL TUBING SERVICES, LLC

MAVERICK SOLUTIONS, LLC

MAVERICK STIMULATION COMPANY, LLC

MAVERICK THRU-TUBING SERVICES, LLC

MCM HOLDINGS, LLC

MSM LEASING, LLC

PERMIAN PLAZA, LLC

PLATINUM PRESSURE SERVICES, INC.

SCH DISPOSAL, L L C

SLEDGE DRILLING CORP.

THE MAVERICK COMPANIES, LLC

XTERRA FISHING & RENTAL TOOLS CO.

By:   /s/ T.M. “Roe” Patterson
Name:   T.M. “Roe” Patterson
Title:   President

[SIGNATURE PAGE TO SECURITY AGREEMENT]


BASIC ENERGY SERVICES, INC.
By:   /s/ T.M. “Roe” Patterson
Name:   T.M. “Roe” Patterson
Title:   President and Chief Executive Officer
BASIC ENERGY SERVICES LP, LLC
By:   /s/ T.M. “Roe” Patterson
Name:   T.M. “Roe” Patterson
Title:   President and Chief Executive Officer
BASIC ENERGY SERVICES GP, LLC
By:   /s/ T.M. “Roe” Patterson
Name:   T.M. “Roe” Patterson
Title:   President and Chief Executive Officer
BASIC ENERGY SERVICES, L.P.
By:   BASIC ENERGY SERVICES GP, LLC,
  its General Partner
By:   Basic Energy Services, Inc., its sole member
By:   /s/ T.M. “Roe” Patterson
Name:   T.M. “Roe” Patterson
Title:   President and Chief Executive Officer
TAYLOR INDUSTRIES, LLC
By:   /s/ T.M. “Roe” Patterson
Name:   T.M. “Roe” Patterson
Title:   Chief Executive Officer

[SIGNATURE PAGE TO SECURITY AGREEMENT]


SCHEDULE 3.3(a)

ORGANIZATION & LOCATION INFORMATION

 

Debtor

  

Jurisdiction &

Type of

Organization

  

Organizational

ID#

  

Chief Executive

Office, Sole Place of

Business, or

Principal Residence

Basic Energy Services, Inc.    Delaware corporation    3611854   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Acid Services, LLC    Kansas limited liability company    2347722   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Admiral Well Service, Inc.    Texas corporation    0801050244   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Basic Energy Services GP, LLC    Delaware limited liability company    3611876   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Basic Energy Services LP, LLC    Delaware limited liability company    3611879   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Basic Energy Services, L.P.    Delaware limited partnership    2307778   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Basic ESA, Inc.    Texas corporation    57139400   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Basic Marine Services, Inc.    Delaware corporation    3917169   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Chaparral Service, Inc.    New Mexico corporation    642181   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

First Energy Services Company    Delaware corporation    3215172   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Globe Well Service, Inc.    Texas corporation    46471700   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

JetStar Energy Services, Inc.    Texas corporation    800481218   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102


Debtor

  

Jurisdiction &

Type of

Organization

  

Organizational

ID#

  

Chief Executive

Office, Sole Place of

Business, or

Principal Residence

JetStar Holdings, Inc.    Delaware corporation    3954247   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

JS Acquisition LLC    Delaware corporation    4278935   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

LeBus Oil Field Service Co.    Texas corporation    77931600   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Maverick Coil Tubing Services, LLC    Colorado limited liability company    20001207071   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Maverick Solutions, LLC    Colorado limited liability company    20031245775   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Maverick Stimulation Company, LLC    Colorado limited liability company    19961105940   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Maverick Thru-Tubing Services, LLC    Colorado limited liability company    20091658924   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

MCM Holdings, LLC    Colorado limited liability company    20011090566   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

MSM Leasing, LLC    Colorado limited liability company    20091399908   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Permian Plaza, LLC    Texas limited liability company    800859993   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Platinum Pressure Services, Inc.    Texas corporation    0800888088   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

SCH Disposal, L.L.C.    Texas limited liability company    704317322   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Sledge Drilling Corp.    Texas corporation    800575730   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

Taylor Industries, LLC    Texas limited liability company    801259923   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

 

Schedule 3.3(a) to Security Agreement


Debtor

  

Jurisdiction &

Type of

Organization

  

Organizational

ID#

  

Chief Executive

Office, Sole Place of

Business, or

Principal Residence

The Maverick Companies, LLC    Colorado limited liability company    20061298717   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

XTERRA Fishing & Rental Tools Co.    Texas corporation    158550700   

801 Cherry Street,

Suite 2100,

Fort Worth, TX 76102

 

Schedule 3.3(a) to Security Agreement


SCHEDULE 3.3(b)

NOTICE INFORMATION

 

Debtor

  

Notice Information

Basic Energy Services, Inc.   

801 Cherry Street,

Suite 2100 Fort Worth, Texas 76102

Attention: T.M. “Roe” Patterson

Telephone: (432) 620-5500

Telecopier: (432) 620-5501

Electronic Mail:

Roe.Patterson@basicenergyservices.com

Acid Services, LLC
Admiral Well Service, Inc.
Basic Energy Services GP, LLC
Basic Energy Services LP, LLC
Basic Energy Services, L.P.
Basic ESA, Inc.
Basic Marine Services, Inc.
Chaparral Service, Inc.
First Energy Services Company
Globe Well Service, Inc.
JetStar Energy Services, Inc.
JetStar Holdings, Inc.
JS Acquisition LLC
LeBus Oil Field Service Co.
Maverick Coil Tubing Services, LLC
Maverick Solutions, LLC
Maverick Stimulation Company, LLC
Maverick Thru-Tubing Services, LLC
MCM Holdings, LLC
MSM Leasing, LLC
Permian Plaza, LLC
Platinum Pressure Services, Inc.
SCH Disposal, L.L.C.
Sledge Drilling Corp.
Taylor Industries, LLC
The Maverick Companies, LLC
XTERRA Fishing & Rental Tools Co.

 

Schedule 3.3(b) to Security Agreement


SCHEDULE 3.4

CERTAIN COLLATERAL

PATENTS/ TRADEMARKS

Schedule 3.6 of this Agreement is incorporated herein as if fully set forth herein.

 

Schedule 3.4 to Security Agreement


SCHEDULE 3.5(a)

PLEDGED EQUITY

 

Pledgor

  

Pledged Entity

  

Certificate #

  

Number & Type of Shares

  

Percentage of Shares

Basic Energy Services, Inc.    Basic Energy Services GP, LLC    002    1,000 Units of membership interest    100%
Basic Energy Services, Inc.    Basic Energy Services LP, LLC    002    1,000 Units of membership interest    100%
Basic Energy Services GP, LLC    Basic Energy Services, L.P.    *    0.10% GP interest    100%
Basic Energy Services, Inc.    Basic ESA, Inc.    135 & 136    510,000 shares of common stock    100%
Basic Energy Services, L.P.    Basic Energy Services International, LLC    *    1,000 Units of membership interest    100%
Basic ESA, Inc.    ESA de Mexico S.A. de C.v    *    1% partes sociales    100%
Basic Energy Services, L.P.    Basic Marine Services, Inc.    2    10 shares of common stock    100%
Basic Energy Services, L.P.    Chaparral Service, Inc.    10    13,000 shares of common stock    100%
Basic Energy Services, L.P.    First Energy Services Company    29    1,000 shares of common stock    100%
Basic Energy Services, L.P.    Globe Well Service, Inc.    21    4,521 shares of common stock    100%
Basic Energy Services, L.P.    JS Acquisition LLC    001    100 units of membership interest    100%
Basic Energy Services, L.P.    LeBus Oil Field Service Co.    42    1,000 shares of common stock    100%

 

Schedule 3.5(a) to Security Agreement


Pledgor

  

Pledged Entity

  

Certificate #

  

Number & Type of Shares

  

Percentage of Shares

Basic Energy Services, L.P.    Maverick Coil Tubing Services, LLC    *    Membership interests    100%
Basic Energy Services, L.P.    Maverick Solutions, LLC    *    Membership interests    100%
Basic Energy Services, L.P.    Maverick Stimulation Company, LLC    *    Membership interests    100%
Basic Energy Services, L.P.    Maverick Thru-Tubing Services, LLC    *    Membership interests    100%
Basic Energy Services, L.P.    MCM Holdings, LLC    *    Membership interests    100%
Basic Energy Services, L.P    MSM Leasing, LLC    *    Membership interests    100%
Basic Energy Services, L.P    The Maverick Companies, LLC    *    Membership interests    100%
Basic Energy Services, L.P.    Permian Plaza, LLC    1    Membership interest    100%
Basic Energy Services, L.P.    Platinum Pressure Services, Inc.    12    9,642,862 shares of common stock    100%
Basic Energy Services, L.P.    SCH Disposal, L.L.C.    6    Membership interest    100%
Basic Energy Services, L.P.    Sledge Drilling Corp.    7    650,000 shares of common stock    100%
Basic Energy Services, L.P.    Taylor Industries, LLC    1    Membership interest    100%
Basic Energy Services, L.P.    XTERRA Fishing & Rental Tools Co.    6    68,000 shares of common stock    100%
Basic Energy Services, L.P.    Robota Energy Equipment, LLC    1    Membership interest    80%

 

Schedule 3.3(a) to Security Agreement


Pledgor

  

Pledged Entity

  

Certificate #

  

Number & Type of Shares

  

Percentage of Shares

Basic Energy Services, LP, LLC    Basic Energy Services, L.P.    *    99.9% Limited Partnership Interest    100%
JetStar Holdings, Inc.    JetStar Energy Services, Inc.    C001    100 shares of common stock    100%
JS Acquisition LLC    Acid Services, LLC    23    Membership interest    100%
JS Acquisition LLC (successor by merger to JetStar Consolidated Holdings, Inc.)    JetStar Holdings, Inc.    C002    100 shares of common stock    100%
Platinum Pressure Services, Inc.    Admiral Well Service, Inc.    2    100 shares of common stock    100%
Basic Energy Services, L.P.    Robota Energy Equipment, LLC    6    20 units of membership interest    20%

 

*

The membership interest in each of the entities are not currently represented by certificates issued to the membership interest owner.

 

Schedule 3.3(a) to Security Agreement


SCHEDULE 3.5(c)

INSTRUMENTS

Intercompany Note.

 

Schedule 3.5(c) to Security Agreement

Exhibit 10.3

Execution Version

 

 

 

SECURITY AGREEMENT

Dated as of October 2, 2018

among

BASIC ENERGY SERVICES, INC.

and the other Debtors parties hereto

in favor of

BANK OF AMERICA, N.A.,

as Administrative Agent

 

 

 


TABLE OF CONTENTS

(CONTINUED)

 

SECTION 1. DEFINITIONS

     1  

SECTION 2. GRANT OF SECURITY INTEREST

     5  

2.1

  Grant of Security Interest      5  

2.2

  Avoidance Limitation      6  

2.3

  Debtors Remain Liable      6  

SECTION 3. REPRESENTATIONS AND WARRANTIES

     6  

3.1

  Title; No Other Liens      6  

3.2

  Perfected First Priority Liens      7  

3.3

  Debtor’s Legal Name; Jurisdiction of Organization; Chief Executive Office      7  

3.4

  Certain Collateral      7  

3.5

  Chattel Paper and Instruments      7  

3.6

  Receivables      7  

3.7

  Bank Accounts      8  

SECTION 4. COVENANTS AND AGREEMENTS

     8  

4.1

  Covenants in Credit Agreement      8  

4.2

  Maintenance of Insurance      9  

4.3

  Maintenance of Perfected Security Interest; Further Documentation; Filing Authorization; Further Assurances; Power of Attorney      9  

4.4

  Changes in Name, etc.      11  

4.5

  Delivery of Instruments, Chattel Paper, and Documents      11  

4.6

  Deposit Accounts, Securities Accounts, and Commodity Accounts      11  

4.7

  Modifications of Receivables, Chattel Paper, Instruments and Payment Intangibles; Administration of Receivables      13  

4.8

  Actions With Respect to Certain Collateral      13  

SECTION 5. LIMITATION ON PERFECTION OF SECURITY INTEREST

     14  

5.1

  Chattel Paper and Instruments      14  

5.2

  Documents      14  

5.3

  Letter-of-Credit Rights      15  

SECTION 6. REMEDIAL PROVISIONS

     15  

6.1

  General Interim Remedies      15  

6.2

  Receivables, Chattel Paper, Instruments and Payment Intangibles      15  

6.3

  Contracts      16  

6.4

  Foreclosure      17  

6.5

  Application of Proceeds      17  

6.6

  Waiver of Certain Rights      18  

6.7

  Remedies Cumulative      18  

6.8

  Reinstatement      18  

 

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TABLE OF CONTENTS

(CONTINUED)

 

SECTION 7. MISCELLANEOUS

     18  

7.1

  Amendments      18  

7.2

  Notices      18  

7.3

  No Waiver by Course of Conduct; Cumulative Remedies; No Duty      18  

7.4

  Enforcement Expenses; Indemnification      19  

7.5

  Successors and Assigns      20  

7.6

  Set-Off      20  

7.7

  Counterparts      20  

7.8

  Severability      20  

7.9

  Section Headings      20  

7.10

  Integration      20  

7.11

  Governing Law Etc.      21  

7.12

  Additional Debtors      22  

7.13

  Termination; Releases      22  

SCHEDULES

 

Schedule 3.3

          Organization Information

Schedule 3.4

          Certain Collateral

Schedule 3.5

          Instruments

Schedule 3.7

          Bank Accounts

ANNEX

 

Annex I

          Security Agreement Supplement

 

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SECURITY AGREEMENT

This SECURITY AGREEMENT dated as of October 2, 2018 (this “ Agreement ”), is among BASIC ENERGY SERVICES, INC., a Delaware corporation (the “ Borrower ”), the undersigned subsidiaries of the Borrower (the Borrower and such undersigned subsidiaries collectively being the “ Debtors ” and individually being a “ Debtor ”), and BANK OF AMERICA, N.A., in its capacity as administrative agent (in such capacity, the “ Administrative Agent ”) for the benefit of the holders of the Secured Obligations (as defined below).

INTRODUCTION

Reference is made to that certain ABL Credit Agreement dated as of October 2, 2018 (as amended, restated or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrower, certain financial institutions which are or may become parties thereto, and Bank of America, N.A., as Administrative Agent. Pursuant to that certain Guaranty dated as of October 2, 2018 (as amended, restated or otherwise modified from time to time, the “ Guaranty ”), made by the Debtors (other than the Borrower) in favor of the Administrative Agent, such Debtors have agreed to guarantee, among other things, the full payment and performance of all of the Borrower’s obligations under the Credit Agreement.

The Debtors share an identity of interest as members of a combined group of companies and will derive substantial direct and indirect economic and other benefits from the extensions of credit under the Credit Agreement. Therefore, in consideration of the credit expected to be received in connection with the Credit Agreement, the Debtors jointly and severally agree with the Administrative Agent as follows:

SECTION 1.

DEFINITIONS

1.1 Terms defined above and elsewhere in this Agreement shall have their specified meanings. Capitalized terms used herein but not defined herein or in the UCC shall have the meanings specified by the Credit Agreement. All capitalized terms used herein and defined in the UCC (unless otherwise defined herein) shall have the same definitions herein as specified therein.

1.2 Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Debtor, shall refer to such Debtor’s Collateral or the relevant part thereof.

1.3 The following terms shall have the following meanings:

Collateral ” has the meaning specified in Section  2.1 .

Collateral Account ” means any deposit account with the Administrative Agent (including any Dominion Account) which is designated, maintained, and under the sole control of the Administrative Agent and is pledged to the Administrative Agent which has been established pursuant to the provisions of this Agreement or the Credit Agreement for the purposes described in this Agreement or the Credit Agreement including collecting, holding, disbursing, or applying certain funds.


Contracts ” means all contracts, undertakings, or agreements (other than rights evidenced by Chattel Paper, Documents or Instruments) with any customer of any Debtor to which any Debtor now is, or hereafter will be, bound or a party, beneficiary or assignee thereof or thereto, in any event, including all contracts, undertakings, or agreements in or under which any Debtor may now or hereafter have any right, title or interest, including any agreement relating to the terms of payment or the terms of performance of any Receivable.

Control Agreement ” means any account control agreement entered into pursuant to Section  4.6 of this Agreement.

Deposit Accounts ” means all “deposit accounts” (as defined in the UCC) now or hereafter held in the name of any Debtor, other than any Excluded Account.

Event of Default ” means any “Event of Default” under the Credit Agreement.

Excluded Accounts ” means, collectively, (a) Senior Notes Collateral Accounts, (b) Deposit Accounts exclusively used for payroll, payroll taxes or employee benefits and (c) Deposit Accounts that have a balance of less than $250,000 at all times; provided that the aggregate balance of all such Deposit Accounts described under this clause (c) shall not exceed $2,000,000 in the aggregate at any time.

Excluded Property ” means any of the following property or assets of any Debtor:

(a) General Intangibles and Contracts which by their respective express terms prohibit the grant of a security interest, except to the extent such prohibition is ineffective under the UCC;

(b) permits and licenses to the extent the grant of a security interest therein is prohibited under applicable Law or regulation or by their express terms, except to the extent such prohibition is ineffective under the UCC;

(c) Equity Interests in any Subsidiary of the Borrower;

(d) any Senior Notes Collateral Account and all funds on deposit therein constituting the identifiable Proceeds of Senior Notes Collateral; and

(e) any other Senior Notes Collateral.

Inventory ” means all of each Debtor’s present and future inventory, wherever located, including inventory, merchandise, goods and other personal property that are held by or on behalf of any Debtor for sale or lease or are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process, finished goods, returned goods, or materials or supplies of any kind, nature or description used or consumed or to be used or consumed in such Debtor’s business or in the processing, production, packaging, promotion, delivery or shipping of the same, including all supplies, and embedded software. “Inventory” shall also include inventory in joint production with another person, inventory in which any Debtor has an interest as consignor, and inventory that is returned to or stopped in transit by any Debtor, and all combinations and products thereof.

 

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Investment Property ” means, other than any shares or Equity Interests constituting Excluded Property, all investment property now owned or hereafter acquired by any Debtor, wherever located, including (a) all securities, whether certificated or uncertificated, including stocks, bonds, interests in limited liability companies, partnership interests, treasuries, certificates of deposit, and mutual fund shares; (b) all securities entitlements of any Debtor, including the rights of any Debtor to any Securities Account and the financial assets held by a securities intermediary in such Securities Account and any free credit balance or other money owing by any securities intermediary with respect to that account; (c) all Securities Accounts of any Debtor; (d) all commodity contracts of any Debtor; and (e) all Commodity Accounts held by any Debtor.

Payment Item ” means each check, draft or other item of payment payable to a Debtor, including those constituting proceeds of any Collateral.

Permitted Liens ” means any Liens permitted by Section  7.01 of the Credit Agreement.

Permitted Prior Liens ” means the following: (a) with respect to Accounts, Instruments and Deposit Accounts, Liens permitted by clauses (c) and (h) of Section  7.01 of the Credit Agreement and, solely with respect to applicable Deposit Accounts, Liens permitted by clause (f) of Section  7.01 of the Credit Agreement, and (b) with respect to all other property, Permitted Liens.

Proceeds ” means all of each Debtor’s present and future (a) proceeds of the Collateral, whether arising from the collection, sale, lease, exchange, assignment, licensing, or other disposition of the Collateral, (b) any and all payments (in any form whatsoever) made or due and payable from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental Authority (or any person acting under color of governmental authority), (c) claims against third parties for impairment, loss, damage, or impairment of the value of such property, and (d) any and all proceeds of, and all claims for, any insurance, indemnity, warranty or guaranty payable from time to time with respect to any of the Collateral, including any credit insurance with respect to Receivables, in each case whether represented as money, deposit accounts, accounts, general intangibles, securities, instruments, documents, chattel paper, inventory, equipment, fixtures, or goods.

Receivables ” means all of each Debtor’s present and future Accounts, Accounts from Governmental Authorities and Payment Intangibles, including those arising from the provision of services, sale of Inventory, or renting of equipment to the customers of any Debtor, and rights to payment under all Contracts, income tax refunds, and other rights to the payment of money, together with all of the right, title and interest of any of the Debtors in and to (a) all security pledged, assigned, hypothecated or granted to or held by any of the Debtors to secure the foregoing, (b) all of any of the Debtors’ right, title and interest in and to any goods or services, the sale of which gave rise thereto, (c) all guarantees, endorsements and indemnifications on, or of, any of the foregoing, (d) all powers of attorney granted to any of the Debtors for the execution of any evidence of indebtedness or security or other writing in connection therewith, (e) all credit information, reports and memoranda relating thereto, and (f) all other writings related in any way to the foregoing.

 

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Records ” means all of each Debtor’s present and future books, accounting records, files, computer files, computer programs, correspondence, credit files, records, ledger cards, invoices, and other records primarily related to any other items of Collateral, including without limitation all similar information stored on a magnetic medium or other similar storage device and other papers and documents in the possession or under the control of any of the Debtors or any computer bureau from time to time acting for any of the Debtors.

Secured Obligations ” means (a) all principal, interest, premium, fees, reimbursements, indemnifications, and other amounts now or hereafter owed by the Borrower under the Credit Agreement, this Agreement, and the other Loan Documents; (b) all amounts now or hereafter owed by the other Debtors under the Guaranty, this Agreement, and the other Loan Documents; (c) all Obligations now or hereafter owed by the Borrower or any other Loan Party to any Hedge Bank with respect to any Swap Contract, (d) all Obligations now or hereafter owed by the Borrower or any other Loan Party to any Cash Management Bank with respect to any Cash Management Agreement, and (e) any increases, extensions, renewals, replacements, and rearrangements of the foregoing obligations under any amendments, supplements, and other modifications of the agreements creating the foregoing obligations, in each case, whether direct or indirect, absolute or contingent.

Securities Accounts ” means all securities accounts (as defined in the UCC) now or hereafter held in the name of any Debtor.

Senior Notes Collateral ” means the “Collateral” as defined in that certain Security Agreement dated as of even date herewith among the Debtors and the Senior Notes Collateral Agent, and includes all of each Debtor’s present or future owned or leased fixtures and equipment wherever located, including drilling platforms and rigs and remotely operated vehicles, trenchers, and other equipment used by any Debtor for the provision of construction services, well operations services, oil and gas production services, contract drilling services, fluid services or other services, trucks, vehicles, motor vehicles, rolling stock, vessels, aircraft, tanks, well service units and equipment, fracturing test tanks, pumping equipment, fluid services equipment, disposal facilities and any manuals, instructions, blueprints, computer software (including software that is imbedded in and part of the equipment).

Senior Notes Collateral Agent ” means UMB Bank, N.A., in its capacity as collateral agent, under the Senior Notes Indenture.

Specified ABL Collateral ” means all General Intangibles (excluding trademarks, trade names and other intellectual property), Investment Property, Instruments, Documents, Letter-of-Credit Rights, Commercial Tort Claims and Supporting Obligations, in each case pertaining to the property described in clause (a) of Section  2.1 .

State of Organization ” means the jurisdiction of organization of each of the Debtors as listed on Schedule  3.3 .

 

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Supporting Obligations ” means all supporting obligations, including letters of credit and guaranties issued in support of Accounts, Chattel Paper, Documents, General Intangibles, or Instruments.

UCC ” means the Uniform Commercial Code as in effect on the date hereof in the State of New York, as amended from time to time, and any successor statute.

SECTION 2.

GRANT OF SECURITY INTEREST

2.1 Grant of Security Interest . Each Debtor hereby grants to the Administrative Agent, for the benefit of the holders of the Secured Obligations, a security interest in all of such Debtor’s right, title, and interest in and to the following property, in each case whether now owned or existing or hereafter acquired or arising (the “ Collateral ”), to secure the payment and performance of the Secured Obligations:

(a) all Receivables (including unbilled accounts but excluding Accounts arising solely from the sale, assignment or other disposition of Senior Notes Collateral), Contracts, Chattel Paper and Inventory;

(b) all Specified ABL Collateral;

(c) all Deposit Accounts (other than Excluded Accounts) with any bank or other financial institution (including all cash, cash equivalents, financial assets, negotiable instruments and other evidence of payment, and other funds on deposit therein or credited thereto);

(d) all Securities Accounts (other than Securities Accounts that contain only the identifiable Proceeds of the Senior Notes Collateral) with any securities intermediary (including any and all Investment Property and all funds or other property held therein or credited thereto);

(e) all Commodity Accounts (other than Commodity Accounts that contain only the identifiable Proceeds of the Senior Notes Collateral) with any commodities intermediary (including any and all commodity contracts and all funds and other property held therein or credited thereto);

(f) all Records relating to the foregoing and all accessions to, substitutions for and replacements of the foregoing, together with all customer lists, credit files, computer files, programs, printouts and other computer materials and records related thereto; and

(g) to the extent not otherwise included, all Proceeds (including without limitation, all business interruption insurance and other insurance proceeds related to the above), Supporting Obligations and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing;

provided , however , that notwithstanding anything to the contrary contained herein or in any other Loan Document, this Agreement shall not constitute nor evidence a grant of a security interest, collateral assignment or any other type of Lien in Excluded Property; provided further , that the Proceeds of Excluded Property shall not constitute Excluded Property solely by virtue of being Proceeds thereof but only to the extent that such Proceeds otherwise independently constitute Excluded Property hereunder.

 

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To the extent that the Collateral is not subject to the UCC, each Debtor collaterally assigns all of such Debtor’s right, title, and interest in and to such Collateral to the Administrative Agent for the benefit of the holders of the Secured Obligations to secure the payment and performance of the Secured Obligations to the full extent that such a collateral assignment is possible under the relevant Law.

2.2 Avoidance Limitation . Notwithstanding Section  2.1 above, the amount of any Debtor’s Secured Obligations that are secured by its rights in Collateral subject to a Lien in favor of the Administrative Agent hereunder or under any other Loan Document shall be limited to the extent, if any, required so that the Liens it has granted under this Agreement shall not be subject to avoidance under Section 548 of the Bankruptcy Code of the United States or to being set aside or annulled under any applicable Law relating to fraud on creditors. In determining the limitations, if any, on the amount of any Debtor’s Secured Obligations that are subject to the Lien on such Debtor’s Collateral hereunder pursuant to the preceding sentence, it is the intention of the parties hereto that any rights of subrogation or contribution which such Debtor may have under the Guaranty, any other agreement, or applicable Law shall be taken into account.

2.3 Debtors Remain Liable . Anything herein to the contrary notwithstanding: (a) each Debtor shall remain liable under the Contracts included in the Collateral to the extent set forth therein to perform such Debtor’s obligations thereunder to the same extent as if this Agreement had not been executed; (b) the exercise by the Administrative Agent of any rights hereunder shall not release any Debtor from any obligations under the Contracts included in the Collateral; and (c) the Administrative Agent shall not have any obligation under the Contracts included in the Collateral by reason of this Agreement, nor shall the Administrative Agent be obligated to perform or fulfill any of the obligations of any Debtor thereunder, including any obligation to make any inquiry as to the nature or sufficiency of any payment any Debtor may be entitled to receive thereunder, to present or file any claim, or to take any action to collect or enforce any claim for payment thereunder.

SECTION 3.

REPRESENTATIONS AND WARRANTIES

To induce the Lenders to make Credit Extensions to the Borrower under the Credit Agreement, each Debtor hereby represents and warrants to the Administrative Agent, for the benefit of the holders of the Secured Obligations, that:

3.1 Title; No Other Liens . Except for the security interests granted to the Administrative Agent for the benefit of the holders of the Secured Obligations pursuant to this Agreement and the other Permitted Liens, such Debtor owns each item of the Collateral free and clear of any and all Liens or claims of others. No financing statement or other public notice with respect to all or any part of the Collateral is on file or of record in any public office, except such (a) as have been filed in favor of the Administrative Agent, for the ratable benefit of the holders of the Secured Obligations, pursuant to this Agreement, and (b) as are permitted by the Credit Agreement.

 

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3.2 Perfected First Priority Liens . The security interests granted pursuant to this Agreement (a) based upon the filing of a financing statement with respect to each Debtor describing the Collateral in the office located in the jurisdiction listed on Schedule  3.3 opposite such Debtor, and the taking of all applicable actions in respect of perfection contemplated by Sections  4.5 , 4.6 , and 4.8 in respect of Collateral, will constitute valid perfected security interests in all of the Collateral subject to Article 9 of the UCC in favor of the Administrative Agent, for the benefit of the holders of the Secured Obligations, as collateral security for such Debtor’s Obligations, enforceable in accordance with the terms hereof and the UCC against all creditors of such Debtor and any Persons purporting to purchase any Collateral from such Debtor and (b) are prior to all other Liens on the Collateral except for Permitted Prior Liens (and subject to the limitations on perfection and method of perfection provided in Section  5 ).

3.3 Debtor s Legal Name; Jurisdiction of Organization; Chief Executive Office . On the date of this Agreement, each Debtor’s exact legal name is set forth on the signature page hereof, and from and after an amendment or modification thereto, on a written notification delivered to the Administrative Agent pursuant to Section  4.4 . On the date hereof, such Debtor’s jurisdiction of organization, type of organization, identification number from the jurisdiction of organization (if any), and the location of such Debtor’s chief executive office or sole place of business or principal residence, as the case may be, are specified on Schedule  3.3 .

3.4 Certain Collateral . None of the Collateral constitutes, or is the Proceeds of, farm products, and none of the Collateral has been purchased for, or will be used by any Debtor primarily for, personal, family or household purposes. Except as set forth on Schedule  3.4 or otherwise notified to the Administrative Agent pursuant to Section  4.8 :

(a) none of the Account Debtors or other persons obligated on any of the Collateral of such Debtor is a Governmental Authority subject to the Federal Assignment of Claims Act or like federal or state statute or rule in respect of such Collateral of the type described in Section  4.8(a) ; and

(b) such Debtor holds no Commercial Tort Claims.

3.5 Chattel Paper and Instruments . Each of the Instruments and Chattel Paper pledged by such Debtor hereunder constitutes the legal, valid and binding obligation of the obligor with respect thereto, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, and general principles of equity. Schedule  3.5 lists all of the Instruments issued to or held by each Debtor as of the date hereof.

3.6 Receivables .

(a) No amount payable to such Debtor under or in connection with any Receivable is evidenced by any Instrument or Chattel Paper which has not been delivered to the Administrative Agent to the extent required by Section  5 .

 

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(b) The amounts represented by such Debtor to the Secured Parties from time to time as owing to such Debtor in respect of the Receivables will at such times be accurate in all material respects.

(c) With respect to each Account that is shown as an Eligible Account in a Borrowing Base Certificate submitted to the Administrative Agent:

(i) it is genuine and in all respects what it purports to be, and is not evidenced by a judgment;

(ii) it arises out of a completed, bona fide sale and delivery of goods or rendition of services in the ordinary course of business, and substantially in accordance with any purchase order, contract or other document relating thereto;

(iii) it is for a sum certain, maturing as stated in the invoice covering such sale or rendition of services, a copy of which has been furnished or is available to the Administrative Agent on request;

(iv) no extension, compromise, settlement, modification, credit, deduction or return has been authorized with respect to the Account, except discounts or allowances granted in the ordinary course of business that are reflected in the reports submitted to the Administrative Agent hereunder; and

(v) to the best of the applicable Debtor’s knowledge, (x) there are no facts or circumstances that are reasonably likely to impair the enforceability or collectability of such Account; (y) the Account Debtor had the capacity to contract when the Account arose, continues to meet the applicable Debtor’s customary credit standards, is solvent, is not contemplating or subject to an Insolvency Proceeding, and has not failed, or suspended or ceased doing business; and (z) there are no proceedings or actions threatened or pending against the Account Debtor that could reasonably be expected to have a material adverse effect on the Account Debtor’s financial condition.

3.7 Bank Accounts . Schedule  3.7 lists all Deposit Accounts, Securities Accounts, Commodities Accounts and other bank accounts maintained by or for the benefit of any Debtor as of the date hereof with any bank or financial institution together with a general description of the purpose of such account (e.g., collections, operating, payroll, etc.) and the approximate outstanding balance in such Deposit Account, Securities Account, Commodities Account and other bank account as of the date hereof.

SECTION 4.

COVENANTS AND AGREEMENTS

Each Debtor covenants and agrees with the Administrative Agent and the holders of the Secured Obligations that, from and after the date of this Agreement until this Agreement terminates in accordance with Section  7.13(a) :

4.1 Covenants in Credit Agreement . Such Debtor shall take, or shall refrain from taking, as the case may be, each action that is necessary to be taken or not taken, as the case may be, so that no Default or Event of Default is caused by the failure to take such action or to refrain from taking such action by such Debtor or any of its Subsidiaries.

 

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4.2 Maintenance of Insurance . Such Debtor will comply with the provisions of the Credit Agreement governing the maintenance of insurance for any of its assets constituting Collateral. All policies representing casualty insurance of the Debtors insuring Collateral shall name the Administrative Agent as lender loss payee in a form reasonably satisfactory to the Administrative Agent.

4.3 Maintenance of Perfected Security Interest; Further Documentation; Filing Authorization; Further Assurances; Power of Attorney .

(a) Such Debtor shall maintain the security interest created by this Agreement as a perfected first priority security interest prior to all other Liens other than Permitted Prior Liens (and subject to the limitations on perfection and method of perfection provided in Section  5 ) and shall defend such security interest against the claims and demands of all Persons whomsoever.

(b) Such Debtor will furnish to the Administrative Agent from time to time statements and schedules further identifying and describing the assets and property of such Debtor and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail.

(c) Subject in each case to Section  5 , each Debtor further agrees to take any other action reasonably requested by the Administrative Agent to ensure the attachment, perfection and priority of, and the ability of the Administrative Agent to enforce, the security interest in any and all of the Collateral including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC, to the extent, if any, that any Debtor’s signature thereon is required therefor; (ii) complying with any provision of any statute, regulation or treaty of the United States or any other country as to any Collateral if compliance with such provision is a condition to the attachment, perfection or priority of, or the ability of the Administrative Agent to enforce, the security interest in such Collateral; and (iii) taking all actions required by the UCC or by other law, as applicable in any relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction.

(d) Each Debtor hereby irrevocably authorizes the Administrative Agent at any time and from time to time to file in any jurisdiction in which the UCC has been adopted any initial financing statements and amendments thereto that describe the Collateral in a manner generally consistent with Section  2.1 and contain any other information required by the UCC for the sufficiency or filing office acceptance of any initial financing statement or amendment. Each Debtor agrees to furnish any such information to the Administrative Agent promptly upon request. Each Debtor also ratifies its authorization for the Administrative Agent to have filed in any UCC jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof and in respect of this Agreement.

 

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(e) During the existence of an Event of Default,

(i) at Administrative Agent’s request, each Debtor shall take any actions reasonably requested by Administrative Agent with respect to such Event of Default, including diligently endeavoring to cure any material defect existing or claimed with respect to any Collateral, and taking all reasonably necessary and desirable steps for the defense of any legal proceedings affecting any Collateral, including the employment of counsel, the prosecution or defense of litigation, and the release or discharge of all adverse claims;

(ii) Administrative Agent, whether or not named as a party to any legal proceedings, is authorized to take any additional steps as Administrative Agent deems necessary or desirable for the defense of any such legal proceedings or the protection of the validity or priority of this Agreement and the liens, security interests, and assignments created hereunder, including the employment of independent counsel, the prosecution or defense of litigation, the compromise or discharge of any adverse claims made with respect to any Collateral and the payment or removal of prior liens or security interests, and the reasonable expenses of Administrative Agent in taking such action shall be paid by the Debtors; and

(iii) each Debtor agrees that, if such Debtor fails to perform under this Agreement or any other Loan Document, Administrative Agent may, but shall not be obligated to, perform such Debtor’s obligations under this Agreement or such other Loan Document, and any reasonable expenses incurred by Administrative Agent in performing such Debtor’s obligations shall be paid by such Debtor. Any such performance by Administrative Agent may be made by Administrative Agent in reasonable reliance on any statement, invoice, or claim, without inquiry into the validity or accuracy thereof. The amount and nature of any expense of Administrative Agent hereunder shall be conclusively established by a certificate of any officer of Administrative Agent absent manifest error.

(f) Each Debtor hereby irrevocably constitutes and appoints the Administrative Agent (and all Persons designated by the Administrative Agent) as such Debtor’s true and lawful attorney (and agent-in-fact) for the purposes provided in this clause (f). The Administrative Agent, or the Administrative Agent’s designee, may, without notice and in either its or a Debtor’s name, but at the cost and expense of Debtors:

(i) Endorse a Debtor’s name on any Payment Item or other proceeds of Collateral (including proceeds of insurance) that come into the Administrative Agent’s possession or control; and

(ii) During the existence of an Event of Default, (A) notify any Account Debtors of the assignment of their Receivables, demand and enforce payment of Receivables by legal proceedings or otherwise, and generally exercise any rights and remedies with respect to Receivables; (B) settle, adjust, modify, compromise, discharge or release any Receivables or other Collateral, or any legal proceedings brought to collect Receivables or Collateral; (C) sell or assign any Receivables and other Collateral upon such terms, for such amounts and at such times as the Administrative Agent deems advisable; (D) collect, liquidate and receive balances in Deposit Accounts, Securities Accounts or Commodity Accounts, and take control, in any manner, of proceeds of

 

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Collateral; (E) prepare, file and sign a Debtor’s name to a proof of claim or other document in a bankruptcy of an Account Debtor, or to any notice, assignment or satisfaction of Lien or similar document; (F) receive, open and dispose of mail addressed to a Debtor; (G) endorse any Chattel Paper, Document, Instrument, bill of lading, or other document or agreement relating to any Receivables, Inventory or other Collateral; (H) use a Debtor’s stationery and sign its name to verifications of Receivables and notices to Account Debtors; (I) use information contained in any data processing, electronic or information systems relating to Collateral; (J) make and adjust claims under insurance policies; (K) take any action as may be necessary or appropriate to obtain payment under any letter of credit, banker’s acceptance or other instrument for which a Debtor is a beneficiary; and (L) take all other actions as the Administrative Agent deems appropriate to fulfill any Debtor’s obligations under the Loan Documents.

4.4 Changes in Name, etc . Such Debtor will not, except upon 10 days’ prior written notice to the Administrative Agent (or such shorter period as may be agreed to by the Administrative Agent in its sole discretion) and the taking of all actions and the execution of all documents reasonably requested by the Administrative Agent to maintain the validity, perfection and priority of the security interests provided for herein: (i) change its type of organization, jurisdiction of organization or other legal structure from that referred to in Section  3 .3 , (ii) change its organizational number if it has one, or (iii) change its name.

4.5 Delivery of Instruments, Chattel Paper, and Documents . If any amount payable under or in connection with any of the Collateral is or becomes evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper shall, to the extent required by Section  5 , be immediately delivered to the Administrative Agent, duly indorsed in a manner reasonably satisfactory to the Administrative Agent, to be held as Collateral pursuant to this Agreement. If any goods are or become covered by a negotiable Document, such Document shall, to the extent required by Section  5 , be immediately delivered to the Administrative Agent to be held as Collateral pursuant to this Agreement.

4.6 Deposit Accounts, Securities Accounts, and Commodity Accounts .

(a) For each Deposit Account, Securities Account or Commodity Account listed on Schedule  3.7 (other than an Excluded Account), the Debtor maintaining such Deposit Account, Securities Account or Commodity Account will take all actions necessary and any actions reasonably requested by the Administrative Agent to enable the Administrative Agent to obtain “control” (within the meaning of Section 9-104 of the UCC) with respect thereto, including the execution of Control Agreements reasonably acceptable to the Administrative Agent. No Debtor shall cause or permit any Excluded Account to cease to constitute an “Excluded Account” (other than as a result of the closing of such Excluded Account) unless and until such Deposit Account, Securities Account or Commodity Account is subject to a Control Agreement in favor of the Administrative Agent in form and substance satisfactory to the Administrative Agent.

(b) For each Deposit Account, Securities Account or Commodity Account created by a Debtor after the date hereof, the Debtor creating and maintaining such Deposit Account shall provide 10 days written notice (or such lesser period as the Administrative Agent may agree) to the Administrative Agent prior to the creation of such Deposit Account, Securities

 

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Account or Commodity Account and, if at the time of its creation, such Deposit Account, Securities Account or Commodity Account does not or is not intended to constitute an Excluded Account, take all actions necessary and any actions reasonably requested by the Administrative Agent to enable the Administrative Agent to obtain “control” (within the meaning of Section 9-104 of the UCC) with respect thereto, including the execution of Control Agreements reasonably acceptable to the Administrative Agent, in each case prior to the transfer of funds into such Deposit Account, Securities Account or Commodity Account.

(c) Notwithstanding the foregoing, the Administrative Agent agrees with each Debtor that the Administrative Agent will not give any instructions to a depositary bank, securities intermediary or commodity intermediary directing the disposition of funds from time to time credited to any Deposit Account, Securities Account or Commodity Account, or withhold any withdrawal rights from any Debtor, unless a Cash Dominion Trigger Period is in effect.

(d) The Debtors shall maintain Dominion Accounts pursuant to lockbox or other arrangements acceptable to the Administrative Agent. The Debtors shall obtain an agreement (in form and substance satisfactory to the Administrative Agent) from each lockbox servicer and Dominion Account bank, establishing the Administrative Agent’s control over and Lien in the lockbox or Dominion Account, which may be exercised by the Administrative Agent only during any Cash Dominion Trigger Period, requiring immediate deposit of all remittances received in the lockbox to a Dominion Account, and waiving offset rights of such servicer or bank, except for customary administrative charges and chargebacks. If a Dominion Account is not maintained with Bank of America, the Administrative Agent may, during any Cash Dominion Trigger Period, require immediate transfer of all funds in such account to a Dominion Account maintained with Bank of America. The Administrative Agent and the Lenders assume no responsibility to the Debtors for any lockbox arrangement or Dominion Account, including any claim of accord and satisfaction or release with respect to any Payment Items accepted by any bank.

(e) The Debtors shall request in writing and otherwise take all necessary steps to ensure that all payments on Receivables (other than Receivables arising solely from the sale, assignment or other disposition of the Senior Notes Collateral other than Inventory) or otherwise relating to Collateral are made directly to a Dominion Account (or a lockbox relating to a Dominion Account). If any Debtor receives cash or Payment Items with respect to any Collateral, it shall hold same in trust for the Administrative Agent and promptly (not later than the next Business Day) deposit same into a Dominion Account.

(f) Notwithstanding anything to the contrary contained in Section 8.01(c) of the Credit Agreement, any failure to comply with the requirements of clauses (a) or (b) of this Section  4.6 shall constitute an immediate Event of Default under the Credit Agreement and shall not be subject to any grace period.

 

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4.7 Modifications of Receivables, Chattel Paper, Instruments and Payment Intangibles; Administration of Receivables .

(a) No Debtor will, without the Administrative Agent’s prior written consent (which consent shall not be unreasonably withheld or delayed): (i) compromise or grant any extension of the time of payment of any of the Collateral consisting of Receivables, Chattel Paper, Instruments or Payment Intangibles, (ii) settle the same for less than the full amount thereof, (iii) release, wholly or partly, any obligor liable for the payment thereof or (iv) allow any credit or discount whatsoever thereon; provided , that so long as no Event of Default has occurred and is continuing, this Section  4.7 shall not restrict any extensions, credits, discounts, compromises or settlements granted or made by any Debtor in the ordinary course of such Debtor’s business and consistent with such prudent practices used in industries that are the same as or similar to those in which such Debtor is engaged.

(b) Each Debtor shall keep accurate and complete records of all Accounts, including all payments and collections thereon, and shall submit to the Administrative Agent sales, collection, reconciliation and other reports in form satisfactory to the Administrative Agent, on such periodic basis as the Administrative Agent may request. The Borrower shall also provide to the Administrative Agent, concurrently with the delivery of each Borrowing Base Certificate, a detailed aged trial balance of all Accounts as of the end of the period covered by such Borrowing Base Certificate, specifying each Account’s Account Debtor name and address, amount, invoice date and due date, showing any discount, allowance, credit, authorized return or dispute, and including such proof of delivery, copies of invoices and invoice registers, copies of related documents, repayment histories, status reports and other information as the Administrative Agent may reasonably request. If Accounts (other than Accounts arising solely from the sale, assignment or other disposition of the Senior Notes Collateral) in an aggregate face amount of $1,000,000 or more cease to be Eligible Accounts (other than as a result of an increase in aging beyond the eligibility limits), the Borrower shall notify the Administrative Agent of such occurrence promptly (and in any event within one Business Day) after the Borrower has knowledge thereof.

(c) If an Account of a Debtor includes a charge for any Taxes, the Administrative Agent is authorized, in its discretion, to pay the amount thereof to the proper taxing authority for the account of such Debtor and, if not collected from the relevant Account Debtor, to charge Debtor therefor; provided , however , that neither the Administrative Agent nor the Lenders shall be liable for any Taxes that may be due from the Debtor or with respect to any Collateral.

(d) Whether or not a Default or Event of Default exists, the Administrative Agent shall have the right at any time, in the name of the Administrative Agent, any designee of the Administrative Agent or any Debtor, to verify the validity, amount or any other matter relating to any Receivable of the Debtors by mail, telephone or otherwise. The Debtors shall cooperate fully with the Administrative Agent in an effort to facilitate and promptly conclude any such verification process.

4.8 Actions With Respect to Certain Collateral .

(a) If any of the Account Debtors or other Persons obligated on any of the Receivables, Chattel Paper, Instruments or Payment Intangibles with a value in excess of $500,000, or on any Contract with a value in excess of $500,000 in any twelve month period, is or becomes a Governmental Authority subject to the Federal Assignment of Claims Act or like federal or state statute or rule in respect of such Collateral, Debtor shall promptly (i) notify the Administrative Agent in a writing signed by such Debtor that such Account Debtor or other Person obligated on such Collateral is a Governmental Authority subject to the Federal Assignment of Claims Act or like federal or state statute or rule and (ii) take all actions reasonably required by the Administrative Agent to ensure the attachment, perfection or priority of, or the ability of the Administrative Agent to enforce, the security interest in such Collateral.

 

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(b) If any Debtor shall at any time hold or acquire a Commercial Tort Claim with a value in excess of $500,000, such Debtor shall promptly notify the Administrative Agent in a writing signed by such Debtor of the brief details thereof and grant to the Administrative Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to the Administrative Agent. Notwithstanding the foregoing, any such security interest in Commercial Tort Claims shall, prior to the occurrence of an Event of Default (and after the occurrence of an Event of Default unless the Administrative Agent has demanded the attachment of such security interest thereto), not be required to attach to the extent the value of any such Commercial Tort Claim does not exceed $500,000.

SECTION 5.

LIMITATION ON PERFECTION OF SECURITY INTEREST

5.1 Chattel Paper and Instruments . The perfection of the security interest granted in Section  2 above in, respectively, Chattel Paper (whether tangible or electronic) and Instruments will, prior to the occurrence of an Event of Default (and after the occurrence of an Event of Default unless the Administrative Agent has required that further actions are taken with respect to the perfection thereof), be effected solely by filing an appropriate financing statement under the applicable UCC so long as (a) with respect to all Chattel Paper and Instruments, the aggregate face amount of all such Chattel Paper and Instruments does not exceed $500,000 and (b) with respect to any individual Chattel Paper or Instrument, the face amount thereof does not exceed $500,000. Notwithstanding the foregoing, if no Event of Default exists, then upon the request of any Debtor the Administrative Agent shall deliver any Chattel Paper or Instrument in its possession to that Debtor if that Debtor requires possession in order to collect such Chattel Paper or Instrument. In the event that the aggregate face amount of such Chattel Paper and Instruments exceeds $500,000 individually or in the aggregate, the Debtors shall provide prompt written notice thereof to the Administrative Agent.

5.2 Documents . The perfection of the security interest granted in Section  2 above in Documents will, prior to the occurrence of an Event of Default (and after the occurrence of an Event of Default unless the Administrative Agent has required that further actions are taken with respect to the perfection thereof), be effected solely by filing an appropriate financing statement under the applicable UCC so long as (a) the aggregate value of the goods covered by all such Documents does not exceed $500,000 and (b) the value of the goods covered by any individual Document does not exceed $500,000. In the event that the value of goods covered by such Documents exceeds $500,000 individually or in the aggregate, the Debtors shall provide prompt written notice thereof to the Administrative Agent.

 

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5.3 Letter-of-Credit Rights . The perfection of the security interest granted in Letter-of-Credit Rights will be required only with respect to (a) solely following the occurrence of an Event of Default and request by the Administrative Agent, any individual Letter-of-Credit Right the face amount of which exceeds $2,500,000 and (b) any Letter-of-Credit Rights constituting Supporting Obligations. In the event that the face amount of any individual Letter of Credit Right exceeds $2,500,000 or that any Letter-of-Credit Rights constitute Supporting Obligations, the Debtors shall provide prompt written notice thereof to the Administrative Agent.

SECTION 6.

REMEDIAL PROVISIONS

During the existence of an Event of Default, the Administrative Agent may, at the Administrative Agent’s option, exercise one or more of the remedies specified elsewhere in this Agreement or the following remedies:

6.1 General Interim Remedies .

(a) To the extent permitted by Law, the Administrative Agent may exercise all the rights and remedies of a secured party under the UCC.

(b) The Administrative Agent may prosecute actions in equity or at law for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted or for the enforcement of any other appropriate legal or equitable remedy.

(c) The Administrative Agent may require any Debtor to promptly assemble any tangible Collateral of such Debtor and make it available to the Administrative Agent at a place to be designated by the Administrative Agent. The Administrative Agent may occupy any premises owned or leased by any Debtor where the Collateral is assembled for a reasonable period in order to effectuate the Administrative Agent’s rights and remedies hereunder or under law, without obligation to any Debtor with respect to such occupation.

6.2 Receivables, Chattel Paper, Instruments and Payment Intangibles . Without limiting any other rights of the Administrative Agent under the Loan Documents, during the existence of an Event of Default, the Administrative Agent may establish Collateral Accounts (including additional Dominion Accounts) for the purpose of collecting the payments due to the Debtors under any Contracts or otherwise with respect to the Receivables, Chattel Paper, Instruments and/or Payment Intangibles and holding the proceeds thereof, and may, or may direct the Debtors to, instruct all makers and/or all obligors with respect thereto to make all payments with respect to such Collateral directly to the Administrative Agent for deposit into such Collateral Account. After such direction to the Debtors, all payments, whether of principal, interest, or other amounts, under any Contracts or otherwise with respect to the Receivables, Chattel Paper, Instruments and/or Payment Intangibles shall be directed to such Collateral Accounts until such direction is revoked in writing by the Administrative Agent. All such payments which may from time to time come into the possession of any Debtor shall be held in trust for the Administrative Agent, segregated from the other funds of such Debtor, and delivered to the Administrative Agent immediately in the form received with any necessary endorsement for deposit into such Collateral Account, such delivery in no event to be later than one Business Day after receipt thereof by the applicable Debtor. Each Debtor agrees to execute any documents reasonably requested by the

 

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Administrative Agent to create any Collateral Account and pledge it to the Administrative Agent. In connection with the foregoing, the Administrative Agent shall have the right at any time during the existence of an Event of Default to take any of the following actions, in the Administrative Agent’s own name or in the name of the applicable Debtor: compromise or extend the time for payment of any payments due with respect to any Instrument or Chattel Paper upon such terms as the Administrative Agent may reasonably determine; endorse the name of the applicable Debtor on checks, instruments, or other evidences of payment with respect to any such Collateral; make written or verbal requests for verification of amount owing on any such Collateral from the maker thereof or obligor thereunder; open mail addressed to such Debtor which the Administrative Agent reasonably believes relates to any such Collateral and, to the extent of checks or other payments with respect to any such Collateral, dispose of same in accordance with this Agreement; take action in the Administrative Agent’s name or the applicable Debtor’s name, to enforce collection; and take all other action necessary to carry out this Agreement and give effect to the Administrative Agent’s rights hereunder. Costs and expenses incurred by the Administrative Agent in collection and enforcement of amounts owed under any Contracts or otherwise with respect to the Receivables, Chattel Paper, Instruments and/or Payment Intangibles, including attorneys’ fees and out-of-pocket expenses, shall be reimbursed by the applicable Debtor to the Administrative Agent on demand. If at any time no Cash Dominion Trigger Period exists, then upon request of the Borrower the Administrative Agent shall promptly revoke any instructions to Account Debtors to make payment to the Collateral Accounts and shall pay the amounts in the Collateral Accounts to the Debtors as their interests may appear.

6.3 Contracts . During the existence of an Event of Default, the Administrative Agent may, at its option, exercise one or more of the following remedies with respect to the Contracts that constitute Collateral:

(a) (i) take any action permitted under Section  6.2 and (ii) in the place and stead of the applicable Debtor, exercise any other rights of such Debtor under the Contracts in accordance with the terms thereof. Without limitation of the foregoing, each Debtor agrees that under the foregoing circumstances, the Administrative Agent may give notices, consents and demands and make elections under the Contracts, modify or waive the terms of the Contracts and enforce the Contracts, in each case, to the same extent and on the same terms as such Debtor might have done in accordance with the terms of such Contracts and applicable Law. It is understood and agreed that notwithstanding the exercise of such rights and/or the taking of such actions by the Administrative Agent, such Debtor shall remain liable for performance of its obligations under the Contracts; and

(b) upon receipt by the Administrative Agent of notice from any counterparty to any Contract of such Person’s intent to terminate such Contract, the Administrative Agent shall be entitled to (i) cure or cause to be cured the condition giving rise to such Person’s right of termination of such Contract, or (ii) acquire and assume (or assign and cause the assumption by a third party of) the rights and obligations of the applicable Debtor under such Contract.

 

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6.4 Foreclosure .

(a) The Administrative Agent may foreclose on the Collateral in any manner permitted by the courts of or in the State of New York or the jurisdiction in which any Collateral is located. If the Administrative Agent should institute a suit for the collection of the Secured Obligations and for the foreclosure of this Agreement, the Administrative Agent may at any time before the entry of a final judgment dismiss the same, and take any other action permitted by this Agreement.

(b) To the extent permitted by Law, the Administrative Agent may exercise all the foreclosure rights and remedies of a secured party under the UCC. In connection therewith, the Administrative Agent may sell any Collateral at public or private sale, at the office of the Administrative Agent or elsewhere, for cash or credit and upon such other terms as the Administrative Agent deems commercially reasonable. The Administrative Agent may sell any Collateral at one or more sales, and the security interest granted hereunder shall remain in effect as to the unsold portion of the Collateral. Each Debtor agrees that to the extent permitted by Law such sales may be made without notice. If notice is required by Law, each Debtor hereby deems ten days advance notice of the time and place of any public or private sale reasonable notification, recognizing that if any portion of the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, shorter notice may be reasonable. The Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn any sale by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was adjourned. In the event that any sale hereunder is not completed or is defective in the opinion of the Administrative Agent, the Administrative Agent shall have the right to cause subsequent sales to be made hereunder. Any statements of fact or other recitals made in any bill of sale, assignment, or other document representing any sale hereunder, including statements relating to the occurrence of an Event of Default, acceleration of the Secured Obligations, notice of the sale, the time, place, and terms of the sale, and other actions taken by the Administrative Agent in relation to the sale may be conclusively relied upon by the purchaser at any sale hereunder. The Administrative Agent may delegate to any agent the performance of any acts in connection with any sale hereunder, including the sending of notices and the conduct of the sale.

6.5 Application of Proceeds .

(a) Unless otherwise specified herein, any cash proceeds received by the Administrative Agent from the sale of, collection of, or other realization upon any part of the Collateral or any other amounts received by the Administrative Agent hereunder may be, at the reasonable discretion of the Administrative Agent (i) held by the Administrative Agent in one or more Collateral Accounts as cash collateral for the Secured Obligations or (ii) applied to the Secured Obligations.

(b) Amounts applied to the Secured Obligations shall be applied in the following order:

First , to the payment of the costs and expenses of exercising the Administrative Agent’s rights hereunder, whether expressly provided for herein or otherwise; and

Second , to the payment of the Secured Obligations in the order set forth in Section  8.03 of the Credit Agreement.

 

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Any surplus cash collateral or cash proceeds held by the Administrative Agent after payment in full of the Secured Obligations and the termination of any commitments of the Administrative Agent to any Debtor shall be paid over to such Debtor or to whomever may be lawfully entitled to receive such surplus.

6.6 Waiver of Certain Rights . To the full extent each Debtor may do so, such Debtor shall not insist upon, plead, claim, or take advantage of any Law providing for any appraisement, valuation, stay, extension, or redemption, and such Debtor hereby waives and releases the same, and all rights to a marshaling of the assets of such Debtor, including the Collateral of such Debtor, or to a sale in inverse order of alienation in the event of foreclosure of the liens and security interests hereby created. Such Debtor shall not assert any right under any law pertaining to the marshaling of assets, sale in inverse order of alienation, the administration of estates of decedents or other matters whatever to defeat, reduce, or affect the right of the Administrative Agent under the terms of this Agreement.

6.7 Remedies Cumulative . The Administrative Agent’s remedies under this Agreement and the Loan Documents to which any Debtor is a party shall be cumulative, and no delay in enforcing this Agreement and the Loan Documents to which any Debtor is a party shall act as a waiver of the Administrative Agent’s rights hereunder.

6.8 Reinstatement . The obligations of each Debtor under this Agreement shall continue to be effective or automatically be reinstated, as the case may be, if at any time payment of any of the Secured Obligations is rescinded or otherwise must be restored or returned by the Administrative Agent upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Debtor or any other obligor or otherwise, all as though such payment had not been made.

SECTION 7.

MISCELLANEOUS

7.1 Amendments . None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except in accordance with Section  10.01 of the Credit Agreement. No consent of any Hedge Bank or any Cash Management Bank (except in such Person’s capacity as a Lender, if applicable) shall be required for any waiver, amendment, supplement or other modification to this Agreement.

7.2 Notices . All notices, requests and demands to or upon the Administrative Agent hereunder shall be in writing and effected in the manner provided for in Section  10.02 of the Credit Agreement. All notices, requests and demands hereunder to any Debtor shall be in writing and given to it at its address or telecopy number set forth in Schedule 10.02 to the Credit Agreement or at such other address in the United States as may be specified by such Debtor in a written notice delivered to the Administrative Agent in accordance with Section  10.02 of the Credit Agreement.

7.3 No Waiver by Course of Conduct; Cumulative Remedies; No Duty . No failure to exercise, nor any delay in exercising, on the part of the Administrative Agent, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of

 

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any other right, power or privilege. A waiver by the Administrative Agent of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that the Administrative Agent would otherwise have on any future occasion. The rights and remedies provided herein and in the other Loan Documents are cumulative, may be exercised singly or concurrently, and are not exclusive of any other rights or remedies provided by Law. The powers conferred on Administrative Agent under this Agreement are solely to protect Administrative Agent’s rights under this Agreement and shall not impose any duty upon it to exercise any such powers. Except as elsewhere provided hereunder, Administrative Agent shall have no duty as to any of the Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to the Collateral.

7.4 Enforcement Expenses; Indemnification .

(a) Each Debtor agrees to pay, or reimburse the Administrative Agent and each holder of the Secured Obligations for, all costs and expenses incurred in connection with the enforcement, attempted enforcement, exercise, or preservation of any rights or remedies under this Agreement or the other Loan Documents to which such Debtor is a party (including all such costs and expenses incurred during any “workout” or restructuring in respect of the Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all attorney fees.

(b) Each Debtor agrees to pay, and to indemnify and hold the Administrative Agent and each holder of the Secured Obligations harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Agreement.

(c) Each Debtor agrees to pay, and to indemnify and hold the Administrative Agent, each holder of the Secured Obligations, and their respective Affiliates, directors, officers, employees, counsel, agents and attorneys-in-fact (collectively the “ Indemnitees ”) harmless from, any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including the fees, charges and disbursements of any counsel for any Indemnitee) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with the execution, delivery, enforcement, performance or administration of any Guaranty, this Agreement, or any Loan Document to which such Debtor is a party, in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee ; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, (y) result from a claim brought by any Debtor against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder, if such Debtor has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction or (z) arose out of any claim, actions, suits, inquiries, litigation, investigation or proceeding that does not involve an act or omission of any Debtor or any of their Affiliates and that is brought solely by an Indemnitee against another Indemnitee; provided that the Swing Line Lenders, L/C Issuers, and Administrative Agent shall remain indemnified in such capacities.

 

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(d) All amounts due under this Section  7.4 shall be payable upon demand therefor. The agreements in this Section shall survive repayment of the Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents.

7.5 Successors and Assigns . This Agreement shall be binding upon the successors and assigns of each Debtor and shall inure to the benefit of the Administrative Agent and the holders of the Secured Obligations and their successors and assigns; provided that no Debtor may assign, transfer or delegate any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent.

7.6 Set-Off . Each Debtor hereby irrevocably authorizes the Administrative Agent and each Lender at any time and from time to time upon the occurrence and during the continuance of any Event of Default, without prior notice to such Debtor or any other Loan Party, any such notice being waived by such Debtor to the fullest extent permitted by Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender to or for the credit or the account of the respective Debtor against any and all Obligations owing to such Lender under the Credit Agreement, any Guaranty, or under any other Loan Document, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand for payment and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or indebtedness. Any such set-off shall be subject to the notice requirements of Section  10.08 of the Credit Agreement; provided , however , that the failure to give such notice shall not affect the validity of such set-off and application.

7.7 Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

7.8 Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

7.9 Section Headings . The Section headings used in this Agreement are included for convenience of reference only and shall not affect the interpretation of this Agreement.

7.10 Integration . This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.

 

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7.11 GOVERNING LAW ETC.

(a) GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

(b) SUBMISSION TO JURISDICTION . EACH DEBTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY DEBTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) WAIVER OF VENUE . EACH DEBTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS . EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION  7.2 . NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

(e) WAIVER OF JURY TRIAL . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED

 

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HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

7.12 Additional Debtors . Each Subsidiary of the Borrower that is required to become a party to this Agreement after the date hereof pursuant to Section  6.12 of the Credit Agreement shall become a Debtor for all purposes of this Agreement upon execution and delivery by such Subsidiary of an instrument in the form of Annex  I hereto.

7.13 Termination; Releases .

(a) This Agreement and the security interest created hereby shall terminate upon termination of the Aggregate Commitments and payment in full of all Obligations (other than (i) contingent indemnification obligations and (ii) obligations and liabilities under Secured Cash Management Agreements and Secured Hedge Agreements as to which arrangements satisfactory to the applicable Cash Management Bank or Hedge Bank shall have been made) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to the Administrative Agent and the L/C Issuer shall have been made), at which time the Administrative Agent shall execute and deliver to the Debtors or the Debtors’ designee, at the Debtors’ expense, all UCC termination statements and similar documents which the Debtors shall reasonably request from time to time to evidence such termination, and, at the Debtors’ expense, the Administrative Agent shall return to the Debtors any Collateral then in its possession. Any execution and delivery of termination statements or documents pursuant to this Section  7.13(a) shall be without recourse to or warranty by the Administrative Agent.

(b) Any Debtor other than the Borrower shall automatically be released from its obligations hereunder and the security interest granted hereby in the Collateral of such Debtor shall be automatically released in the event that all the Equity Interests of such Debtor shall be sold, transferred or otherwise disposed of to a Person other than a Loan Party or a Subsidiary of a Loan Party in a transaction permitted by the Credit Agreement; provided that, to the extent required by the Credit Agreement, the Required Lenders or, if required by the terms of the Credit Agreement, such other requisite number of Lenders, shall have consented to such sale, transfer or other disposition and the terms of such consent did not provide otherwise. If any of the Collateral shall be sold, transferred or otherwise disposed of by any Debtor in a transaction permitted by the Credit Agreement, the security interest created hereby in any Collateral that is so sold, transferred or otherwise disposed of shall automatically terminate and be released upon the closing of such sale, transfer or other disposition, and such Collateral shall be sold free and clear of the Lien and security interest created hereby; provided , however , that such security interest will continue to attach to all proceeds of such sales or other dispositions. In connection with any of the foregoing, the Administrative Agent shall deliver to the Debtors any Collateral then in its possession and shall execute and deliver to the Debtors or the Debtors’ designee, at the Debtors’ expense, all UCC

 

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termination statements and similar documents that the Debtors shall reasonably request from time to time to evidence such termination. Any execution and delivery of termination statements or documents pursuant to this Section  7.13(b) shall be without recourse to or warranty by the Administrative Agent.

(c) No consent of any Hedge Bank or any Cash Management Bank (except in such Person’s capacity as a Lender, if applicable) shall be required for any release of Collateral or Debtors pursuant to this Section.

(d) Each Debtor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement originally filed in connection herewith without the prior written consent of the Administrative Agent subject to such Debtor’s rights under Section 9-509(d)(2) of the UCC.

[Signature pages follow.]

 

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EXECUTED as of the date first above written.

 

BANK OF AMERICA, N.A.,
as Administrative Agent
By:   /s/ Lisa Huynh
Name:   Lisa Huynh
Title:   Vice president

 

Signature Page to Security Agreement

Basic Energy Services, Inc.


BASIC ENERGY SERVICES, INC.
BASIC ENERGY SERVICES GP, LLC
By:   /s/ T.M. “Roe” Patterson

Name:

  T.M. “Roe” Patterson

Title:

  President and Chief Executive Officer
ACID SERVICES, LLC
ADMIRAL WELL SERVICE, INC.
BASIC ESA, INC.
BASIC MARINE SERVICES, INC.
CHAPARRAL SERVICE, INC.
FIRST ENERGY SERVICES COMPANY
GLOBE WELL SERVICE, INC.
JETSTAR ENERGY SERVICES, INC.
JETSTAR HOLDINGS, INC.
JS ACQUISITION LLC
LEBUS OIL FIELD SERVICE CO.
MAVERICK COIL TUBING SERVICES, LLC
MAVERICK SOLUTIONS, LLC
MAVERICK STIMULATION COMPANY, LLC
MAVERICK THRU-TUBING SERVICES, LLC
MCM HOLDINGS, LLC
MSM LEASING, LLC
PERMIAN PLAZA, LLC
PLATINUM PRESSURE SERVICES, INC.
SCH DISPOSAL, L.L.C.
SLEDGE DRILLING CORP.
THE MAVERICK COMPANIES, LLC
XTERRA FISHING & RENTAL TOOLS CO.
By:   /s/ T.M. “Roe” Patterson

Name:

  T.M. “Roe” Patterson

Title:

  President

 

Signature Page to Security Agreement

Basic Energy Services, Inc.


TAYLOR INDUSTRIES, LLC
By:   /s/ T.M. “Roe” Patterson
Name:   T.M. “Roe” Patterson
Title:   Chief Executive Officer
BASIC ENERGY SERVICES LP, LLC
By:   /s/ Jerry Tufly
Name:   Jerry Tufly
Title:   President
BASIC ENERGY SERVICES, L.P.
By:   BASIC ENERGY SERVICES GP, LLC,
its General Partner
By:   /s/ T.M. “Roe” Patterson
Name:   T.M. “Roe” Patterson
Title:   President and Chief Executive Officer

 

Signature Page to Security Agreement

Basic Energy Services, Inc.


SCHEDULE 3.3

ORGANIZATION & LOCATION INFORMATION

 

Debtor

  

Jurisdiction &

Type of

Organization

  

Organizational
ID#

  

Chief Executive Office,

Sole Place of Business, or

Principal Residence

Basic Energy Services, Inc.    Delaware corporation    3611854    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Acid Services, LLC    Kansas limited liability company    2347722    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Admiral Well Service, Inc.    Texas corporation    801050244    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Basic Energy Services GP, LLC    Delaware limited liability company    3611876    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Basic Energy Services LP, LLC    Delaware limited liability company    3611879    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Basic Energy Services, L.P.    Delaware limited partnership    2307778    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Basic ESA, Inc.    Texas corporation    57139400    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Basic Marine Services, Inc.    Delaware corporation    3917169    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Chaparral Service, Inc.    New Mexico corporation    642181    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
First Energy Services Company    Delaware corporation    3215172    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Globe Well Service, Inc.    Texas corporation    46471700    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
JetStar Energy Services, Inc.    Texas corporation    800481218    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
JetStar Holdings, Inc.    Delaware corporation    3954247    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
JS Acquisition LLC    Delaware limited liability company    4278935    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
LeBus Oil Field Service Co.    Texas corporation    77931600    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Maverick Coil Tubing Services, LLC    Colorado limited liability company    20001207071    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Maverick Solutions, LLC    Colorado limited liability company    20031245775    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Maverick Stimulation Company, LLC    Colorado limited liability company    19961105940    801 Cherry Street, Suite 2100, Fort Worth, TX 76102

 

Schedule 3.3 to Security Agreement

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Maverick Thru-Tubing Services, LLC    Colorado limited liability company    20091658924    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
MCM Holdings, LLC    Colorado limited liability company    20011090566    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
MSM Leasing, LLC    Colorado limited liability company    20091399908    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Permian Plaza, LLC    Texas limited liability company    800859993    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Platinum Pressure Services, Inc.    Texas corporation    800888088    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
SCH Disposal, L.L.C.    Texas limited liability company    704317322    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Sledge Drilling Corp.    Texas corporation    800575730    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
Taylor Industries, LLC    Texas limited liability company    801259923    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
The Maverick Companies, LLC    Colorado limited liability company    20061298717    801 Cherry Street, Suite 2100, Fort Worth, TX 76102
XTERRA Fishing & Rental Tools Co.    Texas corporation    158550700    801 Cherry Street, Suite 2100, Fort Worth, TX 76102

 

Schedule 3.3 to Security Agreement

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SCHEDULE 3.4

CERTAIN COLLATERAL

See attached.

 

Schedule 3.4 to Security Agreement

-1-


SCHEDULE 3.5

PLEDGED INSTRUMENTS

None.

 

Schedule 0 to Security Agreement

-1-


SCHEDULE 3.7

BANK ACCOUNTS

 

Schedule 3.7 to Security Agreement

-1-


Annex I to the

Security Agreement

This SUPPLEMENT NO. [    ] dated as of [                 ] (this “ Supplement ”), is delivered in connection with (a) the Security Agreement dated as of October 2, 2018 (as amended, restated or otherwise modified from time to time, the “ Security Agreement ”), among Basic Energy Services, Inc., a Delaware corporation (the “ Borrower ”), certain subsidiaries of the Borrower (such subsidiaries together with the Borrower, the “ Debtors ”) and Bank of America, N.A. (“ Bank of America ”), as administrative agent (in such capacity, the “ Administrative Agent ”) for the benefit of the holders of the Secured Obligations (as defined therein) and (b) the Guaranty dated as of October 2, 2018 (as amended, restated or otherwise modified from time to time, the “ Guaranty ”) made by the Debtors other than the Borrower (the “ Guarantors ”) for the benefit of the Administrative Agent and the Lenders.

A. Reference is made to the ABL Credit Agreement dated as of October 2, 2018 (as amended, restated or otherwise modified from time to time, the “ Credit Agreement ”), among the Borrower, the lenders from time to time party thereto (the “ Lenders ”) and the Administrative Agent. Pursuant to the Guaranty, the Guarantors have agreed to guarantee, among other things, the full payment and performance of all of the Borrower’s obligations under the Credit Agreement.

B. The Debtors have entered into the Security Agreement and the Guarantors have entered into the Guaranty as a condition precedent to the effectiveness of the Credit Agreement or the amendment thereof. Section  7.12 of the Security Agreement and Section  19 of the Guaranty provide that additional Subsidiaries of the Borrower may become Debtors under the Security Agreement and Guarantors under the Guaranty by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the “ New Debtor ”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Debtor under the Security Agreement and a Guarantor under the Guaranty.

C. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement, the Guaranty, and the Credit Agreement.

Accordingly, the Administrative Agent and the New Debtor agree as follows:

SECTION 1. In accordance with Section  7.12 of the Security Agreement, the New Debtor by its signature below becomes a Debtor under the Security Agreement with the same force and effect as if originally named therein as a Debtor, and the New Debtor hereby (a) agrees to all the terms and provisions of the Security Agreement applicable to it as a Debtor thereunder and (b) represents and warrants that the representations and warranties made by it as a Debtor thereunder are true and correct in all material respects on and as of the date hereof. The Schedules to the Security Agreement are hereby supplemented by the Schedules attached hereto with respect to the New Debtor. In furtherance of the foregoing, the New Debtor, as security for the payment and performance in full of the Secured Obligations (as defined in the Security Agreement), does hereby create and grant to the Administrative Agent, for the benefit of the holders of the Secured Obligations, a security interest in and lien on all of the New Debtor’s right, title and interest in and to the Collateral of the New Debtor. Each reference to a “Debtor” in the Security Agreement shall be deemed to include the New Debtor.

 

Annex I to Security Agreement

-1-


SECTION 2. In accordance with Section  19 of the Guaranty, the New Debtor by its signature below becomes a Guarantor under the Guaranty with the same force and effect as if originally named therein as a Guarantor, and the New Debtor hereby (a) agrees to all the terms and provisions of the Guaranty applicable to it as a Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct on and as of the date hereof. Each reference to a “Guarantor” in the Guaranty shall be deemed to include the New Debtor.

SECTION 3. The New Debtor represents and warrants to the Administrative Agent that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

SECTION 4. This Supplement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

SECTION 5. Except as expressly supplemented hereby, the Security Agreement and the Guaranty shall remain in full force and effect.

SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

SECTION 7. All communications and notices to the New Debtor under the Security Agreement or the Guaranty shall be in writing and given as provided in Section  7.2 of the Security Agreement to the address for the New Debtor set forth under its signature below.

SECTION 8. The New Debtor agrees to reimburse the Administrative Agent for its reasonable out of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Administrative Agent.

 

Annex I to Security Agreement

-2-


IN WITNESS WHEREOF , the New Debtor and the Administrative Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

 

[Name of New Debtor],
By:    
Name:    
Title:    
Address:    
 
 

 

BANK OF AMERICA, N.A. , as Administrative Agent
By:    
Name:    
Title:    
Address:    
 
 

 

Annex I to Security Agreement

-3-


Supplemental Schedules

to the Security Agreement

 

Annex I to Security Agreement

-1-

Exhibit 99.1

 

LOGO

NEWS RELEASE

 

Contacts:    Trey Stolz,
   VP Investor Relations
   Basic Energy Services, Inc.
   817-334-4100
   Jack Lascar
   Dennard   Lascar Associates
   713-529-6600

BASIC ENERGY SERVICES CLOSES OFFERING OF SENIOR SECURED NOTES AND

ANNOUNCES NEW ABL CREDIT FACILITY

FORT WORTH, Texas, October 3, 2018 - Basic Energy Services, Inc. (NYSE: BAS) (“Basic” or the “Company”) today announced that the Company has closed its previously announced offering of $300 million aggregate principal amount of 10.75% senior secured notes due 2023 (the “notes”). The notes were issued at a price of 99.042% of par to yield 11.00%. The notes will initially be secured by a first-priority lien on substantially all of the assets of the Company and the subsidiary guarantors other than accounts receivable, inventory and certain related assets. In addition, the Company today announced that it has entered into a new asset-based lending credit facility (“New ABL”) that is secured by its accounts receivable and related assets. The New ABL has up to a five-year term and replaces its prior $150 million asset-based lending credit facility (as amended, “Prior ABL”).

Basic used the net proceeds of the offering to repay Basic’s existing indebtedness under its term loan, to repay Basic’s outstanding borrowings under the Prior ABL, and for general corporate purposes.

Neither the notes nor the related guarantees have been, nor will be, registered under the Securities Act of 1933, as amended (the “Act”), or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. The notes were offered to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A and to certain non-U.S. persons outside of the United States pursuant to Regulation S, each under the Act.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer, solicitation or sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Safe Harbor Statement

This press release includes certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Additionally, forward-looking statements are subject to certain


risks, trends, and uncertainties. Basic cannot provide assurances that the assumptions upon which these forward-looking statements are based will prove to have been correct. Should one of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied in any forward-looking statements, and investors are cautioned not to place undue reliance on these forward-looking statements, which are current only as of this date. Basic does not intend to update or revise any forward-looking statements made herein or any other forward-looking statements as a result of new information, future events or otherwise except as required by law. The Company further expressly disclaims any written or oral statements made by a third party regarding the subject matter of this press release. Additional important risk factors that could cause actual results to differ materially from expectations are disclosed in Item 1A of Basic’s Annual Report on Form 10-K for the year ended December 31, 2017 and subsequent Quarterly Reports on Form 10-Q filed with the U.S. Securities and Exchange Commission.

 

Contacts:    Trey Stolz, VP Investor Relations
   Basic Energy Services, Inc.
   817-334-4100
   Jack Lascar / Kaitlin Ross
   Dennard-Lascar Associates
   713-529-6600