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 25, 2018
NINE ENERGY SERVICE, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-38347 | 80-0759121 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
2001 Kirby Drive, Suite 200
Houston, Texas 77019
(Address of principal executive offices)
(281) 730-5100
(Registrants telephone number, including area code)
N/A
(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 and the Notes
On October 25, 2018 (the Closing Date), Nine Energy Service, Inc. (the Company) issued $400 million principal amount of 8.750% Senior Notes due 2023 (the Notes) at par. The Notes were issued under an indenture, dated as of October 25, 2018 (the Indenture), by and among the Company, certain subsidiaries of the Company and Wells Fargo, National Association, as trustee. The Notes are senior unsecured obligations of the Company. The Notes are fully and unconditionally guaranteed on a senior unsecured basis by each of the Companys current domestic subsidiaries and by certain future subsidiaries.
The Notes will mature on November 1, 2023. The Notes bear interest at the rate of 8.750% per annum, payable in cash semi-annually in arrears on each of May 1 and November 1, commencing May 1, 2019.
At any time prior to November 1, 2020, the Company may, from time to time, redeem up to 35% of the aggregate principal amount of the Notes with an amount of cash not greater than the net cash proceeds of certain equity offerings at a redemption price equal to 108.750% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption, provided that at least 65% of the aggregate principal amount of Notes issued under the Indenture remains outstanding immediately after such redemption and the redemption occurs within 180 days of the closing date of such equity offering.
At any time prior to November 1, 2020, the Company may, on any one or more occasions, redeem all or a part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus a make-whole premium plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
On and after November 1, 2020, the Company may redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption if redeemed during the 12-month period beginning on November 1 of the years indicated below:
Year |
Redemption Price | |||
2020 |
104.375 | % | ||
2021 |
102.188 | % | ||
2022 and thereafter |
100.000 | % |
If the Company experiences certain changes of control, each holder of Notes may require the Company to repurchase all or a portion of its Notes for cash at a price equal to 101% of the principal amount of such Notes, plus any accrued but unpaid interest, if any, to, but excluding, the date of repurchase.
The Indenture contains covenants that, among other things and subject to certain exceptions and qualifications, limit the Companys ability and the ability of its restricted subsidiaries to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends or make other distributions or repurchase or redeem their capital stock; (iii) transfer or sell assets; (iv) make loans and investments; (v) incur liens; (vi) enter into agreements that restrict dividends or other payments from their non-guarantor restricted subsidiaries to them; (vii) consolidate, merge or transfer all or substantially all of their assets; (viii) prepay, redeem or repurchase certain debt; (ix) issue certain preferred stock or similar equity securities; (x) make certain acquisitions and investments; (xi) engage in transactions with affiliates; and (xii) create unrestricted subsidiaries.
Upon an Event of Default (as defined in the Indenture), the trustee or the holders of at least 25% in aggregate principal amount of then outstanding Notes may declare the Notes immediately due and payable, except that a default resulting from certain events of bankruptcy or insolvency with respect to the Company, any restricted subsidiary of the Company that is a significant subsidiary or any group of restricted subsidiaries that, taken together, would constitute a significant subsidiary, will automatically cause all outstanding Notes to become due and payable.
Wells Fargo Securities, LLC, an affiliate of Wells Fargo Bank, National Association, the trustee under the Indenture, was an initial purchaser of the Notes. In addition, Wells Fargo Bank, National Association is a lender under the New Credit Agreement (as defined below) and the Prior Credit Agreement (as defined below).
The foregoing description of the Indenture is qualified in its entirety by reference to such Indenture, a copy of which is attached hereto as Exhibit 4.1 and is incorporated herein by reference.
New Credit Agreement and the New Credit Facility
On the Closing Date, the Company entered into a credit agreement, dated as of October 25, 2018 (the New Credit Agreement), by and among the Company, Nine Energy Canada Inc., JPMorgan Chase Bank, N.A., as administrative agent and as an issuing lender, and certain other financial institutions party thereto as lenders and issuing lenders, that permits aggregate borrowings of up to $200.0 million, subject to a borrowing base, including a Canadian tranche with a sub-limit of up to $25.0 million (the Canadian Sub-Facility) and a sub-limit of $50.0 million for letters of credit (the new credit facility). The borrowing base is initially $147.3 million. The new credit facility will mature five years from the Closing Date or, if earlier, on the date that is 180 days before the scheduled maturity date of the Notes if they have not been redeemed or repurchased by such date.
Loans to the Company and its domestic restricted subsidiaries (the US Credit Parties) under the new credit facility may be base rate loans or LIBOR loans, and loans to Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada and its restricted subsidiaries (the Canadian Credit Parties) under the Canadian Sub-Facility may be CDOR loans or Canadian rate loans. The applicable margin for base rate loans and Canadian prime rate loans will vary from 0.75% to 1.25%, and the applicable margin for LIBOR loans or CDOR loans will vary from 1.75% to 2.25%, in each case depending on the Companys leverage ratio. The Company is permitted to repay any amounts borrowed prior to the maturity date without any premium or penalty subject to minimum amounts of prepayments and customary LIBOR breakage costs. In addition, a commitment fee of 0.50% per annum will be charged on the average daily unused portion of the revolving commitments. Such commitment fee is payable quarterly in arrears.
The New Credit Agreement contains various affirmative and negative covenants, including financial reporting requirements and limitations on indebtedness, liens, mergers, consolidations, liquidations and dissolutions, sales of assets, dividends and other restricted payments, investments (including acquisitions) and transactions with affiliates. The New Credit Agreement contains, as the only financial covenant, a minimum fixed charge ratio financial covenant that is tested quarterly when the availability under the facility drops below a certain threshold or a default has occurred until the availability exceeds such threshold for 30 consecutive days and such default is no longer outstanding.
The Companys obligations under the new credit facility may be accelerated, subject to customary grace and cure periods, upon the occurrence of certain Events of Default (as defined in the New Credit Agreement). Such Events of Default include customary events for a financing agreement of this type, including payment defaults, the inaccuracy of representations and warranties, defaults in the performance of affirmative or negative covenants, defaults on other material indebtedness of the Company or certain of its subsidiaries, defaults related to judgments and the occurrence of a Change in Control (as defined in the New Credit Agreement).
All of the obligations under the new credit facility are secured by first priority perfected security interests (subject to permitted liens) in substantially all of the personal property of US Credit Parties, excluding certain assets. The obligations under the Canadian Sub-Facility are further secured by first priority perfected security interests (subject to the existence of permitted liens) in substantially all of the personal property of Canadian Credit Parties, excluding certain assets. The new credit facility will be guaranteed by the US Credit Parties, and the Canadian Sub-Facility will be further guaranteed by the Canadian Credit Parties and US Credit Parties.
The following financial institutions party to the New Credit Agreement served as a lender and/or agent under the Prior Credit Agreement: JPMorgan Chase Bank, N.A., Zions Bancorporation dba Amegy Bank, Wells Fargo Bank, National Association and Goldman Sachs Bank USA. In addition, affiliates of certain financial institutions party to the New Credit Agreement were the initial purchasers of the Notes. In particular, J.P. Morgan Securities LLC (an affiliate of JPMorgan Chase Bank, N.A.), Goldman Sachs & Co. LLC (an affiliate of Goldman Sachs Bank USA) and Wells Fargo Securities, LLC (an affiliate of Wells Fargo Bank, National Association) were the initial purchasers of the Notes. Also, Wells Fargo Bank, National Association serves as the trustee of the Notes under the Indenture, and J.P. Morgan Securities LLC acted as financial advisor to the Company in connection with the Magnum Acquisition (as defined below).
The foregoing description of the new credit facility does not purport to be complete and is qualified in its entirety by reference to the New Credit Agreement, a copy of which is being filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Registration Rights Agreement
On the Closing Date, in connection with the closing of the Magnum Acquisition, the Company entered into the Registration Rights Agreement, dated as of October 25, 2018, with the sellers of Magnum (as defined below) relating to the registered resale of the Registrable Securities (as defined therein). The information set forth under the caption Registration Rights Agreement in Item 1.01 of the Companys Current Report on Form 8-K filed October 15, 2018 is incorporated by reference into this Item 1.01.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to such agreement, a copy of which is being filed as Exhibit 4.2 hereto and is incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
On the Closing Date, in connection with the Companys entry into the New Credit Agreement, the Company fully repaid and terminated the term loan borrowings and outstanding revolving credit commitments under the credit facility governed by that certain Credit Agreement, dated as of September 14, 2017 and subsequently amended on November 20, 2017 (the Prior Credit Agreement), among the Company and certain of its subsidiaries listed therein, including Nine Energy Canada Inc., JPMorgan Chase Bank, N.A. and certain other financial institutions party thereto.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On the Closing Date, the Company completed its previously announced acquisition (the Magnum Acquisition) of all of the equity interests of Magnum Oil Tools International, LTD, Magnum Oil Tools GP, LLC and Magnum Oil Tools Canada Ltd. (collectively, Magnum) pursuant to a Securities Purchase Agreement, dated as of October 15, 2018 (the Magnum Purchase Agreement), by and among (i) Warren Lynn Frazier, Garrett Lynn Frazier 2018 DG Trust, Derrick Chase Frazier 2018 DG Trust and Frazier Family Foundation, Inc., as sellers, (ii) Warren Frazier, solely in his capacity as Seller Representative (as defined therein), (iii) MOTI Holdco, LLC and Nine Energy Canada Inc., each a subsidiary of the Company, as buyers, (iv) the Company, and (v) solely for the purposes of Sections 5.6.2, 5.20 and 5.23 thereto, Garrett Lynn Frazier and Derrick Chase Frazier. Pursuant to the Magnum Purchase Agreement, the equity interests of Magnum were purchased for an upfront cash payment of approximately $334.5 million, subject to customary adjustments, and 5.0 million shares of the Companys common stock, which were issued to the sellers of Magnum in a private placement. The Magnum Purchase Agreement also includes the potential for additional future payments in cash of (a) up to 60% of the net income (before interest, taxes and certain one-time gains or losses) for the E-Set tools business in 2019 through 2025 and (b) up to $25.0 million based on sales of certain dissolvable plug products in 2019.
The foregoing description of the Magnum Acquisition and the Magnum Purchase Agreement is not complete and is subject to and qualified in its entirety by reference to the Magnum Purchase Agreement, a copy of which was included as Exhibit 2.1 to the Companys Current Report on Form 8-K filed October 15, 2018 and is incorporated by reference in this Current Report on Form 8-K (this Current Report).
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 hereto under the captions Indenture and the Notes and New Credit Agreement and the New Credit Facility is incorporated by reference into this Item 2.03.
On the Closing Date, the Company borrowed $35.0 million under the new credit facility to fund a portion of the upfront cash purchase price of the Magnum Acquisition.
Item 3.02 Unregistered Sales of Equity Securities.
On the Closing Date, the Company delivered 5.0 million shares of its common stock to the sellers of Magnum as part of the purchase price paid at the closing of the Magnum Acquisition Purchase pursuant to the Magnum Purchase Agreement described above in Item 2.01 of this Current Report, which disclosure is incorporated into this Item 3.02 by reference. The issuance of such shares by the Company to the sellers of Magnum was made in reliance upon an exemption from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof.
Item 3.03 Material Modification to Rights of Security Holders.
The information set forth in Item 1.01 hereto under the caption Registration Rights Agreement is incorporated by reference into this Item 3.03.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired. Any financial statements required to be filed in response to this Item 9.01(a) with respect to the transactions described in Item 2.01 herein will be filed by amendment to this Current Report no later than the required filing date.
(b) Pro forma financial information. Any pro forma financial information required to be filed in response to this Item 9.01(b) with respect to the transactions described in Item 2.01 herein will be filed by amendment to this Current Report no later than the required filing date.
(d) Exhibits.
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.
Dated: October 26, 2018 | NINE ENERGY SERVICE, INC. | |||||
By: | /s/ Theodore R. Moore | |||||
Theodore R. Moore Senior Vice President and General Counsel |
Exhibit 4.1
NINE ENERGY SERVICE, INC.
8.750% SENIOR NOTES DUE 2023
INDENTURE
DATED AS OF OCTOBER 25, 2018
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
TABLE OF CONTENTS
Page | ||||||
ARTICLE I | ||||||
DEFINITIONS AND INCORPORATION BY REFERENCE | ||||||
Section 1.1. |
Definitions | 1 | ||||
Section 1.2. |
Other Definitions | 24 | ||||
Section 1.3. |
Rules of Construction | 25 | ||||
ARTICLE II | ||||||
THE NOTES | ||||||
Section 2.1. |
Form and Dating | 25 | ||||
Section 2.2. |
Execution and Authentication | 26 | ||||
Section 2.3. |
Registrar; Paying Agent | 27 | ||||
Section 2.4. |
Paying Agent to Hold Money in Trust | 27 | ||||
Section 2.5. |
Holder Lists | 27 | ||||
Section 2.6. |
Book-Entry Provisions for Global Notes | 28 | ||||
Section 2.7. |
Replacement Notes | 30 | ||||
Section 2.8. |
Outstanding Notes | 30 | ||||
Section 2.9. |
Treasury Notes | 30 | ||||
Section 2.10. |
Temporary Notes | 31 | ||||
Section 2.11. |
Cancellation | 31 | ||||
Section 2.12. |
Defaulted Interest | 31 | ||||
Section 2.13. |
Computation of Interest | 31 | ||||
Section 2.14. |
CUSIP Number | 31 | ||||
Section 2.15. |
Special Transfer Provisions | 31 | ||||
Section 2.16. |
Issuance of Additional Notes | 34 | ||||
ARTICLE III | ||||||
REDEMPTION AND PREPAYMENT | ||||||
Section 3.1. |
Notices to Trustee | 34 | ||||
Section 3.2. |
Selection of Notes to Be Redeemed | 34 | ||||
Section 3.3. |
Notice of Optional Redemption | 34 | ||||
Section 3.4. |
Effect of Notice of Redemption | 36 | ||||
Section 3.5. |
Deposit of Redemption Price | 36 | ||||
Section 3.6. |
Notes Redeemed in Part | 36 | ||||
Section 3.7. |
Optional Redemption | 36 | ||||
Section 3.8. |
Special Mandatory Redemption | 37 | ||||
ARTICLE IV | ||||||
COVENANTS | ||||||
Section 4.1. |
Payment of Notes | 38 | ||||
Section 4.2. |
Maintenance of Office or Agency | 38 | ||||
Section 4.3. |
Provision of Financial Information | 38 | ||||
Section 4.4. |
Compliance Certificate | 40 | ||||
Section 4.5. |
Taxes | 40 | ||||
Section 4.6. |
Stay, Extension and Usury Laws | 40 | ||||
Section 4.7. |
Limitation on Restricted Payments | 41 | ||||
Section 4.8. |
Limitation on Dividend and Other Restrictions Affecting Restricted Subsidiaries | 43 | ||||
Section 4.9. |
Limitation on Additional Indebtedness | 45 |
i
Section 4.10. |
Limitation on Asset Sales | 48 | ||||
Section 4.11. |
Limitation on Transactions with Affiliates | 51 | ||||
Section 4.12. |
Limitation on Liens | 53 | ||||
Section 4.13. |
Offer to Purchase upon Change of Control | 53 | ||||
Section 4.14. |
Corporate Existence | 55 | ||||
Section 4.15. |
Additional Guarantees | 55 | ||||
Section 4.16. |
Limitation on Designation of Unrestricted Subsidiaries | 55 | ||||
Section 4.17. |
Effectiveness of Covenants | 56 | ||||
Section 4.18. |
Use of Proceeds Prior to the Consummation of the Magnum Acquisition | 58 | ||||
ARTICLE V | ||||||
SUCCESSORS | ||||||
Section 5.1. |
Consolidation, Merger, Conveyance, Transfer or Lease | 58 | ||||
ARTICLE VI | ||||||
DEFAULTS AND REMEDIES | ||||||
Section 6.1. |
Events of Default | 60 | ||||
Section 6.2. |
Acceleration | 62 | ||||
Section 6.3. |
Other Remedies | 62 | ||||
Section 6.4. |
Waiver of Past Defaults | 62 | ||||
Section 6.5. |
Control by Majority | 62 | ||||
Section 6.6. |
Limitation on Suits | 63 | ||||
Section 6.7. |
Rights of Holders of Notes to Receive Payment | 63 | ||||
Section 6.8. |
Collection Suit by Trustee | 63 | ||||
Section 6.9. |
Trustee May File Proofs of Claim | 63 | ||||
Section 6.10. |
Priorities | 64 | ||||
Section 6.11. |
Undertaking for Costs | 64 | ||||
ARTICLE VII | ||||||
TRUSTEE | ||||||
Section 7.1. |
Duties of Trustee | 64 | ||||
Section 7.2. |
Rights of Trustee | 65 | ||||
Section 7.3. |
Individual Rights of the Trustee | 67 | ||||
Section 7.4. |
Trustees Disclaimer | 67 | ||||
Section 7.5. |
Notice of Defaults | 67 | ||||
Section 7.6. |
Compensation and Indemnity | 67 | ||||
Section 7.7. |
Replacement of Trustee | 68 | ||||
Section 7.8. |
Successor Trustee by Merger, Etc | 69 | ||||
Section 7.9. |
Eligibility; Disqualification | 69 | ||||
ARTICLE VIII | ||||||
DEFEASANCE; DISCHARGE OF THIS INDENTURE | ||||||
Section 8.1. |
Option to Effect Legal Defeasance or Covenant Defeasance | 69 | ||||
Section 8.2. |
Legal Defeasance | 69 | ||||
Section 8.3. |
Covenant Defeasance | 69 | ||||
Section 8.4. |
Conditions to Legal or Covenant Defeasance | 70 | ||||
Section 8.5. |
Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions | 71 | ||||
Section 8.6. |
Repayment to Issuer | 71 | ||||
Section 8.7. |
Reinstatement | 71 | ||||
Section 8.8. |
Discharge | 72 |
ii
ARTICLE IX | ||||||
AMENDMENT, SUPPLEMENT AND WAIVER | ||||||
Section 9.1. |
Without Consent of Holders of the Notes | 73 | ||||
Section 9.2. |
With Consent of Holders of Notes | 73 | ||||
Section 9.3. |
Revocation and Effect of Consents | 74 | ||||
Section 9.4. |
Notation on or Exchange of Notes | 75 | ||||
Section 9.5. |
Trustee to Sign Amendments, Etc | 75 | ||||
ARTICLE X | ||||||
GUARANTEES | ||||||
Section 10.1. |
Guarantees | 75 | ||||
Section 10.2. |
Execution and Delivery of Guarantee | 76 | ||||
Section 10.3. |
Severability | 76 | ||||
Section 10.4. |
Limitation of Guarantors Liability | 76 | ||||
Section 10.5. |
Releases | 77 | ||||
Section 10.6. |
Benefits Acknowledged | 77 | ||||
ARTICLE XI | ||||||
MISCELLANEOUS | ||||||
Section 11.1. |
Concerning the Trust Indenture | 77 | ||||
Section 11.2. |
Notices | 78 | ||||
Section 11.3. |
Certificate and Opinion as to Conditions Precedent | 79 | ||||
Section 11.4. |
Statements Required in Certificate or Opinion | 79 | ||||
Section 11.5. |
Rules by Trustee and Agents | 79 | ||||
Section 11.6. |
No Personal Liability of Directors, Officers, Employees and Stockholders | 79 | ||||
Section 11.7. |
Governing Law; Consent to Jurisdiction | 79 | ||||
Section 11.8. |
No Adverse Interpretation of Other Agreements | 80 | ||||
Section 11.9. |
Successors | 80 | ||||
Section 11.10. |
Severability | 80 | ||||
Section 11.11. |
Execution in Counterparts | 80 | ||||
Section 11.12. |
Table of Contents, Headings, Etc | 80 | ||||
Section 11.13. |
Acts of Holders | 80 | ||||
Section 11.14. |
Force Majeure | 81 | ||||
Section 11.15. |
Legal Holidays | 81 | ||||
Section 11.16. |
USA PATRIOT Act | 81 | ||||
Section 11.17. |
Waiver of Jury Trial | 81 |
Exhibits
Exhibit A | Form of Note | |
Exhibit B | Form of Supplemental Indenture to be Delivered by Subsequent Guarantors | |
Exhibit C | Form of Certificate to be Delivered in Connection with Transfers Pursuant to Rule 144A | |
Exhibit D | Form of Certificate to be Delivered in Connection with Transfers Pursuant to Regulation S | |
Exhibit E | Form of Certificate to be Delivered in Connection with Transfers to an IAI |
iii
This Indenture, dated as of October 25, 2018, is by and among Nine Energy Service, Inc., a Delaware corporation (as more fully defined herein, the Issuer), the Guarantors listed on the signature pages hereto, and Wells Fargo Bank, National Association, as trustee (the Trustee), paying agent and registrar.
The Issuer, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined herein) of (i) the Issuers 8.750% Senior Notes due 2023 issued on the date hereof (the Initial Notes) and (ii) Additional Notes (as defined herein):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
ABL Credit Agreement means the Credit Agreement dated on or about date of consummation of the Magnum Acquisition, by and among the Issuer, as U.S. borrower, Nine Energy Canada, Inc., as Canadian borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the several lenders and other agents party thereto, including any notes, guarantees, collateral and security documents, instruments and agreements executed in connection therewith (including Hedging Obligations related to the Indebtedness incurred thereunder), and in each case as such agreement or facility may be amended (including any amendment or restatement thereof), supplemented or otherwise modified from time to time, including any agreement or indenture exchanging, extending the maturity of, refinancing, renewing, replacing, substituting or otherwise restructuring, whether in the bank or debt capital markets (or combination thereof) (including increasing the amount of available borrowings thereunder or adding or removing Subsidiaries as borrowers or guarantors thereunder) all or any portion of the Indebtedness under such agreement or facility or any successor or replacement agreement or facility.
Acquired Indebtedness means:
(1) with respect to any Person that becomes a Restricted Subsidiary after the Issue Date, Indebtedness of such Person and its Subsidiaries (including, for the avoidance of doubt, Indebtedness incurred in the ordinary course of such Persons business to acquire assets used or useful in its business) existing at the time such Person becomes a Restricted Subsidiary; and
(2) with respect to the Issuer or any Restricted Subsidiary, any Indebtedness of a Person (including, for the avoidance of doubt, Indebtedness incurred in the ordinary course of such Persons business to acquire assets used or useful in its business), other than the Issuer or a Restricted Subsidiary, existing at the time such Person is merged with or into the Issuer or a Restricted Subsidiary, or Indebtedness expressly assumed by the Issuer or any Restricted Subsidiary in connection with the acquisition of an asset or assets from another Person.
Additional Notes means Notes (other than the Initial Notes) issued pursuant to Article II and otherwise in compliance with the provisions of this Indenture whether or not they bear the same CUSIP number.
Affiliate of any Person means any other Person which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person. For purposes of this definition, control of a Person shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.
Agent means any Registrar, Paying Agent, co-registrar or other agent appointed pursuant to this Indenture.
amend means to amend, supplement, restate, amend and restate or otherwise modify, including successively, and amendment shall have a correlative meaning.
Applicable Premium means, with respect to any Note on any applicable redemption date, the greater of:
(1) 1.0% of the principal amount of such Note; and
(2) the excess, if any, of:
(a) the present value at such redemption date of (i) the redemption price of such Note at November 1, 2020 (such redemption price being set forth in the table appearing in Section 3.7(b)) plus (ii) all required interest payments (in each case excluding accrued and unpaid interest to such redemption date) due on such Note through November 1, 2020, computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months); over
(b) the principal amount of such Note.
asset means any asset or property, including, without limitation, Equity Interests.
Asset Acquisition means:
(1) an Investment by the Issuer or any Restricted Subsidiary of the Issuer in any other Person if, as a result of such Investment, such Person shall become a Restricted Subsidiary of the Issuer, or shall be merged with or into the Issuer or any Restricted Subsidiary of the Issuer, or
(2) the acquisition by the Issuer or any Restricted Subsidiary of the Issuer of all or substantially all of the assets of any other Person (other than a Restricted Subsidiary of the Issuer) or any division or line of business of any such other Person (other than in the ordinary course of business).
Asset Sale means:
(1) any sale, conveyance, transfer, lease, assignment or other disposition by the Issuer or any Restricted Subsidiary to any Person other than the Issuer or any Restricted Subsidiary (including by means of a sale and leaseback transaction or a merger or consolidation), in one transaction or a series of related transactions, of any assets of the Issuer or any of its Restricted Subsidiaries other than in the ordinary course of business; or
(2) any issuance of Equity Interests of a Restricted Subsidiary (other than Preferred Stock of Restricted Subsidiaries issued in compliance with Section 4.9) to any Person other than the Issuer or any Restricted Subsidiary in one transaction or a series of related transactions (the actions described in these clauses (1) and (2), collectively, for purposes of this definition, a transfer).
For purposes of this definition, the term Asset Sale shall not include:
(a) transfers of cash or Cash Equivalents;
2
(b) transfers of assets (including Equity Interests) that are governed by, and made in accordance with, Section 4.13 or Section 5.1;
(c) Permitted Investments and Restricted Payments permitted under Section 4.7;
(d) the creation of or realization on any Lien not prohibited under this Indenture and any disposition of assets resulting from the enforcement or foreclosure of any such Lien;
(e) transfers of damaged, worn-out or obsolete equipment or assets that, in the Issuers reasonable judgment, are no longer used or useful in the business of the Issuer or its Restricted Subsidiaries;
(f) sales or 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 Issuer or any Restricted Subsidiary to the extent not materially interfering with the business of the Issuer and the Restricted Subsidiaries;
(g) a disposition of inventory in the ordinary course of business;
(h) a disposition of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring and similar arrangements;
(i) the trade or exchange by the Issuer or any Restricted Subsidiary of any asset for any other asset or assets that are used in a Permitted Business; provided, that the Fair Market Value of the asset or assets received by the Issuer or any Restricted Subsidiary in such trade or exchange (including any cash or Cash Equivalents) is at least equal to the Fair Market Value (as determined in good faith by the Board of Directors or an executive officer of the Issuer or of such Restricted Subsidiary with responsibility for such transaction, which determination shall be conclusive evidence of compliance with this provision) of the asset or assets disposed of by the Issuer or any Restricted Subsidiary pursuant to such trade or exchange; and, provided, further, that if any cash or Cash Equivalents are used in such trade or exchange to achieve an exchange of equivalent value, that the amount of such cash and/or Cash Equivalents received shall be deemed proceeds of an Asset Sale, subject to clause (o) below;
(j) dispositions of Investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements between joint venture parties set forth in, joint venture agreements or any similar binding arrangements;
(k) the disposition of workover rigs and other assets used primarily in the Production Solutions segment of the Issuers and its Restricted Subsidiaries business;
(l) the disposition of assets received in settlement of debts accrued in the ordinary course of business;
(m) 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;
(n) dispositions of Equity Interests in or Indebtedness of an Unrestricted Subsidiary; and
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(o) any transfer or series of related transfers that, but for this clause, would be Asset Sales, if after giving effect to such transfers, the aggregate Fair Market Value of the assets transferred in such transaction or any such series of related transactions does not exceed $15.0 million per occurrence.
Bankruptcy Law means Title 11, U.S. Code or any similar federal, state or foreign law for the relief of debtors, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, winding-up, restructuring, examinership or similar debtor relief laws.
Board of Directors means, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person and (ii) in any other case, the functional equivalent of the foregoing or, in each case, any duly authorized committee of such body.
Borrowing Base means, with respect to the borrowings under the ABL Credit Agreement and any amendment to and/or modification or replacement thereof in the form of an asset-based borrowing base credit facility, in each case with lenders that include commercial banks regulated by the U.S. Office of the Comptroller of the Currency, as of the date of determination, an amount equal to the sum, without duplication, of (i) 85.0% of the net book value of the Issuers and its Restricted Subsidiaries accounts receivable at such date and (ii) 60.0% of the net book value of the Issuers and its Restricted Subsidiaries inventories at such date, as determined by the lenders or administrative agent thereunder.
Net book value shall be determined in accordance with GAAP and shall be calculated using amounts reflected on the most recent available balance sheet (it being understood that the accounts receivable and inventories of an acquired business may be included if such acquisition has been completed on or prior to the date of determination).
Business Day means a day other than a Saturday, Sunday or other day on which banking institutions in Houston, Texas or the State of New York are authorized or required by law to close.
Capitalized Lease means a lease required to be capitalized on a balance sheet (excluding the footnotes thereto) prepared in accordance with GAAP. 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 and applicable to the Issuer on the Issue Date shall be deemed not to be a Capitalized Lease.
Capitalized Lease Obligations of any Person means the obligations of such Person to pay rent or other amounts under a Capitalized Lease, and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP, excluding liabilities resulting from a change in GAAP subsequent to the date of this Indenture, 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.
Cash Equivalents means:
(1) marketable obligations issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of such government is pledged in support thereof), maturing within one year of the date of acquisition thereof;
(2) demand and time deposits and certificates of deposit of any lender under any Debt Facility or any Eligible Bank organized under the laws of the United States, any state thereof or the District of Columbia or a U.S. branch of any other Eligible Bank maturing within one year of the date of acquisition thereof;
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(3) commercial paper issued by any Person incorporated in the United States rated at least A1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moodys or an equivalent rating by a nationally recognized rating agency if both S&P and Moodys cease publishing ratings of commercial paper issuers generally, and in each case maturing not more than one year after the date of acquisition thereof;
(4) repurchase obligations with a term of not more than one year for underlying securities of the types described in clause (1) above entered into with any Eligible Bank and maturing not more than one year after such time;
(5) securities issued and fully guaranteed by any state, commonwealth or territory of the United States or by any political subdivision or taxing authority thereof, rated at least A by Moodys or S&P and having maturities of not more than one year from the date of acquisition;
(6) investments in money market or other mutual funds substantially all of whose assets comprise securities of the types described in clauses (1) through (5) above;
(7) demand deposit accounts maintained in the ordinary course of business; and
(8) in the case of any Subsidiary of the Issuer organized or having its principal place of business outside the United States, investments denominated in the currency of the jurisdiction in which such Subsidiary is organized or has its principal place of business which are similar to the items specified in clauses (1) through (7) above.
Change of Control means the occurrence of any of the following events:
(1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Restricted Subsidiaries, taken as a whole, to any person (as that term is used in Section 13(d)(3) of the Exchange Act), other than a Permitted Holder;
(2) any person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than a Permitted Holder, is or becomes the beneficial owner of (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause that person or group shall be deemed to have beneficial ownership of all securities that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), or controls, directly or indirectly, Voting Stock representing more than 50.0% of the voting power of the total outstanding Voting Stock of the Issuer on a fully diluted basis, in each case other than as a result of a merger or consolidation as a result of which the beneficial owners of the Issuers Voting Stock immediately prior to the transaction beneficially own, immediately after the transaction, a majority of the voting power of the Voting Stock of the successor entity or any parent thereof; or
(3) the adoption by the stockholders of the Issuer of a Plan of Liquidation.
For purposes of this definition, a Person shall not be deemed to have beneficial ownership of securities subject to a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement.
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Common Stock means with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Persons common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock.
Consolidated Amortization Expense for any period means the amortization expense of the relevant Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.
Consolidated Cash Flow for any period means, with respect to any specified Person and its Restricted Subsidiaries, without duplication, the sum of the amounts for such period of:
(1) Consolidated Net Income, plus
(2) in each case only to the extent deducted in determining Consolidated Net Income,
(a) Consolidated Income Tax Expense,
(b) Consolidated Amortization Expense,
(c) Consolidated Depreciation Expense,
(d) Consolidated Interest Expense, and
(e) all other non-cash items reducing the Consolidated Net Income (excluding any non-cash charge that results in an accrual of a reserve for cash charges in any future period) for such period, minus
(3) the aggregate amount of all non-cash items, determined on a consolidated basis, to the extent such items increased Consolidated Net Income for such period (other than accrual of revenue in the ordinary course or any non-cash items to the extent they represent the reversal of an accrual of a reserve for a potential cash item that reduced Consolidated Cash Flow in any prior period).
Consolidated Depreciation Expense for any period means the depreciation expense of the relevant Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.
Consolidated Income Tax Expense for any period means the provision for taxes of the relevant Person and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP.
Consolidated Interest Coverage Ratio means, on any date of determination, with respect to any Person, the ratio of (x) Consolidated Cash Flow during the most recent four consecutive full fiscal quarters for which financial statements prepared on a consolidated basis in accordance with GAAP are available (the Four-Quarter Period) ending on or prior to the date of the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio (the Transaction Date) to (y) Consolidated Interest Expense for the Four-Quarter Period. For purposes of this definition, Consolidated Cash Flow and Consolidated Interest Expense shall be calculated after giving effect on a pro forma basis for the period of such calculation to:
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(1) the incurrence of any Indebtedness or the issuance of any Disqualified Equity Interests of the Issuer or Disqualified Equity Interests or Preferred Stock of any Restricted Subsidiary (and the application of the proceeds thereof) and any repayment, repurchase or redemption of other Indebtedness or other Disqualified Equity Interests or Preferred Stock (and the application of the proceeds therefrom) (other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to any revolving credit arrangement) occurring during the Four-Quarter Period or at any time subsequent to the last day of the Four-Quarter Period and on or prior to the Transaction Date, as if such incurrence, repayment, repurchase, issuance or redemption, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four-Quarter Period; and
(2) any Asset Sale or Asset Acquisition (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Issuer or any Restricted Subsidiary (including any Person who becomes a Restricted Subsidiary as a result of such Asset Acquisition) incurring Acquired Indebtedness and also including any Consolidated Cash Flow (including any pro forma expense and cost reductions that have occurred or are reasonably expected to occur within the next 12 months)) in each case occurring during the Four-Quarter Period or at any time subsequent to the last day of the Four-Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition (including the incurrence of, or assumption or liability for, any such Indebtedness or Acquired Indebtedness) occurred on the first day of the Four-Quarter Period; provided, that such pro forma calculations shall be determined in good faith by a Responsible Financial or Accounting Officer of the Issuer whether or not such pro forma adjustments would be permitted under SEC rules or guidelines.
In calculating Consolidated Interest Expense for purposes of this Consolidated Interest Coverage Ratio:
(a) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date;
(b) if interest on any Indebtedness actually incurred on the Transaction Date 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 rates, then the interest rate in effect on the Transaction Date will be deemed to have been in effect during the Four-Quarter Period; and
(c) notwithstanding clause (a) or (b) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Hedging Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements.
Consolidated Interest Expense for any period means the sum, without duplication, of the total interest expense of the relevant Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, including, without duplication:
(1) imputed interest on Capitalized Lease Obligations;
(2) commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations, bankers acceptance financing and receivables financings;
(3) the net costs associated with Hedging Obligations related to interest rates;
(4) amortization of debt issuance costs, debt discount or premium and other financing fees and expenses;
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(5) the interest portion of any deferred payment obligations;
(6) all other non-cash interest expense;
(7) capitalized interest;
(8) all dividend payments on any series of Disqualified Equity Interests of the Issuer or any of its Restricted Subsidiaries or any Preferred Stock of any Restricted Subsidiary (other than dividends on Equity Interests to the extent payable in Qualified Equity Interests of the Issuer or to the Issuer or a Restricted Subsidiary of the Issuer);
(9) all interest payable with respect to discontinued operations; and
(10) all interest on any Indebtedness described in clause (7) or (8) of the definition of Indebtedness.
Notwithstanding the foregoing, the interest component of any lease that is not a Capitalized Lease will not be included in Consolidated Interest Expense.
Consolidated Net Income for any period means the net income (or loss) of such Person and its Restricted Subsidiaries, in each case for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded in calculating such net income (or loss), to the extent otherwise included therein, without duplication:
(1) the net income (or loss) of any Person (other than a Restricted Subsidiary) in which any Person other than the Issuer and the Restricted Subsidiaries has an ownership interest, except to the extent that cash in an amount equal to any such income has actually been received by the Issuer or any of its Restricted Subsidiaries during such period;
(2) except to the extent includible in the net income (or loss) of the Issuer pursuant to the foregoing clause (1), the net income (or loss) of any Person that accrued prior to the date that (a) such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Issuer or any Restricted Subsidiary or (b) the assets of such Person are acquired by the Issuer or any Restricted Subsidiary;
(3) the net income of any Restricted Subsidiary other than a Guarantor during such period to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary during such period, unless such restriction with respect to the payment of dividends has been legally waived;
(4) gains or losses attributable to discontinued operations;
(5) any gain (or loss), together with any related provisions for taxes on any such gain (or the tax effect of any such loss), realized during such period by the Issuer or any Restricted Subsidiary upon any Asset Sale by the Issuer or any Restricted Subsidiary;
(6) gains and losses due solely to fluctuations in currency values and the related tax effects according to GAAP;
(7) unrealized gains and losses with respect to Hedging Obligations;
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(8) the cumulative effect of any change in accounting principles or policies;
(9) extraordinary gains and losses and the related tax effect;
(10) (A) any costs, expenses or charges (including advisory, legal and professional fees) related to any issuance of debt or equity, investments, acquisition, disposition, recapitalization or incurrence, amendment, waiver, modification, extinguishment or refinancing of any Indebtedness, whether or not consummated, including such fees, expenses or charges related to the offering of the Notes and any Debt Facilities, (B) any costs, expenses or charges relating to the Transactions, and (C) legal settlement expenses;
(11) non-cash charges or expenses with respect to the grant of stock options, restricted stock or other equity compensation awards and the non-cash interest expense with respect to the equity component of any convertible or exchangeable debt security; and
(12) goodwill write-downs or other non-cash impairments of assets.
Consolidated Net 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 Restricted Subsidiaries determined in accordance with GAAP, less, to the extent included in a determination of Total Assets, and without duplication, all goodwill, patents, tradenames, trademarks, copyrights, franchises, experimental expenses, organization expenses and any other amounts classified as intangible assets in accordance with GAAP.
Corporate Trust Office means the offices of the Trustee at which at any time its corporate trust business shall be principally administered, which office as of the date hereof is located at Wells Fargo Bank, National Association, 1445 Ross Avenue, Suite 4300, Dallas, Texas 75202, Attention: Corporate, Municipal & Escrow Services, or such other address as the Trustee may designate from time to time by notice to the Holders and the Issuer, or the corporate trust office of any successor trustee (or such other address as such successor trustee may designate from time to time by notice to the Holders and the Issuer).
Customary Recourse Exceptions means, with respect to any Non-Recourse Debt of an Unrestricted Subsidiary, exclusions from the exculpation provisions with respect to such Non-Recourse Debt for the voluntary bankruptcy of such Unrestricted Subsidiary, fraud, misapplication of cash, environmental claims, waste, willful destruction and other circumstances customarily excluded by lenders from exculpation provisions or included in separate indemnification agreements in non-recourse financings.
Debt Facilities means one or more debt facilities or indentures (which may be outstanding at the same time and including, without limitation, the ABL Credit Agreement) providing for revolving credit loans, debt securities, term loans, receivables financing or letters of credit and, in each case, as such agreements may be amended, refinanced, restated, refunded or otherwise restructured, in whole or in part from time to time (including increasing the amount of available borrowings thereunder or adding Subsidiaries of the Issuer as additional borrowers or guarantors thereunder) with respect to all or any portion of the Indebtedness under such agreement or agreements or any successor or replacement agreement or agreements and whether by the same or any other agent, lender, group of lenders or institutional lenders or investors.
Default means (1) any Event of Default or (2) any event, act or condition that, after notice or the passage of time or both, would be an Event of Default.
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Designated Non-cash Consideration means the Fair Market Value of non-cash consideration received by the Issuer or a Restricted Subsidiary of the Issuer in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officers Certificate, setting forth the basis of such valuation, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection on such Designated Non-cash Consideration.
Depositary means with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.3 hereof as the Depositary with respect to the Global Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.
Disqualified Equity Interests of any Person means any class of Equity Interests of such Person that, by its terms, or by the terms of any related agreement or of any security into which it is convertible, puttable or exchangeable (in each case, at the option of the holder thereof), is, or upon the happening of any event or the passage of time would be, required to be redeemed by such Person, at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the date which is 91 days after the Stated Maturity of the Notes; provided, however, that any class of Equity Interests of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Equity Interests that are not Disqualified Equity Interests, and that is not convertible, puttable or exchangeable for Disqualified Equity Interests or Indebtedness, will not be deemed to be Disqualified Equity Interests so long as such Person satisfies its obligations with respect thereto solely by the delivery of Equity Interests that are not Disqualified Equity Interests; provided, further, however, that any Equity Interests that would not constitute Disqualified Equity Interests but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests are convertible, exchangeable or exercisable) the right to require the Issuer to repurchase or redeem such Equity Interests upon the occurrence of a change in control or an Asset Sale occurring prior to the 91st day after the Stated Maturity of the Notes shall not constitute Disqualified Equity Interests if the change of control or asset sale provisions applicable to such Equity Interests are no more favorable to such holders than Section 4.13 and Section 4.10, respectively, and such Equity Interests specifically provide that the Issuer will not repurchase or redeem any such Equity Interests pursuant to such provisions prior to the Issuers purchase of the Notes as required pursuant to Section 4.13 and Section 4.10, respectively.
dollars, U.S. dollars or $ means lawful money of the United States.
DTC means The Depository Trust Company and any successor.
Eligible Bank shall mean any commercial bank having, or which is the principal banking subsidiary of a bank holding company having, capital and surplus aggregating in excess of $250.0 million (or in the equivalent thereof in a foreign currency as of the date of determination) and a rating of A (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization.
Equity Interests of any Person means (1) any and all shares or other equity interests (including Common Stock, Preferred Stock, limited liability company interests, trust units and partnership interests) in such Person and (2) all rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such Person, but excluding from all of the foregoing any debt securities convertible into Equity Interests, regardless of whether such debt securities include any right of participation with Equity Interests.
Exchange Act means the U.S. Securities Exchange Act of 1934, as amended.
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Fair Market Value means, with respect to any asset, the price (after taking into account any liabilities relating to such asset) that would be negotiated in an arms-length transaction for cash between a willing seller and a willing and able buyer, neither of which is under any compulsion to complete the transaction as such price is determined in good faith by management of the Issuer.
Foreign Subsidiary means any Restricted Subsidiary not organized or existing under the laws of the United States, any state thereof or the District of Columbia, and any Restricted Subsidiary of such Restricted Subsidiary.
GAAP means generally accepted accounting principles in the United States, which are in effect from time to time.
Global Note Legend means the legend identified as such in Exhibit A.
Global Notes means the Notes that are in the form of Exhibit A issued in global form and registered in the name of the Depositary or its nominee.
guarantee means a direct or indirect guarantee by any Person of any Indebtedness of any other Person and includes any obligation, direct or indirect, contingent or otherwise, of such Person entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); guarantee, when used as a verb, and guaranteed have correlative meanings.
Guarantee means, individually, any guarantee of payment of the Notes by a Guarantor pursuant to the terms of this Indenture and any supplemental indenture hereto, and, collectively, all such guarantees.
Guarantors means each Restricted Subsidiary of the Issuer on the Issue Date that is a party to this Indenture for purposes of providing a Guarantee with respect to the Notes, and each other Person that is required to, or at the election of the Issuer, does become a Guarantor by the terms of this Indenture after the Issue Date, in each case, until such Person is released from its Guarantee in accordance with the terms of this Indenture.
Hedging Obligations of any Person means the obligations of such Person under option, swap, cap, collar, forward purchase or similar agreements or arrangements intended to manage exposure to interest rates or currency exchange rates or commodity prices (including, without limitation, for purposes of this definition, rates for electrical power used in the ordinary course of business), either generally or under specific contingencies.
Holder means any registered holder, from time to time, of the Notes.
IAI means an institution that is an accredited investor as described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act and is not a QIB.
incur means, with respect to any Indebtedness or Obligation, incur, create, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to such Indebtedness or Obligation; provided that (1) the Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary of the Issuer shall be deemed to have been incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary of the Issuer and (2) neither the accrual of interest nor the accretion of original issue discount or the accretion or accumulation of dividends on any Equity Interests shall be deemed to be an incurrence of Indebtedness.
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Indebtedness of any Person at any date means, without duplication:
(1) all liabilities, contingent or otherwise, of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof);
(2) all obligations of such Person evidenced by bonds, debentures, bankers acceptances, notes or other similar instruments;
(3) all reimbursement obligations of such Person in respect of letters of credit, letters of guaranty and similar credit transactions;
(4) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except deferred compensation, trade payables and accrued expenses incurred by such Person in the ordinary course of business in connection with obtaining goods, materials or services and not overdue by more than 180 days unless subject to a bona fide dispute;
(5) the greater of the maximum mandatory redemption or repurchase price of (not including, in either case, any redemption or repurchase premium) or the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Equity Interests or, with respect to any Subsidiary that is not a Guarantor, any Preferred Stock (but excluding, in each case, any accrued dividends);
(6) all Capitalized Lease Obligations of such Person (but not any lease that is not a Capitalized Lease Obligation);
(7) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person;
(8) all Indebtedness of others guaranteed by such Person to the extent of such guarantee; provided that Indebtedness of the Issuer or its Subsidiaries that is guaranteed by the Issuer or the Issuers Subsidiaries shall only be counted once in the calculation of the amount of Indebtedness of the Issuer and its Subsidiaries on a consolidated basis;
(9) to the extent not otherwise included in this definition, net Hedging Obligations of such Person; and
(10) all obligations of such Person under conditional sale or other title retention agreements relating to assets purchased by such Person.
The amount of any Indebtedness which is incurred at a discount to the principal amount at maturity thereof as of any date shall be deemed to have been incurred at the accreted value thereof as of such date. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above, the maximum liability of such Person for any such contingent obligations at such date and, in the case of clause (7), the lesser of (a) the Fair Market Value of any asset subject to a Lien securing the Indebtedness of others on the date that the Lien attaches and (b) the amount of the Indebtedness secured. For purposes of clause (5), the maximum mandatory redemption or repurchase price of any Disqualified Equity Interests that do not have a fixed redemption or repurchase price shall be calculated in accordance with the terms of such Disqualified Equity Interests as if such Disqualified Equity Interests were redeemed or repurchased on any date on which an amount of Indebtedness outstanding shall be required to be determined pursuant to this Indenture.
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The term Indebtedness excludes any repayment or reimbursement obligation of such Person or any of its Restricted Subsidiaries with respect to Customary Recourse Exceptions, unless and until an event or circumstance occurs that triggers the Persons or such Restricted Subsidiarys direct repayment or reimbursement obligation (as opposed to contingent or performance obligations) to the lender or other Person to whom such obligation is actually owed, in which case the amount of such direct payment or reimbursement obligation shall constitute Indebtedness.
Indenture means this Indenture, as amended or supplemented from time to time.
Initial Notes has the meaning set forth in the preamble hereto.
Intellectual Property means all patents, patent applications, trademarks, trade names, service marks, copyrights, technology, trade secrets, proprietary information, domain names, know-how and processes necessary for the conduct of the Issuers or any Restricted Subsidiarys business.
Investment Grade Rating means a rating equal to or higher than Baa3 (or the equivalent) by Moodys and BBB- (or the equivalent) by S&P, or any other equivalent rating by any Rating Agency, in each case, with a stable or better outlook.
Investments of any Person means:
(1) all direct or indirect investments by such Person in any other Person (including Affiliates) in the form of loans, advances or capital contributions or other credit extensions constituting Indebtedness of such other Person, and any guarantee of Indebtedness of any other Person;
(2) all purchases (or other acquisitions for consideration) by such Person of Indebtedness, Equity Interests or other securities of any other Person (other than any such purchase that constitutes a Restricted Payment of the type described in clause (2) of the definition thereof);
(3) all other items that would be classified as investments in another Person on a balance sheet of such Person prepared in accordance with GAAP; and
(4) the Designation of any Subsidiary as an Unrestricted Subsidiary.
Except as otherwise expressly specified in this definition, the amount of any Investment (other than an Investment made in cash) shall be the Fair Market Value thereof on the date such Investment is made. The amount of an Investment pursuant to clause (4) shall be the Designation Amount determined in accordance with Section 4.16. If the Issuer or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary, or any Restricted Subsidiary issues any Equity Interests, in either case, such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary, the Issuer shall be deemed to have made an Investment on the date of any such sale or other disposition equal to the Fair Market Value of the Equity Interests of and all other Investments in such Restricted Subsidiary retained. Notwithstanding the foregoing, purchases or redemptions of Equity Interests of the Issuer shall be deemed not to be Investments.
Issue Date means October 25, 2018, the date on which the Initial Notes are originally issued.
Issuer means Nine Energy Service, Inc., a Delaware corporation, and any successor Person resulting from any transaction permitted by Section 5.1.
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Lien means, with respect to any asset, any mortgage, deed of trust, lien (statutory or other), pledge, lease, easement, restriction, covenant, charge, security interest or other encumbrance of any kind or nature in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement.
Magnum means Magnum Oil Tools International, LTD, Magnum Oil Tools GP, LLC and Magnum Oil Tools Canada Ltd.
Magnum Acquisition means the acquisition of Magnum pursuant to the Magnum Acquisition Agreement.
Magnum Acquisition Agreement means that certain securities purchase agreement dated as of October 15, 2018, by and among MOTI Holdco, LLC, the Issuer, Nine Energy Canada Inc., the Sellers (as defined therein) and the Seller Representative (as defined therein) and certain other parties named therein.
Moodys means Moodys Investors Service, Inc., or any successor to its rating agency business.
Net Available Proceeds means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents received by the Issuer or any of its Restricted Subsidiaries from such Asset Sale, net of:
(1) brokerage commissions and other fees and expenses (including fees, discounts and expenses of legal counsel, accountants and investment banks, consultants and placement agents) of such Asset Sale;
(2) provisions for taxes payable (including any withholding or other taxes paid or reasonably estimated to be payable in connection with the transfer to the Issuer of such proceeds from any Restricted Subsidiary that received such proceeds) as a result of such Asset Sale (after taking into account any available tax credits or deductions and any tax sharing arrangements);
(3) amounts required to be paid to any Person (other than the Issuer or any Restricted Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale or having a Lien thereon;
(4) payments of unassumed liabilities (not constituting Indebtedness) relating to the assets sold at the time of, or within 30 days after the date of, such Asset Sale; and
(5) appropriate amounts to be provided by the Issuer or any Restricted Subsidiary, as the case may be, as a reserve required in accordance with GAAP against any adjustment in the sale price of such asset or assets or liabilities associated with such Asset Sale and retained by the Issuer or any Restricted Subsidiary, as the case may be, after such Asset Sale, including pensions and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale; provided, however, that any amounts remaining after adjustments, revaluations or liquidations of such reserves shall constitute Net Available Proceeds.
Non-Recourse Debt means Indebtedness of an Unrestricted Subsidiary as to which neither the Issuer nor any Restricted Subsidiary (a) provides credit support of any kind through any undertaking, agreement or instrument that would constitute Indebtedness, except for Customary Recourse Exceptions, or (b) is directly or indirectly liable as a guarantor or otherwise.
Note Custodian means the Person appointed as custodian for the Depositary with respect to the Global Notes, or any successor entity thereto.
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Notes means the Initial Notes and any Additional Notes. The Initial Notes and the Additional Notes, if any, shall be treated as a single class for all purposes under this Indenture.
Obligation means any principal, interest, penalties, fees, indemnification, reimbursements, costs, expenses, damages and other liabilities payable under the documentation governing any Indebtedness.
Offering Memorandum means the Issuers offering memorandum, dated October 18, 2018, relating to the offer and sale of the Initial Notes.
Officer means any of the following of the Issuer or any Guarantor: the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary.
Officers Certificate means a certificate signed by two Officers that meets the requirements of Section 11.4 of this Indenture.
Opinion of Counsel means a written opinion from legal counsel acceptable to the Trustee. The counsel may be an employee of or counsel to the Issuer or the Trustee.
Pari Passu Indebtedness means any Indebtedness of the Issuer or any Guarantor that is not Subordinated Indebtedness.
Participant means, with respect to the Depositary, a Person who has an account with the Depositary.
Paying Agent means any Person authorized by the Issuer to pay the principal of, premium, if any, or interest on any Notes on behalf of the Issuer.
Payment Default means any default in payment of amounts when due on the Notes, without giving effect to any grace period.
Permitted Business means the businesses engaged in by the Issuer and its Subsidiaries on the Issue Date as described in the Offering Memorandum and businesses that are reasonably related, incidental or ancillary thereto or reasonable extensions thereof.
Permitted Holder means L.E. Simmons & Associates and any fund or investment vehicle directly or indirectly controlled or managed thereby, and in case any Affiliate thereof but not including, however, any portfolio companies of the foregoing.
Permitted Investment means:
(1) Investments by the Issuer or any Restricted Subsidiary in (a) any Restricted Subsidiary or (b) any Person that will become immediately after such Investment a Restricted Subsidiary or that will merge or consolidate into the Issuer or any Restricted Subsidiary and any Investment held by any such Person at such time that was not incurred in contemplation of such acquisition, merger or consolidation;
(2) Investments in the Issuer by any Restricted Subsidiary;
(3) loans and advances to directors, employees and officers of the Issuer and its Restricted Subsidiaries (i) in the ordinary course of business (including payroll, travel and entertainment related advances) (other than any loans or advances to any director or executive officer (or equivalent thereof) that would be in violation of Section 402 of the Sarbanes Oxley Act) and (ii) to purchase Equity Interests of the Issuer not in excess of $2.5 million in the aggregate outstanding at any one time;
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(4) Hedging Obligations entered into in the ordinary course of business for bona fide hedging purposes of the Issuer or any Restricted Subsidiary not for the purpose of speculation;
(5) Investments in cash, Cash Equivalents, U.S. Treasury securities, investment grade corporate debt securities or any fund invested primarily in the foregoing;
(6) receivables owing to the Issuer or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Issuer or any such Restricted Subsidiary deems reasonable under the circumstances;
(7) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers or received in compromise or resolution of litigation, arbitration or other disputes with such parties;
(8) Investments made by the Issuer or any Restricted Subsidiary as a result of consideration received in connection with an Asset Sale made in compliance with Section 4.10 or a transaction excluded from the definition of Asset Sale;
(9) lease, utility and other similar deposits in the ordinary course of business;
(10) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Issuer or any Restricted Subsidiary or in satisfaction of judgments;
(11) Permitted Joint Venture Investments made by the Issuer or any of its Restricted Subsidiaries, in an aggregate amount (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (11) and then outstanding, that does not exceed the greater of (a) $75.0 million and (b) 10.0% of the Issuers Consolidated Net Tangible Assets determined at the time of investment;
(12) guarantees of Indebtedness of the Issuer or any of its Restricted Subsidiaries permitted in accordance with Section 4.9;
(13) repurchases of, or other Investments in, the Notes;
(14) advances or extensions of credit in the nature of accounts receivable arising from the sale or lease of goods or services, the leasing of equipment or the licensing of property in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided that such trade terms may include such concessionary trade terms as the Issuer or the applicable Restricted Subsidiary deems reasonable under the circumstances;
(15) Investments made pursuant to commitments in effect on the Issue Date;
(16) Investments the payment for which consists of Equity Interests (exclusive of Disqualified Equity Interests) of the Issuer; provided, however, that such Equity Interests will not increase the amount available for Restricted Payments under the Restricted Payments Basket;
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(17) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value) that, when taken together with all other Investments made pursuant to this clause (17) since the Issue Date and then outstanding, do not exceed the greater of (a) $50.0 million and (b) 7.5% of the Issuers Consolidated Net Tangible Assets determined at the time of investment; and
(18) performance guarantees of any trade or non-financial operating contract (other than such contract that itself constitutes Indebtedness) in the ordinary course of business.
In determining whether any Investment is a Permitted Investment, the Issuer may allocate or reallocate all or any portion of an Investment among the clauses of this definition and any of the provisions of Section 4.7.
Permitted Joint Venture Investment means, with respect to an Investment by any specified Person, an Investment by such specified Person in any other Person engaged in a Permitted Business (1) in which the Person has significant involvement in the day to day operations and management or veto power over significant management decisions or board or management committee representation and (2) of which at least 20.0% of the outstanding Equity Interests of such other Person is at the time owned directly or indirectly by the specified Person.
Permitted Liens means the following types of Liens:
(1) Liens for taxes, assessments or governmental charges or levies not yet due and payable or delinquent or that are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of the Issuer or its Restricted Subsidiaries, as the case may be, in conformity with GAAP;
(2) Liens in respect of property of the Issuer or any Restricted Subsidiary imposed by law or contract, which were not incurred or created to secure Indebtedness for borrowed money, such as carriers, warehousemens, materialmens, landlords, workmens, suppliers, repairmens and mechanics Liens and other similar Liens arising in the ordinary course of business, and which do not in the aggregate materially detract from the value of the property of the Issuer or its Restricted Subsidiaries, taken as a whole, and do not materially impair the use thereof in the operation of the business of the Issuer and its Restricted Subsidiaries, taken as a whole;
(3) pledges or deposits made in connection therewith in the ordinary course of business in connection with workers compensation, unemployment insurance, road transportation and other types of social security regulations;
(4) Liens (i) incurred in the ordinary course of business to secure the performance of tenders, bids, trade contracts, stay and customs bonds, leases, statutory obligations, surety and appeal bonds, statutory bonds, government contracts, performance and return money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) or (ii) incurred in the ordinary course of business to secure liability for premiums to insurance carriers;
(5) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Persons obligations in respect of bankers acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;
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(6) Liens arising out of judgments or awards not resulting in a Default or an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;
(7) easements, rights of way, restrictions (including zoning restrictions), covenants, encroachments, protrusions and other similar charges or encumbrances, and minor title deficiencies on or with respect to any Real Property, in each case whether now or hereafter in existence, not (i) securing Indebtedness and (ii) in the aggregate materially interfering with the conduct of the business of the Issuer and its Restricted Subsidiaries and not materially impairing the use of such Real Property in such business;
(8) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other assets relating to such letters of credit and products and proceeds thereof;
(9) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Issuer or any Restricted Subsidiary, including rights of offset and setoff;
(10) bankers Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by the Issuer or any Restricted Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements;
(11) any interest or title of a lessor under any lease entered into by the Issuer or any Restricted Subsidiary in accordance with this Indenture;
(12) the filing of UCC financing statements solely as a precautionary measure in connection with operating leases, consignments of goods or transfers of accounts, in each case to the extent not securing performance of a payment or other obligation;
(13) Liens securing the Notes and any Guarantee;
(14) Liens securing Hedging Obligations entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary not for the purpose of speculation;
(15) Liens securing Specified Cash Management Agreements entered into in the ordinary course of business;
(16) Liens in favor of the Issuer or a Guarantor;
(17) Liens securing Indebtedness under Debt Facilities incurred and then outstanding pursuant to Section 4.9(b)(1);
(18) Liens arising pursuant to Purchase Money Indebtedness or Capital Lease Obligations; provided that (i) the Indebtedness secured by any such Lien (including refinancings thereof) does not exceed 100.0% of the cost of the property being acquired or leased at the time of the incurrence of such Indebtedness and (ii) any such Liens attach only to the property being financed pursuant to such Purchase Money Indebtedness (plus improvements, accessions, proceeds, replacements or dividends or distributions in respect thereof) and do not encumber any other property of the Issuer or any Restricted Subsidiary;
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(19) Liens securing Acquired Indebtedness; provided that such Indebtedness was not initially incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary or being acquired or merged into the Issuer or a Restricted Subsidiary of the Issuer and such Liens do not extend to assets not subject to such Lien at the time of acquisition (plus improvements, accessions, proceeds, replacements or dividends or distributions in respect thereof);
(20) Liens on property of a Person existing at the time such Person is acquired or amalgamated or merged with or into or consolidated with the Issuer or any Restricted Subsidiary (and not created in anticipation or contemplation thereof); provided that such Liens do not extend to property not subject to such Liens at the time of acquisition (plus improvements, accessions, proceeds, replacements or dividends or distributions in respect thereof);
(21) Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any joint venture owned by the Issuer or any Restricted Subsidiary of the Issuer to the extent securing Non-Recourse Debt or other Indebtedness of such Unrestricted Subsidiary or joint venture;
(22) Liens arising from the deposit of funds or securities in trust for the purpose of decreasing or defeasing Indebtedness so long as such deposit of funds or securities and such decreasing or defeasing of Indebtedness are permitted under Section 4.9;
(23) licenses of Intellectual Property granted by the Issuer or any Restricted Subsidiary in the ordinary course of business and not interfering in any material respect with the ordinary conduct of the business of the Issuer or such Restricted Subsidiary;
(24) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Issuer or any Restricted Subsidiary in the ordinary course of business;
(25) Liens in favor of the Trustee as provided for in this Indenture on money or property held or collected by the Trustee in its capacity as Trustee;
(26) Liens on assets of any non-Guarantor Subsidiary to secure Indebtedness of such non-Guarantor Subsidiary incurred pursuant to Section 4.9(b)(16);
(27) Liens existing on the Issue Date (other than Liens securing the Debt Facilities);
(28) other Liens with respect to obligations which do not in the aggregate exceed at any time outstanding the greater of (a) $50.0 million and (b) 7.5% of the Issuers Consolidated Net Tangible Assets determined at the time of incurrence of such obligation; and
(29) any Lien renewing, extending, refinancing or refunding a Lien permitted by clauses (13), (18), (19), (20), (26), (27) and this clause (29); provided that such Liens do not extend to any additional assets (other than improvements, accessions, proceeds, replacements or dividends or distributions in respect thereof) and the amount of such Indebtedness is not increased except as necessary to pay premiums or expenses incurred in connection with such refinancing.
Person means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint-stock company, trust, mutual fund trust, unincorporated organization or government or other agency or political subdivision thereof or other legal entity of any kind.
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Plan of Liquidation with respect to any Person, means a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in phases or otherwise): (1) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person otherwise than as an entirety or substantially as an entirety; and (2) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such Person to holders of Equity Interests of such Person.
Preferred Stock means, with respect to any Person, any and all preferred or preference stock or other Equity Interests (however designated) of such Person whether now outstanding or issued after the Issue Date that is preferred as to the payment of dividends upon liquidation, dissolution or winding up.
principal means, with respect to the Notes, the principal of, and premium, if any, on the Notes.
Purchase Money Indebtedness means Indebtedness, including Capitalized Lease Obligations, of the Issuer or any Restricted Subsidiary incurred for the purpose of financing all or any part of the purchase price of property, plant or equipment used in the business of the Issuer or any Restricted Subsidiary or the cost of installation, construction or improvement thereof; provided, however, that (except in the case of Capitalized Lease Obligations) the amount of such Indebtedness shall not exceed such purchase price or cost.
Qualified Equity Interests of any Person means Equity Interests of such Person other than Disqualified Equity Interests; provided that such Equity Interests shall not be deemed Qualified Equity Interests 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 Equity Interests refer to Qualified Equity Interests of the Issuer.
Qualified Equity Offering means the issuance and sale of Qualified Equity Interests of the Issuer (or any direct or indirect parent of the Issuer to the extent the net proceeds therefrom are contributed to the common equity capital of the Issuer or used to purchase Qualified Equity Interests of the Issuer), other than (a) any issuance pursuant to employee benefit plans or otherwise in compensation to officers, directors, trustees or employees, or (b) public offerings with respect to the Issuers Qualified Equity Interests (or options, warrants or rights with respect thereto) registered on Form S-4 or S-8.
Rating Agencies means Moodys and S&P.
Real Property means, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned, leased or operated by any Person, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof.
refinance means to refinance, repay, prepay, replace, renew or refund.
Refinancing Indebtedness means Indebtedness of the Issuer or a Restricted Subsidiary incurred in exchange for, or the proceeds of which are used to redeem, refinance, replace, defease, discharge, refund or otherwise retire for value, in whole or in part, any Indebtedness of the Issuer or any Restricted Subsidiary (the Refinanced Indebtedness); provided that:
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(1) the principal amount (or accreted value, in the case of Indebtedness issued at a discount) of the Refinancing Indebtedness does not exceed the principal amount of the Refinanced Indebtedness plus the amount of accrued and unpaid interest on the Refinanced Indebtedness, any premium paid to the holders of the Refinanced Indebtedness and reasonable expenses incurred in connection with the incurrence of the Refinancing Indebtedness;
(2) the obligor of the Refinancing Indebtedness does not include any Person (other than the Issuer or any Guarantor) that is not an obligor of the Refinanced Indebtedness;
(3) if the Refinanced Indebtedness was subordinated in right of payment to the Notes or the Guarantees, as the case may be, then such Refinancing Indebtedness, by its terms, is subordinate in right of payment to the Notes or the Guarantees, as the case may be, at least to the same extent as the Refinanced Indebtedness;
(4) the Refinancing Indebtedness has a Stated Maturity either (a) no earlier than the Refinanced Indebtedness being repaid or amended or (b) no earlier than 91 days after the maturity date of the Notes;
(5) the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the Notes has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Refinanced Indebtedness being repaid that is scheduled to mature on or prior to the maturity date of the Notes; and
(6) the proceeds of the Refinancing Indebtedness shall be used substantially concurrently with the incurrence thereof to redeem, refinance, replace, defease, discharge, refund or otherwise retire for value the Refinanced Indebtedness, unless the Refinanced Indebtedness is not then due and is not redeemable or prepayable at the option of the obligor thereof or is redeemable or prepayable only with notice, in which case such proceeds shall be held until the Refinanced Indebtedness becomes due or redeemable or prepayable or such notice period lapses and then shall be used to refinance the Refinanced Indebtedness; provided that in any event the Refinanced Indebtedness shall be redeemed, refinanced, replaced, defeased, discharged, refunded or otherwise retired for value within one year of the incurrence of the Refinancing Indebtedness.
Regulation S Legend means the legend identified as such in Exhibit A.
Responsible Financial or Accounting Officer of the Issuer means any one of the Chief Financial Officer (or other principal financial officer), Controller, Treasurer or Chief Accounting Officer (or other principal accounting officer or controller) of the Issuer.
Responsible 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, assistant 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 Persons knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.
Restricted Notes Legend means the legend identified as such in Exhibit A.
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Restricted Payment means any of the following:
(1) the payment of any dividend or any other distribution (whether made in cash, securities or other property) on or in respect of Equity Interests of the Issuer or any Restricted Subsidiary or any payment made to the direct or indirect holders (in their capacities as such) of Equity Interests of the Issuer or any Restricted Subsidiary, including, without limitation, any payment in connection with any merger or consolidation involving the Issuer or any of its Restricted Subsidiaries but excluding (a) dividends or distributions payable solely in Qualified Equity Interests or through accretion or accumulation of such dividends on such Equity Interests and (b) in the case of Restricted Subsidiaries, dividends or distributions payable to the Issuer or to a Restricted Subsidiary (and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of its Equity Interests on a pro rata basis or a basis more favorable to the Issuer);
(2) the purchase, redemption, defeasance or other acquisition or retirement for value of any Equity Interests of the Issuer or any direct or indirect parent of the Issuer held by Persons other than the Issuer or a Restricted Subsidiary (including, without limitation, any payment in connection with any merger or consolidation involving the Issuer);
(3) any Investment other than a Permitted Investment; or
(4) any principal payment on, purchase, redemption, defeasance, prepayment, decrease or other acquisition or retirement for value prior to any scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment, as the case may be, in respect of Subordinated Indebtedness (other than any such payment made within one year of any such scheduled maturity or scheduled repayment or sinking fund payment and other than any Subordinated Indebtedness owed to and held by the Issuer or any Restricted Subsidiary permitted under clause (6) of the definition of Permitted Indebtedness in Section 4.9(b) of this Indenture).
Restricted Period means the 40-day distribution compliance period as defined in Regulation S promulgated under the Securities Act.
Restricted Subsidiary means any Subsidiary other than an Unrestricted Subsidiary.
S&P means S&P Global Ratings or any successor to its rating agency business.
SEC means the U.S. Securities and Exchange Commission.
Securities Act means the U.S. Securities Act of 1933, as amended.
Significant Subsidiary means any Restricted Subsidiary that would be a significant subsidiary as defined in Rule 1-02 of Regulation S-X promulgated pursuant to the Securities Act as such Regulation was in effect on the Issue Date.
Specified Cash Management Agreements means any agreement providing for treasury, depositary, purchasing card or cash management services, including in connection with any automated clearing house transfers of funds or any similar transactions between the Issuer or any Restricted Subsidiary and any lender.
Stated Maturity means, with respect to any Indebtedness, the date specified in the agreement governing or certificate relating to such Indebtedness as the fixed date on which the final payment of principal of such Indebtedness is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.
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Subordinated Indebtedness means Indebtedness of the Issuer or any Guarantor that is expressly subordinated in right of payment to the Notes or the Guarantees, respectively.
Subsidiary means, with respect to any Person:
(1) any corporation, limited liability company, association, trust or other business entity of which more than 50.0% of the total voting power of the Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof).
Unless otherwise specified, Subsidiary refers to a Subsidiary of the Issuer.
TIA or Trust Indenture Act means the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb), as amended.
Transactions shall have the meaning set forth in the Offering Memorandum.
Transfer Restricted Notes means Notes that bear or are required to bear the Restricted Notes Legend.
Treasury Rate means, as of any redemption date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 which has become publicly available at least two Business Days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source or similar market data)) most nearly equal to the period from the redemption date to November 1, 2020; provided, however, that if the period from the redemption date to November 1, 2020 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the redemption date to November 1, 2020 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.
Trustee has the meaning set forth in the preamble of this Indenture and any successor thereto. United States or U.S. means the United States of America.
Unrestricted Subsidiary means (a) any Subsidiary that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Issuer in accordance with Section 4.16 and (b) any Subsidiary of an Unrestricted Subsidiary.
U.S. Government Obligations means direct non-callable obligations of, or guaranteed by, the United States for the payment of which guarantee or obligations the full faith and credit of the United States is pledged.
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Voting Stock with respect to any Person, means securities of any class of Equity Interests of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock or other relevant equity interest 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 when applied to any Indebtedness at any date, means 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 payment of principal, including payment at Stated Maturity, in respect thereof 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.
Wholly-Owned Subsidiary means a Restricted Subsidiary, all of the Equity Interests of which (other than directors qualifying shares) are owned by the Issuer or another Wholly-Owned Subsidiary.
Section 1.2. Other Definitions.
Term |
Defined in Section | |||
acceleration declaration | 6.2 | |||
Act | 11.13 | |||
Affiliate Transaction | 4.11(a) | |||
Alternate Offer | 4.13(c) | |||
Applicable Premium Deficit | 8.8 | |||
Change of Control Offer | 4.13(b) | |||
Change of Control Payment Date | 4.13(b) | |||
Change of Control Purchase Price | 4.13(a) | |||
Covenant Defeasance | 8.3 | |||
Coverage Ratio Exception | 4.9(a) | |||
Deposit Trustee | 8.5 | |||
Designation | 4.16(a) | |||
Designation Amount | 4.16(a) | |||
EDGAR | 4.3(a) | |||
Event of Default | 6.1 | |||
Excess Proceeds | 4.10(b) | |||
Four-Quarter Period | 1.1 | |||
IAI Global Note | 2.1(b) | |||
Initial Lien | 4.12(a) | |||
Legal Defeasance | 8.2 | |||
Net Proceeds Offer | 4.10(c) | |||
Net Proceeds Offer Amount | 4.10(d) | |||
Net Proceeds Offer Period | 4.10(d) | |||
Net Proceeds Purchase Date | 4.10(d) | |||
Permitted Indebtedness | 4.9(b) | |||
QIBs | 2.1(b) | |||
Redesignation | 4.16(b) | |||
Registrar | 2.3 | |||
Regulation S | 2.1(b) | |||
Regulation S Global Note | 2.1(b) | |||
Reinstatement Date | 4.17(b) | |||
Restricted Payments Basket | 4.7(a) | |||
Rule 144A | 2.1(b) |
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Rule 144A Global Note | 2.1(b) | |||
Special Mandatory Redemption | 3.8(a) | |||
Special Mandatory Redemption Date | 3.8(b) | |||
Special Mandatory Redemption Event | 3.8(a) | |||
Special Mandatory Redemption Notice | 3.8(b) | |||
Special Mandatory Redemption Price | 3.8(a) | |||
Successor | 5.1(a) | |||
Suspended Covenants | 4.17(a) | |||
Suspension Date | 4.17(a) | |||
Suspension Period | 4.17(b) | |||
Transaction Date | 1.1 |
Section 1.3. Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein;
(2) an accounting term not otherwise defined herein has the meaning assigned to it in accordance with GAAP;
(3) or is not exclusive;
(4) words in the singular include the plural, and in the plural include the singular;
(5) unless otherwise specified, any reference to Section, Article or Exhibit refers to such Section, Article or Exhibit, as the case may be, of this Indenture;
(6) provisions apply to successive events and transactions; and
(7) references to sections of or rules under the Securities Act or the Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time.
ARTICLE II
THE NOTES
Section 2.1. Form and Dating. The Notes shall be substantially in the form of Exhibit A attached hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes will be issued in registered form, without coupons, and in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The registered Holder will be treated as the owner of such Note for all purposes.
The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture, and the Issuer and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
(a) The Notes shall be issued initially in the form of one or more Global Notes, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Note Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.
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Each Global Note shall represent such of the outstanding Notes as shall be specified therein, and each shall provide that it shall represent the aggregate amount of outstanding Notes from time to time endorsed thereon and that the aggregate amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions and transfers of interests. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.6.
(b) The Initial Notes are being issued by the Issuer only (i) to qualified institutional buyers (as defined in Rule 144A under the Securities Act (Rule 144A)) (QIBs) and (ii) in reliance on Regulation S under the Securities Act (Regulation S). After such initial issuance, Initial Notes that are Transfer Restricted Notes may be transferred to QIBs in reliance on Rule 144A, outside the United States pursuant to Regulation S, to IAIs or to the Issuer, in accordance with certain transfer restrictions. Initial Notes that are offered in reliance on Rule 144A shall be issued in the form of one or more permanent Global Notes substantially in the form set forth in Exhibit A and bear the Restricted Notes Legend and the Global Notes Legend (collectively, the Rule 144A Global Note), deposited with the Note Custodian, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided. Initial Notes that are offered in offshore transactions in reliance on Regulation S shall be initially issued in the form of one or more permanent Global Notes substantially in the form set forth in Exhibit A and bearing the Regulation S Legend and the Global Notes Legend (collectively, the Regulation S Global Note), deposited with the Note Custodian, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided. 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 and the Depositary or its nominee, as the case may be, in connection with transfers of interests therein as hereinafter provided. One or more Global Notes substantially in the form set forth in Exhibit A and bear the Restricted Notes Legend and the Global Notes Legend (collectively, the IAI Global Note) shall also be issued on the Issue Date and deposited with the Depositary to accommodate transfers of beneficial interests in the Notes to IAIs subsequent to the initial distribution. To the extent CUSIP numbers are issued pursuant to Section 2.14, the Rule 144A Global Note, the Regulation S Global Note and the IAI Global Note shall each be issued with separate CUSIP numbers. The aggregate principal amount of each Global Note may from time to time be increased or decreased by adjustments made on the records of the Note Custodian, at the direction of the Trustee, in accordance with the instructions given by the Holder thereof as required by Section 2.6 hereof. Transfers of Notes among QIBs and to or by purchasers pursuant to Regulation S shall be represented by appropriate increases and decreases to the respective amounts of the appropriate Global Notes, as more fully provided in Section 2.15.
(c) Section 2.1(b) shall apply only to Global Notes deposited with or on behalf of the Depositary.
The Issuer shall execute and the Trustee shall, in accordance with this Section 2.1 and Section 2.2, authenticate and deliver the Global Notes that (i) shall be registered in the name of the Depositary or the nominee of the Depositary and (ii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositarys instructions or held by the Note Custodian for the Depositary.
Section 2.2. Execution and Authentication. An Officer shall sign the Notes for the Issuer by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.
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A Note shall not be valid until authenticated by the manual signature of a Responsible Officer of the Trustee. The signature of a Responsible Officer of the Trustee shall be conclusive evidence that the Note has been authenticated under this Indenture.
The Trustee shall, upon receipt of a written order of the Issuer signed by one Officer directing the Trustee to authenticate the Notes and certifying that all conditions precedent to the issuance of the Notes contained herein have been complied with and receipt of an Officers Certificate and an Opinion of Counsel, authenticate Notes for original issue in the aggregate principal amount stated in such written order.
The Trustee may appoint an authenticating agent reasonably acceptable to the Issuer to authenticate Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent or agents. An authenticating agent has the same rights as an Agent to deal with Holders or the Issuer or an Affiliate of the Issuer.
Section 2.3. Registrar; Paying Agent. The Issuer shall maintain (i) an office or agency where Notes may be presented for registration of transfer or for exchange (Registrar) and (ii) an office or agency where Notes may be presented for payment to a Paying Agent. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuer may appoint one or more co-registrars and one or more additional Paying Agents. The term Registrar includes any co-registrar, and the term Paying Agent includes any additional Paying Agent. The Issuer may change any Paying Agent or Registrar without notice to any Holder. The Issuer and/or any Restricted Subsidiary may act as Paying Agent or Registrar.
The Issuer shall notify the Trustee in writing, and the Trustee shall notify the Holders, of the name and address of any Agent not a party to this Indenture. The Issuer shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. If the Issuer fails to appoint or maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 7.6.
The Issuer initially appoints the Trustee to act as the Registrar and Paying Agent, at its Corporate Trust Office and its address at 150 East 42nd Street, 40th Floor, New York, New York 10017.
The Issuer initially appoints DTC to act as the Depositary with respect to the Global Notes.
Section 2.4. Paying Agent to Hold Money in Trust. The Issuer shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all money held by the Paying Agent for the payment of principal or premium, if any, or interest on the Notes, and shall notify the Trustee in writing of any Default by the Issuer in making any such payment. While any such Default continues, the Trustee may require a Paying Agent to pay to the Trustee all money held by it in trust for the benefit of the Holders or the Trustee. The Issuer at any time may require a Paying Agent to pay all money held by it in trust for the benefit of the Holders or the Trustee to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Issuer or any of its Subsidiaries) shall have no further liability for such money. If the Issuer or any of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon the occurrence of any of the events specified in Section 6.1, the Trustee shall serve as Paying Agent for the Notes.
Section 2.5. Holder 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 all Holders. If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee at least seven (7) 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 the Holders.
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Section 2.6. Book-Entry Provisions for Global Notes.
(a) Each Global Note shall (i) deposited with the Trustee as custodian for DTC, (ii) registered in the name of Cede & Co., as nominee of DTC, and (iii) bear the Global Note legends as required by Section 2.6(e). Ownership of beneficial interest in each global note shall be limited to Participants in the Depositary or persons who hold interests through Participants.
Members of, or Participants in, the Depositary shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, or the Note Custodian, or under such Global Note, and the Depositary may be treated by the Issuer, and the Trustee or any Agent and any of their respective agents, as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any Agent or their respective agents from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Participants, the operation of customary practices governing the exercise of the rights of an owner of a beneficial interest in any Global Note.
Neither the Trustee nor any Agent shall have any responsibility or obligation to any Holder that is a member of (or a Participant in) the Depositary or any other Person with respect to the accuracy of the records of the Depositary (or its nominee) or of any member or Participant thereof, with respect to any ownership interest in the Notes or with respect to the delivery of any notice (including any notice of redemption) or the payment of any amount or delivery of any Notes (or other security or property) under or with respect to the Notes. The Trustee and any Agent may rely (and shall be fully protected in relying) upon information furnished by the Depositary with respect to its members, Participants and any beneficial owners in the Notes.
Neither the Trustee nor any Agent shall have any responsibility for any actions taken or not taken by the Depositary.
(b) Transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, to the Depositary, its successors or their respective nominees. Interests of beneficial owners in a Global Note may be transferred in accordance with Section 2.15 and the rules and procedures of the Depositary. In addition, certificated Notes shall be transferred to beneficial owners in exchange for their beneficial interests only if (i) the Depositary notifies the Issuer that it is unwilling or unable to continue as Depositary for the Global Notes or the Depositary ceases to be a clearing agency registered under the Exchange Act and, in each case, a successor depositary is not appointed by the Issuer within 90 days of such notice, (ii) an Event of Default of which a Responsible Officer of the Trustee has actual notice has occurred and is continuing and the Registrar has received a request from any Holder of a Global Note to issue such certificated Notes or (iii) the Issuer, in its sole discretion, notifies the Trustee that it elects to cause the issuance of certificated Notes.
(c) In connection with the transfer of an entire Global Note to beneficial owners pursuant to Section 2.6(b), such Global Note shall be deemed to be surrendered to the Trustee for cancellation, and the Issuer shall execute, and the Trustee shall authenticate and deliver to each beneficial owner identified by the Depositary in exchange for its beneficial interest in such Global Note an equal aggregate principal amount of certificated Notes of authorized denominations.
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(d) The registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Participants and Persons that may hold interests through Participants, to take any action which a Holder is entitled to take under this Indenture or the Notes.
(e) Each Global Note shall bear the Global Note Legend on the face thereof.
(f) At such time as all beneficial interests in Global Notes have been exchanged for certificated Notes, redeemed, repurchased or cancelled, all Global Notes shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for certificated Notes, redeemed, repurchased or cancelled, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note, by the Trustee or the Note Custodian, at the direction of the Trustee, to reflect such reduction.
(g) General Provisions Relating to Transfers and Exchanges.
(1) To permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Global Notes and certificated Notes at the Registrars request.
(2) No service charge shall be made to a Holder for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any stamp or transfer tax or similar governmental charge payable in connection therewith (other than any such stamp or transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Section 2.10, Section 3.6, Section 4.10, Section 4.13 or Section 9.4).
(3) All Global Notes and certificated Notes issued upon any registration of transfer or exchange of Global Notes or certificated Notes shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes (or interests therein) or certificated Notes surrendered upon such registration of transfer or exchange.
(4) None of the Issuer, the Trustee or the Registrar is required (A) to issue, to register the transfer of or to exchange Notes during a period beginning at the opening of 15 days before the day of any selection of Notes for redemption and ending at the close of business on the day of such selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date.
(5) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuer may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent, or the Issuer shall be affected by notice to the contrary.
(6) The Trustee shall authenticate Global Notes and certificated Notes in accordance with the provisions of Section 2.2. Except as provided in Section 2.6(b), neither the Trustee nor the Registrar shall authenticate or deliver any certificated Note in exchange for a Global Note.
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(7) Each Holder agrees to indemnify the Issuer and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holders Note in violation of any provision of this Indenture and/or applicable United States federal or state securities law.
(8) Neither the Trustee nor any Agent shall have any 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 Participants or beneficial owners of interests 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.
(9) In connection with any proposed exchange of a certificated Note for a Global Note, the Issuer or the Depositary shall be required to provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Section 6045 of the Internal Revenue Code of 1986. The Trustee may rely on information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
Section 2.7. Replacement Notes. If any mutilated Note is surrendered to the Trustee, or the Issuer and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, the Issuer shall issue and the Trustee, upon the written order of the Issuer signed by an Officer of the Issuer, shall authenticate a replacement Note if the Trustees requirements are met. An indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuer to protect the Issuer, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Issuer, the Trustee and the Agents may charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Issuer and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
Section 2.8. Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.8 as not outstanding. Except as set forth in Section 2.9, a Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note.
If a Note is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.
If the Paying Agent (other than the Issuer, a Subsidiary or an Affiliate of any thereof) holds, on any payment date, money sufficient to pay the amounts under the Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.9. Treasury Notes. 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 Issuer or by any Affiliate of the Issuer shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes of which a Responsible Officer of the Trustee has written notice as being so owned shall be so disregarded. Notwithstanding the foregoing, Notes that are to be acquired by the Issuer or an Affiliate of the Issuer pursuant to an exchange offer, tender offer or other agreement shall not be deemed to be owned by such entity until legal title to such Notes passes to such entity.
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Section 2.10. Temporary Notes. Until certificated Notes are ready for delivery, the Issuer may prepare and the Trustee shall authenticate temporary Notes upon a written order of the Issuer signed by one Officer of the Issuer. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Issuer considers appropriate for temporary Notes. Without unreasonable delay, the Issuer shall prepare and the Trustee shall upon receipt of a written order of the Issuer signed by one Officer, authenticate certificated Notes in certificate form in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this Indenture.
Section 2.11. Cancellation. The Issuer at any time may deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder or which the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly cancelled by the Trustee. All Notes surrendered for registration of transfer, exchange or payment, if surrendered to any Person other than the Trustee, shall be delivered to the Trustee. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation. Subject to Section 2.7, the Issuer may not issue new Notes to replace Notes that it has redeemed or paid or that have been delivered to the Trustee for cancellation. All cancelled Notes held by the Trustee shall be disposed of in accordance with its retention policy then in effect, and certification of their disposal delivered to the Issuer upon its written request therefor.
Section 2.12. Defaulted Interest. If the Issuer defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, which date shall be the earliest practicable date but in all events at least five (5) Business Days prior to the payment date, in each case at the rate provided in the Notes and in Section 4.1. The Issuer shall fix or cause to be fixed each such special record date and payment date and shall promptly thereafter notify the Trustee of any such date. At least 15 days before the special record date, the Issuer (or, at the request of the Issuer, the Trustee, in the name and at the expense of the Issuer) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. The Trustee will have no duty whatsoever to determine whether any defaulted interest is payable or the amount thereof.
Section 2.13. Computation of Interest. Interest, if any, on the Notes shall be computed on the basis of a 360-day year comprised of twelve 30-day months.
Section 2.14. CUSIP Number. The Issuer in issuing the Notes may use a CUSIP number, and if it does so, the Trustee shall use the CUSIP number in notices of redemption or exchange as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in the notice or on the Notes and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption or exchange shall not be affected by any defect in or omission of such numbers. The Issuer shall promptly notify the Trustee in writing of any change in any CUSIP number.
Section 2.15. Special Transfer Provisions. Each Note issued pursuant to an exemption from registration under the Securities Act (other than in reliance on Regulation S) will constitute a Transfer Restricted Note and be required to bear the Restricted Notes Legend until the date that is one year after the later of the date of original issue and the last date on which the Issuer or any affiliate (within the meaning of Rule 405 under the Securities Act) of the Issuer was the owner of such Notes (or any predecessor thereto), unless and until such Transfer Restricted Note is transferred or exchanged pursuant to an effective registration statement under the Securities Act.
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(a) Transfers to QIBs. The following provisions shall apply with respect to the registration of any proposed transfer of a Note issued in reliance on Regulation S to a QIB:
(1) The Registrar shall register the transfer of a Note issued in reliance on Regulation S by a Holder to a QIB if such transfer is being made by a proposed transferor who has provided the Registrar with (a) an appropriately completed certificate of transfer in the form attached to the Note and (b) a certificate substantially in the form set forth in Exhibit C from the proposed transferor; provided that the letter required by this clause (b) shall only be required prior to the expiration of the Restricted Period.
(2) If the proposed transferee is a Participant and the Note to be transferred consists of an interest in the Regulation S Global Note, upon receipt by the Registrar of (x) the items required by paragraph (a)(1) above and (y) instructions given in accordance with the Depositarys and the Registrars procedures therefor, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Rule 144A Global Note in an amount equal to the principal amount of the beneficial interest in the Regulation S Global Note to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of such Regulation S Global Note in an amount equal to the principal amount of the beneficial interest in such Regulation S Global Note to be so transferred.
(b) Transfers Pursuant to Regulation S. The following provisions shall apply with respect to registration of any proposed transfer of a Transfer Restricted Note pursuant to Regulation S:
(1) The Registrar shall register any proposed transfer of a Transfer Restricted Note by a Holder pursuant to Regulation S upon receipt of (a) an appropriately completed certificate of transfer in the form attached to the Note and (b) a certificate substantially in the form set forth in Exhibit D hereto from the proposed transferor.
(2) If the proposed transferee is a Participant and the Transfer Restricted Note to be transferred consists of an interest in the Rule 144A Global Note or the IAI Global Note upon receipt by the Registrar of (x) the letter, if any, required by paragraph (b)(1) above and (y) instructions in accordance with the Depositarys and the Registrars procedures therefor, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Regulation S Global Note in an amount equal to the principal amount of the beneficial interest in the Rule 144A Global Note or the IAI Global Note to be transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Rule 144A Global Note or the IAI Global Note in an amount equal to the principal amount of the beneficial interest in such Rule 144A Global Note or the IAI Global Note to be transferred.
(c) Transfers to IAIs. The following provisions shall apply with respect to the registration of any proposed transfer of a Note issued in reliance on Rule 144A or Regulation S to an IAI:
(1) The Registrar shall register the transfer of a Note issued in reliance on Rule 144A or Regulation S by a Holder to an IAI if such transfer is being made by a proposed transferor who has provided the Registrar with (a) an appropriately completed certificate of transfer in the form attached to the Note and (b) a certificate substantially in the form set forth in Exhibit E from the proposed transferor.
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(2) If the proposed transferee is a Participant and the Note to be transferred consists of an interest in the Rule 144A Global Note or the Regulation S Global Note, upon receipt by the Registrar of (x) the items required by paragraph (c)(1) above and (y) instructions given in accordance with the Depositarys and the Registrars procedures therefor, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the IAI Global Note in an amount equal to the principal amount of the beneficial interest in the Rule 144A Global Note or the Regulation S Global Note to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of such 144A Global Note or the Regulation S Global Note in an amount equal to the principal amount of the beneficial interest in such 144A Global Note or Regulation S Global Note to be so transferred.
(d) In the event that a Global Note is exchanged for Notes in certificated, registered form pursuant to Section 2.6, such Notes may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of clauses (a), (b) and (c) of this Section 2.15 above (including the certification requirements intended to ensure that such transfers comply with Rule 144A, Regulation S or other applicable exemption, as the case may be) and such other procedures as may from time to time be adopted by the Issuer and notified to the Trustee in writing.
(e) Restricted Notes Legend. Upon the transfer, exchange or replacement of Notes not bearing the Restricted Notes Legend, the Registrar shall deliver Notes that do not bear the Restricted Notes Legend. Upon the transfer, exchange or replacement of Notes bearing the Restricted Notes Legend, the Registrar shall deliver only Notes that bear the Restricted Notes Legend unless there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Issuer 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.
(f) Regulation S Legend. Upon the transfer, exchange or replacement of Notes not bearing the Regulation S Legend, the Registrar shall deliver Notes that do not bear the Regulation S Legend. Upon the transfer, exchange or replacement of Notes bearing the Regulation S Legend, the Registrar shall deliver only Notes that bear the Regulation S Legend unless there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Issuer 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.
(g) General. By its acceptance of any Note bearing the Restricted Notes Legend or the Regulation S Legend, as applicable, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Restricted Notes Legend or the Regulation S Legend, as applicable, and agrees that it shall transfer such Note only as provided in this Indenture. A transfer of a beneficial interest in a Global Note that does not involve an exchange of such interest for a certificated Note or a beneficial interest in another Global Note shall be subject to compliance with applicable law and the applicable procedures of the Depositary but is not subject to any procedure required by this Indenture.
In connection with any proposed transfer pursuant to Regulation S or pursuant to any other available exemption from the registration requirements of the Securities Act (other than pursuant to Rule 144A), the Issuer may require the delivery of an Opinion of Counsel, other certifications or other information satisfactory to the Issuer.
The Registrar shall retain copies of all letters, notices and other written communications received pursuant to this Section 2.15.
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Section 2.16. Issuance of Additional Notes. The Issuer shall be entitled to issue Additional Notes, in an unlimited aggregate principal amount under this Indenture that shall have identical terms as the Initial Notes, other than with respect to the date of issuance, issue price, amount of interest payable on the first interest payment date applicable thereto and transfer restrictions; provided that such issuance is not prohibited by the terms of this Indenture, including Section 4.9; provided, further, that if any Additional Notes are not fungible with the Initial Notes for U.S. federal income tax purposes, such Additional Notes shall have a separate CUSIP number from the Initial Notes. The Initial Notes and any Additional Notes shall be treated as a single class for all purposes under this Indenture.
With respect to any Additional Notes, the Issuer shall set forth in an Officers Certificate, a copy of which shall be delivered to the Trustee, the following information:
(1) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;
(2) the issue price, the issue date, the CUSIP number of such Additional Notes, the first interest payment date and the amount of interest payable on such first interest payment date applicable thereto and the date from which interest shall accrue;
(3) whether such Additional Notes shall be Transfer Restricted Notes; and
(4) that such issuance is not prohibited by this Indenture.
The Trustee shall, upon receipt of the Officers Certificate and Opinion of Counsel, authenticate the Additional Notes in accordance with the provisions of Section 2.2 of this Indenture.
ARTICLE III
REDEMPTION AND PREPAYMENT
Section 3.1. Notices to Trustee. If the Issuer elects to redeem Notes pursuant to the optional redemption provisions of Section 3.7, it shall furnish to the Trustee, at least five Business Days (or such shorter period as is acceptable to the Trustee) before sending a notice of such redemption, an Officers Certificate setting forth the (i) section of this Indenture pursuant to which the redemption shall occur, (ii) redemption date and (iii) principal amount of Notes to be redeemed.
Section 3.2. Selection of Notes to Be Redeemed. In the event that less than all of the Notes are to be redeemed at any time, the Trustee shall select the Notes to be redeemed among the Holders on a pro rata basis (except that any Notes represented by a Global Note will be redeemed by such method the Depositary may require); provided, however that no Notes of $2,000 in original principal amount or less shall be selected for redemption in part.
On and after the redemption date, unless the Issuer defaults in the payment of the redemption price, interest will cease to accrue on Notes or portions of them called for redemption so long as the Issuer has deposited with the Paying Agent funds in satisfaction of the applicable redemption price pursuant to this Indenture (including accrued and unpaid interest on the Notes to be redeemed). The Trustee shall promptly notify the Issuer in writing of the Notes selected for redemption. The Trustee may select for redemption portions (equal to $1,000 or any integral multiples of $1,000 thereof) of the principal of the Notes that have minimum denominations larger than $2,000.
Section 3.3. Notice of Optional Redemption. The Issuer shall deliver or cause to be delivered in accordance with Section 11.2, a notice of optional redemption to each Holder whose Notes are to be redeemed (with a copy to the Trustee), at least 15 days but not more than 60 days before a redemption date (except that notices may be delivered more than 60 days before a redemption date if the notice is issued in
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connection with a defeasance or discharge of this Indenture pursuant to Article VIII). Any notice of redemption may, at the Issuers discretion, be subject to one or more conditions precedent. If such redemption is subject to satisfaction of one or more conditions precedent, such notice will describe each such condition, and if applicable, will state that, in the Issuers discretion, the redemption date may be delayed until such time (including more than 60 days after the date the notice of redemption was mailed or delivered, including by electronic transmission) as any or all such conditions are satisfied (or waived by the Issuer in its sole discretion), or that such redemption may not occur and such notice may be rescinded in the event that any or all such conditions are not satisfied (or waived by the Issuer in its sole discretion) by the redemption date, or by the redemption date as so delayed, or that such notice may be rescinded at any time in the Issuers discretion if as determined in good faith by the Issuer, any or all of such conditions will not be satisfied. The Issuer will provide the Trustee with written notice of the satisfaction or waiver of such conditions precedent, the delay of such redemption or the rescission of such notice of redemption in the same manner that the related notice of redemption was given to the Trustee, and the Trustee will send a copy of such notice to the Trustee to the Holders in the same manner that the related notice of redemption was given to such Holders. In addition, the Issuer may provide in such notice that payment of the redemption price and performance of the Issuers obligations with respect to such redemption may be performed by another Person.
The notice shall identify the Notes to be redeemed (including CUSIP numbers and corresponding ISINs, if applicable) and shall state:
(1) the redemption date;
(2) the redemption price (or the method by which it is to be determined);
(3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date, upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note (or appropriate adjustments to the amount and beneficial interests in a Global Note will be made, as appropriate);
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(6) that, unless the Issuer defaults in making such redemption payment, interest, if any, on Notes called for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed;
(8) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes; and
(9) any conditions precedent to such redemption.
At the Issuers written request, the Trustee shall give the notice of redemption in the Issuers name and at the Issuers expense; provided, however, that the Issuer shall have delivered to the Trustee, at least 15 days prior to the date of the giving of the notice of redemption (or such shorter period as is acceptable to the Trustee), an Officers Certificate requesting that the Trustee give such notice and setting forth the
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information to be stated in the notice as provided in the preceding paragraph. The notice sent in the manner herein provided shall be deemed to have been duly given whether or not the Holder receives such notice. In any case, failure to give such notice or any defect in the notice to the Holder of any Note shall not affect the validity of the proceeding for the redemption of any other Note.
Section 3.4. Effect of Notice of Redemption. Once notice of redemption is delivered in accordance with Section 3.3, Notes called for redemption become due and payable on the redemption date at the applicable redemption price, subject to satisfaction of any conditions specified in the notice of redemption and as further contemplated by the first paragraph of Section 3.3.
Section 3.5. Deposit of Redemption Price. On or before 11:00 a.m. (New York City time) on the redemption date, the Issuer shall deposit with the Trustee or with the Paying Agent (other than the Issuer or an Affiliate of the Issuer) money sufficient to pay the redemption price on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Issuer any money deposited with the Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to pay the redemption price of all Notes to be redeemed.
If Notes called for redemption are paid or if the Issuer has deposited with the Trustee or Paying Agent money sufficient to pay the redemption price of, and unpaid and accrued interest, if any, on, all Notes to be redeemed, on and after the redemption date, and interest, if any, shall cease to accrue on the Notes or the portions of Notes called for redemption (regardless of whether certificates for such securities are actually surrendered). If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest, if any, shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuer to comply with the preceding paragraph, and interest, if any, shall be paid on the unpaid principal from the redemption date until such principal is paid, and to the extent lawful on any interest, if any, not paid on such unpaid principal, in each case, at the rate provided in the Notes and in Section 4.1.
Section 3.6. Notes Redeemed in Part. Upon surrender and cancellation of a Note that is redeemed in part, the Issuer shall issue and, upon the written request of an Officer of the Issuer, the Trustee shall authenticate for the Holder at the expense of the Issuer a new Note equal in principal amount to the unredeemed portion of the Note surrendered and canceled; provided that each such new Note will be in a principal amount of $2,000 or integral multiples of $1,000 in excess thereof.
Section 3.7. Optional Redemption.
(a) The Notes may be redeemed, in whole or in part, at any time or from time to time prior to November 1, 2020 at the option of the Issuer, upon notice as provided in Section 3.3, at a redemption price equal to 100.0% of the principal amount of the Notes redeemed plus the Applicable Premium, and accrued and unpaid interest, if any, to, the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). The Issuer will calculate the Treasury Rate and Applicable Premium and, prior to the redemption date, provide an Officers Certificate to the Trustee setting forth the Treasury Rate and the Applicable Premium and showing the calculation of each in reasonable detail.
(b) At any time or from time to time on or after November 1, 2020, the Issuer, at its option, may redeem the Notes in whole or in part, upon notice as provided in Section 3.3, at the redemption prices (expressed as percentages of principal amount of the Notes to be redeemed) set forth below, together with accrued and unpaid interest thereon, if any, to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period beginning November 1 of the years indicated below:
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Year |
Redemption Price | |||
2020 |
104.375 | % | ||
2021 |
102.188 | % | ||
2022 and thereafter |
100.000 | % |
(c) At any time or from time to time prior to November 1, 2020, the Issuer, at its option, may on any one or more occasions redeem up to 35.0% of the principal amount of the outstanding Notes issued under this Indenture, upon notice as provided in Section 3.3, in an amount not greater than the net cash proceeds of one or more Qualified Equity Offerings at a redemption price equal to 108.750% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided that:
(1) at least 65.0% of the aggregate principal amount of Notes originally issued under this Indenture on the Issue Date (excluding Notes held by the Issuer and its Subsidiaries) remains outstanding immediately after giving effect to any such redemption; and
(2) the redemption occurs not more than 180 days after the date of the closing of any such Qualified Equity Offering.
(d) The Issuer may redeem Notes as provided in Section 4.13.
(e) The Issuer may acquire Notes by means other than a redemption, whether pursuant to a tender offer, open market purchase, negotiated transaction or otherwise, in accordance with applicable securities laws.
Section 3.8. Special Mandatory Redemption.
(a) In the event that (1) the Magnum Acquisition is not consummated on or prior to November 30, 2018 or (2) at any time prior to November 30, 2018, the Magnum Acquisition Agreement is terminated without the Magnum Acquisition being consummated (any such event being a Special Mandatory Redemption Event), the Issuer will redeem all of the Notes (the Special Mandatory Redemption), at a price equal to 100% of the issue price of the Notes plus accrued and unpaid interest to, but excluding, the redemption date (the Special Mandatory Redemption Price). For purposes of the foregoing, the Magnum Acquisition will be deemed consummated if the closing under the Magnum Acquisition Agreement occurs, including after giving effect to any amendments to the Magnum Acquisition Agreement or waivers thereunder acceptable to the Issuer.
(b) Notice of the occurrence of a Special Mandatory Redemption Event and that a Special Mandatory Redemption is to occur (the Special Mandatory Redemption Notice), shall be delivered to the Trustee and delivered to Holders of Notes according to the procedures of DTC within ten Business Days after the Special Mandatory Redemption Event. At the Issuers written request, the Trustee shall give the Special Mandatory Redemption Notice in the Issuers name and at the Issuers expense; provided, however, that the Issuer shall have delivered to the Trustee, at least three Business Days prior to the date of the giving of the Special Mandatory Redemption Notice (or such shorter period as is acceptable to the Trustee), an Officers Certificate requesting that the Trustee give such notice and setting forth the information to be stated in the notice. On the redemption date specified in the Special Mandatory Redemption Notice, which shall be no more than ten Business Days (or such other minimum period as may be required by DTC) after mailing or sending the Special Mandatory Redemption Notice, the special mandatory redemption shall occur (the date of such redemption, the Special Mandatory Redemption Date).
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(c) If funds sufficient to pay the Special Mandatory Redemption Price of all of the Notes on the Special Mandatory Redemption Date are deposited with a Paying Agent or the Trustee on or before such Special Mandatory Redemption Date, then on and after such Special Mandatory Redemption Date, the Notes shall cease to bear interest and, other than the right to receive the Special Mandatory Redemption Price, all rights under such Notes shall terminate.
(d) Upon the consummation of the Magnum Acquisition, this Section 3.8 will cease to apply.
ARTICLE IV
COVENANTS
Section 4.1. Payment of Notes.
(a) The Issuer shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid for all purposes hereunder on the date the Trustee or the Paying Agent (if other than the Issuer or a Subsidiary thereof) holds, as of 11:00 a.m. (New York City time) on the relevant payment date, U.S. dollars deposited by the Issuer in immediately available funds and designated for and sufficient to pay all such principal, premium, if any, and interest then due. The Issuer shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period), at the same rate to the extent lawful.
Section 4.2. Maintenance of Office or Agency. The Issuer shall maintain an office or agency where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer and Guarantors in respect of the Notes and this Indenture may be served. The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer 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.
The Issuer 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 such designations. The Issuer shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Issuer hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Issuer in accordance with Section 2.3.
Section 4.3. Provision of Financial Information.
(a) Whether or not required by the SEC, so long as any Notes are outstanding, the Issuer will furnish to the Trustee and the Holders, or, to the extent permitted by the SEC, file electronically with the SEC through the SECs Electronic Data Gathering, Analysis and Retrieval System (EDGAR) (or any successor system) within the time periods specified in the SECs rules and regulations after giving effect to any applicable grace periods therein:
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(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 Issuer 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 Issuer were required to file such reports;
provided that 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. If the Issuer becomes a Subsidiary of any parent company, which parent company provides a guarantee of the Notes, then the reports required to be filed pursuant to this covenant by the Issuer may instead by filed by such parent in lieu thereof.
(b) If the Issuer has designated any of its Subsidiaries as Unrestricted Subsidiaries, and such Unrestricted Subsidiaries, individually or taken together, would constitute a Significant Subsidiary, then the quarterly and annual financial information required by Section 4.3(a) will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in Managements Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of the Issuer and its Restricted Subsidiaries excluding the Unrestricted Subsidiaries.
(c) So long as any Notes are outstanding (unless restricted by law, including in connection with any proposed securities offering), the Issuer will also:
(1) not later than 15 Business Days after filing or furnishing a copy of each of the reports referred to in clause (1) of Section 4.3(a) with the SEC or the Trustee, hold a conference call to discuss the results of operations for the relevant reporting period, with the opportunity to ask questions of management (the Issuer may satisfy the requirements of this clause (1) by holding the required conference call within the time period required by this clause (1) as part of any earnings call of the Issuer or any parent); and
(2) issue a press release or otherwise publicly announce no fewer than two Business Days prior to the date of the conference call required to be held in accordance with this paragraph, announcing the time and date of such conference call and either including all information necessary to access the call or directing Holders, prospective investors, broker-dealers and securities analysts to contact the appropriate person at the Issuer to contact the appropriate person at the Issuer to obtain such information.
(d) To the extent the Issuer is not required to file any of the reports required by Section 4.3(a) with the SEC, the Issuer shall (i) maintain a public website on which the reports required by Section 4.3(a) are posted along with details regarding the times and dates of conference calls required above and information on how to obtain access to such conference calls or (ii) file such reports electronically with the SEC through EDGAR (or any successor system).
(e) Any and all Defaults arising from a failure to furnish in a timely manner any information or notice required by this covenant shall be deemed cured (and the Issuer shall be deemed to be in compliance with this covenant) upon furnishing such information or notice as contemplated by this covenant (but without regard to the date on which such information or notice is so furnished).
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(f) For so long as any Notes remain outstanding, the Issuer shall 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.
(g) Delivery of such reports, information and documents to the Trustee is for informational purposes only, and the Trustees receipt thereof shall not constitute actual or constructive knowledge or notice of any information contained therein or determinable from information contained therein, including the Issuers, any Guarantors or any other persons compliance with any of the covenants in this Indenture or the Notes (as to which the Trustee is entitled to rely exclusively on Officers Certificates). The Trustee will not be obligated to monitor or confirm, on a continuing basis or otherwise, the Issuers, any Guarantors or any other persons compliance with any of the covenants described herein or to determine whether such reports, information or documents have been posted on any website or other online data system or filed with the SEC through EDGAR (or other applicable system) or to participate in any conference calls.
Section 4.4. Compliance Certificate. The Issuer shall deliver to the Trustee, within 90 days after the end of each fiscal year beginning with the fiscal year ending December 31, 2018, an Officers Certificate stating that a review of the activities of the Issuer and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether each has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that, to his or her knowledge, each entity has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Issuer is taking or proposes to take with respect thereto) and that, to his or her knowledge, no event has occurred and remains in existence by reason of which payments on account of the principal of, premium, if any, or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Issuer is taking or proposes to take with respect thereto.
The Issuer shall, so long as any of the Notes are outstanding, deliver to the Trustee, within 30 days after upon any Officer becomes aware of any Default or Event of Default, an Officers Certificate specifying such Default or Event of Default and what action the Issuer is taking or proposes to take with respect thereto.
Section 4.5. Taxes. The Issuer shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency all material taxes, assessments and governmental levies, except such as are contested in good faith and by appropriate proceedings and with respect to which appropriate reserves have been taken in accordance with GAAP or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.
Section 4.6. Stay, Extension and Usury Laws. The Issuer and each of the Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture, and the Issuer and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
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Section 4.7. Limitation on Restricted Payments.
(a) The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, make any Restricted Payment if at the time of such Restricted Payment:
(1) a Payment Default or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof;
(2) the Issuer is not able to incur at least $1.00 of additional Indebtedness pursuant to the Coverage Ratio Exception; or
(3) the amount of such Restricted Payment, when added to the aggregate amount of all other Restricted Payments made after the Issue Date (other than Restricted Payments made pursuant to Section 4.7(b)(2) through (12)), exceeds the sum (the Restricted Payments Basket) of (without duplication):
(A) 50.0% of Consolidated Net Income of the Issuer and the Restricted Subsidiaries for the period (taken as one accounting period) commencing on October 1, 2018 to and including the last day of the fiscal quarter ended immediately prior to the date of such calculation for which consolidated financial statements are available (or, if such Consolidated Net Income shall be a deficit, minus 100.0% of such deficit), plus
(B) 100.0% of (i) the aggregate net cash proceeds, or the Fair Market Value of any assets or Equity Interests of any Person engaged in a Permitted Business, in each case received by the Issuer or its Restricted Subsidiaries on or after the Issue Date, as a contribution to the Issuers common equity capital or from the issue or sale of Qualified Equity Interests of the Issuer or from the issue or sale of convertible or exchangeable Disqualified Equity Interests of the Issuer or convertible or exchangeable debt securities of the Issuer that have been converted into or exchanged for such Qualified Equity Interests (other than Equity Interests or debt securities issued or sold to a Subsidiary of the Issuer or net cash proceeds received by the Issuer from Qualified Equity Offerings to the extent applied to redeem the Notes in accordance with the provisions set forth under Section 3.7(c)), and (ii) the aggregate net cash proceeds, if any, received by the Issuer or any of its Restricted Subsidiaries upon any conversion or exchange described in clause (i) above, plus
(C) in the case of the disposition or repayment of or return on any Investment that was treated as a Restricted Payment made by the Issuer after the Issue Date, an amount (to the extent not included in the computation of Consolidated Net Income) equal to 100.0% of the aggregate amount received by the Issuer or any Restricted Subsidiary in cash or other property (valued at the Fair Market Value thereof) as the return of capital with respect to such Investment, plus
(D) upon a Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, an amount (to the extent not included in the computation of Consolidated Net Income) equal to the lesser of (i) the Fair Market Value of the Issuers proportionate interest in such Subsidiary immediately following such Redesignation, and (ii) the aggregate amount of the Issuers Investments in such Subsidiary to the extent such Investments reduced the Restricted Payments Basket and were not previously repaid or otherwise reduced.
(b) Notwithstanding the foregoing, Section 4.7(a) will not prohibit:
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(1) the payment of any dividend or redemption payment or the making of any distribution within 60 days after the date of declaration thereof if, on the date of declaration, the dividend, redemption or distribution payment, as the case may be, would have complied with the provisions of this Indenture;
(2) any Restricted Payment made in exchange for, or out of the proceeds of, the substantially concurrent issuance and sale of Qualified Equity Interests;
(3) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Indebtedness of the Issuer or any Restricted Subsidiary in exchange for, or out of the proceeds of, the substantially concurrent incurrence of, Refinancing Indebtedness permitted to be incurred under Section 4.9 and the other terms of this Indenture;
(4) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Indebtedness of the Issuer or any Restricted Subsidiary (A) at a purchase price not greater than 101.0% of the principal amount of such Subordinated Indebtedness in the event of a Change of Control in accordance with provisions similar to Section 4.13 or (B) at a purchase price not greater than 100.0% of the principal amount thereof in accordance with provisions similar to Section 4.10; provided that, prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other acquisition or retirement, the Issuer has made the Change of Control Offer or Net Proceeds Offer, as applicable, as provided in such covenant with respect to the Notes and has completed the repurchase or redemption of all Notes validly tendered for payment in connection with such Change of Control Offer or Net Proceeds Offer;
(5) so long as no Default has occurred and is continuing or would result therefrom, the redemption, repurchase or other acquisition or retirement for value of Equity Interests of the Issuer held by officers, directors or employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates), either (x) upon any such individuals death, disability, retirement, severance or termination of employment or service or (y) 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 (A) $5.0 million during any calendar year (with unused amounts in any calendar year being carried forward to succeeding calendar years; provided that such amount in any calendar year shall not exceed $10.0 million) plus (B) the amount of any net cash proceeds received by or contributed to the Issuer from the issuance and sale after the Issue Date of Qualified Equity Interests to its officers, directors or employees that have not been applied to the payment of Restricted Payments pursuant to this clause (5), plus (C) the net cash proceeds of any key-man life insurance policies that have not been applied to the payment of Restricted Payments pursuant to this clause (5); and provided further that cancellation of Indebtedness owing to the Issuer from members of management of the Issuer or any Restricted Subsidiary, not to exceed $2.5 million in the aggregate, in connection with a repurchase of Equity Interests of the Issuer will not be deemed to constitute a Restricted Payment for purposes of this Section 4.7 or any other provision of this Indenture;
(6) (A) repurchases, redemptions or other acquisitions or retirements for value of Equity Interests of the Issuer deemed to occur upon the exercise of stock options, warrants, rights to acquire Equity Interests of the Issuer or other convertible securities to the extent such Equity Interests of the Issuer represent a portion of the exercise or exchange price thereof and (B) any repurchase, redemptions or other acquisitions or retirements for value of Equity Interests of the Issuer made in lieu of withholding taxes in connection with any exercise or exchange of stock options, warrants or similar rights;
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(7) so long as no Payment Default or Event of Default has occurred and is continuing or would result therefrom, dividends or distributions on Disqualified Equity Interests of the Issuer or any Restricted Subsidiary or on any Preferred Stock of any Restricted Subsidiary, in each case issued in compliance with Section 4.9 to the extent such dividends or distributions are included in the definition of Consolidated Interest Expense;
(8) the payment of cash in lieu of fractional Equity Interests of the Issuer;
(9) payments or distributions to dissenting stockholders pursuant to applicable law in connection with a merger, consolidation or transfer of assets that complies with Section 5.1;
(10) cash distributions by the Issuer to the holders of Equity Interests of the Issuer in accordance with a distribution reinvestment plan or dividend reinvestment plan to the extent such payments are applied to the purchase of Equity Interests directly from the Issuer;
(11) any purchase price or future cash consideration payments (including any earnout payments or reimbursements of funds held for employee retention) made in connection with the Magnum Acquisition; or
(12) so long as no Payment Default or Event of Default has occurred and is continuing or would result therefrom, payment of other Restricted Payments from time to time in an aggregate amount since the Issue Date not to exceed $35.0 million;
provided that no issuance and sale of Qualified Equity Interests used to make a payment pursuant to clauses (2) or (5)(B) above shall increase the Restricted Payments Basket to the extent of such payment.
For the purposes of determining compliance with any U.S. dollar-denominated restriction on Restricted Payments denominated in a foreign currency, the U.S. dollar-equivalent amount of such Restricted Payment shall be calculated based on the relevant currency exchange rate in effect on the date that such Restricted Payment was made. The amount of any Restricted Payment (other than cash) will be the Fair Market Value on the date of the Restricted Payment (or, in the case of a dividend, on the date of declaration) of the assets or securities proposed to be transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
Section 4.8. Limitation on Dividend and Other Restrictions Affecting Restricted Subsidiaries. The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:
(a) pay dividends or make any other distributions on or in respect of its Equity Interests to the Issuer or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock shall not be deemed a restriction on the ability to make distributions on Equity Interests);
(b) make loans or advances, or pay any Indebtedness or other obligation owed, to the Issuer or any other Restricted Subsidiary (it being understood that the subordination of loans or advances made to the Issuer or any Restricted Subsidiary to other Indebtedness or obligations incurred by the Issuer or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or
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(c) transfer any of its property or assets to the Issuer or any other Restricted Subsidiary (it being understood that such transfers shall not include any type of transfer described in clause (a) or (b) above);
except for, in each case:
(1) encumbrances or restrictions existing under the ABL Credit Agreement or any other agreements existing on the Issue Date;
(2) encumbrances or restrictions existing under this Indenture, the Notes and the Guarantees;
(3) any instrument governing Acquired Indebtedness or Equity Interests of a Person acquired by the Issuer or any of its Restricted Subsidiaries, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired;
(4) any agreement or other instrument of a Person acquired by the Issuer or any of its Restricted Subsidiaries in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired (including after acquired property);
(5) any amendment, restatement, modification, renewal, increases, supplement, refunding, replacement or refinancing of an agreement referred to in clauses (1), (2), (3), (4), (10) or this clause (5); provided, however, that such amendments, restatements, modifications, renewals, increases, supplements, refunding, replacements or refinancing are, in the good faith judgment of the Issuer, not materially more restrictive, taken as a whole, than the encumbrances and restrictions contained in the agreements referred to in such clauses on the Issue Date or the date such Restricted Subsidiary became a Restricted Subsidiary or was merged into a Restricted Subsidiary, whichever is applicable;
(6) encumbrances or restrictions existing under or by reason of applicable law, regulation or order;
(7) non-assignment provisions of any contract or any lease entered into in the ordinary course of business;
(8) in the case of clause (c) above, Liens permitted to be incurred under the provisions of Section 4.12 that limit the right of the debtor to dispose of the assets securing such Indebtedness;
(9) restrictions imposed under any agreement to sell Equity Interests or assets, as permitted under this Indenture, to any Person pending the closing of such sale;
(10) (A) any other agreement governing Indebtedness or other obligations entered into after the Issue Date that contains encumbrances and restrictions that in the good faith judgment of the Issuer are not materially more restrictive, taken as a whole, with respect to any Restricted Subsidiary than those in effect on the Issue Date pursuant to agreements in effect on the Issue Date or those contained in this Indenture, the Notes and the Guarantees or (B) any such encumbrance or restriction contained in agreements or instruments governing such Indebtedness is customary and does not prohibit (except upon a default or an event of default thereunder) the payment of dividends in an amount sufficient, as determined by the Issuer in good faith, to make scheduled payments of cash interest and principal on the Notes when due;
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(11) customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements, shareholder agreements and other similar agreements entered into in the ordinary course of business that restrict the disposition or distribution of ownership interests in or assets of such partnership, limited liability company, joint venture, corporation or similar Person;
(12) Purchase Money Indebtedness and any Refinancing Indebtedness in respect thereof incurred in compliance with Section 4.9 that imposes restrictions of the nature described in Section 4.8(c) on the assets acquired;
(13) restrictions on cash or other deposits or net worth imposed by customers, suppliers or landlords under contracts entered into in the ordinary course of business;
(14) any encumbrance or restriction with respect to an Unrestricted Subsidiary pursuant to or by reason of an agreement that the Unrestricted Subsidiary is a party to entered into before the date on which such Unrestricted Subsidiary became a Restricted Subsidiary; provided that such agreement was not entered into in anticipation of the Unrestricted Subsidiary becoming a Restricted Subsidiary and any such encumbrance or restriction shall not extend to any assets or property of the Issuer or any other Restricted Subsidiary other than the assets and property so acquired;
(15) with respect to any Foreign Subsidiary, any encumbrance or restriction contained in the terms of any Indebtedness or any agreement pursuant to which such Indebtedness was incurred if either (A) the encumbrance or restriction applies only in the event of a payment default or a default with respect to a financial covenant in such Indebtedness or agreement or (B) the Issuer determines that any such encumbrance or restriction will not materially affect the Issuers ability to make principal or interest payments on the Notes, as determined in good faith by the Board of Directors or senior management of the Issuer, whose determination shall be conclusive; and
(16) supermajority voting requirements existing under corporate charters, by-laws, stockholders agreements and similar documents and agreements.
Section 4.9. Limitation on Additional Indebtedness.
(a) The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness); provided that the Issuer or any Guarantor may incur additional Indebtedness (including Acquired Indebtedness), in each case, if, after giving effect thereto on a pro forma basis (including giving pro forma effect to the application of the proceeds thereof), the Issuers Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the Coverage Ratio Exception).
(b) Notwithstanding the above, each of the following incurrences of Indebtedness shall be permitted (the Permitted Indebtedness):
(1) Indebtedness of the Issuer or any Restricted Subsidiary under one or more Debt Facilities in an aggregate principal amount at any time outstanding, including the issuance and creation of letters of credit and bankers acceptances thereunder (with letters of credit and bankers acceptances being deemed to have a principal amount equal to the face amount thereof) not to exceed the greatest of (A) $275.0 million, (B) the sum of $100.0 million plus 30.0% of the Issuers Consolidated Net Tangible Assets determined at the time of incurrence, and (C) the Borrowing Base under the ABL Credit Agreement as in effect as of the date of incurrence;
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(2) Indebtedness represented by (A) the Initial Notes (excluding any Additional Notes), and (B) the Guarantees of the Notes;
(3) Indebtedness of the Issuer and its Restricted Subsidiaries to the extent outstanding on the Issue Date (other than Indebtedness referred to in clauses (1), (2), (4), (5), (6), (7) and (9) of this Section 4.9(b));
(4) guarantees by (A) the Issuer or any Guarantor of Indebtedness permitted to be incurred in accordance with the provisions of this Indenture; provided that in the event such Indebtedness that is being guaranteed is Subordinated Indebtedness, then the related guarantee shall be subordinated in right of payment to the Notes or the Guarantees, as the case may be, and (B) guarantees of Indebtedness incurred by Restricted Subsidiaries that are not Guarantors in accordance with the provisions of this Indenture;
(5) Indebtedness under Hedging Obligations entered into for bona fide hedging purposes of the Issuer or any Restricted Subsidiary in the ordinary course of business and not for the purpose of speculation; provided that in the case of Hedging Obligations relating to interest rates, (A) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this Section 4.9, and (B) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;
(6) Indebtedness of the Issuer owed to and held by a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to and held by the Issuer or any other Restricted Subsidiary; provided, however, that
(A) if the Issuer is the obligor on Indebtedness and a Restricted Subsidiary that is not a Guarantor is the obligee, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes;
(B) if a Guarantor is the obligor on such Indebtedness and a Restricted Subsidiary that is not a Guarantor is the obligee, such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor; and
(C) (i) any subsequent issuance or transfer of Equity Interests or any other event which results in any such Indebtedness being held by a Person other than the Issuer or any other Restricted Subsidiary; and
(ii) any sale or other transfer of any such Indebtedness to a Person other than the Issuer or any other Restricted Subsidiary shall be deemed, in each case of this clause (C), to constitute an incurrence of such Indebtedness not permitted by this clause (6);
(7) Indebtedness in respect of workers compensation claims, bank guarantees, warehouse receipt or similar facilities, property, casualty or liability insurance, take-or-pay obligations in supply arrangements, self-insurance obligations or completion, performance, bid performance, appeal or surety bonds in the ordinary course of business, including guarantees or obligations with respect to letters of credit supporting such workers compensation claims, bank guarantees, warehouse receipt or similar facilities, property, casualty or liability insurance, take-or-pay obligations in supply arrangements, self-insurance obligations or completion, performance, bid performance, appeal or surety bonds;
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(8) Purchase Money Indebtedness or Capitalized Lease Obligations incurred by the Issuer or any Restricted Subsidiary in an aggregate principal amount, taken together with Refinancing Indebtedness in respect thereof, not to exceed at any time outstanding the greater of (A) $50.0 million and (B) 7.5% of the Issuers Consolidated Net Tangible Assets determined at the time of incurrence;
(9) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business;
(10) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;
(11) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception or with respect to Indebtedness incurred pursuant to clause (2), (3) or (8) above, this clause (11), clause (15) or clause (16) below;
(12) indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted 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 acquisition;
(13) additional Indebtedness of the Issuer or any Restricted Subsidiary in an aggregate principal amount which, when taken together with the principal amount of all other Indebtedness incurred pursuant to this clause (13) and then outstanding, will not exceed the greater of (A) $50.0 million and (B) 7.5% of the Issuers Consolidated Net Tangible Assets determined at the time of incurrence;
(14) Indebtedness in respect of Specified Cash Management Agreements entered into in the ordinary course of business;
(15) Indebtedness of Persons incurred and outstanding on the date on which such Person was acquired by the Issuer or any Restricted Subsidiary, or merged or consolidated with or into the Issuer or any Restricted Subsidiary or incurred by the Company or any Restricted Subsidiary to finance any such acquisition or merger; provided, however, that at the time such Person or assets is/are acquired by the Issuer or a Restricted Subsidiary, or merged or consolidated with the Issuer or any Restricted Subsidiary and after giving pro forma effect to the incurrence of such Indebtedness pursuant to this clause (15) and any other related Indebtedness, either (A) the Issuer would have been able to incur $1.00 of additional Indebtedness pursuant to the Coverage Ratio Exception; or (B) the Consolidated Interest Coverage Ratio of the Issuer and its Restricted Subsidiaries would be greater than or equal to such Consolidated Interest Coverage Ratio immediately prior to such acquisition, merger or consolidation; and
(16) Indebtedness of non-Guarantor Subsidiaries not to exceed $50.0 million at any one time outstanding.
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(c) For purposes of determining compliance with this Section 4.9, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (16) above or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall, in its sole discretion, classify such item of Indebtedness and may divide and classify such Indebtedness in more than one of the types of Indebtedness described (except that Indebtedness incurred under the ABL Credit Agreement on the Issue Date shall be deemed to have been incurred under clause (b)(1) above and may not be reclassified), and may later reclassify any item of Indebtedness described in clauses (b)(1) through (b)(16) above (provided that at the time of reclassification it meets the criteria in such category or categories). In addition, for purposes of determining any particular amount of Indebtedness under this Section 4.9, (i) guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness; and (ii) the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with GAAP.
(d) The accrual of interest, the accretion or amortization of original issue discount and the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms will not be deemed to be an incurrence of Indebtedness of this covenant; provided, in each such case, that the amount thereof is included in Consolidated Interest Expense of the Issuer as accrued.
(e) For the purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the U.S. dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the earlier of the date that 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. The principal amount of any Indebtedness incurred to refinance other 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 Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.
(f) If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under this Section 4.9, the Issuer shall be in Default of this Section 4.9).
Section 4.10. Limitation on Asset Sales.
(a) The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale unless:
(1) the Issuer or such Restricted Subsidiary, as the case may be, receives consideration at least equal to the Fair Market Value (such Fair Market Value to be determined on the date of contractually agreeing to such Asset Sale) of the Equity Interests or assets subject to such Asset Sale; and
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(2) at least 75.0% of the total consideration from such Asset Sale and all other Asset Sales on a cumulative basis since the Issue Date received by the Issuer or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents.
For purposes of clause (2) above and for no other purpose, the following shall be deemed to be cash:
(A) the amount (without duplication) of any liabilities (as shown on the Issuers or such Restricted Subsidiarys most recent balance sheet) (other than Subordinated Indebtedness or intercompany Indebtedness) of the Issuer or such Restricted Subsidiary that is expressly assumed by the transferee of any such assets pursuant to a written agreement that releases the Issuer or such Restricted Subsidiary from further liability therefor;
(B) the amount of any securities, notes or other obligations received from such transferee that are within 180 days after such Asset Sale converted by the Issuer or such Restricted Subsidiary into cash (to the extent of the cash actually so received);
(C) any assets or Equity Interests of the kind referred to in Section 4.10(b)(2);
(D) accounts receivable of a business retained by the Issuer or any Restricted Subsidiary, as the case may be, following the sale of such business; provided that such accounts receivable (i) are not past due more than 60 days and (ii) do not have a payment date greater than 90 days from the date of the invoices creating such accounts receivable; and
(E) any Designated Non-cash Consideration received by the Issuer or such Restricted Subsidiary in such Asset Sale having an aggregate Fair Market Value taken together with all other Designated Non-cash Consideration received pursuant to this clause (E), not to exceed an amount equal to 7.5% of the Issuers Consolidated Net Tangible Assets (determined at the time of receipt of such Designated Non-cash Consideration), with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value.
In the case of any Asset Sale pursuant to a condemnation, seizure, appropriation or similar taking, including by deed in lieu of condemnation, or any actual or constructive total loss or an agreed or compromised total loss, such Asset Sale shall not be required to satisfy the requirements of clauses (1) and (2) of this Section 4.10(a).
(b) If the Issuer or any Restricted Subsidiary engages in an Asset Sale, the Issuer or such Restricted Subsidiary may, no later than 365 days following the consummation thereof, apply all or any of the Net Available Proceeds therefrom to:
(1) repay, repurchase, redeem, defease or otherwise retire any Indebtedness of the Issuer or a Restricted Subsidiary (other than any Disqualified Equity Interests or Subordinated Indebtedness of the Issuer or a Guarantor, and other than Indebtedness owed to the Issuer or an Affiliate of the Issuer); or
(2) (A) make any capital expenditure or otherwise invest all or any part of the Net Available Proceeds thereof in the purchase of assets (other than securities and excluding working capital or current assets for the avoidance of doubt) to be used by the Issuer or any Restricted Subsidiary in a Permitted Business, (B) acquire Qualified Equity Interests held by a Person other than the Issuer or any of its Restricted Subsidiaries in a Person that is a Restricted Subsidiary or in
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a Person engaged in a Permitted Business that shall become a Restricted Subsidiary immediately upon the consummation of such acquisition or (C) a combination of (A) and (B); provided that the requirements of this clause (2) will be deemed to be satisfied with respect to any Asset Sale if the Issuer or any Restricted Subsidiary enters into an agreement committing to make the acquisition, investment or expenditure referred to above within 365 days after the receipt of such Net Available Proceeds with the good faith expectation that such Net Available Proceeds will be applied to satisfy such commitment in accordance with such agreement within 180 days after such 365-day period, and if such Net Available Proceeds are not so applied within such 180-day period, then such Net Available Proceeds will constitute Excess Proceeds (as defined below).
The amount of Net Available Proceeds not applied or invested as provided in clauses (1) or (2) of this Section 4.10(b) shall constitute Excess Proceeds.
(c) On the 366th day after an Asset Sale (or, at the Issuers option, an earlier date), if the aggregate amount of Excess Proceeds equals or exceeds $30.0 million, the Issuer shall be required to make an offer, with a copy to the Trustee, to purchase or redeem (a Net Proceeds Offer) from all Holders and, to the extent required by the terms of other Pari Passu Indebtedness of the Issuer, to all holders of other Pari Passu Indebtedness outstanding with similar provisions requiring the Issuer to make an offer to purchase or redeem such Pari Passu Indebtedness with the proceeds from any Asset Sale, to purchase or redeem the maximum principal amount of Notes and any such Pari Passu Indebtedness to which the Net Proceeds Offer applies that may be purchased or redeemed out of the Excess Proceeds, at an offer price in cash in an amount equal to 100.0% of the principal amount of Notes and Pari Passu Indebtedness plus accrued and unpaid interest thereon, if any, to the date of purchase, in accordance with the procedures set forth in this Indenture or the agreements governing the Pari Passu Indebtedness, as applicable, in each case in minimum denominations of $2,000 or integral multiples of $1,000 in excess thereof.
To the extent that the sum of the aggregate principal amount of Notes and Pari Passu Indebtedness so validly tendered pursuant to a Net Proceeds Offer is less than the Excess Proceeds, the Issuer may use any remaining Excess Proceeds, or a portion thereof, for any purposes not otherwise prohibited by the provisions of this Indenture. If the aggregate principal amount of Notes and Pari Passu Indebtedness so validly tendered pursuant to a Net Proceeds Offer exceeds the amount of Excess Proceeds, the Issuer shall select the Notes and Pari Passu Indebtedness to be purchased on a pro rata basis on the basis of the aggregate outstanding principal amount of Notes and Pari Passu Indebtedness. Upon completion of such Net Proceeds Offer in accordance with the foregoing provisions, the amount of Excess Proceeds with respect to which such Net Proceeds Offer was made shall be deemed to be zero.
(d) The Net Proceeds 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 Net Proceeds Offer Period). No later than five (5) Business Days after the termination of the Net Proceeds Offer Period (the Net Proceeds Purchase Date), the Issuer will purchase the principal amount of Notes and Pari Passu Indebtedness required to be purchased pursuant to this Section 4.10 (the Net Proceeds Offer Amount) or, if less than the Net Proceeds Offer Amount has been so validly tendered, all Notes and Pari Passu Indebtedness validly tendered in response to the Net Proceeds Offer.
(e) If the Net Proceeds Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Net Proceeds Offer.
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(f) Pending the final application of any Net Available Proceeds pursuant to this Section 4.10, the holder of such Net Available Proceeds may apply such Net Available Proceeds temporarily to reduce Indebtedness outstanding under a revolving Debt Facility or otherwise invest such Net Available Proceeds in any manner not prohibited by this Indenture.
(g) On or before the Net Proceeds Purchase Date, the Issuer will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Net Proceeds Offer Amount of Notes and Pari Passu Indebtedness or portions of Notes and Pari Passu Indebtedness so validly tendered and not properly withdrawn pursuant to the Net Proceeds Offer, or if less than the Net Proceeds Offer Amount has been validly tendered and not properly withdrawn, all Notes and Pari Passu Indebtedness so validly tendered and not properly withdrawn, in each case in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. The Issuer or the Paying Agent, as the case may be, will promptly (but in any case not later than five (5) Business Days after termination of the Net Proceeds Offer Period) mail or deliver to each tendering Holder and the Issuer will mail or deliver to each tendering holder or lender of Pari Passu Indebtedness, as the case may be, an amount equal to the purchase price of the Notes or Pari Passu Indebtedness so validly tendered and not properly withdrawn by such holder or lender, as the case may be, and accepted by the Issuer for purchase, and the Issuer will promptly issue a new Note, and the Trustee, upon delivery of an Officers Certificate from the Issuer, 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 thereof. Any Note not so accepted will be promptly mailed or delivered by the Issuer to the Holder thereof. The Issuer will publicly announce the results of the Net Proceeds Offer as soon as practicable after the Net Proceeds Purchase Date.
(h) Notwithstanding the foregoing, the sale, conveyance or other disposition of all or substantially all of the assets of the Issuer and its Restricted Subsidiaries, taken as a whole, will be governed by Section 4.13 and/or Section 5.1 and not by this Section 4.10.
(i) The Issuer shall comply with all applicable securities laws and regulations in the United States, including, without limitation, the requirements of Rule 14e-1 under the Exchange Act and any other applicable laws and regulations in connection with the purchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any applicable securities laws or regulations conflict with this Section 4.10, the Issuer shall comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.10 by virtue of such compliance.
Section 4.11. Limitation on Transactions with Affiliates.
(a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, in one transaction or a series of related transactions, sell, lease, transfer or otherwise dispose of any of its assets to, or purchase any assets from, or enter into any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (an Affiliate Transaction) involving aggregate payments or consideration to or from the Issuer or a Restricted Subsidiary in excess of $5.0 million with respect to any single transaction or series of related transactions, unless:
(1) the terms of such Affiliate Transaction either (i) are not materially less favorable to the Issuer or such Restricted Subsidiary, as the case may be, than those that could reasonably be expected to have been obtained in a comparable transaction at the time of such transaction in arms length dealings with a Person who is not such an Affiliate, or (ii) if in the good faith judgment of the Issuers Board of Directors or senior management no comparable transaction is available with which to compare such Affiliate Transaction, are otherwise fair to the Issuer or such Restricted Subsidiary from a financial point of view; and
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(2) the Issuer delivers to the Trustee, (i) with respect to any Affiliate Transaction involving aggregate value in excess of $20.0 million, an Officers Certificate certifying that such Affiliate Transaction complies with clause (1) above and (ii) with respect to any Affiliate Transaction involving aggregate value in excess of $40.0 million, an Officers Certificate certifying that such Affiliate Transaction complies with clause (1) above and which sets forth and authenticates a resolution that has been approved by the Board of Directors of the Issuer, including a majority of the disinterested members of the Board of Directors of the Issuer, if any.
(b) The foregoing restrictions shall not apply to:
(1) transactions to the extent between or among (i) the Issuer and one or more Restricted Subsidiaries or (ii) Restricted Subsidiaries;
(2) reasonable director, trustee, officer and employee compensation (including bonuses) and other benefits (including pursuant to any employment agreement or any retirement, health, stock option or other benefit plan), payments or loans (or cancellation of loans) to employees of the Issuer and indemnification arrangements, in each case, as determined in good faith by the Issuers Board of Directors or senior management;
(3) Permitted Investments or any Restricted Payments which are made in accordance with Section 4.7;
(4) any agreement in effect on the Issue Date or as thereafter amended or replaced in any manner that, taken as a whole, is not materially less advantageous to the Issuer than such agreement as it was in effect on the Issue Date;
(5) any transaction with a Person (other than an Unrestricted Subsidiary of the Issuer) which would constitute an Affiliate of the Issuer solely because the Issuer or a Restricted Subsidiary owns an equity interest in or otherwise controls such Person;
(6) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture; provided that in the reasonable determination of the Board of Directors of the Issuer or the senior management of the Issuer, such transactions are on terms not materially less favorable to the Issuer or the relevant Restricted Subsidiary than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arms-length basis from a Person that is not an Affiliate of the Issuer;
(7) the issuance or sale of any Qualified Equity Interests of the Issuer and the granting of registration and other customary rights in connection therewith to, or the receipt of capital contributions from, Affiliates of the Issuer;
(8) payments to an Affiliate in respect of the Notes or any other Indebtedness of the Issuer 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;
(9) any transaction in which the Issuer 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 Issuer or such Restricted Subsidiary from a financial point of view or that such transaction meets the requirements of Section 4.11(a);
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(10) any transaction where the only consideration paid by the Issuer or the relevant Restricted Subsidiary is Qualified Equity Interests of the Issuer;
(11) transactions between the Issuer or any Restricted Subsidiary and any Person, a director of which is also a director of the Issuer or any direct or indirect parent company of the Issuer, and such director is the sole cause for such Person to be deemed an Affiliate of the Issuer or any Restricted Subsidiary; provided, however, that such director shall abstain from voting as a director of the Issuer or such direct or indirect parent company, as the case may be, on any matter involving such other Person; and
(12) the entering into of a tax sharing agreement, or payments pursuant thereto, between the Issuer and/or one or more Subsidiaries, on the one hand, and any other Person with which the Issuer or such Subsidiaries are required or permitted to file a consolidated tax return or with which the Issuer or such Subsidiaries are part of a consolidated group for tax purposes to be used by such Person to pay taxes, and which payments by the Issuer and the Restricted Subsidiaries are not in excess of the tax liabilities that would have been payable by them on a stand-alone basis.
Section 4.12. Limitation on Liens.
(a) The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or permit or suffer to exist any Lien (an Initial Lien) of any kind (other than Permitted Liens) upon any of their property or assets (including Equity Interests of any Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, which Lien secures Indebtedness, unless contemporaneously with the incurrence of such Lien:
(1) in the case of any Lien securing Indebtedness that is not Subordinated Indebtedness, effective provision is made to secure the Notes or such Guarantee, as the case may be, at least equally and ratably with or prior to such Indebtedness with a Lien on the same collateral; and
(2) in the case of any Lien securing Subordinated Indebtedness, effective provision is made to secure the Notes or such Guarantee, as the case may be, with a Lien on the same collateral that is senior to the Lien securing such Subordinated Indebtedness.
(b) A lien created for the benefit of the Holders pursuant to Section 4.12(a) shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien.
Section 4.13. Offer to Purchase upon Change of Control.
(a) Upon the occurrence of any Change of Control, unless the Issuer has previously or concurrently exercised its right to redeem all of the Notes as described under Section 3.7, each Holder will have the right, except as provided below, to require that the Issuer purchase all or any portion (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holders Notes for a cash price (the Change of Control Purchase Price) equal to 101.0% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase.
(b) Not later than 30 days following any Change of Control, the Issuer will deliver, or cause to be delivered, to the Holders, with a copy to the Trustee, a notice:
(1) describing the transaction or transactions that constitute the Change of Control;
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(2) offering to purchase, pursuant to the procedures required by this Indenture and described in the notice (a Change of Control Offer), on a date specified in the notice, which shall be a Business Day not earlier than 30 days, nor later than 60 days, from the date the notice is delivered (the Change of Control Payment Date), and for the Change of Control Purchase Price, all Notes properly tendered by such Holder pursuant to such Change of Control Offer prior to 5:00 p.m. New York time on the second Business Day preceding the Change of Control Payment Date; and
(3) describing the procedures, as determined by the Issuer, consistent with this Indenture, that Holders must follow to accept the Change of Control Offer.
(c) On or before the Change of Control Payment Date, the Issuer will, to the extent lawful:
(1) deposit with the Paying Agent an amount equal to the Change of Control Purchase Price in respect of all Notes or portions of Notes properly tendered;
(2) accept for payment all Notes or portions of Notes (of $2,000 or integral multiples of $1,000 in excess thereof) properly tendered pursuant to the Change of Control Offer; and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer.
The Paying Agent will promptly deliver to each Holder who has so tendered Notes the Change of Control Purchase Price for such Notes, 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 so tendered, if any; provided that each such new Note will be in a principal amount of $2,000 or integral multiples of $1,000 in excess thereof.
If the Change of Control Payment 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 on the relevant interest payment date to the Person in whose name a Note is registered at the close of business on such record date.
A Change of Control Offer shall remain open for at least 20 Business Days or for such longer period as is required by law. The Issuer shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.
The Issuer will not be required to make a Change of Control Offer upon a Change of Control if (i) 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 Issuer and purchases all Notes properly tendered and not withdrawn under such Change of Control Offer or (ii) in connection with or in contemplation of any publicly announced Change of Control, the Issuer 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 Purchase Price and has purchased all Notes properly tendered in accordance with the terms of the Alternate Offer.
If Holders of not less than 90.0% in aggregate principal amount of the outstanding Notes validly tender and do not withdraw such Notes in a Change of Control Offer or Alternate Offer and the Issuer, or any third party making a Change of Control Offer in lieu of the Issuer as described above, purchases all of the Notes validly tendered and not withdrawn by such Holders, the Issuer 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
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to the Change of Control Offer or an Alternate Offer, as applicable, to redeem all Notes that remain outstanding following such purchase at a redemption price in cash equal to the applicable Change of Control Purchase Price or an Alternate Offer price, as applicable, plus, to the extent not included in the Change of Control Purchase Price or an Alternate Offer price, as applicable, accrued and unpaid interest, if any, to, but excluding, the date of redemption.
The Issuer shall comply with all applicable securities legislation in the United States, including, without limitation, the requirements of Rule 14e- 1 under the Exchange Act and any other applicable laws and regulations in connection with the purchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any applicable securities laws or regulations conflict with this Section 4.13, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.13 by virtue of such compliance.
The provisions under this Indenture relating to the Issuers obligation to make a Change of Control Offer may be waived, modified or terminated with the written consent of the Holders of a majority in principal amount of the Notes then outstanding.
Notwithstanding anything to the contrary contained herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.
Section 4.14. Corporate Existence. Subject to Article V, the Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership, limited liability company or other existence of each of the Guarantors in accordance with the respective organizational documents (as the same may be amended from time to time) of the Issuer or any such Guarantor and the rights (charter and statutory), licenses and franchises of the Issuer and the Guarantors; provided that the Issuer shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of the Guarantors, if the Issuer shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Issuer and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders.
Section 4.15. Additional Guarantees. If any Restricted Subsidiary of the Issuer that is not already a Guarantor, other than a Foreign Subsidiary, shall guarantee any Indebtedness of the Issuer or any Guarantor under any Debt Facility (including the ABL Credit Agreement), then the Issuer shall, within 30 days thereof, cause such Restricted Subsidiary to execute and deliver to the Trustee a supplemental indenture in substantially the form attached hereto as Exhibit B, pursuant to which such Restricted Subsidiary shall become a Guarantor with respect to the Notes, upon the terms and subject to the release provisions and other limitations set forth in Article X.
Section 4.16. Limitation on Designation of Unrestricted Subsidiaries. (a) The Board of Directors of the Issuer may designate any Subsidiary (including any newly formed or newly acquired Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) of the Issuer as an Unrestricted Subsidiary under this Indenture (a Designation) only if:
(1) no Default shall have occurred and be continuing at the time of or after giving effect to such Designation; and
(2) the Issuer would be permitted to make, at the time of such Designation, (a) a Permitted Investment or (b) an Investment pursuant to Section 4.7, in either case, in an amount (the Designation Amount) equal to the Fair Market Value of the Issuers proportionate interest in such Subsidiary on such date.
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No Subsidiary shall be Designated as an Unrestricted Subsidiary unless:
(A) all of the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of Designation, consist of Non-Recourse Debt, except for any guarantee given solely to support the pledge by the Issuer or any Restricted Subsidiary of the Equity Interests of such Unrestricted Subsidiary, which guarantee is not recourse to the Issuer or any Restricted Subsidiary, and except for any guarantee of Indebtedness of such Subsidiary by the Issuer or a Restricted Subsidiary that is permitted as both an incurrence of Indebtedness and an Investment (in each case in an amount equal to the amount of such Indebtedness so guaranteed) permitted under Section 4.7 and Section 4.9;
(B) except as permitted by Section 4.11, on the date such Subsidiary is Designated an Unrestricted Subsidiary, such Subsidiary is not party to any agreement, contract, arrangement or understanding (other than a guarantee permitted under clause (A) above) with the Issuer or any Restricted Subsidiary unless the terms of the agreement, contract, arrangement or understanding are not materially less favorable to the Issuer or the Restricted Subsidiary than those that could reasonably be expected to have been obtained at the time from Persons who are not Affiliates of the Issuer; and
(C) such Subsidiary is a Person with respect to which neither the Issuer nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests of such Person or (b) to maintain or preserve the Persons financial condition or to cause the Person to achieve any specified levels of operating results (in each case other than a guarantee permitted under clause (A) above) or to the extent treated as an Investment permitted by Section 4.7.
Any such Designation by the Board of Directors of the Issuer shall be evidenced to the Trustee by filing with the Trustee a resolution of the Board of Directors of the Issuer giving effect to such Designation and an Officers Certificate certifying that such Designation complies with the foregoing conditions. If, at any time, any Unrestricted Subsidiary fails to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of the Subsidiary and any Liens on assets of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary at such time and, if the Indebtedness is not permitted to be incurred under Section 4.9 or the Lien is not permitted under Section 4.12, the Issuer shall be in default of the applicable covenant.
(b) The Board of Directors of the Issuer may redesignate an Unrestricted Subsidiary as a Restricted Subsidiary (a Redesignation) only if:
(1) no Default shall have occurred and be continuing at the time of and after giving effect to such Redesignation; and
(2) all Liens, Indebtedness and Investments of such Unrestricted Subsidiary outstanding immediately following such Redesignation would, if incurred or made at such time, have been permitted to be incurred or made for all purposes of this Indenture.
Any such Redesignation shall be evidenced to the Trustee by filing with the Trustee an Officers Certificate certifying that such Redesignation complies with the foregoing conditions.
Section 4.17. Effectiveness of Covenants.
(a) If:
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(1) the Notes have an Investment Grade Rating from either of the Rating Agencies; and
(2) no Default or Event of Default has occurred and is then continuing;
then upon delivery by the Issuer to the Trustee of an Officers Certificate to the foregoing effect (the date of delivery of any such Officers Certificate, the Suspension Date), the Issuer and its Restricted Subsidiaries will thereafter, except as provided below, not be subject to the following covenants (collectively, the Suspended Covenants):
(i) Section 4.7;
(ii) Section 4.8;
(iii) Section 4.9;
(iv) Section 4.10;
(v) Section 4.11;
(vi) Section 4.15 (but only with respect to any Person that is required to become a Guarantor after the date of the commencement of the applicable Suspension Date);
(vii) Section 4.16; and
(viii) Section 5.1(a)(3).
(b) If at any time the Notes credit rating is downgraded from an Investment Grade Rating by both Rating Agencies, then the Suspended Covenants will thereafter be reinstated (the Reinstatement Date) and be applicable pursuant to the terms of this Indenture (including in connection with performing any calculation or assessment to determine compliance with the terms of this Indenture), unless and until another Suspension Date occurs; provided, however, that no Default, Event of Default or breach of any kind shall be deemed to exist under this Indenture, the Notes or the Guarantees with respect to the Suspended Covenants based on, and none of the Issuer or any of its Subsidiaries shall bear any liability for, any actions taken or events occurring during the Suspension Period (as defined below), regardless of whether such actions or events would have been permitted if the applicable Suspended Covenants remained in effect during such period. The period of time between any Suspension Date and any Reinstatement Date is referred to as a Suspension Period.
(c) On the Reinstatement Date, all Indebtedness incurred during the Suspension Period will be deemed to have been outstanding on the Issue Date so that it is classified under Section 4.09(b)(3) without regard to limitations therein, any Liens incurred during the Suspension Period will be deemed incurred under clause (27) of the definition of Permitted Liens without regard to the limitations therein, and any other contract or arrangement or Investment made or entered into during the Suspension Period will be deemed to have been in effect as of the Issue Date for purposes of Sections 4.08 and 4.11 and the definition of Permitted Investments. With respect to Restricted Payments made after the Reinstatement Date, the amount of Restricted Payments made will be calculated as if Section 4.7 had been in effect prior to, but not during, the Suspension Period. Accordingly, Restricted Payments made during the Suspension Period will not reduce the amount available to be made as Restricted Payments under Section 4.7(a). During any Suspension Period and until a Reinstatement Date, the dollar amount in the Restricted Payments Basket shall remain fixed at the dollar amount that was available as of the Suspension Date that commenced such Suspension Period.
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(d) During any period when the Suspended Covenants are suspended, the Board of Directors of the Issuer may not designate any of the Issuers Subsidiaries as Unrestricted Subsidiaries pursuant to this Indenture.
(e) Promptly following the occurrence of any Suspension Date or Reinstatement Date, the Issuer will provide an Officers Certificate to the Trustee regarding such occurrence. The Trustee shall have no obligation to independently determine or verify if a Suspension Date or Reinstatement Date has occurred or notify the Holders of any Suspension Date or Reinstatement Date. The Trustee may provide a copy of such Officers Certificate to any Holder of the Notes upon request.
Section 4.18. Use of Proceeds Prior to the Consummation of the Magnum Acquisition.
(a) Prior to the earlier of (1) the date of the consummation of the Magnum Acquisition and (2) the date on which the Notes are redeemed by the Issuer pursuant to Section 3.8, the Issuer shall not, and shall not permit any of its Subsidiaries to, use the net proceeds from the issuance of the Notes for any other purpose other than making investments in Cash Equivalents or consummating the Transactions.
(b) Upon the consummation of the Magnum Acquisition, this Section 4.18 will automatically cease to be of any force or effect.
ARTICLE V
SUCCESSORS
Section 5.1. Consolidation, Merger, Conveyance, Transfer or Lease.
(a) The Issuer will not, directly or indirectly, in a single transaction or a series of related transactions, consolidate or merge with or into another Person (whether or not the Issuer is the surviving Person), or sell, lease, transfer, convey or otherwise dispose of or assign all or substantially all of the assets of the Issuer and its Restricted Subsidiaries (taken as a whole) to any Person unless:
(1) either:
(A) the Issuer will be the surviving or continuing Person; or
(B) the Person (if other than the Issuer) formed by or surviving or continuing from such consolidation or merger or to which such sale, lease, transfer, conveyance or other disposition or assignment shall be made (collectively, the Successor) is a corporation, limited liability company or limited partnership organized and existing under the laws of the United States or of any State of the United States or the District of Columbia, and the Successor expressly assumes, by agreements in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Issuer under the Notes and this Indenture; provided, that if the Successor is not a corporation, a Restricted Subsidiary that is a corporation expressly assumes as co-obligor all of the obligations of the Issuer under this Indenture and the Notes pursuant to a supplemental indenture to this Indenture executed and delivered to the Trustee;
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(2) immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (1)(B) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, no Default shall have occurred and be continuing;
(3) immediately after giving pro forma effect to such transaction and the assumption of the obligations as set forth in clause (1)(B) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, (i) the Issuer or its Successor, as the case may be, could incur $1.00 of additional Indebtedness pursuant to the Coverage Ratio Exception or (ii) the Consolidated Interest Coverage Ratio for the Issuer or its Successor, as the case may be, and its Restricted Subsidiaries would be greater than or equal to such Consolidated Interest Coverage Ratio prior to such transaction; and
(4) the Issuer shall have delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that such merger, consolidation or transfer and such agreement and/or supplemental indenture (if any) comply with this Indenture.
For purposes of this Section 5.1, any Indebtedness of the Successor which was not Indebtedness of the Issuer immediately prior to the transaction shall be deemed to have been incurred in connection with such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries of the Issuer, the Equity Interests of which constitute all or substantially all of the properties and assets of the Issuer, will be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer.
(b) Except in circumstances under which this Indenture provides for the release of the Guarantee of a Guarantor as described under Section 10.5, no Guarantor will, and the Issuer will not permit any Guarantor to, directly or indirectly, consolidate or merge with or into another Person (whether or not the Guarantor is the surviving Person) unless either:
(1) (A)(i) such Guarantor will be the surviving or continuing Person; or (ii) the Person (if other than such Guarantor) formed by or surviving any such consolidation or merger is the Issuer or another Guarantor or assumes, by agreements in form and substance reasonably satisfactory to the Trustee, all of the obligations of such Guarantor under the Guarantee of such Guarantor and this Indenture;
(B) immediately after giving effect to such transaction, no Default shall have occurred and be continuing; and
(C) the Issuer shall have delivered to the Trustee an Officers Certificate and an Opinion of Counsel, each stating that such merger or consolidation and such agreements and/or supplemental indenture (if any) comply with this Indenture; or
(2) the transaction does not violate Section 4.10.
(c) Upon any consolidation or merger of the Issuer or a Guarantor, or any transfer of all or substantially all of the assets of the Issuer in accordance with the foregoing, in which the Issuer or such Guarantor is not the continuing obligor under the Notes or its Guarantee, as applicable, the surviving entity formed by such consolidation or merger or into which the Issuer or such Guarantor is merged or the Person to which the sale, conveyance, lease, transfer, disposition or assignment is made will succeed to, and be substituted for, and may exercise every right and power of, the Issuer or such Guarantor under this
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Indenture, the Notes and the Guarantees with the same effect as if such surviving entity had been named therein as the Issuer or such Guarantor and, except in the case of a lease, the Issuer or such Guarantor, as the case may be, will be released from the obligation to pay the principal of and interest on the Notes or in respect of its Guarantee, as the case may be, and all of the Issuers or such Guarantors other obligations and covenants under the Notes, this Indenture and its Guarantee, if applicable.
(d) Notwithstanding the foregoing, (i) any Restricted Subsidiary may consolidate or merge with or into or convey, transfer, sell, dispose, assign or lease, in one transaction or a series of transactions, all or substantially all of its assets to the Issuer or another Restricted Subsidiary and (ii) the Issuer or any Guarantor may (i) consolidate or merge with or into or convey, transfer or lease, in one transaction or a series of transactions, all or part of its properties and assets to the Issuer or another Guarantor or (ii) merge with a Restricted Subsidiary of the Issuer solely, with respect to this clause (ii) for the purpose of reincorporating the Issuer or Guarantor in a State of the United States or the District of Columbia.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1. Events of Default. Each of the following is an Event of Default:
(1) failure to pay interest on any of the Notes when the same becomes due and payable and the continuance of any such failure for 30 days;
(2) failure to pay principal of or premium, if any, on any of the Notes when it becomes due and payable, whether at Stated Maturity, upon redemption, required purchase, acceleration or otherwise;
(3) failure by the Issuer or any of its Restricted Subsidiaries to comply with any of their respective agreements or covenants described in Section 5.1, or failure by the Issuer to comply in respect of its obligations to make a Change of Control Offer pursuant to Section 4.13 or a Net Proceeds Offer pursuant to Section 4.10;
(4) (a) except with respect to Section 4.3, or as described in clause (3) of this Section 6.1, failure by the Issuer or any Restricted Subsidiary to comply with any other covenant or agreement contained in this Indenture and continuance of this failure for 60 days after notice of the failure has been given to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25.0% of the aggregate principal amount of the Notes then outstanding, or (b) failure by the Issuer for 180 days after notice of the failure has been given to the Issuer by the Trustee or to the Issuer and the Trustee by the Holders of at least 25.0% of the aggregate principal amount of the Notes then outstanding to comply with Section 4.3;
(5) default by the Issuer or any Restricted Subsidiary of the Issuer under any mortgage, indenture or other instrument or agreement under which there is issued or by which there is secured or evidenced Indebtedness for borrowed money by the Issuer or any Restricted Subsidiary, whether such Indebtedness now exists or is incurred after the Issue Date, which default:
(A) is caused by a failure to pay at its Stated Maturity principal on such Indebtedness within the applicable express grace period and any extensions thereof, or
(B) results in the acceleration of such Indebtedness prior to its Stated Maturity,
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and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other Indebtedness with respect to which an event described in clause (A) or (B) has occurred and is continuing, aggregates $50.0 million or more, and in any such case, such Indebtedness is not repaid or such failure to pay is not cured or such acceleration is not rescinded, annulled or otherwise cured within 30 days;
(6) one or more judgments (to the extent not covered by insurance) for the payment of money in an aggregate amount in excess of $50.0 million shall be rendered against the Issuer or any of its Significant Subsidiaries and the same shall remain undischarged for a period of 60 consecutive days during which execution shall not be effectively stayed;
(7) the Issuer or any Significant Subsidiary of the Issuer or group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an involuntary case,
(C) consents to the appointment of a custodian of it or for all or substantially all of its property,
(D) makes a general assignment for the benefit of its creditors, or
(E) admits in writing that it generally is not paying its debts as they become due; or
(F) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i) is for relief against the Issuer or any Significant Subsidiary of the Issuer or group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary, in an involuntary case;
(ii) appoints a custodian of the Issuer or any Significant Subsidiary of the Issuer or group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Issuer or any Significant Subsidiary of the Issuer or group of Restricted Subsidiaries of the Issuer that, taken together, would constitute a Significant Subsidiary
and, in each case, the order or decree remains unstayed and in effect for 60 consecutive days; or
(8) any Guarantee ceases to be in full force and effect (other than in accordance with the terms of such Guarantee and this Indenture) or is declared null and void and unenforceable or found to be invalid or any Guarantor denies its liability under the Guarantee of such Guarantor (other than by reason of release of such Guarantor from its Guarantee in accordance with the terms of this Indenture).
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Section 6.2. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.1(7) with respect to the Issuer) shall have occurred and be continuing under this Indenture, the Trustee, by written notice to the Issuer, or the Holders of at least 25.0% in aggregate principal amount of the Notes then outstanding by written notice to the Issuer and the Trustee, may declare (an acceleration declaration) all principal of and accrued and unpaid interest, if any, on the Notes to be due and payable. Upon such acceleration declaration, the aggregate principal of and accrued and unpaid interest on the outstanding Notes shall become due and payable immediately.
If an Event of Default specified in Section 6.1(7) occurs with respect to the Issuer, then all unpaid principal of and accrued and unpaid interest, if any, on all outstanding Notes shall ipso facto become and be immediately due and payable without any declaration, further action or notice to the extent permitted by applicable law.
After such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of the Notes then outstanding may rescind and annul such acceleration if:
(1) the rescission would not conflict with any judgment or decree;
(2) all existing Events of Default have been cured or waived other than nonpayment of accelerated principal and interest;
(3) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid; and
(4) the Issuer has paid the Trustee its reasonable compensation and reimbursed the Trustee for its reasonable expenses, disbursements and advances.
No such rescission shall affect any subsequent Default or impair any right consequent thereto.
Section 6.3. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payments on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
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 Holder 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. All remedies are cumulative to the extent permitted by law.
Section 6.4. Waiver of Past Defaults. Subject to Section 9.2, the Holders of a majority in aggregate principal amount of the Notes then outstanding by written notice to the Trustee may, on behalf of the Holders of all of the Notes, waive any existing Default and its consequences under this Indenture except a continuing Default in the payment of interest or premium, or the principal of, the Notes.
Section 6.5. Control by Majority. The Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust power conferred on it. However, (i) the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders not joining in the giving of such direction (it being understood that the Trustee does not have an affirmative duty to determine whether or not any such direction is unduly prejudicial to the
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rights of Holders of the Notes not joining in the giving of such direction) and (ii) the Trustee may take any other action it deems proper that is not inconsistent with any such direction received from the Holders. Subject to Section 7.1, prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it against all loss, liability and expense caused by taking or not taking such action.
Section 6.6. Limitation on Suits. A Holder may pursue a remedy with respect to this Indenture or the Notes only if:
(1) the Holder gives to the Trustee written notice of a continuing Event of Default;
(2) the Holder or Holders of at least 25.0% in aggregate principal amount of outstanding Notes make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer the Trustee indemnity satisfactory to the Trustee against any costs, liability or expense;
(4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction that is inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not any such use by a Holder prejudices the rights of any other Holders or obtains priority or preference over such other Holders).
Section 6.7. Rights of Holders of Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the contractual right of any Holder to receive payment of principal of, premium, if any, or interest on, such Note or to bring suit for the enforcement of any such payment, on or after the due date expressed in the Notes, shall not be modified without the consent of the Holder.
Section 6.8. Collection Suit by Trustee. If an Event of Default specified in Section 6.1(1) or Section 6.1(2) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount of principal of, premium and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.9. Trustee May File Proofs of Claim. The Trustee is authorized to 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 Holders allowed in any judicial proceedings relative to the Issuer (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other securities or property payable or deliverable upon the conversion or exchange of the Notes or on any such claims, and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such 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 to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.6. To the extent that the payment of any such compensation, expenses, disbursements and advances to the Trustee, its agents and counsel,
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and any other amounts due the Trustee under Section 7.6 out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding, whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing in this Section 6.9 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, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities. If the Trustee collects any money or property pursuant to this Article VI, it shall pay out the money and property in the following order:
First: to the Trustee, its agents and attorneys for amounts due under Section 7.7, including payment of all reasonable compensation, expenses and liabilities incurred, and all advances made, by it and the costs and expenses of collection;
Second: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively;
Third: without duplication, to the Holders for any other Obligations owing to the Holders under this Indenture and the Notes; and
Fourth: to the Issuer 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 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 the 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7, or a suit by Holders of more than 10.0% in principal amount of the then outstanding Notes.
ARTICLE VII
TRUSTEE
Section 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of 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 his or her own affairs.
(b) Except during the continuance of an Event of Default:
(1) the duties of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
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(2) the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein); provided, however, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions furnished to it to determine whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities 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 7.1;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not 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 shall require the Trustee to expend or risk its own funds or incur any liability.
(d) The Trustee shall not be liable for interest on or the investment of any money received by it except as the Trustee may agree in writing with the Issuer. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
(e) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to this Section 7.1.
Section 7.2. Rights of Trustee.
(a) The Trustee may conclusively rely and shall be fully protected in acting or refraining from acting on any resolution, certificate, statement, instrument, opinion, notice, report, request, direction, consent, order, bond, debenture or other document (whether in original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated therein.
(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 such Officers Certificate or Opinion of Counsel. Prior to taking, suffering or admitting any action, the Trustee may consult with counsel of the Trustees own choosing, and the Trustee shall be fully protected from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in conclusive reliance on the advice or opinion of such counsel.
(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any attorney or agent appointed with due care.
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(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the discretion or rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer or a Guarantor shall be sufficient if signed by an Officer of the Issuer or such Guarantor.
(f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction.
(g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or documents, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine during normal business hours the books, records and premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer, and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
(h) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, to the Agents and to each other agent, custodian and Person employed to act hereunder.
(i) The Trustee may request that the Issuer and each of the Guarantors shall deliver to the Trustee an Officers Certificate setting forth the names of individuals and/or titles of Officers of the Issuer and each Guarantor, as applicable, authorized at such time to take specified actions pursuant to this Indenture of the Issuer, the Notes and the Guarantees, which Officers Certificate may be signed by any Person authorized to sign an Officers Certificate, including any Person specified as so authorized in any such certificate previously delivered and not superseded.
(j) The Trustee shall not be deemed to have notice or be charged with knowledge of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or the Trustee shall have received from the Issuer or any other obligor upon the Notes or from any Holder written notice thereof at its address set forth in Section 11.2 and such notice references the Notes and this Indenture. In the absence of such actual knowledge or such notice, the Trustee may conclusively assume that no such Default or Event of Default exists.
(k) In no event shall the Trustee be responsible or liable for special, indirect, punitive, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
(l) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.
(m) The Issuer will be responsible for making calculations called for under the Notes, including but not limited to determination of redemption price, premium, if any, and any other amounts payable on the Notes. The Issuer will make the calculations in good faith and, absent manifest error, its calculations will be final and binding on the Holders of the Notes. The Issuer will provide a schedule of its calculations to the Trustee when applicable, and the Trustee is entitled to rely conclusively on the accuracy of the Issuers calculations without independent verification.
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Section 7.3. Individual Rights of the Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights and duties. The Trustee is also subject to Section 7.9.
Section 7.4. Trustees Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Notes or any Guarantee, it shall not be accountable for the use of the proceeds from the Notes or any money paid to the Issuer or upon the Issuers direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes, any Officers Certificate delivered to the Trustee hereunder, or any other document in connection with the sale of the Notes or pursuant to this Indenture other than the Trustees certificate of authentication hereunder.
Section 7.5. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if a Responsible Officer of the Trustee has knowledge thereof as set forth in Section 7.2(j), the Trustee shall deliver to Holders a 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, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders.
Section 7.6. Compensation and Indemnity. The Issuer shall pay to the Trustee from time to time compensation for its acceptance of this Indenture and for all services rendered by it hereunder as agreed upon in writing. The Trustees compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Trustee, as applicable, promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustees agents and counsel.
Each of the Issuer and the Guarantors, jointly and severally, shall indemnify, defend, protect and hold harmless the Trustee (in its individual and trustee capacities) and its officers, directors, employees and agents from and against any and all claims, damages, losses, liabilities, actions, suits, costs or expenses incurred by it (including, without limitation, the fees and expenses of its agents and counsel and court costs) arising out of or in connection with the acceptance or administration of its duties under this Indenture and trusts thereunder, the performance of its obligations and/or exercise of its rights hereunder, including the costs and expenses of enforcing this Indenture against the Issuer or any Guarantor (including this Section 7.6) and defending itself against any claim (whether asserted by the Issuer or any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, claim, damage, liability or expense shall be caused by its own gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, non-appealable judgment. The Trustee shall notify the Issuer promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder. The Trustee may have one separate counsel, and the Issuer shall pay the reasonable fees and expenses of such counsel for the Trustee. The Issuer need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld.
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The obligations of the Issuer and the Guarantors under this Section 7.6 shall survive the satisfaction and discharge of this Indenture, the payment of the Notes or the resignation or removal of the Trustee.
To secure the Issuers payment obligations in this Section 7.6, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal or interest, if any, on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture, the payment of the Notes and the resignation or removal of the Trustee.
When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.1(7) occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
Section 7.7. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor trustees acceptance of appointment as provided in this Section 7.7.
The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuer. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee upon 30 days prior notice by so notifying the Trustee and the Issuer in writing. The Issuer may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.8;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of the Trustee for any reason, the Issuer shall promptly appoint a successor trustee. Within one year after the successor trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor trustee to replace the successor trustee appointed by the Issuer.
If a successor trustee does not take office within 30 days after the retiring Trustee resigns or is removed, such retiring Trustee (at the expense of the Issuer), the Issuer or the Holders of at least 10.0% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor trustee.
If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.8, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee.
A successor trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor trustee shall have all the rights, powers and the duties of the Trustee under this Indenture. The successor trustee shall mail a notice of its succession to the Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee; provided that all sums owing to such Trustee hereunder have been paid and subject to the Lien provided for in Section 7.5. Notwithstanding replacement of the Trustee pursuant to this Section 7.7, the Issuers and the Guarantors obligations under Section 7.6 shall continue for the benefit of the retiring Trustee.
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Section 7.8. Successor Trustee by Merger, Etc. If the Trustee or any Agent consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business (including this transaction) to, another corporation, the successor corporation without any further act shall be the successor Trustee or any Agent, as applicable.
Section 7.9. Eligibility; Disqualification. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States or of any state thereof that is authorized under such laws to exercise corporate trustee power and that is subject to supervision or examination by federal or state authorities. Such Trustee together with its affiliates shall at all times have a combined capital surplus of at least $50.0 million as set forth in its most recent annual report of condition.
ARTICLE VIII
DEFEASANCE; DISCHARGE OF THIS INDENTURE
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance. The Issuer may, by delivery of an Officers Certificate, at any time, elect to have either Section 8.2 or Section 8.3 applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII.
Section 8.2. Legal Defeasance. Upon the Issuers exercise under Section 8.1 of the option applicable to this Section 8.2, the Issuer shall, subject to the satisfaction of the conditions set forth in Section 8.4, be deemed to have been discharged from its obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, Legal Defeasance). For this purpose, Legal Defeasance means that the Issuer and the Guarantors shall be deemed to have paid and discharged the entire Obligations represented by the Notes and the Guarantees, which shall thereafter be deemed to be outstanding only for the purposes of Section 8.5 and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all of its other Obligations under such Notes, Guarantees and this Indenture (and the Trustee, on written demand of and at the expense of the Issuer, shall execute instruments acknowledging the same), and this Indenture shall cease to be of further effect as to all such Notes and Guarantees, except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, and interest and premium, if any, on such Notes when such payments are due from the trust funds referred to in Section 8.4(1); (b) the Issuers obligations with respect to such Notes under Section 2.2, Section 2.3, Section 2.4, Section 2.6, Section 2.7, Section 2.10, and Section 4.2; (c) the rights, powers, trusts, duties and immunities of the Trustee, including without limitation thereunder, under Section 7.6, Section 8.5 and Section 8.7 and the obligations of the Issuer and the Guarantors in connection therewith; and (d) the provisions of this Article VIII. Subject to compliance with this Article VIII, the Issuer may exercise its option under this Section 8.2 notwithstanding the prior exercise of its option under Section 8.3.
Section 8.3. Covenant Defeasance. Upon the Issuers exercise under Section 8.1 above of the option applicable to this Section 8.3, the Issuer shall, subject to the satisfaction of the conditions set forth in Section 8.4 below, be released from its obligations under Section 4.3, Section 4.7, Section 4.8, Section 4.9, Section 4.10, Section 4.11, Section 4.12, Section 4.13, Section 4.15, Section 4.16 and Section 5.1(a)(3) on and after the date the conditions set forth below are satisfied (hereinafter, Covenant Defeasance), and the Notes shall thereafter be deemed not outstanding for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed outstanding for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Issuer or any of its Subsidiaries may omit to comply
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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 shall not constitute a Default under Section 6.1, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby.
Section 8.4. Conditions to Legal or Covenant Defeasance. The following shall be the conditions to the application of either Section 8.2 or Section 8.3 to the outstanding Notes:
(1) the Issuer must irrevocably deposit with the Trustee, as trust funds, in trust solely for the benefit of the Holders, U.S. dollars, U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient (without consideration of any reinvestment of interest) in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants selected by the Issuer and delivered to the Trustee, to pay the principal of and interest, if any, on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be,
(2) in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that:
(A) the Issuer has received from, or there has been published by the United States Internal Revenue Service, a ruling, or
(B) since the Issue Date, there has been a change in the applicable U.S. 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 U.S. federal income tax purposes as a result of the Legal Defeasance and will be subject to U.S. 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 Issuer 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 U.S. federal income tax purposes as a result of the Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the Covenant Defeasance had not occurred,
(4) no Default shall have occurred and be continuing on the date of such deposit (other than a Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowings),
(5) the Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under any other material agreement or instrument (other than this Indenture and the agreements governing any other Indebtedness being defeased, discharged or replaced) to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound,
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(6) the Issuer shall have delivered to the Trustee an Officers Certificate stating that the deposit was not made by it with the intent of preferring the Holders over any other of its creditors or with the intent of defeating, hindering, delaying or defrauding any other of its creditors or others, and
(7) the Issuer shall have delivered to the Trustee an Officers Certificate and an Opinion of Counsel to the effect that the conditions precedent provided for in clauses (1) through (6) of this Section 8.4 have been complied with.
Section 8.5. Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.6, all U.S. dollar and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.5, the Deposit Trustee) pursuant to Section 8.4 or Section 8.8 in respect of the outstanding Notes shall be held in trust, shall not be invested, and shall be applied by the Deposit Trustee in accordance with the provisions of such Notes and this Indenture to the payment, either directly or through any Paying Agent (including the Issuer or any Subsidiary acting as Paying Agent) as the Deposit Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, if any, but such money need not be segregated from other funds except to the extent required by law.
The Issuer shall pay and indemnify the Deposit Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable U.S. Government Obligations deposited pursuant to Section 8.4 or Section 8.8 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article VIII to the contrary notwithstanding, the Deposit Trustee shall deliver or pay to the Issuer from time to time upon the written request of the Issuer and be relieved of all liability with respect to any U.S. dollars or non-callable U.S. Government Obligations held by it as provided in Section 8.4 or Section 8.8 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Deposit Trustee (which may be the opinion delivered under Section 8.4(1)), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance or satisfaction and discharge, as the case may be.
Section 8.6. Repayment to Issuer. Subject to any applicable abandoned property law, any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of the principal of, premium, if any, or interest, if any, on any Note and remaining unclaimed for two years after such principal and premium, if any, or interest has become due and payable shall be paid to the Issuer on its written request or (if then held by the Issuer) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof; and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining shall be repaid to the Issuer.
Section 8.7. Reinstatement. If the Trustee or Paying Agent is unable to apply any U.S. dollars or U.S. Government Obligations in accordance with Section 8.2, Section 8.3 or Section 8.8, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations of the Issuer and the Guarantors under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to
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Section 8.2, Section 8.3 or Section 8.8 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.2, Section 8.3 or Section 8.8, as the case may be; provided, however, that, if the Issuer makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.
Section 8.8. Discharge. This Indenture will be discharged and will cease to be of further effect (except as to rights of registration of transfer or exchange of Notes which shall survive until all Notes have been canceled and the rights, protections and immunities of the Trustee) as to all outstanding Notes when either:
(1) all the Notes that have been authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from this trust), have been delivered to the Trustee for cancellation; or
(2) (A) all Notes not delivered to the Trustee for cancellation otherwise (i) have become due and payable, (ii) will become due and payable, or may be called for redemption, within one year or (iii) have been called for redemption pursuant to Section 3.7 and, in any case, the Issuer 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, U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest (which in the case of a deposit of U.S. Government Obligations will be in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants selected by the Issuer and delivered to the Trustee) to pay and discharge the entire Indebtedness (including all principal and accrued interest, if any) on the Notes not theretofore delivered to the Trustee for cancellation (provided that if such redemption is made as provided under Section 3.7(a), (x) the amount of cash in U.S. dollars, non-callable Government Securities, or a combination thereof, that must be irrevocably deposited will be determined using an assumed Applicable Premium calculated as of the date of such deposit and (y) the depositor must irrevocably deposit or cause to be deposited additional money in trust on the redemption date as necessary to pay the Applicable Premium as determined by such date) (any such amount, the Applicable Premium Deficit) (it being understood that any satisfaction and discharge shall be subject to the condition subsequent that such Applicable Premium Deficit is in fact paid); provided that the Trustee shall have no liability whatsoever in the event that such Applicable Premium Deficit is not in fact paid after any satisfaction and discharge of this Indenture and that any Applicable Premium Deficit will be set forth in an Officers Certificate delivered to the Trustee simultaneously with the deposit of such Applicable Premium Deficit that confirms that such Applicable Premium Deficit will be applied toward such redemption);
(B) the Issuer has paid or caused to be paid all other sums payable by it under this Indenture; and
(C) the Issuer has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or on the date of redemption, as the case may be.
In addition, the Issuer must deliver an Officers Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been complied with.
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After the Notes are no longer outstanding, the Issuers and the Guarantors obligations in Section 7.6, Section 8.5 and Section 8.7 shall survive any discharge pursuant to this Section 8.8.
After such delivery or irrevocable deposit and receipt of the Officers Certificate and Opinion of Counsel, the Trustee, upon written request, shall acknowledge in writing the discharge of the Issuers obligations under the Notes and this Indenture except for those surviving obligations specified above.
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1. Without Consent of Holders of the Notes. Notwithstanding Section 9.2, without the consent of any Holders, the Issuer, the Guarantors and the Trustee, at any time and from time to time, may amend or supplement this Indenture, the Guarantees or the Notes issued hereunder for any of the following purposes:
(1) to cure any ambiguity, 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 Issuers or a Guarantors obligations to the Holders in the case of a merger, consolidation or sale of all or substantially all of the Issuers or such Guarantors assets, or sale, lease, transfer, conveyance or other disposition or assignment in accordance with Section 5.1;
(4) to add any Guarantee or to effect the release of any Guarantor from any of its obligations under its Guarantee or the provisions of this Indenture (to the extent in accordance with this Indenture);
(5) to make any change that would provide any additional rights or benefits to the Holders or that does not materially adversely affect the rights of any Holder;
(6) to secure the Notes or any Guarantees or any other obligation under this Indenture;
(7) to evidence and provide for the acceptance of appointment by successor trustees;
(8) to conform the text of this Indenture or the Notes to any provision of the Description of notes contained in the Offering Memorandum, to the extent that such provision in the Description of the Notes was intended to be a substantially verbatim recitation of a provision of this Indenture, the Guarantees or the Notes, as evidenced by an Officers Certificate of the Issuer; or
(9) to provide for the issuance of Additional Notes in accordance with this Indenture.
After an amendment under this Indenture becomes effective, the Issuer shall deliver to Holders of the Notes a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of the amendment.
Section 9.2. With Consent of Holders of Notes. With the consent of the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes), the Issuer, the Guarantors and the Trustee may amend or supplement this Indenture, the Notes or any
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Guarantees or, subject to Section 6.7, waive any existing Default or Event of Default or compliance with any provision of this Indenture or the Notes; provided, however, that no such amendment, supplement or waiver shall, without the consent of the Holder of each outstanding Note affected thereby (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes):
(1) reduce, or change the maturity of, the principal of any Note;
(2) reduce the rate of or extend the time for payment of interest on any Note;
(3) reduce any premium payable upon redemption of the Notes or change the date on which any Notes are subject to redemption (other than the notice provisions) or waive any payment with respect to the redemption of the Notes; provided, however, that solely for the avoidance of doubt, and without any other implication, any purchase or repurchase of Notes (including pursuant to Section 4.10 and Section 4.13) shall not be deemed a redemption of the Notes;
(4) make any Note payable in money or currency other than that stated in the Notes;
(5) modify or change any provision of this Indenture or the related definitions to affect the ranking of the Notes or any Guarantee in a manner that adversely affects the Holders;
(6) reduce the percentage of Holders necessary to consent to an amendment or waiver to this Indenture or the Notes;
(7) waive a default in the payment of principal of or premium or interest, if any, on any Notes (except a rescission of acceleration of the Notes by the Holders thereof as provided in this Indenture and a waiver of the payment default that resulted from such acceleration);
(8) modify the contractual rights of Holders to receive payments of principal of or interest, if any, on the Notes on or after the due date therefor or to institute suit for the enforcement of any payment on the Notes;
(9) release any Guarantor from any of its obligations under its Guarantee or this Indenture, except as permitted by this Indenture; or
(10) make any change in these amendment and waiver provisions.
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 or waiver, but it shall be sufficient if such consent approves the substance thereof.
Section 9.3. Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holders Note, even if notation of the consent is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. When an amendment, supplement or waiver becomes effective in accordance with its terms, it thereafter binds every Holder.
The Issuer may, but shall not be obligated to, fix a record date for determining which Holders consent to such amendment, supplement or waiver.
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Section 9.4. Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuer in exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
Section 9.5. Trustee to Sign Amendments, Etc. The Trustee shall sign any amended or supplemental indenture authorized pursuant to this Article IX if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. In signing or refusing to sign any amendment or supplemental indenture, the Trustee shall be provided with and (subject to Section 7.1) shall be fully protected in relying upon an Officers Certificate and an Opinion of Counsel stating that the execution of such amendment or supplemental indenture is authorized or permitted by this Indenture and that all conditions precedent thereto have been met or waived.
ARTICLE X
GUARANTEES
Section 10.1. Guarantees.
(a) Each Guarantor hereby jointly and severally, fully and unconditionally guarantees the Notes and obligations of the Issuer hereunder and thereunder, and guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee, that: (i) the principal of and premium, if any, and interest, if any, on the Notes shall be paid in full when due, whether at Stated Maturity, by acceleration, call for redemption or otherwise, together with interest on the overdue principal, if any, and interest on any overdue interest, if any, to the extent lawful, and all other Obligations of the Issuer to the Holders or the Trustee under this Indenture or the Notes shall be paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes or of any such other obligations, the same shall be paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise. Each of the Guarantees shall be a guarantee of payment and not of collection.
(b) Each Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor.
(c) Each Guarantor hereby waives the benefits of diligence, presentment, demand for payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer or any other Person, protest, notice and all demands whatsoever and covenants that the Guarantee of such Guarantor shall not be discharged as to any Note or this Indenture except by complete performance of the obligations contained in such Note and this Indenture and such Guarantee. Each of the Guarantors hereby agrees that, in the event of a Default in payment of principal or premium, if any, or interest on any Note, whether at its Stated Maturity, by acceleration, call for redemption, purchase or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Note, subject to the terms and conditions set forth in this Indenture, directly against each of the Guarantors to enforce each such Guarantors Guarantee without first proceeding against the Issuer or any other Guarantor. Each Guarantor agrees that if, after the occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders are prevented by applicable law from exercising their
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respective rights to accelerate the maturity of the Notes, to collect interest on the Notes, or to enforce or exercise any other right or remedy with respect to the Notes, such Guarantor shall pay to the Trustee for the account of the Holders, upon demand therefor, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Trustee or any of the Holders and any other amounts due and owing to the Trustee under this Indenture.
(d) If any Holder or the Trustee is required by any court or otherwise to return to the Issuer or any Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Issuer or any Guarantor, any amount paid by any of them to the Trustee or such Holder, the Guarantee of each of the Guarantors, to the extent theretofore discharged, shall be reinstated in full force and effect. This paragraph (d) shall remain effective notwithstanding any contrary action which may be taken by the Trustee or any Holder in reliance upon such amount required to be returned. This paragraph (d) shall survive the termination of this Indenture.
(e) Each Guarantor further agrees that, as between each Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI for the purposes of the Guarantee of such Guarantor, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article VI, such obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purpose of the Guarantee of such Guarantor.
(f) Each Guarantor that makes a payment for distribution under its Guarantee is entitled upon payment in full of all guaranteed obligations under this Indenture to seek contribution from each other Guarantor in a pro rata amount of such payment based on the respective net assets of all the Guarantors at the time of such payment in accordance with GAAP.
Section 10.2. Execution and Delivery of Guarantee. To evidence its Guarantee set forth in Section 10.1, each Guarantor agrees that this Indenture or a supplemental indenture in substantially the form attached hereto as Exhibit B shall be executed on behalf of such Guarantor by an Officer of such Guarantor (or, if an officer is not available, by a board member or director) on behalf of such Guarantor by manual or facsimile signature. Each Guarantor hereby agrees that its Guarantee set forth in Section 10.1 hereof shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes. In case the Officer, board member or director of such Guarantor whose signature is on this Indenture or supplemental indenture, as applicable, no longer holds office at the time the Trustee authenticates any Note, the Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.
Section 10.3. Severability. In case any provision of any Guarantee 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.
Section 10.4. Limitation of Guarantors Liability. Each Guarantor and by its acceptance hereof each Holder confirms that it is the intention of all such parties that the Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law or the provisions of its local law relating to fraudulent transfer or conveyance. To effectuate the foregoing intention, the Trustee, the Holders and Guarantors hereby irrevocably agree that the obligations of such Guarantor under its Guarantee (other than a company that is a direct or indirect parent of the Issuer) shall be limited to the
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maximum amount that will not, after giving effect to all other contingent and fixed liabilities of such Guarantor (including, without limitation, any guarantees under the Credit Agreement) and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee, result in the obligations of such Guarantor under its Guarantee constituting a fraudulent conveyance, fraudulent preference or fraudulent transfer or otherwise reviewable under applicable law.
Section 10.5. Releases. A Guarantor shall be automatically released of any Obligations under its Guarantee and this Indenture upon:
(a) any sale or other disposition of all or substantially all of the assets of such Guarantor (by merger, consolidation or otherwise) to a Person that is not (either before or after giving effect to such transaction) the Issuer or a Restricted Subsidiary, if the sale or other disposition does not violate Section 4.10 of this Indenture;
(b) any sale, exchange or transfer (by merger, consolidation or otherwise) of the Equity Interests of such Guarantor after which the applicable Guarantor is no longer a Restricted Subsidiary, which sale, exchange or transfer does not violate Section 4.10 of this Indenture;
(c) the proper Designation of such Guarantor by the Issuer as an Unrestricted Subsidiary in accordance with the terms of this Indenture;
(d) the Guarantor ceasing to guarantee Indebtedness of the Issuer and any Guarantor under any Debt Facility (including the ABL Credit Agreement);
(e) if the Issuer exercises its Legal Defeasance option or its Covenant Defeasance option pursuant to Section 8.2 or Section 8.3 or if its Obligations under this Indenture are discharged in accordance with Section 8.8; or
(f) dissolution of such Guarantor; provided no Default has occurred that is continuing.
Upon delivery to the Trustee of an Officers Certificate and an Opinion of Counsel to the effect that the conditions to release of a Guarantors Guarantee set forth above have been satisfied, the Trustee shall execute any documents reasonably requested by the Issuer to evidence such release.
Any Guarantor not released from its obligations under its Guarantee shall remain liable for the full amount of principal of and interest on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article X.
Section 10.6. Benefits Acknowledged. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that its guarantee and waivers pursuant to its Guarantee are knowingly made in contemplation of such benefits.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Concerning the Trust Indenture Act. The TIA shall not be applicable to, and shall not govern, this Indenture, the Notes or the Guarantees.
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Section 11.2. Notices. Any notice, request, direction, instruction or communication by the Issuer, any Guarantor or the Trustee to the others is duly given if in writing and delivered in person or mailed by first class mail (registered or certified, return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, to the addresses set forth below:
If to the Issuer or any Guarantor:
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, Texas 77019
Facsimile: (281) 605-1318
Attention: Chief Financial Officer
If to the Trustee:
Wells Fargo Bank, National Association
1445 Ross Avenue, Suite 4300
Dallas, Texas 75202
Facsimile: (469) 729-7638
Attention: Corporate, Municipal & Escrow Services
The parties hereto, by written notice to the others, may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders and the Trustee) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier promising next Business Day delivery.
Any notice or communication to a Holder and the Trustee shall be mailed by first class mail or by overnight air courier promising next Business Day delivery to its address shown on the register kept by the Registrar. Notwithstanding the foregoing, as long as the Notes are Global Notes, notices to be given to the Holders shall be given to the Depositary, in accordance with its applicable policies as in effect from time to time. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
In respect of this Indenture, the Trustee shall not have any duty or obligation to verify or confirm that the Person sending instructions, directors, reports, notices or other communications or information by electronic transmission is, in fact, a Person authorized to give such instructions, directors, reports notices or other communications or information on behalf of the party purporting to send such electronic transmission; and the Trustee shall not have any liability for any losses, liability, costs or expenses incurred or sustained by any party as a result of such reliance upon or compliance with such instructions directors, reports, notices or other communications or information. Each other party, agrees to assume all risks arising out of the use of electronic methods to submit instructions, directions, reports, notices or other communications or indemnifications to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, notices, reports or other communications or information, and the risks of interception and misuse by third parties.
If a notice or communication is delivered in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it, except in the case of notices or communications given to the Trustee, which shall be effective only upon actual receipt.
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If the Issuer delivers a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time.
Section 11.3. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuer to the Trustee to take any action under this Indenture, the Issuer shall furnish to the Trustee upon request:
(a) an Officers Certificate (which shall include the statements set forth in Section 11.4) in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel (which shall include the statements set forth in Section 11.4) in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
Section 11.4. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or opinion has read and understands such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she 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 satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.
Section 11.5. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. Each of the Agents may make reasonable rules and set reasonable requirements for its functions.
Section 11.6. No Personal Liability of Directors, Officers, Employees and Stockholders. No director, officer, employee, incorporator or stockholder, partner or member of the Issuer or any Guarantor, as such, will have any liability for any indebtedness, obligations or liabilities of the Issuer under the Notes or this Indenture or of any Guarantor under its Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes and the Guarantees.
Section 11.7. Governing Law; Consent to Jurisdiction. THE LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE GUARANTEES. Each of the parties to this Indenture each hereby irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan in The City of New York in any action or proceeding arising out of or relating to the Notes, the Guarantees or this Indenture, and all such parties hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in such New York State or federal court and hereby irrevocably waive, to the fullest extent that they may legally do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.
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Section 11.8. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuer or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
Section 11.9. Successors. All agreements of the Issuer and the Guarantors in this Indenture and the Notes and the Guarantees, as applicable, shall bind their respective successors and assigns. All agreements of the Trustee in this Indenture shall bind its respective successors and assigns.
Section 11.10. Severability. In case any provision in this Indenture or in the Notes 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.
Section 11.11. Execution in Counterparts. This Indenture may be executed in two or more counterparts, which when so executed shall constitute one and the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or 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. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
Section 11.12. Table of Contents, Headings, Etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.
Section 11.13. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing (or, with respect to Global Notes, otherwise in accordance with the rules and procedures of the Depositary); and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the Act of Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Issuer, if made in the manner provided in this Section 11.13.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to such officer the execution thereof. Where such execution is by a signer acting in a capacity other than such signers individual capacity, such certificate or affidavit shall also constitute sufficient proof of such signers authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
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(c) The ownership of Notes shall be proved by the register maintained by the Registrar hereunder.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note.
(e) If the Issuer shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Issuer may, at its option, by or pursuant to a board resolution of the Issuers Board of Directors, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Issuer shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of outstanding Notes have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the outstanding Notes shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date.
Section 11.14. Force Majeure. In no event shall the Trustee or 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, fire, riots, strikes, or work stoppages for any reason, embargoes, governmental actions, 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 U.S. banking industry to resume performance as soon as practicable under the circumstances.
Section 11.15. Legal Holidays. If any scheduled payment date with respect to the Notes falls on a day that is not a Business Day, the payment to be made on such payment date will be made on the next succeeding Business Day with the same force and effect as if made on such payment date, and no additional interest will accrue solely as a result of such delayed payment.
Section 11.16. USA PATRIOT Act. The parties hereto acknowledge that in accordance with Section 326 of the USA PATRIOT Act, 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. The Company agrees that it will provide the Trustee with information about the Issuer as the Trustee may reasonably request in order for the Trustee to satisfy the requirements of the USA PATRIOT Act.
Section 11.17. Waiver of Jury Trial. EACH OF THE ISSUER, ANY GUARANTOR AND THE TRUSTEE HEREBY, AND EACH HOLDER OF A NOTE BY ITS ACCEPTANCE THEREOF, 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 ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY OR HEREBY.
[Signatures on following page]
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COMPANY | ||
NINE ENERGY SERVICE, INC. | ||
By | /s/ Ann G. Fox | |
Name: | Ann G. Fox | |
Title: | President and Chief Executive Officer |
[Signature Page to Indenture]
GUARANTORS | ||
BECKMAN PRODUCTION SERVICES, INC. (DE) | ||
BECKMAN PRODUCTION SERVICES, INC. (MI) | ||
BIG LAKE SERVICES, LLC BIG LAKE SERVICES HOLDCO, LLC CDK INTERMEDIATE, LLC CDK PERFORATING, LLC | ||
CDK PERFORATING HOLDINGS, INC. | ||
CREST PUMPING TECHNOLOGIES, LLC | ||
DAK-TANA WIRELINE, LLC J & R WELL SERVICE, LLC | ||
NINE DOWNHOLE TECHNOLOGIES, LLC | ||
NINE ENERGY SERVICE, LLC | ||
NORTHERN PRODUCTION COMPANY, LLC | ||
NORTHERN STATES COMPLETIONS, INC. | ||
PEAK PRESSURE CONTROL, LLC R & S WELL SERVICE, INC. REDZONE COIL TUBING, LLC REDZONE HOLDCO, LLC SJL WELL SERVICE, LLC | ||
By | /s/ Ann G. Fox | |
Name: | Ann G. Fox | |
Title: | President and Chief Executive Officer |
[Signature Page to Indenture]
TRUSTEE |
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee |
By: | /s/ Patrick Giordano | |
Name: | Patrick Giordano | |
Title: | Vice President |
[Signature Page to Indenture]
EXHIBIT A
FORM OF NOTE
[Global Note Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY OR SUCH OTHER REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE 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 NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSORS NOMINEE.
[Restricted Notes Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OR OTHER 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 OR 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 AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES 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 COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (RULE 144A), TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER AS DEFINED IN RULE 144A 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, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER AND THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM $250,000 PRINCIPAL AMOUNT OF SECURITIES OR (F) PURSUANT TO ANOTHER
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AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANYS AND THE TRUSTEES RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) 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 AFTER THE RESALE RESTRICTION TERMINATION DATE.
BY ITS ACQUISITION OF THIS SECURITY, THE HOLDER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD THIS SECURITY (OR ANY INTEREST HEREIN) CONSTITUTES THE ASSETS OF ANY (A) EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (ERISA), (B) PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE), (C) PLAN (INCLUDING GOVERNMENTAL PLANS (AS DEFINED IN SECTION 3(32) OF ERISA), CHURCH PLANS (AS DEFINED IN SECTION 3(33) OF ERISA), AND NON U.S. PLANS (AS DEFINED IN SECTION 4(B)(4) OF ERISA)) THAT IS SUBJECT TO PROVISIONS UNDER ANY OTHER U.S. OR NON-U.S. FEDERAL, STATE, LOCAL, OR OTHER LAWS, RULES OR REGULATIONS THAT ARE SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (COLLECTIVELY, SIMILAR LAWS), OR (D) OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE PLAN ASSETS OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT DESCRIBED IN CLAUSES (A), (B), (C) AND (D), OR (2) THE ACQUISITION AND HOLDING OF THIS SECURITY (OR ANY INTEREST HEREIN) WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAW.
[Regulation S Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OR OTHER 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 OR 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 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE DATE ON WHICH THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S, ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (RULE 144A), TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER AS DEFINED IN RULE 144A 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, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
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MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER AND THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM $250,000 PRINCIPAL AMOUNT OF SECURITIES OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANYS AND THE TRUSTEES RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) 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 AFTER THE RESALE RESTRICTION TERMINATION DATE. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
BY ITS ACQUISITION OF THIS SECURITY, THE HOLDER THEREOF WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (1) NO PORTION OF THE ASSETS USED BY SUCH HOLDER TO ACQUIRE OR HOLD THIS SECURITY (OR ANY INTEREST HEREIN) CONSTITUTES THE ASSETS OF ANY (A) EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO TITLE I OF THE U.S. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (ERISA), (B) PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER ARRANGEMENT THAT IS SUBJECT TO SECTION 4975 OF THE U.S. INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE CODE), (C) PLAN (INCLUDING GOVERNMENTAL PLANS (AS DEFINED IN SECTION 3(32) OF ERISA), CHURCH PLANS (AS DEFINED IN SECTION 3(33) OF ERISA), AND NON U.S. PLANS (AS DEFINED IN SECTION 4(B)(4) OF ERISA)) THAT IS SUBJECT TO PROVISIONS UNDER ANY OTHER U.S. OR NON-U.S. FEDERAL, STATE, LOCAL, OR OTHER LAWS, RULES OR REGULATIONS THAT ARE SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (COLLECTIVELY, SIMILAR LAWS), OR (D) OF AN ENTITY WHOSE UNDERLYING ASSETS ARE CONSIDERED TO INCLUDE PLAN ASSETS OF ANY SUCH PLAN, ACCOUNT OR ARRANGEMENT DESCRIBED IN CLAUSES (A), (B), (C) AND (D), OR (2) THE ACQUISITION AND HOLDING OF THIS SECURITY (OR ANY INTEREST HEREIN) WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR A SIMILAR VIOLATION UNDER ANY APPLICABLE SIMILAR LAW.
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8.750% Senior Notes due 2023
No. $_______________
CUSIP NO.1
ISIN
Nine Energy Service, Inc. (including any successor thereto) promises to pay to [Cede & Co.]2 or registered assigns, the principal sum of $[] ( UNITED STATES DOLLARS) [(as may be increased or decreased as set forth on the Schedule of Increases and Decreases attached hereto)]3 on November 1, 2023.
Interest Payment Dates: May 1 and November 1, beginning May 1, 2019
Record Dates: April 15 and October 15 (whether or not a Business Day)
Reference is made to further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Note shall not be entitled to any benefits under the Indenture referred to on the reverse hereof or be valid or obligatory for any purpose.
1 | Rule 144A Note CUSIP: 65441VAA9 Rule 144A Note ISIN: US65441VAA98 Regulation S Note CUSIP: U6540LAA2 IAI Note CUSIP: USU6540LAA27 IAI Note ISIN: 65441VAB7 Regulation S Note ISIN: US65441VAB71 |
2 | For Global Notes only. |
3 | For Global Notes only. |
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NINE ENERGY SERVICE, INC. | ||
By: |
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Name: |
| |
Title: |
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This is one of the Notes referred to in the within-mentioned Indenture: | ||
Dated: | ||
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee | ||
By: |
| |
Name: |
| |
Title: | Authorized Signatory |
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(Reverse of 8.750% Senior Note)
8.750% Senior Notes due 2023
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
(1) Interest. Nine Energy Service, Inc., a Delaware corporation, and any successor thereto (the Issuer) promises to pay interest on the unpaid principal amount of this 8.750% Senior Note due 2023 (a Note) at a fixed rate of 8.750% per annum. The Issuer will pay interest in U.S. dollars semiannually in arrears on May 1 and November 1, commencing May 1, 2019 (each an Interest Payment Date) or if any such day is not a Business Day, on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date, and no additional interest shall accrue solely as a result of such delayed payment. Interest on the Notes shall accrue from the most recent date to which interest has been paid, or, if no interest has been paid, from and including the date of issuance. The Issuer shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period), at the same rate to the extent lawful. Interest shall be computed on the basis of a 360-day year comprised of twelve 30-day months.
(2) Method of Payment. The Issuer will pay interest on the Notes (except defaulted interest) on the applicable Interest Payment Date to the Persons who are registered Holders at the close of business on the April 15 and October 15 preceding the Interest Payment Date (whether or not a Business Day), even if such Notes are cancelled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. If a Holder of at least $5,000,000 aggregate principal amount of the Notes in physical, certificated form has given written wire transfer instructions to the Trustee at least ten Business Days prior to the applicable Interest Payment Date, the Issuer will make all payments of principal, premium, and interest, if any, on such Holders Notes by wire transfer of immediately available funds to the account in New York specified in those instructions. Otherwise, payments on the Notes will be made at the office or agency of the Trustee or Paying Agent in the City and State of New York unless the Issuer elects to make interest payments by check mailed to the Holders at their addresses set forth in the register of Holders. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
Any payments of principal of this Note prior to Stated Maturity shall be binding upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. The final principal amount due and payable at the maturity of this Note shall be payable only upon presentation and surrender of this Note at an office of the Trustee or the Trustees agent appointed for such purposes. Payments in respect of Global Notes will be made by wire transfer of immediately available funds to the Depositary.
(3) Paying Agent and Registrar. Initially, Wells Fargo Bank, National Association shall act as Paying Agent and Registrar. The Issuer may change any Paying Agent or Registrar without notice to any Holder, and the Issuer and/or any Restricted Subsidiaries may act as Paying Agent or Registrar.
(4) Indenture. The Issuer issued the Notes under an Indenture, dated as of October 25, 2018 (the Indenture), among the Issuer, the Guarantors thereto and the Trustee. The terms of the Notes include those stated in the Indenture. To the extent the provisions of this Note are inconsistent with the provisions of the Indenture, the Indenture shall govern. The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of such terms. The Initial Notes issued on the Issue Date were initially issued in an aggregate principal amount of $400,000,000. The Indenture permits the issuance of Additional Notes subject to compliance with certain conditions.
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The payment of principal and interest on the Notes and all other amounts under the Indenture is unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Guarantors.
(5) Redemption and Repurchase. The Notes are subject to optional redemption, and may be the subject of Special Mandatory Redemption, a Net Proceeds Offer and a Change of Control Offer, as further described in the Indenture. Except as provided in the Indenture, the Issuer shall not be required to make mandatory redemption or sinking fund payments with respect to Notes.
(6) Denominations, Transfer, Exchange. The Notes are in registered form without coupons in initial minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.
The transfer of the Notes may be registered and the Notes may be exchanged as provided in the Indenture. The Registrar, the Trustee and the Issuer may require a Holder, among other things, to furnish appropriate endorsements and transfer documents, and the Issuer may require a Holder to pay any stamp or transfer tax or similar government charge required by law or permitted by the Indenture in accordance with Section 2.6(g)(2) of the Indenture. The Registrar is not required (A) to issue, to register the transfer of or to exchange Notes during a period beginning at the opening of 15 days before the day of any selection of Notes for redemption and ending at the close of business on the day of such selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date.
(7) Persons Deemed Owners. The registered Holder of a Note will be treated as its owner for all purposes.
(8) Amendment, Supplement and Waiver. The Indenture, the Notes and the Guarantees may be amended or supplemented, and compliance with provisions thereof may be waived, in each case as provided in the Indenture.
(9) Defaults and Remedies. The remedies of Holders in the event of a Default are as set forth in the Indenture.
(10) No Recourse Against Others. No director, officer, employee, incorporator or stockholder, partner or member of the Issuer or any Guarantor, as such, will have any liability for any indebtedness, obligations or liabilities of the Issuer under the Notes or the Indenture or of any Guarantor under its Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes and the Guarantees, to the extent permitted by applicable law.
(11) Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.
(12) Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
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(13) CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a convenience to the Holders. 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, and reliance may be placed only on the other identification numbers placed thereon.
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The Issuer shall furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, Texas 77019
Facsimile: 1-281-605-1318
Attention: General Counsel
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ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to
(Insert assignees soc. sec. or tax I.D. no.)
(Print or type assignees name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Issuer. The agent may substitute another to act for him.
| ||
Date: _____________
| ||
Your Signature: |
| |
(Sign exactly as your name appears on the face of this Note) | ||
Signature guarantee: |
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10 or Section 4.13 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.13
If you want to elect to have only part of the Note purchased by the Issuer pursuant to Section 4.10 or Section 4.13 of the Indenture, state the amount you elect to have purchased: $
Date: _____________ | ||
Your Signature: |
| |
(Sign exactly as your name appears on the face of this Note) | ||
Tax Identification No.: | ||
Signature guarantee: |
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[INCLUDE IN TRANSFER RESTRICTED NOTES]
CERTIFICATE TO BE DELIVERED UPON
EXCHANGE OF TRANSFER RESTRICTED NOTES
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, Texas 77019
Facsimile: 1-281-605-1318
Attention: Chief Financial Officer
Wells Fargo Bank, National Association
Corporate Trust DAPS REORG
600 Fourth Street South, 7th Floor
MAC N9300-070
Minneapolis, MN 55415
Phone: 1-800-344-5128
Fax: 1-866-969-1290
Email: dapsreorg@wellsfargo.com
Re: CUSIP NO.
Reference is hereby made to that certain Indenture dated October 25, 2018 (the Indenture) among Nine Energy Service, Inc. (the Issuer), the guarantors named therein, and Wells Fargo Bank, National Association, as trustee (the Trustee). Capitalized terms used but not defined herein shall have the meanings set forth in the Indenture.
This certificate relates to $ principal amount of Notes held in (check applicable space) book-entry or definitive form by the undersigned.
The undersigned (transferor) (check one box below):
☐ | hereby requests the Registrar to deliver in exchange for its beneficial interest in the Global Note held by the Depositary a Note or Notes in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Note (or the portion thereof indicated above), in accordance with Section 2.6 of the Indenture; |
☐ | hereby requests the Trustee to exchange a Note or Notes to (transferee). |
In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the periods referred to in Rule 144(d) under the Securities Act of 1933, as amended, the undersigned confirms that such Notes are being transferred in accordance with its terms:
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CHECK ONE BOX BELOW:
(1) ☐ to the Issuer or any of its subsidiaries; or
(2) ☐ pursuant to a registration statement that has been declared effective under the Securities Act of 1933, as amended; or
(3) ☐ inside the United States to a qualified institutional buyer (as defined in Rule 144A under the Securities Act of 1933, as amended) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A under the Securities Act of 1933, as amended, in each case pursuant to and in compliance with Rule 144A thereunder; or
(4) ☐ outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act of 1933, as amended, in compliance with Rule 904 thereunder; or
(5) ☐ to an institutional accredited investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act of 1933, as amended, that is not a qualified institutional buyer and that is purchasing for its own account or for the account of another institutional accredited investor; or
(6) ☐ pursuant to another available exemption from the registration requirements of the Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Registrar will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof.
|
Signature |
Signature Guarantee: |
| |
(Signature must be guaranteed by a participant in a recognized signature guarantee medallion program) |
TO BE COMPLETED BY PURCHASER IF (2) 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 each of it and any such account is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act of 1933, as amended (Rule 144A), 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 Issuer 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 undersigneds foregoing representations in order to claim the exemption from registration provided by Rule 144A.
[NAME OF TRANSFEREE] |
|
NOTICE: To be executed by an executive officer, if an entity |
Dated: _________________________ |
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[INCLUDE IN NOTES BEARING THE REGULATION S LEGEND]
CERTIFICATE TO BE DELIVERED UPON
EXCHANGE OF NOTES BEARING THE REGULATION S LEGEND
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, Texas 77019
Facsimile: 1-281-605-1318
Attention: Chief Financial Officer
Wells Fargo Bank, National Association
Corporate Trust DAPS REORG
600 Fourth Street South, 7th Floor
MAC N9300-070
Minneapolis, MN 55415
Phone: 1-800-344-5128
Fax: 1-866-969-1290
Email: dapsreorg@wellsfargo.com
Re: CUSIP NO.
Reference is hereby made to that certain Indenture dated October 25, 2018 (the Indenture) among Nine Energy Service, Inc. (the Issuer), the guarantors named therein, and Wells Fargo Bank, National Association, as trustee (the Trustee). Capitalized terms used but not defined herein shall have the meanings set forth in the Indenture.
This certificate relates to $ principal amount of Notes held in (check applicable space) book-entry or definitive form by the undersigned.
The undersigned (transferor) (check one box below):
☐ | hereby requests the Registrar to deliver in exchange for its beneficial interest in the Global Note held by the Depositary a Note or Notes in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Note (or the portion thereof indicated above), in accordance with Section 2.6 of the Indenture; |
☐ | hereby requests the Trustee to exchange a Note or Notes to (transferee). |
In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the Restricted Period (as defined in the Indenture), the undersigned confirms that such Notes are being transferred in accordance with its terms:
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CHECK ONE BOX BELOW:
(1) ☐ to the Issuer or any of its subsidiaries; or
(2) ☐ pursuant to a registration statement that has been declared effective under the Securities Act of 1933, as amended; or
(3) ☐ inside the United States to a qualified institutional buyer (as defined in Rule 144A under the Securities Act of 1933, as amended) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A under the Securities Act of 1933, as amended, in each case pursuant to and in compliance with Rule 144A thereunder; or
(4) ☐ outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act of 1933, as amended, in compliance with Rule 904 thereunder; or
(5) ☐ to an institutional accredited investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act of 1933, as amended, that is not a qualified institutional buyer and that is purchasing for its own account or for the account of another institutional accredited investor; or
(6) ☐ pursuant to another available exemption from the registration requirements of the Securities Act of 1933, as amended.
Prior to the expiration of the Restricted Period, unless one of the boxes is checked, the Registrar will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof.
|
Signature |
Signature Guarantee: |
| |
(Signature must be guaranteed by a participant in a recognized signature guarantee medallion program) |
TO BE COMPLETED BY PURCHASER IF (2) 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 each of it and any such account is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act of 1933, as amended (Rule 144A), 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 Issuer 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 undersigneds foregoing representations in order to claim the exemption from registration provided by Rule 144A.
[NAME OF TRANSFEREE] |
|
NOTICE: To be executed by an executive officer, if an entity |
Dated: _________________________ |
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SCHEDULE OF INCREASES AND DECREASES OF 8.750% SENIOR NOTES DUE 2023
The initial outstanding principal amount of this Global Note is $ . The following transfers, exchanges and redemption of this Global Note have been made:
Date of Transfer, Exchange or Redemption |
Amount of Decrease in |
Amount of Increase in |
Principal Amount of this |
Signature of Trustee or Note Custodian | ||||
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EXHIBIT B
[FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED
BY SUBSEQUENT GUARANTORS]
This Supplemental Indenture and Guarantee, dated as of [], 2018 (this Supplemental Indenture or Guarantee), among (the New Guarantor), Nine Energy Service, Inc. (together with its successors and assigns, the Issuer), each other then-existing Guarantor under the Indenture referred to below (the Guarantors), and Wells Fargo Bank, National Association, as Trustee, paying agent and registrar under such Indenture.
W I T N E S S E T H:
WHEREAS, the Issuer, the Guarantors and the Trustee have heretofore executed and delivered an Indenture, dated as of October 25, 2018 (as amended, supplemented, waived or otherwise modified, the Indenture), providing for the issuance of an unlimited aggregate principal amount 8.750% Senior Notes due 2023 of the Issuer (the Notes);
WHEREAS, Section 4.15 of the Indenture provides that the Issuer will cause any Restricted Subsidiary of the Issuer that is not a Guarantor, other than a Foreign Subsidiary, that guarantees any Indebtedness of the Issuer or any Guarantor under a Debt Facility, to execute and deliver a Guarantee with respect to the Notes on the same terms and conditions as those set forth in the Indenture.
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee, the Issuer and the Guarantors are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of any Holder to add an additional Guarantor.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Guarantor, the Issuer, the existing Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
ARTICLE I
Definitions
SECTION 1.1 Defined Terms. As used in this Supplemental Indenture, capitalized terms defined in the Indenture or in the preamble or recitals thereto 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; Guarantee
SECTION 2.1 Agreement to be Bound. The New Guarantor hereby becomes a party to the Indenture as a Guarantor and as such shall have all of the rights and be subject to all of the obligations and agreements of a Guarantor under the Indenture, including Article X thereof.
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ARTICLE III
Miscellaneous
SECTION 3.1 Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
SECTION 3.2 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 3.3 Ratification of Indenture; Supplemental Indentures Part of Indenture; No Liability of Trustee. 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 a Note 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 the New Guarantors Guarantee. Additionally, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Issuer, the New Guarantor and the Guarantors, and the Trustee makes no representation with respect to any such matters.
SECTION 3.4 Counterparts. This Supplemental Indenture may be executed in two or more counterparts, which when so executed shall constitute one and the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
SECTION 3.5 Headings. The headings of the Articles and the sections in this Guarantee are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.
NINE ENERGY SERVICE, INC. |
By: |
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Name: |
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Title: |
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[EXISTING GUARANTORS] |
By: |
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Name: |
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Title: |
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[NEW GUARANTOR], as a Guarantor |
By: |
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Name: |
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Title: |
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WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee |
By: |
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Name: |
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Title: |
|
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EXHIBIT C
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS PURSUANT TO RULE 144A]
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, Texas 77019
Facsimile: 1-281-605-1318
Attention: Chief Financial Officer
Wells Fargo Bank, National Association
Corporate Trust DAPS REORG
600 Fourth Street South, 7th Floor
MAC N9300-070
Minneapolis, MN 55415
Phone: 1-800-344-5128
Fax: 1-866-969-1290
Email: dapsreorg@wellsfargo.com
Re: Nine Energy Service, Inc. (the Issuer) 8.750% Senior Notes due 2023 (the Notes)
Ladies and Gentlemen:
In connection with our proposed sale of $[] aggregate principal amount at maturity of the Notes (CUSIP No. []), we hereby certify that such transfer is being effected pursuant to and in accordance with Rule 144A (Rule 144A) under the United States Securities Act of 1933, as amended (the Securities Act), and, accordingly, we hereby further certify that the Notes are being transferred to a person that we reasonably believe is purchasing the Notes for its own account, or for one or more accounts with respect to which such person exercises sole investment discretion, and such person and each such account is a qualified institutional buyer within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Notes are being transferred in compliance with any applicable blue sky securities laws of any state of the United States.
The Issuer and you are entitled to rely 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.
Very truly yours, |
[NAME OF TRANSFEROR] |
By: |
| |
Name: |
| |
Title: | Authorized Signature |
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EXHIBIT D
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S]
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, Texas 77019
Facsimile: 1-281-605-1318
Attention: Chief Financial Officer
Wells Fargo Bank, National Association
Corporate Trust DAPS REORG
600 Fourth Street South, 7th Floor
MAC N9300-070
Minneapolis, MN 55415
Phone: 1-800-344-5128
Fax: 1-866-969-1290
Email: dapsreorg@wellsfargo.com
Re: Nine Energy Service, Inc. (the Issuer) 8.750% Senior Notes due 2023 (the Notes)
Ladies and Gentlemen:
In connection with our proposed sale of $[] aggregate principal amount of the Notes (CUSIP No. []), we confirm that such sale has been effected pursuant to and in accordance with Regulation S (Regulation S) under the U.S. Securities Act of 1933, as amended (the Securities Act), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United States;
(2) either (a) 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 (b) 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;
(3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and
(4) 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) or Rule 904(b) of Regulation S are applicable thereto, we confirm that such sale has been made in accordance with the applicable provisions of Rule 903(b) or Rule 904(b), as the case may be.
D-1
The Issuer and you are entitled to rely 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: |
| |
Name: |
| |
Title: | Authorized Signature |
D-2
EXHIBIT E
[FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS TO AN IAI]
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, Texas 77019
Facsimile: 1-281-605-1318
Attention: Chief Financial Officer
Wells Fargo Bank, National Association
Corporate Trust DAPS REORG
600 Fourth Street South, 7th Floor
MAC N9300-070
Minneapolis, MN 55415
Phone: 1-800-344-5128
Fax: 1-866-969-1290
Email: dapsreorg@wellsfargo.com
Re: Nine Energy Service, Inc. (the Issuer) 8.750% Senior Notes due 2023 (the Notes)
Ladies and Gentlemen:
In connection with our proposed sale of $[] aggregate principal amount at maturity of the Notes (CUSIP No. []), we hereby certify that such transfer is being effected to an institutional accredited investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act of 1933 that is not a qualified institutional buyer and that is purchasing for its own account or for the account of another institutional accredited investor.
The Issuer and you are entitled to rely 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.
Very truly yours, | ||
[NAME OF TRANSFEROR] | ||
By: |
| |
Name: |
| |
Title: | Authorized Signature |
E-1
Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this Agreement), dated as of October 25, 2018, is adopted, executed and agreed to, for good and valuable consideration, by and among Nine Energy Service, Inc., a Delaware corporation (the Company), the undersigned former owners of the equity interests of Magnum Oil Tools International, LTD (MOTI), Magnum Oil Tools Canada Ltd. (MOTC) and Magnum Oil Tools GP, LLC (the General Partner and, together with MOTI and MOTC, Magnum) and the other holders that may become party hereto from time to time (each, a Party and collectively, the Parties).
RECITALS
A. This Agreement is being entered into pursuant to the Securities Purchase Agreement, dated as of October 15, 2018 (the Purchase Agreement), by and among the former owners of Magnum (the Magnum Owners), as sellers, Warren Lynn Frazier, in his capacity as seller representative, MOTI Holdco, LLC and Nine Energy Canada Inc., each of which is a wholly-owned subsidiary of the Company, as buyer (the Buyer), the Company, and solely for the purposes of Sections 5.6.2, 5.20 and 5.23 thereof, Garrett Lynn Frazier and Derrick Chase Frazier.
B. In connection with the closing of the transactions contemplated by the Purchase Agreement, on the date hereof, as partial consideration for the sale of the equity interests of Magnum to the Buyer pursuant to the Purchase Agreement, the Company is issuing to the Magnum Owners 5,000,000 shares (the Shares) of the Companys common stock, par value $0.01 per share (Common Stock), pursuant to the terms of the Purchase Agreement.
C. Pursuant to the Purchase Agreement, with respect to the Shares, the Company has agreed to provide the Magnum Owners certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the Securities Act), and applicable state securities laws.
NOW, THEREFORE, for and in consideration of the Recitals, the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
AGREEMENTS
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. When used in this Agreement, the following terms shall have the meanings indicated.
Affiliate means, with respect to a particular Person, any Person Controlling, Controlled by or Under Common Control with such Person. With respect to a natural person, such persons Affiliate shall also include such persons spouse, children, brothers, sisters, parents, spouses parents, the trustee of any trust that treats such natural person or the persons as mentioned above as beneficiary or the object of such trust, or any entities that are Controlled by the foregoing persons.
Agreement has the meaning assigned such term in the introductory paragraph.
Board means the board of directors of the Company.
Business Day means any day except Saturday, Sunday or any other day on which commercial banks located in Texas are authorized or required by law to be closed for business.
Buyer has the meaning assigned such term in the Recitals.
Common Stock has the meaning assigned such term in the Recitals.
Company has the meaning assigned such term in the introductory paragraph.
Control (including the correlative terms Controlling, Controlled by and Under Common Control with) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or any partnership or other ownership interest, by contract or otherwise) of a Person.
Demand Request is defined in Section 2.1.1.
Exchange Act means the Securities Exchange Act of 1934, as amended.
FINRA means the Financial Industry Regulatory Authority, Inc.
General Partner has the meaning assigned such term in the introductory paragraph.
Holders means the Magnum Owners, in each case, for so long as such Person owns Registrable Securities; provided, however, that a Person shall cease to be a Holder when such Person owns less than 4% of the then outstanding shares of Common Stock and such Person may dispose of all Registrable Securities then owned by such Person pursuant to Rule 144 (or any successor rule) under the Securities Act without volume or manner-of-sale restrictions and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144(c)(1) (or any successor rule).
Indemnified Party is defined in Section 7.3.
Indemnifying Party is defined in Section 7.3.
Inspectors is defined in Section 5.1(i).
Magnum has the meaning assigned such term in the introductory paragraph.
Magnum Owners has the meaning assigned such term in the Recitals.
Majority Holders means, as of the time of determination, the Holders that hold the majority of the Registrable Securities.
Material Adverse Effect is defined in Section 2.5.
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MOTC has the meaning assigned such term in the introductory paragraph.
MOTI has the meaning assigned such term in the introductory paragraph.
Participating Holders means the Requesting Holders and the Holders that request to participate in an Underwritten Shelf Takedown Demand pursuant to Section 2.3.2.
Party and Parties has the meaning assigned such terms in the introductory paragraph.
Person means any natural person, firm, limited partnership, general partnership, joint stock company, joint venture, association, corporation, limited liability company, company, trust, bank trust company, land trust, business trust or other organization whether or not a legal entity, and any government or an agency or political subdivision thereof.
Piggyback Offering is defined in Section 3.1.2.
Piggyback Registration Statement is defined in Section 3.1.1.
Purchase Agreement has the meaning assigned such term in the Recitals.
Records is defined in Section 5.1(i).
Registrable Securities means the Shares, and any other securities issued or issuable with respect to such Shares by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization; provided, that any Registrable Security will cease to be a Registrable Security when (a) a registration statement covering such Registrable Security has been declared effective by the SEC and it has been disposed of pursuant to such effective registration statement, (b) it is sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met, (c)(i) it has been otherwise transferred, (ii) the Company has delivered a new certificate or other evidence of ownership for it not bearing a restrictive legend, and (iii) it may be resold without subsequent registration under the Securities Act, or (d) it is held by a Person that is a transferee that has not taken valid assignment of the rights provided in this Agreement pursuant to Section 9.1 or who is otherwise not a Holder in accordance with the provisos to the definition of Holder provided for herein.
Registration Expenses is defined in Section 6.1.1.
Requesting Holders means the Holders who make an Underwritten Shelf Takedown Demand pursuant to Section 2.3.1.
Required Filing Date is defined in Section 2.1.2.
SCF Holders means SCF-VII, L.P., a Delaware limited partnership, and any of its Affiliates that holds Common Stock and each transferee of SCF Registrable Securities (as defined in the Stockholders Agreement) if such transfer was permitted by the Stockholders Agreement.
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SEC means the Securities and Exchange Commission or any successor governmental agency.
Securities Act has the meaning assigned such term in the Recitals.
Shares has the meaning assigned such term in the Recitals.
Shelf Effectiveness Deadline means as promptly as practicable after the filing of the Shelf Registration Statement, but in no event later than (a) 60 days after the filing thereof or (b) if earlier, three Business Days after the date on which the SEC informs the Company (i) that the SEC will not review the Resale Shelf Registration Statement or (ii) that the Company may request the acceleration of the effectiveness of the Shelf Registration Statement; provided, that if in any case the Shelf Effectiveness Deadline falls on a Saturday, Sunday or any other day which shall be a legal holiday or a day on which the SEC is authorized or required by law or other government actions to close, the Shelf Effectiveness Deadline shall be the following Business Day
Shelf Effectiveness Period means the period from the date of the filing of the Shelf Registration Statement until the date that all Registrable Securities registered thereunder cease to be Registrable Securities.
Shelf Registration Statement is defined in Section 2.1.1.
Stockholders Agreement means that certain Second Amended and Restated Stockholders Agreement of Nine Energy Service, Inc., dated as of February 28, 2017, by and among the Company and the other Persons party thereto and as may be amended from time to time.
Underwriter means a securities dealer that purchases any Registrable Securities as principal and not as part of such dealers market-making activities.
Underwritten Offering means an offering in which Common Stock is sold to an underwriter on a firm commitment basis for reoffering to the public or an offering that is a bought deal with one or more investment banks.
Underwritten Shelf Takedown is defined in Section 2.3.1.
Underwritten Shelf Takedown Demand is defined in Section 2.3.1.
ARTICLE 2
DEMAND RIGHTS
SECTION 2.1 Request for Registration.
2.1.1. Beginning on February 1, 2019, the Majority Holders may make a written request (the Demand Request) to have the Company prepare and file a shelf registration statement under the Securities Act to permit the resale of the Registrable Securities from time to time as permitted by Rule 415 under the Securities Act (or any similar provision adopted by the SEC then in effect) (the Shelf Registration Statement).
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2.1.2. Subject to Section 4.1, the Company shall use its best efforts to file under the Securities Act the Shelf Registration Statement within 30 days after receiving the Demand Request (the Required Filing Date) and shall use commercially reasonable efforts to (a) cause the Shelf Registration Statement to be declared effective by the SEC on or prior to the Shelf Effectiveness Deadline and (b) cause the Shelf Registration Statement to continue to be effective until the expiration of the Shelf Effectiveness Period.
SECTION 2.2 Effective Registration and Expenses. A registration will not count as the Demand Request until the Shelf Registration Statement has become effective unless the Majority Holders withdraw the Demand Request, in which case the Company will be deemed to have fulfilled its obligations set forth in Section 2.1 unless (a) the Holders pay all Registration Expenses in connection with such withdrawn registration, (b) during the registration process material adverse information regarding the Company is disclosed that was not known by the Holders at the time the Demand Request was made, or (c) the Company has not complied in all material respects with its obligations hereunder required to have been taken prior to such withdrawal.
SECTION 2.3 Request for Underwritten Shelf Takedown.
2.3.1. The Majority Holders may make up to two written requests (each, an Underwritten Shelf Takedown Demand) to distribute all or a portion of their Registrable Securities in an Underwritten Offering (an Underwritten Shelf Takedown); provided, however, that if (a) the Shelf Registration Statement is not effective or otherwise not available for the offer or sale of Registrable Securities for at least 18 months between February 1, 2019 and January 31, 2021, then the Majority Holders will have the right to one additional Underwritten Shelf Takedown Demand and (b) if the total number of Registrable Securities to be sold or otherwise distributed in any such Underwritten Offering by the Participating Holders is cutback (pursuant to Section 2.5) to less than 50% of the Registrable Securities requested for distribution by the Participating Holders, then such Underwritten Offering shall not be counted for purposes of the Majority Holders right to two Underwritten Shelf Takedown Demands.
2.3.2. Within two Business Days of delivery of an Underwritten Shelf Takedown Demand to the Company, the Requesting Holders shall notify the other Holders of such demand, and such other Holders shall have the opportunity to include in such Underwritten Shelf Takedown that number of Registrable Securities as such Holders may request in writing to the Company within two Business Days after the date that notice of the Underwritten Shelf Takedown Demand was delivered to the Holders by the Requesting Holders. Subject to Section 2.5, the Company shall include in the Underwritten Shelf Takedown all such Registrable Securities.
2.3.3. At any time prior to the launch of the Underwritten Shelf Takedown, the Majority Holders may withdraw the Underwritten Shelf Takedown Demand. A withdrawn Underwritten Shelf Takedown Demand shall count as one of the permitted Underwritten Shelf Takedowns pursuant to Section 2.3.1 unless (a) the Holders pay all Registration Expenses incurred in connection with such withdrawn offering, (b) during the offering process material adverse information regarding the Company is disclosed that was not known by the Holders at the time the Underwritten Shelf Takedown Demand was made, or (c) the Company has not complied in all material respects with its obligations hereunder required to have been taken prior to such withdrawal.
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SECTION 2.4 Selection of Underwriters. The Requesting Holders shall select the investment banking firm(s) to act as the managing Underwriter(s) in connection with such offering; provided that such selections shall be subject to the consent of the Company, which consent shall not be unreasonably withheld.
SECTION 2.5 Priority on Underwritten Shelf Takedown. If the managing Underwriter(s) advise the Requesting Holders that in their opinion the inclusion of all securities requested to be included in the Underwritten Shelf Takedown (whether by the Company, any other Person, the Requesting Holders or the other Holders) may materially and adversely affect the price or success of the offering (a Material Adverse Effect), then all such securities to be included in such Underwritten Shelf Takedown shall be limited to the securities that the managing Underwriter(s) believe can be sold without a Material Adverse Effect and shall be allocated (a) first, pro rata among the Requesting Holders, the other Holders who properly requested to include their securities in such Underwritten Shelf Takedown pursuant to this Agreement and the SCF Holders and Affiliates of the Company who properly requested to include their securities in such Underwritten Shelf Takedown pursuant to the Stockholders Agreement (based on the number of shares of Common Stock held at such time by such Persons that are Registrable Securities under this Agreement or the Stockholders Agreement), (b) second, to the extent that any additional securities can, in the opinion of such managing Underwriter(s), be sold without a Material Adverse Effect, to the Company, and (c) third, to the extent that any additional securities can, in the opinion of such managing Underwriter(s), be sold without a Material Adverse Effect, to the Companys stockholders who properly requested to include their securities in such Underwritten Shelf Takedown pursuant to an agreement, other than this Agreement or the Stockholders Agreement, with the Company that provides for registration rights in accordance with the terms of such registration rights agreement.
ARTICLE 3
PIGGYBACK RIGHTS
SECTION 3.1 Piggyback Offerings.
3.1.1. If the Shelf Registration Statement has not yet been filed and declared effective or if the Shelf Registration Statement is not then effective, if the Company proposes to file a registration statement under the Securities Act to permit the sale or resale of any shares of Common Stock for its own account or for the account of any holder of Common Stock in an Underwritten Offering (other than a registration statement on Form S-4 or Form S-8 or any substitute form that may be adopted by the SEC or any registration statement filed in connection with an exchange offer or offering of securities solely to the Companys existing security holders or under an employee benefit plan and only on a form that would permit the registration of Registrable Securities) (a Piggyback Registration Statement), then the Company shall as soon as practicable give written notice of such proposed filing to the Holders (but in no event less than five Business Days before the anticipated filing date of such registration statement), and such notice shall offer each Holder the opportunity to register and sell in such Underwritten Offering such number of
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Registrable Securities as each such Holder may request; provided, however, that the Company shall not be required to provide such notice or make such offer to the Holders if the Company has been advised by the managing Underwriter(s) that the inclusion of any Registrable Securities may have a Material Adverse Effect. Each Holder agrees that the fact that such a notice has been delivered shall constitute confidential information, and each Holder agrees not to disclose that such notice has been delivered or effect any public sale or distribution of Common Stock until the earlier of (a) the date and time on which the registration statement prepared in connection with such notice has been filed with the SEC and (b) 20 days after the date of such notice. Subject to Section 3.2, the Company shall include in each such Piggyback Registration Statement and related Underwritten Offering all Registrable Securities requested by the Holders to be included therein by written notice to the Company within 10 days after the Companys notice referred to above was given (in accordance with Section 10.3) (except that (i) if the managing Underwriter(s) determine that marketing factors require a shorter time period and the Holders are so informed in the applicable written notice, the Holders written request for inclusion must be made within five days and (ii) in the case of an overnight offering or a bought deal, the Holders written request for inclusion must be made within one Business Day); provided, however, that the Company may at any time withdraw or cease proceeding with any such registration prior to effectiveness of such registration whether or not any Holder has elected to include any Registrable Securities in such registration. Each Holder shall be permitted to withdraw all or part of such Holders Registrable Securities from a Piggyback Registration Statement at any time prior to the effective date thereof.
3.1.2. On and after the date on which the Shelf Registration Statement has been declared effective, if the Company or any holder of Common Stock proposes to sell any shares of Common Stock in an Underwritten Offering and the Shelf Registration Statement is then effective, then the Company shall promptly give written notice of such proposed offering to the Holders, and such notice shall offer each Holder the opportunity to sell its Registrable Securities in such offering as each such Holder may request (a Piggyback Offering). Each Holder agrees that the fact that such a notice has been delivered shall constitute confidential information, and such Holder agrees not to disclose that such notice has been delivered or effect any public sale or distribution of Common Stock until the earlier of (a) the date and time on which the registration statement or prospectus supplement prepared in connection with such notice has been filed with the SEC and (b) 20 days after the date of such notice. Subject to Section 3.2, the Company shall include in each such Piggyback Offering all Registrable Securities requested to be included therein by written notice to the Company within 10 days after the Companys notice referred to above was given (in accordance with Section 10.3) (except that (i) if the managing Underwriter(s) determine that marketing factors require a shorter time period and the Holders are so informed in the applicable written notice, the Holders written request for inclusion must be made within five days and (ii) in the case of an overnight offering or a bought deal, the Holders written request for inclusion must be made within one Business Day); provided, however, that the Company may at any time withdraw or cease proceeding with any such offering prior to the launch of such offering whether or not any Holder has elected to include any Registrable Securities in such offering. Each Holder shall be permitted to withdraw all or part of such Holders Registrable Securities from a Piggyback Offering at any time prior to the launch of such offering.
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SECTION 3.2 Selection of Underwriters. The Company shall select the investment banking firm(s) to act as the managing Underwriter(s) in connection with an Underwritten Offering pursuant to a Piggyback Registration Statement or a Piggyback Offering if it is initiated as a primary Underwritten Offering on behalf of the Company. The Company shall use commercially reasonable efforts to cause the managing Underwriter(s) of a proposed Underwritten Offering to permit the Registrable Securities requested to be included in the offering to be included on the same terms and conditions as any similar securities included therein. Notwithstanding the foregoing, the Company shall not be required to include any Holders Registrable Securities in such offering unless such Holder complies with the provisions of Section 8.1.
SECTION 3.3 Priority in Underwritten Piggyback Offerings. If the managing Underwriter(s) of a proposed an Underwritten Offering pursuant to a Piggyback Registration Statement or a Piggyback Offering advise the Company that in their opinion the inclusion of all securities requested to be included in such offering (whether by the Company, any other Person or the Holders) may cause a Material Adverse Effect, then all such securities to be included in such offering shall be limited to the securities that the managing Underwriter(s) believe can be sold without a Material Adverse Effect and shall be allocated as follows:
(a) if such offering was initiated by the Company to sell or otherwise distribute securities for its own account, then (i) first to the Company, (ii) second, to the extent that any additional securities can, in the opinion of such managing Underwriter(s), be sold without a Material Adverse Effect, pro rata among the Holders who properly requested to include their securities in such offering pursuant to this Agreement and the SCF Holders and Affiliates of the Company who properly requested to include their securities in such offering pursuant to the Stockholders Agreement (based on the number of shares of Common Stock held at such time by such Persons that are Registrable Securities under this Agreement or the Stockholders Agreement), and (iii) third, to the extent that any additional securities can, in the opinion of such managing Underwriter(s), be sold without a Material Adverse Effect, to the Companys stockholders who properly requested to include their securities in such offering pursuant to an agreement, other than this Agreement or the Stockholders Agreement, with the Company that provides for registration rights in accordance with the terms of such registration rights agreement;
(b) if such offering was initiated by an SCF Holder pursuant to the Stockholders Agreement, then (i) first, pro rata among the SCF Holders who initiated such offering and the other SCF Holders and Affiliates of the Company who properly requested to include their securities in such offering pursuant to the Stockholders Agreement and the Holders who properly requested to include their securities in such offering pursuant to this Agreement (based on the number of shares of Common Stock held at such time by such Persons that are Registrable Securities under this Agreement or the Stockholders Agreement), (ii) second, to the extent that any additional securities can, in the opinion of such managing Underwriter(s), be sold without a Material Adverse Effect, pro rata among the Companys stockholders who properly requested to include their securities in such offering pursuant to an agreement, other than this Agreement or the Stockholders Agreement, with the Company that provides for registration rights in accordance with the terms of such registration rights agreement, and (iii) third, to the extent that any additional securities can, in the opinion of such managing Underwriter(s), be sold without a Material Adverse Effect, to the Company; and
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(c) if such offering was initiated by a stockholder of the Company pursuant to an agreement, other than this Agreement or the Stockholders Agreement, with the Company that provides for registration rights, then (i) first, among the Companys stockholders who initiated such offering or properly requested to include their securities in such offering pursuant to such registration agreement in accordance with the terms of such registration rights agreement, (ii) second, pro rata among the Holders who properly requested to include their securities in such offering pursuant to this Agreement and the SCF Holders and the Affiliates of the Company who properly requested to include their securities in such offering pursuant to the Stockholders Agreement (based on the number of shares of Common Stock held at such time by such Persons that are Registrable Securities under this Agreement or the Stockholders Agreement), and (iii) third, to the extent that any additional securities can, in the opinion of such managing Underwriter(s), be sold without a Material Adverse Effect, to the Company.
ARTICLE 4
DEFERRALS AND SUSPENSIONS
SECTION 4.1 Deferral of Filing. The Company may defer the filing (but not the preparation) of the Shelf Registration Statement if (a) at the time the Company receives the Demand Request, (i) the Company or any of its subsidiaries are engaged in confidential negotiations or other confidential business activities, disclosure of which would be required in such registration statement (but would not be required if such registration statement were not filed) and the Board determines in good faith that such disclosure would be materially detrimental to the Company or (ii) the Company has experienced some other material non-public event or is in possession of material non-public information concerning the Company, and the Board determines in good faith that such disclosure would be materially detrimental to the Company, until a date not later than 60 days after the Required Filing Date or (b) prior to receiving such Demand Request, the Board had determined to effect an Underwritten Offering of the Companys equity securities for the Companys account and the Company had taken substantial steps (including, but not limited to, selecting or entering into a letter of intent with the managing Underwriter(s) for such offering) and is proceeding with reasonable diligence to effect such offering, until a date not later than the end of the lock-up period referred to in the underwriting agreement relating to such Underwritten Offering. A deferral of the filing of the Shelf Registration Statement pursuant to this Section 4.1 shall be lifted, and the Shelf Registration Statement shall be filed as soon as reasonably practicable, if, in the case of a deferral pursuant to clause (a) of the preceding sentence, the negotiations or other activities are disclosed or terminated, or in the case of a deferral pursuant to clause (b) of the preceding sentence, the proposed Underwritten Offering for the Companys account is abandoned. In order to defer the filing of the Shelf Registration Statement pursuant to this Section 4.1, the Company shall promptly, upon determining to seek such deferral, deliver to each Holder a certificate signed by the Chief Executive Officer of the Company stating that the Company is deferring such filing pursuant to this Section 4.1 and the basis therefor in reasonable detail. Within 20 days after receiving such certificate, the Majority Holders may withdraw the Demand Request by giving written notice to the Company, but following such withdrawal, the Holders shall be prohibited from making a Demand Request until the end of the deferral period as contemplated by this Section 4.1. If withdrawn, the Demand Request shall be deemed not to have been made for all purposes of this Agreement. The Company may defer the filing of the Shelf Registration Statement pursuant to this Section 4.1 only two times during any 12-month period.
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SECTION 4.2 Use, and Suspension of Use, of Shelf Registration Statement. The Company shall be entitled to suspend for a reasonable period of time (but not more than 60 consecutive days and not more than 120 days in any 12-month period) the offer or sale of Registrable Securities pursuant to the Shelf Registration Statement by any Holder if (a) a road show is not then in progress with respect to a proposed offering of Registrable Securities by such Holder pursuant to such registration statement and such Holder has not executed an underwriting agreement with respect to a pending sale of Registrable Securities pursuant to such registration statement and (b)(i) the Company or any of its subsidiaries are engaged in confidential negotiations or other confidential business activities, disclosure of which would be required if such registration statement were used (but would not be required if such registration statement were not used) and the Board determines in good faith that such disclosure would be materially detrimental to the Company or (ii) the Company has experienced some other material non-public event or is in possession of material non-public information concerning the Company, and the Board determines in good faith that such disclosure would be materially detrimental to the Company. In order to suspend the use of the Shelf Registration Statement pursuant to this Section 4.2, the Company shall promptly, upon determining to seek such suspension, deliver to the Holders a certificate signed by the Chief Executive Officer of the Company stating that the Company is suspending use of such registration statement pursuant to this Section 4.2 and the basis therefor in reasonable detail.
ARTICLE 5
REGISTRATION PROCEDURES
SECTION 5.1 Registration Procedures. The Company will, at its expense:
(a) | prepare and file with the SEC the Shelf Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution thereof, and use commercially reasonable efforts and proceed diligently and in good faith to cause such filed registration statement to become effective under the Securities Act; provided that before filing the Shelf Registration Statement or any amendments or supplements thereto, the Company will furnish to the Holders and to one counsel reasonably acceptable to the Company selected by the Majority Holders, copies of all such documents proposed to be filed, which documents will be subject to the review of such counsel; provided further, the Company shall not file the Shelf Registration Statement or any amendments or supplements thereto if the Majority Holders or their counsel reasonably object on a timely basis; |
(b) | prepare and file with the SEC such amendments and supplements to the Shelf Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Shelf Registration Statement effective pursuant to Section 2 for the Shelf Effectiveness Period and comply with the provisions of the Securities |
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Act with respect to the disposition of all Registrable Securities covered by the Shelf Registration Statement during such period in accordance with the intended method of disposition set forth in the Shelf Registration Statement; provided, however, that a Holder that has been included on the Shelf Registration Statement may request that such Holders Registrable Securities be removed from the Shelf Registration Statement, in which event the Company shall promptly either withdraw the Shelf Registration Statement or file a post-effective amendment to the Shelf Registration Statement removing such Registrable Securities; |
(c) | furnish to each Holder such number of copies of the Shelf Registration Statement, each amendment and supplement thereto (in each case including all exhibits thereto), the prospectus included therein (including each preliminary prospectus) and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder; |
(d) | notify the Holders promptly, and (if requested by any such Holder) confirm such notice in writing, (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to the Shelf Registration Statement or any post-effective amendment thereto, when the same has become effective under the Securities Act and each applicable state law, (ii) of any request by the SEC or any other federal or state governmental authority for amendments or supplements to the Shelf Registration Statement or related prospectus or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Shelf Registration Statement or the initiation of any proceedings for that purpose, (iv) if at any time the representations or warranties of the Company or any of its subsidiaries contained in any agreement (including any underwriting agreement) contemplated by Section 5.1(i) cease to be true and correct in any material respect, (v) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, (vi) of the happening of any event that makes any statement made in the Shelf Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in such registration statement, prospectus or documents so that, in the case of the Shelf Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vii) of the Companys reasonable determination that a post-effective amendment to the Shelf Registration Statement would be appropriate; |
(e) | use commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of the Shelf Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment; |
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(f) | in connection with any Underwritten Offering, cooperate with the Holders and the managing Underwriter(s) to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depositary Trust Company; |
(g) | in connection with any Underwritten Offering, use commercially reasonable efforts to register or qualify such Registrable Securities as promptly as practicable under such other securities or blue sky laws of such jurisdictions as any Holder or managing Underwriter(s) reasonably (in light of the intended plan of distribution) requests and do any and all other acts and things that may be reasonably necessary or advisable to enable such Holder or managing Underwriter(s) to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 5.1(g), (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction; |
(h) | in connection with any Underwritten Offering, use commercially reasonable efforts to cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities, if any, as may be required of the Company to enable the Holders thereof to consummate the disposition of such Registrable Securities; |
(i) | in connection with any Underwritten Offering, enter into customary agreements (including an underwriting agreement in customary form with customary indemnification provisions) and take such other actions as are reasonably required or advisable in order to expedite or facilitate the disposition of such Registrable Securities, including providing reasonable availability of appropriate members of senior management of the Company to provide customary due diligence assistance in connection with any offering and to participate in customary road show presentations in connection with any Underwritten Offerings in substantially the same manner as they would in an Underwritten Offering by the Company of its Common Stock for its own account, after taking into account the reasonable business requirements of the Company in determining the scheduling and duration of any road show; |
(j) | in connection with any Underwritten Offering, make available for inspection by any Holder, any Underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other professional retained by any such Holder or Underwriter (collectively, the Inspectors) all financial and other records, pertinent corporate documents and properties of the Company (collectively, the Records) as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Companys officers, |
12
directors and employees to supply all information reasonably requested by any such Inspectors in connection with the Shelf Registration Statement. Each Holder agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company or its Affiliates unless and until such is made generally available to the public (other than by such Holder). Each Holder further agrees that it will, as soon as practicable upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company at its expense to undertake appropriate action to prevent disclosure of the Records deemed confidential; |
(k) | in connection with any Underwritten Offering, use commercially reasonable efforts to obtain a comfort letter or comfort letters from the Companys independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters as the managing Underwriter(s) reasonably request; |
(l) | otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering a period of 12 months, beginning within three months after the effective date of the Shelf Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act; |
(m) | use commercially reasonable efforts to cause all Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed or quoted on any inter-dealer quotation system on which similar securities issued by the Company are then quoted; |
(n) | if any event contemplated by Section 5.1(c)(vi) shall occur, as promptly as practicable prepare a supplement or amendment or post-effective amendment to the Shelf Registration Statement or the related prospectus or any document incorporated therein by reference or promptly file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; |
(o) | in connection with any Underwritten Offering, cooperate and assist in any filing required to be made with FINRA and in the performance of any due diligence investigation by any Underwriter, including any qualified independent underwriter, or any Holder; and |
(p) | upon request and subject to appropriate confidentiality obligations, furnish to a Holder copies of any and all transmittal letters or other correspondence with the SEC or any other governmental authority having jurisdiction over the Holders offering of Registrable Securities, in each case relating to an offering by the Holder of Registrable Shares, unless confidential treatment of such correspondence has been requested of the SEC; provided that the Company may excise any information contained therein that would constitute material non-public information. |
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Notwithstanding anything contained herein to the contrary, the Company hereby agrees that the Shelf Registration Statement shall contain all language (including on the prospectus cover page, the principal stockholders chart and the plan of distribution) as may be reasonably requested by a Holder. The Company may require, by written request, each Holder to promptly furnish in writing to the Company such information regarding the distribution of the Registrable Securities as it may from time to time reasonably request and such other information as may be legally required in connection with such registration. Notwithstanding anything herein to the contrary, the Company shall have the right to exclude from any offering the Registrable Securities of any Holder who does not comply with the provisions of the immediately preceding sentence.
Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5.1(d)(vi), such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Shelf Registration Statement until such Holders receipt of the copies of the supplemented or amended prospectus contemplated by Section 5.1(n), and, if so directed by the Company, such Holder will deliver to the Company all copies, other than permanent file copies, then in such Holders possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice.
ARTICLE 6
REGISTRATION EXPENSES
SECTION 6.1 Registration Expenses.
6.1.1. Subject to the provisions in Section 2.2 with respect to a withdrawn Demand Request, in connection with the Shelf Registration Statement, the Company shall pay the following registration expenses (the Registration Expenses):
(a) | all registration and filing fees (including with respect to filings to be made with FINRA); |
(b) | fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities); |
(c) | printing expenses; |
(d) | internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties); |
(e) | the fees and expenses incurred in connection with the listing on an exchange of the Registrable Securities if the Company shall choose, or be required pursuant to Section 5.1(l), to list such Registrable Securities; |
(f) | reasonable fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company (including the expenses of any comfort letters requested pursuant to Section 5.1(j)); |
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(g) | the reasonable fees and expenses of any special experts retained by the Company in connection with such registration; |
(h) | reasonable fees and expenses of one counsel reasonably acceptable to the Company selected by the Majority Holders incurred in connection with the registration of such Registrable Securities thereunder; and |
(i) | fees and expenses of any qualified independent underwriter or other independent appraiser participating in any offering pursuant to Rule 2720 of the FINRA Manual. |
6.1.2. Subject to the provisions in Section 2.3.3 with respect to a withdrawn Underwritten Shelf Takedown Demand, all Registration Expenses incurred in connection with therewith will be borne by the Company.
6.1.3. The Company shall not have any obligation hereunder to pay any underwriting fees, discounts or commissions attributable to the sale of Registrable Securities or, except as provided by clause (b), (h) or (i) above, any out-of-pocket expenses of the Holders (or the agents who manage their accounts) or the fees and disbursements of any Underwriter.
ARTICLE 7
INDEMNIFICATION; CONTRIBUTION
SECTION 7.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless each Holder, each Person, if any, who Controls such Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and the officers, directors, agents, general and limited partners, and employees of each Holder and each such Controlling Person from and against any and all losses, claims, damages, liabilities (joint or several) and expenses (including reasonable costs of investigation and attorneys fees) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Registrable Securities or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses arise out of, or are based upon and in conformity with, any such untrue statement or omission or allegation thereof based upon information furnished in writing to the Company by such Holder or on such Holders behalf expressly for use therein. The Company also agrees to indemnify any Underwriters of the Registrable Securities, their officers and directors and each Person who Controls such Underwriters on substantially the same basis as that of the indemnification of the Holders provided in this Section 7.1.
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SECTION 7.2 Indemnification by Holder. Each Holder agrees to indemnify and hold harmless each other Holder, the Company, each Person, if any, who Controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and the officers, directors, agents and employees of each other Holder, the Company and each such Controlling Person to the same extent as the foregoing indemnity from the Company to such Holder, but only with respect to information furnished in writing by such Holder or on such Holders behalf expressly for use in any registration statement or prospectus relating to the Registrable Securities. The liability of any Holder under this Section 7.2 shall be limited to the aggregate cash and property received by such Holder pursuant to the sale of Registrable Securities covered by such registration statement or prospectus.
SECTION 7.3 Conduct of Indemnification Proceedings. If any action or proceeding (including any governmental investigation) shall be brought or asserted against any Person entitled to indemnification under Section 7.1 or 7.2 (an Indemnified Party) in respect of which indemnity may be sought from any Person who has agreed to provide such indemnification under Section 7.1 or 7.2 (an Indemnifying Party), the Indemnified Party shall give prompt written notice to the Indemnifying Party and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all reasonable expenses of such defense. Such Indemnified Party shall have the right to employ separate counsel in any such action or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (a) the Indemnifying Party has agreed to pay such fees and expenses, (b) the Indemnifying Party fails promptly to assume the defense of such action or proceeding or fails to employ counsel reasonably satisfactory to such Indemnified Party, or (c) the named parties to any such action or proceeding (including any impleaded parties) include both such Indemnified Party and Indemnifying Party (or an Affiliate of the Indemnifying Party), and such Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to the Indemnified Party that are different from or additional to those available to the Indemnifying Party, or there is a conflict of interest on the part of counsel employed by the Indemnifying Party to represent such Indemnified Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of such action or proceeding on behalf of such Indemnified Party). Notwithstanding the foregoing, the Indemnifying Party shall not, in connection with any such action or proceeding or separate but substantially similar related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable at any time for the fees and expenses of more than one separate firm of attorneys (together in each case with appropriate local counsel). The Indemnifying Party shall not be liable for any settlement of any such action or proceeding effected without its written consent (which consent will not be unreasonably withheld), but if settled with its written consent, or if there be a final judgment for the plaintiff in any such action or proceeding, the Indemnifying Party shall indemnify and hold harmless such Indemnified Party from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. The Indemnifying Party shall not consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release, in form and substance reasonably satisfactory to the Indemnified Party, from all liability in respect of such action or proceeding for which such Indemnified Party would be entitled to indemnification hereunder.
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SECTION 7.4 Contribution. If the indemnification provided for in Section 7.1 or 7.2 is unavailable to the Indemnified Parties in respect of any losses, claims, damages, liabilities or judgments referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Parties, shall contribute to the amount paid or payable by such Indemnified Parties as a result of such losses, claims, damages, liabilities and judgments as between the Company on the one hand and each Holder on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of each Holder in connection with the statements or omissions that resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of each Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such Person, and such Persons relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 7.4 were determined by any method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7.4, no Holder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities of such Holder were offered to the public (less any underwriting discounts or commissions) exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
ARTICLE 8
PARTICIPATION IN UNDERWRITTEN OFFERINGS
SECTION 8.1 Participation in Underwritten Offerings. No Holder may participate in any Underwritten Offerings hereunder unless such Holder (a) agrees to sell such Holders Registrable Securities on the basis provided in any underwriting arrangements approved by the Person entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, custody agreements, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and this Agreement; provided that any obligation of such Holder to indemnify any Person pursuant to any such underwriting agreements shall be several, not joint and several, among such Holders selling Registrable Shares, and such liability shall be limited to the proceeds (after deducting underwriting commissions and discounts but before deducting any other expenses) received by such Holder from the sale of his, her or its Registrable Shares pursuant to such Underwritten Offering.
17
ARTICLE 9
TRANSFERS OF REGISTRATION RIGHTS
SECTION 9.1 Transfers of Registration Rights. The provisions hereof will inure to the benefit of, and be binding upon, the successors and assigns of each of the Parties, except as otherwise provided herein; provided, however, that the registration rights granted hereby may be transferred only (a) by operation of law or (b) with the express prior written consent of the Company, provided that any such transferee shall not be entitled to the rights provided in this Agreement unless such transferee of registration rights hereunder agrees to be bound by the terms and conditions hereof and executes and delivers to the Company an acknowledgment and agreement to such effect. Notwithstanding anything to the contrary contained in this Section 9.1, any Holder may elect to transfer all or a portion of its Registrable Securities to any third party without assigning its rights hereunder with respect thereto; provided, that in any such event all rights under this Agreement with respect to the Registrable Securities so transferred shall cease and terminate. References to a Party in this Agreement shall be deemed to include any such transferee or assignee permitted by this Section 9.1.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 Entire Agreement. Except as otherwise expressly provided herein, this Agreement constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the Parties in connection therewith.
SECTION 10.2 Amendment; Termination. The provisions of this Agreement may only be amended by the written consent of the Company and the Majority Holders. The provisions of this Agreement shall terminate and be of no further force or effect (a) as of and following the tenth anniversary of the date hereof or (b) as to any Holder, on such earlier date on which such Holder no longer owns any Registrable Securities; provided that the provisions of Article 7 of this Agreement shall survive for any sales of Registrable Securities prior to such date.
SECTION 10.3 Notices. All notices, requests, claims, demands, waivers and other communications under this Agreement shall be in writing and shall be deemed given (a) five Business Days after the date mailed by registered or certified mail, postage prepaid, return receipt requested, (b) when sent, if sent by e-mail; provided that the e-mail transmission is promptly confirmed by the intended recipient by either telephone or reply e-mail, or (c) when delivered, if delivered by hand, via courier or by overnight delivery service to the intended recipient; provided that such delivery is delivered by 5:30 p.m. (Central time) on a Business Day (otherwise, the following Business Day). A notice will be deemed given pursuant to the foregoing sentence only if properly addressed to a Party at the following address for such Party (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 10.2):
If to the Holders:
c/o Warren Lynn Frazier
5655 Bear Lane, Suite 100
Corpus Christi, TX 78405
E-mail: lynn.frazier.cc@gmail.com
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If to the Company:
Nine Energy Service, Inc.
2001 Kirby Drive, Suite 200
Houston, TX 77019
Attention: General Counsel
E-mail: ted.moore@nineenergyservice.com
with a copy (which shall not constitute notice) to:
Kirkland & Ellis LLP
609 Main Street
Houston, TX 77002
Attention: Matthew R. Pacey
E-mail: matt.pacey@kirkland.com
SECTION 10.4 Binding Effect; Benefits of Agreement. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns and each Holder and its successors and assigns. Except as provided in Section 9.1, neither this Agreement nor any of the rights, benefits or obligations hereunder may be assigned or transferred, by operation of law or otherwise, by any Holder without the prior written consent of the Company.
SECTION 10.5 Governing Law; Waiver of Jury Trial.
10.5.1 This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws that would direct the application of the laws of another jurisdiction.
10.5.2 THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANOTHER IN ANY MATTER WHATSOEVER ARISING OUT OF OR IN RELATION TO OR IN CONNECTION WITH THIS AGREEMENT. FURTHER, NOTHING HEREIN SHALL DIVEST A COURT OF COMPETENT JURISDICTION OF THE RIGHT AND POWER TO GRANT A TEMPORARY RESTRAINING ORDER, TO GRANT TEMPORARY INJUNCTIVE RELIEF, OR TO COMPEL SPECIFIC PERFORMANCE OF ANY DECISION OF AN ARBITRAL TRIBUNAL MADE PURSUANT TO THIS PROVISION.
SECTION 10.6 Severability. If any provision of this Agreement shall be determined to be illegal and unenforceable by any court of law, the remaining provisions shall be severable and enforceable in accordance with their terms.
SECTION 10.7 Counterparts. This Agreement may be executed in one or more counterparts. Each Party agrees that this Agreement and the transactions contemplated hereby may be entered into electronically and that any electronic signature, whether digital or encrypted, used by any Party is intended to authenticate this Agreement and to have the same force and effect as a manual signature. For purposes of this Agreement, an electronic signature means any electronic symbol, designation or process attached to or logically associated with a record, contract, document or instrument and adopted by a Party with the intent to sign such record, contract, document or instrument.
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SECTION 10.8 Section Headings. Headings contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provisions hereof.
[Signature pages follow.]
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its undersigned duly authorized representative as of the date first written above.
NINE ENERGY SERVICE, INC. | ||
By: | /s/ Ann G. Fox | |
Name: | Ann G. Fox | |
Title: | President and Chief Executive Officer | |
MAGNUM OWNERS: | ||
WARREN LYNN FRAZIER | ||
/s/ Warren Lynn Frazier
GARRETT LYNN FRAZIER 2018 DG TRUST | ||
/s/ Leah Schexnayder-Delaune | ||
By: | Leah Schexnayder-Delaune | |
Title: | Trustee | |
DERRICK CHASE FRAZIER 2018 DG TRUST | ||
/s/ Leah Schexnayder-Delaune | ||
By: | Leah Schexnayder-Delaune | |
Title: | Trustee | |
FRAZIER FAMILY FOUNDATION, INC. | ||
/s/ Warren Lynn Frazier | ||
By: | Warren Lynn Frazier | |
Title: | President |
[Signature Page to Registration Rights Agreement]
Exhibit 10.1
CREDIT AGREEMENT
dated as of October 25, 2018
among
NINE ENERGY SERVICE, INC.
as U.S. Borrower
and
NINE ENERGY CANADA INC.,
as Canadian Borrower
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and an Issuing Lender
WELLS FARGO BANK, NATIONAL ASSOCIATION, and
ZIONS BANCORPORATION, N.A. dba AMEGY BANK,
as Issuing Lenders
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
as Lenders
JPMORGAN CHASE BANK, N.A.,
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Page | ||||||
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS |
1 | |||||
Section 1.1 |
Certain Defined Terms |
1 | ||||
Section 1.2 |
Computation of Time Periods |
42 | ||||
Section 1.3 |
Accounting Terms; Changes in GAAP |
42 | ||||
Section 1.4 |
Classes and Types of Loans |
43 | ||||
Section 1.5 |
Other Interpretive Provisions; UCC, PPSA Terms |
43 | ||||
Section 1.6 |
Exchange Rates; Currency Equivalents |
44 | ||||
Section 1.7 |
Currency Matters; Currency Indemnity |
44 | ||||
ARTICLE II CREDIT FACILITIES |
44 | |||||
Section 2.1 |
Commitments |
44 | ||||
Section 2.2 |
Loans and Borrowings |
45 | ||||
Section 2.3 |
Requests for Borrowing; Notice of Borrowing |
46 | ||||
Section 2.4 |
Protective Advances |
47 | ||||
Section 2.5 |
Cash Dominion |
47 | ||||
Section 2.6 |
Letters of Credit |
48 | ||||
Section 2.7 |
Funding of Borrowings |
53 | ||||
Section 2.8 |
Interest Elections |
53 | ||||
Section 2.9 |
Increase, Reduction and Termination of Commitments |
54 | ||||
Section 2.10 |
Repayment of Loans. Evidence of Debt. |
56 | ||||
Section 2.11 |
Prepayment of Loans |
57 | ||||
Section 2.12 |
Fees |
59 | ||||
Section 2.13 |
Interest |
60 | ||||
Section 2.14 |
Alternate Rate of Interest |
61 | ||||
Section 2.15 |
Increased Costs; Illegality |
62 | ||||
Section 2.16 |
Breakage Costs |
63 | ||||
Section 2.17 |
Withholding of Taxes; Gross-Up |
64 | ||||
Section 2.18 |
Payments Generally; Allocation of Proceeds; Sharing of Set-Offs |
67 | ||||
Section 2.19 |
Mitigation Obligations; Replacement of Lenders |
70 | ||||
Section 2.20 |
Defaulting Lender Provisions |
71 | ||||
Section 2.21 |
Returned Payments |
72 | ||||
Section 2.22 |
Banking Services and Swap Agreements |
72 | ||||
Section 2.23 |
Excess Resulting From Exchange Rate Change |
73 | ||||
Section 2.24 |
Canadian Loans |
73 | ||||
ARTICLE III CONDITIONS PRECEDENT |
74 | |||||
Section 3.1 |
Conditions Precedent to the Closing Date |
74 | ||||
Section 3.2 |
Conditions Precedent to Each Credit Extension After Closing Date |
77 | ||||
Section 3.3 |
Determinations Under Section 3.1 and Section 3.2 |
78 | ||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES |
78 | |||||
Section 4.1 |
Organization |
78 | ||||
Section 4.2 |
Authorization |
78 |
i
Section 4.3 |
Enforceability |
78 | ||||
Section 4.4 |
Financial Condition |
79 | ||||
Section 4.5 |
Ownership and Liens; Real Property |
79 | ||||
Section 4.6 |
True and Complete Disclosure |
79 | ||||
Section 4.7 |
Litigation |
79 | ||||
Section 4.8 |
Compliance with Agreements |
80 | ||||
Section 4.9 |
Pension Plans |
80 | ||||
Section 4.10 |
Environmental Condition |
81 | ||||
Section 4.11 |
Subsidiaries |
81 | ||||
Section 4.12 |
Investment Company Act |
81 | ||||
Section 4.13 |
Taxes |
81 | ||||
Section 4.14 |
Permits, Licenses, etc. |
82 | ||||
Section 4.15 |
Use of Proceeds |
82 | ||||
Section 4.16 |
Condition of Property; Casualties |
82 | ||||
Section 4.17 |
Insurance |
82 | ||||
Section 4.18 |
Security Interest |
82 | ||||
Section 4.19 |
OFAC; Anti-Terrorism; Anti-Corruption Laws; Sanctions |
83 | ||||
Section 4.20 |
Solvency |
83 | ||||
Section 4.21 |
EEA Financial Institution |
83 | ||||
Section 4.22 |
Qualified ECP Counterparty |
83 | ||||
ARTICLE V AFFIRMATIVE COVENANTS |
83 | |||||
Section 5.1 |
Organization |
83 | ||||
Section 5.2 |
Reporting |
83 | ||||
Section 5.3 |
Insurance |
88 | ||||
Section 5.4 |
Compliance with Laws |
89 | ||||
Section 5.5 |
Taxes |
89 | ||||
Section 5.6 |
Security |
89 | ||||
Section 5.7 |
Designations with Respect to Subsidiaries |
90 | ||||
Section 5.8 |
Books and Records; Inspection; Field Examinations |
91 | ||||
Section 5.9 |
Maintenance of Property |
91 | ||||
Section 5.10 |
Controlled Accounts |
91 | ||||
Section 5.11 |
Appraisals |
92 | ||||
Section 5.12 |
Post-Closing; Further Assurances |
92 | ||||
ARTICLE VI NEGATIVE COVENANTS |
93 | |||||
Section 6.1 |
Debt |
93 | ||||
Section 6.2 |
Liens |
95 | ||||
Section 6.3 |
Investments |
97 | ||||
Section 6.4 |
Acquisitions |
98 | ||||
Section 6.5 |
Agreements Restricting Liens |
99 | ||||
Section 6.6 |
Use of Proceeds; Use of Letters of Credit |
99 | ||||
Section 6.7 |
Corporate Actions; Accounting Changes |
100 | ||||
Section 6.8 |
Disposition of Assets |
101 | ||||
Section 6.9 |
Restricted Payments |
102 | ||||
Section 6.10 |
Certain Payments, Prepayments and Redemptions of Debt |
103 | ||||
Section 6.11 |
Affiliate Transactions |
103 | ||||
Section 6.12 |
Line of Business |
103 | ||||
Section 6.13 |
Hazardous Materials |
104 |
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Section 6.14 |
Compliance with ERISA |
104 | ||||
Section 6.15 |
Sale and Leaseback Transactions |
104 | ||||
Section 6.16 |
Limitation on Hedging |
105 | ||||
Section 6.17 |
No Material Amendments |
105 | ||||
Section 6.18 |
Fixed Charge Coverage Ratio |
105 | ||||
Section 6.19 |
Establishment of Canadian Defined Benefit Plan |
105 | ||||
ARTICLE VII DEFAULT AND REMEDIES |
105 | |||||
Section 7.1 |
Events of Default |
105 | ||||
Section 7.2 |
Optional Acceleration of Maturity |
107 | ||||
Section 7.3 |
Automatic Acceleration of Maturity |
108 | ||||
Section 7.4 |
Set-off |
108 | ||||
Section 7.5 |
Remedies Cumulative, No Waiver |
109 | ||||
Section 7.6 |
Application of Payments |
109 | ||||
ARTICLE VIII THE ADMINISTRATIVE AGENT AND THE ISSUING LENDER |
109 | |||||
Section 8.1 |
Appointment, Powers, and Immunities |
109 | ||||
Section 8.2 |
Reliance by Administrative Agent and Issuing Lenders |
111 | ||||
Section 8.3 |
Delegation of Duties |
111 | ||||
Section 8.4 |
Indemnification |
111 | ||||
Section 8.5 |
Non-Reliance on Administrative Agent and Other Lenders |
112 | ||||
Section 8.6 |
Resignation of Administrative Agent or an Issuing Lender |
113 | ||||
Section 8.7 |
Collateral Matters |
114 | ||||
Section 8.8 |
No Other Duties, etc. |
116 | ||||
ARTICLE IX MISCELLANEOUS |
116 | |||||
Section 9.1 |
Expenses; Indemnity; Damage Waiver |
116 | ||||
Section 9.2 |
Waivers and Amendments |
118 | ||||
Section 9.3 |
Severability |
119 | ||||
Section 9.4 |
Survival of Representations and Obligations |
119 | ||||
Section 9.5 |
Binding Effect |
120 | ||||
Section 9.6 |
Successors and Assigns Generally |
120 | ||||
Section 9.7 |
Lender Assignments and Participations |
120 | ||||
Section 9.8 |
Confidentiality |
122 | ||||
Section 9.9 |
Notices, etc. |
123 | ||||
Section 9.10 |
Usury Not Intended |
124 | ||||
Section 9.11 |
Usury Recapture |
125 | ||||
Section 9.12 |
Judgment Currency |
125 | ||||
Section 9.13 |
Payments Set Aside |
126 | ||||
Section 9.14 |
Governing Law |
126 | ||||
Section 9.15 |
Submission to Jurisdiction |
126 | ||||
Section 9.16 |
Waiver of Venue |
127 | ||||
Section 9.17 |
Service of Process |
127 | ||||
Section 9.18 |
Execution in Counterparts |
127 | ||||
Section 9.19 |
Electronic Execution of Assignments |
127 | ||||
Section 9.20 |
Waiver of Jury |
127 | ||||
Section 9.21 |
USA Patriot Act |
128 | ||||
Section 9.22 |
Canadian AML |
128 |
iii
Section 9.23 |
Acknowledgement and Consent to Bail-In of EEA Financial Institutions |
128 | ||||
Section 9.24 |
Integration |
129 | ||||
Section 9.25 |
No Fiduciary Duty, etc. |
129 | ||||
ARTICLE X The Borrower Representative |
129 | |||||
Section 10.1 |
Appointment; Nature of Relationship |
129 | ||||
Section 10.2 |
Powers |
130 | ||||
Section 10.3 |
Employment of Agents |
130 | ||||
Section 10.4 |
Notices |
130 | ||||
Section 10.5 |
Successor Borrower Representative |
130 | ||||
Section 10.6 |
Execution of Credit Documents; Borrowing Base Certificate |
130 |
Exhibits and Schedules
Exhibit A | Form of Assignment and Assumption | |
Exhibit B | Form of Borrowing Base Certificate | |
Exhibit C | Form of Guaranty | |
Exhibit D | Pledge and Security Agreement | |
Exhibit E | Form of Compliance Certificate | |
Exhibit F | Form of Notice of Borrowing | |
Exhibit G | Form of U.S. Tax Compliance Certificate | |
Schedule I | Commitments, Contact Information | |
Schedule II | Existing Letters of Credit | |
Schedule 4.1 | Organizational Information | |
Schedule 4.10 | Environmental Conditions | |
Schedule 4.11 | Subsidiaries | |
Schedule 5.7 | Requirements for New Subsidiaries | |
Schedule 6.1 | Permitted Debt | |
Schedule 6.2 | Permitted Liens | |
Schedule 6.3 | Permitted Investments | |
Schedule 6.11 | Permitted Affiliate Transactions |
iv
CREDIT AGREEMENT
This Credit Agreement dated as of October 25, 2018 (this Agreement) is among Nine Energy Service, Inc., a Delaware corporation (the U.S. Borrower, and the Company), Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada (the Canadian Borrower and, together with the U.S. Borrower, the Borrowers), the Lenders, JPMorgan Chase Bank, N.A. (JPMCB U.S.), as Administrative Agent and as an Issuing Lender (each as defined below) and Wells Fargo Bank, National Association (Wells Fargo), as an Issuing Lender and Zions Bancorporation, N.A. dba Amegy Bank (Amegy), as an Issuing Lender.
PRELIMINARY STATEMENT:
WHEREAS, the Borrowers have requested that the Lenders and the Issuing Lenders provide certain loans to and extensions of credit on behalf of the Borrowers on and after the Closing Date; and
WHEREAS, the Lenders and the Issuing Lenders have agreed to make such loans and extensions of credit subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and of the loans, extensions of credit and commitments hereinafter referred to, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Certain Defined Terms. As used in this Agreement, the defined terms set forth in the recitals above shall have the meanings set forth above and the following terms shall have the following meanings (unless otherwise indicated, such meanings to be equally applicable to both the singular and plural forms of the terms defined):
ABR, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Alternate Base Rate.
Acceptable Security Interest means a security interest which (a) exists in favor of the Administrative Agent for its benefit and the ratable benefit of the applicable Secured Parties, (b) is superior to all other security interests (other than the Permitted Liens and other than as to Excluded Perfection Collateral), (c) secures the Secured Obligations, (d) is enforceable against the Credit Party which created such security interest and (e) except as to Excluded Perfection Collateral, is perfected.
Account has the meaning assigned to such term in the U.S. Security Agreement or the Canadian Security Agreement, as applicable.
Account Control Agreement means an account control agreement (or similar agreement), in form and substance satisfactory to the Administrative Agent, executed by the applicable Credit Party, the Administrative Agent and the relevant depository institution or securities intermediary, as applicable, party thereto. Such agreement shall provide a first priority perfected Lien in favor of the Administrative Agent, for the benefit of the Secured Parties, in the applicable Credit Partys Deposit Account, Securities Account or Commodity Account, as applicable.
Account Debtor means any Person obligated on an Account.
Acquisition means any transaction, or any series of related transactions, consummated on or after the Closing Date, by which any Credit Party (a) acquires any going business or all or substantially all of the assets of any Person, whether through purchase of assets, merger, amalgamation or otherwise or (b) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the Equity Interests of a Person which has ordinary voting power for the election of directors or other similar management personnel of a Person (other than Equity Interests having such power only by reason of the happening of a contingency) or a majority of the outstanding Equity Interests of a Person.
Adjusted LIBO Rate means an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
Administrative Agent means JPMorgan Chase Bank, N.A., acting through one or more of its branches or affiliates, including, with respect to any Canadian Loan, JPMCB Canada, in its capacity as Canadian Administrative Agent under this Agreement.
Administrative Questionnaire means an Administrative Questionnaire in a form supplied by the Administrative Agent.
Affiliate means, with respect to a specified 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 Borrowing Base means, at any time, the Dollar Equivalent Amount of the sum of the U.S. Borrowing Base plus the Canadian Borrowing Base.
Aggregate Canadian Exposure means, at any time, the aggregate Canadian Exposure of all Lenders at such time.
Aggregate Commitments means at any time, the aggregate amount of the Commitments. As of the Closing Date, the Aggregate Commitments are $200.0 million.
Aggregate Credit Exposure means, at any time, the Dollar Equivalent Amount of the aggregate Credit Exposure at such time, as increased or reduced from time to time pursuant to the terms and conditions hereof.
Aggregate U.S. Exposure means, at any time, the aggregate U.S. Exposure of all Lenders at such time.
Agreement has the meaning assigned to such term in the preamble.
Alternate Base Rate means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus 1⁄2 of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus one percent (1%), provided that, for the purpose of this definition, the Adjusted LIBO Rate for any day shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively. If the Alternate
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Base Rate is being used as an alternate rate of interest pursuant to Section 2.14 hereof, then the Alternate Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Alternate Base Rate as so determined pursuant to the foregoing would be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
AML Legislation means, collectively, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), the Criminal Code (Canada) and the United Nations Act (Canada), including the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism (Canada) and the United Nations Al-Qaida and Taliban Regulations (Canada) promulgated under the United Nations Act (Canada), and other applicable anti-money laundering, anti-terrorist financing, government sanction and know your client laws, in each case, applicable to Secured Parties operating in Canada or any of its provinces or territories, including any rules, regulations, directives, guidelines or orders thereunder.
Anti-Corruption Laws means all laws, rules, ordinances and regulations of any jurisdiction applicable to the Company or any of its Subsidiaries from time to time concerning or relating to bribery, money laundering or corruption, including the United States Foreign Corrupt Practice Act of 1997 and the U.K. Bribery Act 2010.
Applicable Borrower means the U.S. Borrower or the Canadian Borrower, as applicable.
Applicable Margin means, at any time with respect to each Type of Loan and the Letters of Credit, the percentage rate per annum which is applicable at such time with respect to such Loan or Letter of Credit as set forth in the grid below based on the Leverage Ratio for the most recently ended four fiscal quarter period of the Company for which financial statements have been delivered, as set forth in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section 5.2(c), and subject to further adjustments as set forth below:
Level |
Applicable Margin | |||||||||||
Leverage Ratio | Eurocurrency and CDOR Margin |
ABR, CBR and CPR Margin |
||||||||||
Level I |
£ | 1.00:1.00 | 1.75 | % | 0.75 | % | ||||||
Level II |
|
> 1.00:1.0 and < 2.00:1.00 |
|
2.00 | % | 1.00 | % | |||||
Level III |
³ | 2.00:1.00 | 2.25 | % | 1.25 | % |
Any increase or decrease in the Applicable Margin resulting from a change in the Leverage Ratio shall become effective as of the date a Compliance Certificate is delivered pursuant to Section 5.2(c). Notwithstanding the foregoing: (a) if the Company fails to deliver a Compliance Certificate as required by Section 5.2(c), then from the date of such failure until the delivery of such Compliance Certificate in accordance with the requirements of Section 5.2(c), the Applicable Margin shall be set at Level III and (b) during the Fixed Applicable Margin Period, the Applicable Margin shall be set at Level II.
Without limitation of any other provision of this Agreement or any other remedy available to the Lender Parties hereunder, to the extent that any financial statements or any information contained in any Compliance Certificate delivered hereunder shall be incorrect in any material respect and the Company shall deliver to the Lender Parties corrected financial statements or other corrected information in a Compliance Certificate (or otherwise), the Administrative Agent may recalculate the Applicable Margin based upon such corrected financial statements or such other corrected information and, upon written notice thereof to the Company, the Loans shall bear interest based upon such recalculated Applicable Margin
3
retroactively from the date of delivery of the erroneous financial statements or other erroneous information in question; it being understood that the Company shall promptly pay any additional interest that would have been due but for such incorrect information, and no Default shall be deemed to have occurred as a result of a failure to pay such additional interest when originally due.
Applicable Percentage means, with respect to the Facility and any Lender, the ratio (expressed as a percentage) of (a) such Lenders Commitment at such time to the Aggregate Commitments at such time or (b) if the Commitments have been terminated or expired, the ratio (expressed as a percentage) of such Lenders aggregate outstanding Loans at such time to the total outstanding Loans at such time; provided that, (i) in accordance with Section 2.20, so long as any Lender shall be a Defaulting Lender, such Defaulting Lenders Commitment shall be disregarded in the calculations under clause (a) or (ii) if no Loans or Commitments are then outstanding, then Applicable Percentage means the Applicable Percentage most recently in effect, after giving pro forma effect to any Assignment and Assumptions.
Approved Fund means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and 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.
Assignment and Assumption means an Assignment and Assumption executed by a Lender and an Eligible Assignee and accepted by the Administrative Agent in substantially the form set forth in Exhibit A.
Availability means, at any time, the Dollar Equivalent Amount of the sum of U.S. Availability plus Canadian Availability.
Availability Period means the period from and including the Closing Date to but excluding the earlier of (a) the Maturity Date and (b) the date of termination of the Commitments.
Available Commitment means, for each Lender, at any time, its Commitment minus its Revolving Exposure.
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.
Banking Services means each and any of the following bank services provided to any Credit Party by any Banking Services Provider: (a) credit cards for commercial customers (including, without limitation, commercial credit cards and purchasing cards), (b) stored value cards, (c) merchant processing services, and (d) treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, cash pooling services, overdrafts and interstate depository network services).
Banking Services Obligations means any and all obligations of any Credit Party owing to the Banking Services Providers, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Banking Services.
4
Banking Services Provider means any Lender or Affiliate of a Lender that provides Banking Services to any Credit Party.
Bankruptcy Code means the Bankruptcy Code of the United States.
Bankruptcy Event means, with respect to any Person, when such Person becomes the subject of a bankruptcy or insolvency proceeding, or proposal proceeding under the Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement Act (Canada) or the Winding Up and Restructuring Act (Canada) as now or hereafter in effect, or any successor legislation thereto, or has had a receiver, interim receiver, receiver manager, monitor, sequestrator, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business, appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that, a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the United States or Canada or from the enforcement of judgments or writs of attachment on its assets or permits such Person (or such Governmental Authority or instrumentality), to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
Base Rate Borrowing means a Borrowing of the Type calculated at ABR, CBR or CPR, as the context requires.
Base Rate Loan means (a) a U.S. Dollar denominated Loan which bears interest based upon the Alternate Base Rate or the Canadian Base Rate and (b) a Canadian Dollar denominated Loan which bears interest based upon the Canadian Prime Rate.
Beneficial Owner means, with respect to any U.S. federal withholding tax, the beneficial owner, for U.S. federal income tax purposes, to whom such tax relates.
Beneficial Ownership Certification means a certificate regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.
Beneficial Ownership Regulation means 31 C.F.R. § 1010.230.
Borrower Representative has the meaning assigned to such term in Section 10.1.
Borrowers has the meaning set forth in the preamble.
Borrowing means (a) a borrowing consisting of Loans of the same Type made by the Lenders pursuant to Section 2.1(a) or converted by each Lender to Loans of a different Type pursuant to Section 2.8 and, in the case of Non-Base Rate Loans, as to which a single Interest Period is in effect, and (b) a Protective Advance.
Borrowing Base means the U.S. Borrowing Base and/or the Canadian Borrowing Base as the context requires.
Borrowing Base Certificate means a certificate, signed and certified as accurate and complete by a Financial Officer of the Borrower Representative, in substantially the form of Exhibit B or another form which is reasonably acceptable to the Administrative Agent.
5
Business Day means (a) any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Legal Requirements of, or are in fact closed in, New York, New York, Houston, Texas, or Calgary, Alberta, Canada; and
(b) (i) if such day relates to any interest rate settings as to a Eurodollar Loan denominated in Dollars, any fundings, disbursements, settlements and payments in Dollars in respect of any such Eurodollar Loan, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Eurodollar Loan, means any such day on which dealings in deposits in Dollars are conducted by and between banks in the London interbank Eurodollar market and (ii) if such day relates to a Loan denominated in Canadian Dollars, any such day shall also exclude any day on which commercial banks are not open for dealings in Canadian Dollar deposits in the interbank market in Toronto, Ontario.
Business Optimization Costs and Savings means (a) those certain costs and expenses paid or payable by the Credit Parties in connection with the transition, restructuring, integration and business optimization of the assets of the Credit Parties and other costs related to replacing services to be performed for the Credit Parties business, including in the case of each of the foregoing all one-time costs and charges in connection with the following: (i) restructuring, business optimization, set-up, recertification and integration, (ii) retention and severance, (iii) systems and information technology procurement, establishment and optimization, (iv) rebranding, (v) contract termination, (vi) the start-up, closure, relocation or reconfiguration, consolidation, or opening of facilities and future lease commitments, (vii) recruiting, retention, relocation, signing bonuses, severance and salary for interim employees, (viii) consulting fees and expenses not payable to any Affiliate of the Credit Parties, (ix) interim salary and bonus, and (x) and any other costs incurred in connection with any of the foregoing, (b) unrealized pro forma cost synergies and expenses comprised of headcount reductions, facility consolidations, and administrative expenses, such as insurance, audit & tax filings, information technology investments and facility costs and (c) run rate costs and savings in connection with any Acquisition.
CAD or Canadian Dollars or Cdn$ means the lawful currency of Canada.
Canadian Applicable Percentage means, with respect to the Canadian Sublimit and each Canadian Lender, the ratio (expressed as a percentage) of such Canadian Lenders Canadian Sublimit at such time to the aggregate Canadian Sublimit at such time.
Canadian Availability means, at any time, an amount equal to (a) the Canadian Loan Limit, minus (b) the Aggregate Canadian Exposure (calculated, with respect to any Defaulting Lender, as if such Defaulting Lender had funded its Applicable Percentage of all outstanding Canadian Loans).
Canadian Base Rate means, for any period, the rate per annum determined by the Administrative Agent to be the greater of (a) the rate of interest per annum most recently announced by JPMCB Canada as its reference rate in effect on such day for determining interest rates for U.S. Dollar denominated commercial loans in Canada and commonly known as base rate (or its equivalent or analogous such rate), such rate not being intended to be the lowest rate of interest charged by JPMCB Canada, (b) the NYFRB Rate in effect on such day plus 1⁄2 of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, for the purpose of this definition, the Adjusted LIBO Rate for any day shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day, subject to the interest rate floors set forth therein. Any change in the Canadian Base Rate due to a change in the rate described in clause (i), the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the rate described in clause (i), the NYFRB Rate or the Adjusted LIBO Rate, respectively. If the Canadian Base Rate is being used as an alternate rate of interest pursuant to Section 2.19 hereof, then the Canadian Base Rate shall be the greater of clause (a) and (b) above and shall be determined without reference to clause (c) above.
6
Canadian Borrower means Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada.
Canadian Borrowing means a Borrowing of Canadian Loans.
Canadian Borrowing Base means the Dollar Equivalent Amount of the sum of (a) 85% of the Canadian Credit Parties Eligible Accounts at such time, plus (b) 80% of the Canadian Credit Parties Eligible Unbilled Accounts at such time, in an aggregate amount, when combined with clause (b) of the definition of U.S. Borrowing Base, not to exceed $10.0 million, plus (c) the product of 85% multiplied by the Net Orderly Liquidation Value percentage identified in the most recent Inventory appraisal ordered by the Administrative Agent multiplied by the Canadian Credit Parties Eligible Inventory (valued at the lower of cost (FIFO) or market), minus (d) Reserves applicable to the Canadian Credit Parties established by the Administrative Agent in its Permitted Discretion; provided that, until both an acceptable appraisal and field exam with respect to the assets of the Magnum Targets are received by the Administrative Agent, the assets of the Magnum Targets included in the Canadian Borrowing Base shall be limited to 50% of the book value of the Accounts of the Magnum Targets that are Canadian Credit Parties; provided, further, that if such field exam and appraisal are not received on or prior to the date that is sixty (60) days after the Closing Date, no assets of the Magnum Targets shall be included in the Canadian Borrowing Base until such field examination and appraisal have been received by the Administrative Agent.
Canadian Concentration Account has the meaning assigned to such term in Section 5.10(c).
Canadian Credit Parties means (a) the Canadian Borrower and (b) each Subsidiary thereof that has guaranteed the Canadian Secured Obligations pursuant to Section 5.12(b), and their respective successors and assigns.
Canadian Defined Benefit Plan has the meaning assigned to such term in Section 4.09(c).
Canadian Excluded Lender means Amegy.
Canadian Exposure means, (a) solely for purposes of calculating the Available Commitment of any Canadian Lender, the principal amount of such Lenders Canadian Loans, and (b) otherwise, for each Lender, at any time, such Lenders Applicable Percentage of all Canadian Loans as if such Lender had funded its participations in all Canadian Loans outstanding at such time.
Canadian Lender means each Lender or its applicable Affiliate that is not a Canadian Excluded Lender.
Canadian Loan Limit means the least of (x) the aggregate Canadian Sublimit, (y) the Canadian Borrowing Base and (z) the Aggregate Commitments less the U.S. Exposure.
Canadian Loan means a Loan made pursuant to Section 2.24.
Canadian Obligations means all unpaid principal of and accrued and unpaid interest on the Canadian Loans, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), obligations and liabilities of any of the Canadian Credit Parties to any of the Lenders, the
7
Administrative Agent or any indemnified party, individually or collectively, existing on the Closing Date or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, in each case, arising or incurred under this Agreement or any of the other Credit Documents in respect of any of the Canadian Loans or other instruments at any time evidencing any thereof.
Canadian Pension Event means (a) the wind-up or termination, in whole or in part, of a Canadian Defined Benefit Plan; or (b) the filing of an amendment with a Governmental Authority to wind-up or terminate, in whole or in part, a Canadian Defined Benefit Plan; (c) the institution of proceedings by any Governmental Authority to wind-up or terminate, in whole or in part, or to have a trustee appointed to administer a Canadian Defined Benefit Plan; or (d) any other event or condition which would reasonably be expected to result in the termination of, winding up of, or partial termination or winding up of, or the appointment of a trustee to administer, any Canadian Defined Benefit Plan.
Canadian Pension Plan means each pension plan required to be registered under Canadian federal, provincial or territorial law that is maintained or contributed to by a Credit Party for its Canadian employees or former Canadian employees, but does not include the Canada Pension Plan or the Quebec Pension Plan as maintained by the Government of Canada or the Province of Quebec, respectively.
Canadian Prime Rate means, on any day, the rate determined by the Administrative Agent to be the higher of (i) the rate equal to the PRIMCAN Index rate that appears on the Bloomberg screen at 10:15 a.m. Toronto time on such day (or, in the event that the PRIMCAN Index is not published by Bloomberg, any other information service that publishes such index from time to time, as selected by the Administrative Agent in its reasonable discretion) and (ii) the average rate for 30 day Canadian Dollar-denominated bankers acceptances displayed and identified as such on the Reuters Screen CDOR Page as defined in the International Swaps and Derivatives Association, Inc. definitions, as modified and amended from time to time (or, in the event such rate does not appear on such page or screen, on any successor or substitute page or screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time, as selected by the Administrative Agent in its reasonable discretion) as of 10:15 a.m. Toronto local time on such day and, if such day is not a Business Day, then on the immediately preceding Business Day (as adjusted by the Administrative Agent after 10:15 a.m. Toronto local time to reflect any error in the posted rate of interest or in the posted average annual rate of interest), plus 1% per annum; provided, that if any the above rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. Any change in the Canadian Prime Rate due to a change in the PRIMCAN Index or in the average rate for 30 day Canadian Dollar-denominated bankers acceptances displayed and identified as such on the Reuters Screen CDOR Page shall be effective from and including the effective date of such change in the PRIMCAN Index or in the 30 day Canadian Dollar-denominated bankers acceptances displayed and identified as such on the Reuters Screen CDOR Page, respectively.
Canadian Secured Obligations means all Canadian Obligations, together with all (i) Banking Services Obligations owing by Canadian Credit Parties to one or more Lenders or their respective Affiliates and (ii) Swap Agreement Obligations owing by Canadian Credit Parties to one or more Lenders or their respective Affiliates (including a Person that is a party to a Swap Agreement with the Canadian Credit Parties that entered into such Swap Agreement before or while such Person was a Lender or an Affiliate of a Lender, whether or not such Person at any time ceases to be a Lender or an Affiliate of a Lender, as the case may be); provided, however, that the definition of Canadian Secured Obligations shall not create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support, as applicable) any Excluded Swap Obligations of such Guarantor for purposes of determining any obligations of any Guarantor.
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Canadian Security Agreement means that certain Pledge and Security Agreement (including any and all supplements or joinders thereto), substantially in the form in Exhibit D-2, dated as of the date hereof, between the Canadian Credit Parties and the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, as the same may be amended, restated, supplemented or otherwise modified from time to time.
Canadian Sublimit means, as to any Canadian Lender, (i) as of the Closing Date, the amount set forth on Schedule I or (ii) if such Canadian Lender has entered into an Assignment and Assumption or has otherwise assumed a portion of the Canadian Sublimit after the Effective Date, the amount set forth for such Lender as its portion of the Canadian Sublimit in the Register; provided that the aggregate amount of the Canadian Sublimit shall not exceed $25.0 million as such amount may be reduced pursuant to Section 2.9.
Capital Expenditures means, for any Person and period of its determination, without duplication, the aggregate of all expenditures and costs (whether paid in cash or accrued as liabilities during that period and including that portion of payments under Capital Leases that are capitalized on the balance sheet of such Person) of such Person during such period that, in conformity with GAAP, are required to be included in or reflected as property, plant, equipment or other similar fixed asset accounts on the balance sheet of such Person, but excluding any such expenditure made to restore, replace or rebuild Property to the condition of such Property immediately prior to any damage, loss, destruction or condemnation of such Property, to the extent such expenditure is made with insurance proceeds, condemnation awards or damage recovery proceeds relating to any such damage, loss, destruction or condemnation.
Capital Leases means, for any Person, any lease of any Property by such Person as lessee which would, in accordance with GAAP, be required to be classified and accounted for as a capital lease on the balance sheet of such Person.
Cash Collateral Account means a cash collateral account pledged to the Administrative Agent containing cash deposited pursuant to the terms hereof to be maintained with the Administrative Agent in accordance with the terms hereof.
Cash Collateralize means, to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the applicable Issuing Lender or the Lenders, as collateral for Secured Obligations, or the obligations of Lenders to fund participations in respect of Letter of Credit Obligations, cash or deposit account balances or, if the Administrative Agent and the applicable Issuing Lender shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the applicable Issuing Lender. 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 Event shall occur at any time (a) Availability is less than the greater of (x) $18.75 million and (y) 12.5% of the lesser of the Borrowing Base and the Aggregate Commitment or (b) an Event of Default has occurred and is continuing and the Administrative Agent or the Required Lenders have elected to declare a Cash Dominion Event. Once commenced, a Cash Dominion Event shall be deemed to be continuing until such time as (x) no Event of Default is continuing and (y) Availability equals or exceeds for thirty (30) consecutive days the greater of (1) $18.75 million and (2) 12.5% of the lesser of the Borrowing Base and the Aggregate Commitment (such period, the Cash Dominion Period).
Cash Dominion Period has the meaning assigned to such term within the definition of Cash Dominion Event.
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CBR, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the loans comprising such Borrowing, bear interest at a rate determined by reference to the Canadian Base Rate.
CDOR, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the loans comprising such Borrowing, bear interest at a rate determined by reference to the CDOR Rate.
CDOR Rate means, for an Interest Period equal to one, two, three or six months (as selected by the Canadian Borrower), the Canadian dollar offered rate which, in turn means on any day the sum of (a) the annual rate of interest determined with reference to the arithmetic average of the discount rate quotations of all institutions listed in respect of the relevant Interest Period for Canadian Dollar-denominated bankers acceptances displayed and identified as such on the Reuters Screen CDOR Page as defined in the International Swaps and Derivatives Association, Inc. definitions, as modified and amended from time to time (the CDOR Screen Rate), as of 10:15 a.m. Toronto local time on the first day of the applicable Interest Period and, if such day is not a Business Day, then on the immediately preceding Business Day (as adjusted by the Administrative Agent after 10:15 a.m. Toronto local time to reflect any error in the posted rate of interest or in the posted average annual rate of interest) plus (b) 0.10% per annum; provided, that (x) if the CDOR Screen Rate shall be less than zero, such rate shall be deemed to be zero and (y) if the CDOR Screen Rate is not available on the Reuters Screen CDOR Page on any particular day, then the Canadian dollar offered rate component of such rate on that day shall be calculated as the applicable Interpolated Rate as of such time on such day; or if such day is not a Business Day, then as so determined on the immediately preceding Business Day.
CDOR Screen Rate has the meaning assigned to such term in the definition of CDOR Rate.
CERCLA means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, analogous state and local laws, and all rules and regulations and legally enforceable requirements promulgated thereunder, in each case as now or hereafter in effect.
Change in Control means the occurrence of any of the following events: (a) any person or group (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than SCF 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 (such right, an option right), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 33% or more of the equity securities of the Company entitled to vote for members of the board of directors of the Company 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) occupation at any time of a majority of the seats (other than vacant seats) on the board of directors of the Company by Persons who were not (i) directors of the Company on the date of this Agreement, (ii) nominated or appointed by the board of directors of the Company (iii) approved by the board of directors of the Company as director candidates prior to their election; provided that, the foregoing clause (b) shall not include any change to the board of directors of the Company solely to the extent required for the board of directors of the Company to comply with Section 303A.01 of the New York Stock Exchange listed company manual within one year after the Closing Date.
Change in Law means the occurrence, after the date of this Agreement (or with respect to any Lender, if later, the date on which such Lender becomes a Lender), 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
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Authority or (c) compliance by any Lender or Issuing Lender (or, for purposes of Section 2.15(b), by any Lending Office of such Lender or by such Lenders or Issuing Lenders holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) 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 be deemed to be a Change in Law, regardless of the date enacted, adopted or issued.
Class when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are U.S. Loans, Canadian Loans or Protective Advances.
Closing Date means the date on which all of the conditions set forth in Section 3.1 have been satisfied or waived in accordance therewith.
Code means the Internal Revenue Code of 1986, as amended, and Treasury regulations thereunder.
Collateral means all Property of the Credit Parties, now owned or hereafter acquired, upon which a Lien is created, or purported to be created, by any Security Document. The Collateral shall not include any Excluded Collateral. In no event is any Building (as defined in the applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulation) included in the definition of Collateral and no Building or Manufactured (Mobile) Home is hereby encumbered by this Agreement or any other Credit Document.
Collateral Access Agreement has the meaning assigned to such term in the U.S. Security Agreement or the Canadian Security Agreement, as applicable.
Collateral Deposit Account has the meaning assigned to such term in Section 5.10(b).
Commitment Fee means the fees required under Section 2.12(a).
Commitment means, with respect to each Lender, the commitment, if any, of such Lender to make Loans and to acquire participations in Letters of Credit or Canadian Loans hereunder, expressed as an amount representing the maximum possible aggregate amount of such Lenders Credit Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant to (a) Section 2.9 and (b) assignments by or to such Lender pursuant to Section 9.7. The initial amount of each Lenders Commitment is set forth on Schedule I, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable, provided that, after the Maturity Date, the Commitment for each Lender shall be zero.
Commodity Account has the meaning assigned to such term in the UCC.
Communications has the meaning assigned to such term in Section 9.9(b)(i).
Company has the meaning assigned to such term in the preamble.
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Compliance Certificate means a compliance certificate executed by a Responsible Officer of the Borrower Representative or such other Person as required by this Agreement in substantially the same form as Exhibit E.
Concentration Account has the meaning assigned to such term in Section 5.10(c).
Condemnation Event means any event that gives rise to the receipt by any Restricted Entity of any condemnation awards in respect of any Property.
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.
Control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership, by contract, or otherwise, and the terms Controlled by or under common Control with shall have the correlative meanings.
Controlled Account means a Deposit Account, Securities Account or Commodity Account and the Concentration Account that is subject to an Account Control Agreement.
Controlled Group means all members of a controlled group of corporations and all businesses (whether or not incorporated) under common Control which, together with the Company or any Subsidiary (as applicable), are treated as a single employer under Section 414 of the Code.
CPR, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the loans comprising such Borrowing, bear interest at a rate determined by reference to the Canadian Prime Rate.
Credit Documents means this Agreement, the Notes, the Letter of Credit Documents, the Guaranty, the Notices of Borrowing, the Notices of Continuation or Conversion, the Security Documents, the Fee Letter, and each other agreement, instrument, or document executed at any time in connection with this Agreement.
Credit Exposure means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lenders Loans and its LC Exposure at such time.
Credit Extension means a Loan or a Letter of Credit Extension.
Credit Parties means the Borrowers and the Guarantors.
Debt means, for any Person, without duplication: (a) indebtedness of such Person for borrowed money; (b) to the extent not covered under clause (a) above, obligations under letters of credit and agreements relating to the issuance of letters of credit, bankers acceptances, bank guaranties, surety bonds and similar instruments; (c) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (d) obligations of such Person under conditional sale or other title retention agreements relating to any Properties purchased by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business); (e) obligations of such Person to pay in cash the deferred purchase price of Property or services (such obligations including, without limitation, any earn-out obligations, contingent obligations, or other similar obligations associated with such purchase) but excluding trade accounts payable in the ordinary course of business and, in each case, either not past due for more than ninety (90) days after the date on which such trade account payable was created or being contested in good faith and for which adequate reserves have been made in accordance with GAAP; (f) obligations of such Person as lessee under Capital Leases and obligations of such Person
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in respect of synthetic leases; (g) obligations of such Person under any Swap Agreement; (h) all obligations of such Person to mandatorily purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person on a date certain or upon the occurrence of certain events or conditions, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends (which obligations, for the avoidance of doubt, do not include any obligations to issue Equity Interests in respect of warrants); (i) the Debt of any partnership or unincorporated joint venture in which such Person is a general partner or a joint venturer, but only to the extent to which there is recourse to such Person for the payment of such Debt; (j) Disqualified Equity Interests; (k) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) of such Person to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) through (j) above; and (l) indebtedness or obligations of others of the kinds referred to in clauses (a) through (j) secured by any Lien on or in respect of any Property of such Person, but if recourse is only to such Property, then only to the extent of the lesser of the amount of the Debt secured thereby and the fair market value of the Property subject to such Lien.
Debtor Relief Laws means (a) the Bankruptcy Code, (b) the Bankruptcy and Insolvency Act (Canada), the Companies Creditors Arrangement Act (Canada), and the Winding-Up and Restructuring Act (Canada) and any other applicable insolvency or other similar law of any jurisdiction, including any corporate law or other law of any jurisdiction permitting a debtor to obtain a stay or a compromise of the claims of its creditors against it, and (c) all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, corporate or similar other debtor relief laws of the United States, Canada or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.
Default means (a) an Event of Default or (b) any event or condition which with notice or lapse of time or both would, unless cured or waived, become an Event of Default.
Defaulting Lender means, subject to Section 2.20, 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 Applicable Borrower in writing that such failure is the result of such Lenders good faith 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 waived, or (ii) pay to the Administrative Agent, the Canadian Administrative Agent, the applicable Issuing 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) within two (2) Business Days of the date when due, (b) has notified the Applicable Borrower, the Administrative Agent or the applicable Issuing 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 Lenders obligation to fund a Loan hereunder and states that such position is based on such Lenders good faith 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 Applicable Borrower, to confirm in writing to the Administrative Agent and such 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 Applicable 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 or Bail-In Action, or (ii) had appointed for it a receiver, interim receiver, receiver manager, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation
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or any other state or federal regulatory authority acting in such a capacity; 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 clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.20) upon delivery of written notice of such determination to the Applicable Borrower, the applicable Issuing Lender and each Lender under the Facility.
Deposit Account has the meaning assigned to such term in the applicable Security Agreement.
Disposition means any sale, lease, transfer, assignment, conveyance, or other disposition of any Property and Dispose or similar terms shall have correlative meanings.
Disqualified Equity Interest means any Equity Interest that, 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, matures or is mandatorily redeemable for any consideration other than another Equity Interest (which would not constitute a Disqualified Equity Interest), pursuant to a sinking fund obligation or otherwise (except as a result of a Change in Control or asset sale so long as any rights of the holders thereof upon the occurrence of such Change in Control or asset sale event shall be subject to prior Payment in Full), or is convertible or exchangeable for Debt or redeemable for any consideration other than any Equity Interest (which would not constitute a Disqualified Equity Interest) at the option of the holder thereof, in whole or in part, on or prior to the date that is one hundred eighty (180) days after the earlier of (a) the Maturity Date and (b) Payment in Full; provided that, if such Equity Interest is issued pursuant to a Plan for the benefit of the Company or its Subsidiaries or their officers or employees, such Equity Interest shall not constitute a Disqualified Equity Interest solely because it may be required to be repurchased by the Company or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.
Dividing Person has the meaning assigned to it in the definition of Division.
Division means the division of the assets, liabilities and/or obligations of a Person (the Dividing Person) among two or more Persons (whether pursuant to a plan of division or similar arrangement) pursuant to Section 18-217 of the Delaware Limited Liability Company Act, which may or may not include the Dividing Person and pursuant to which the Dividing Person may or may not survive.
Division Successor means any Person that, upon the consummation of a Division of a Dividing Person, holds all or any portion of the assets, liabilities and/or obligations previously held by such Dividing Person immediately prior to the consummation of such Division. A Dividing Person which retains any of its assets, liabilities and/or obligations after a Division shall be deemed a Division Successor upon the occurrence of such Division.
Dollar Equivalent Amount means, for any amount, at the time of determination thereof, (a) if such amount is expressed in Dollars, such amount, (b) if such amount is expressed in Canadian Dollars, the equivalent of such amount in Dollars determined by using the rate of exchange for the purchase of Dollars with Canadian Dollars last provided (either by publication or otherwise provided to the Administrative Agent) by the applicable Thomson Reuters Corporation (Reuters) source on the Business Day (New York City time) immediately preceding the date of determination or if such service ceases to be available or ceases to provide a rate of exchange for the purchase of Dollars with Canadian Dollars, as provided by such
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other publicly available information service which provides that rate of exchange at such time in place of Reuters chosen by the Administrative Agent in its sole discretion (or if such service ceases to be available or ceases to provide such rate of exchange, the equivalent of such amount in Dollars as determined by the Administrative Agent using any method of determination it deems appropriate in its sole discretion) and (c) if such amount is denominated in any other currency, the equivalent of such amount in Dollars as determined by the Administrative Agent using any method of determination it deems appropriate in its sole discretion.
Dollars and $ means U.S. Dollars unless otherwise specified herein.
Domestic Restricted Subsidiary means any Restricted Subsidiary that is a Domestic Subsidiary; provided that, neither an Excluded Domestic Holdco nor a Subsidiary of a Foreign Subsidiary shall be a Domestic Restricted Subsidiary.
Domestic Subsidiary means any Subsidiary that is either (a) incorporated or organized under the laws of the United States, any State thereof or the District of Columbia or (b) disregarded for U.S. federal income tax purposes and the parent is either the Company or any other Domestic Subsidiary.
EBITDA means, for any period, Net Income of the Company and its consolidated Restricted Subsidiaries for such period (it being understood that no amounts of the Unrestricted Subsidiaries Net Income shall be taken into account in calculating EBITDA other than to the extent provided in clause (v) below) plus (a) without duplication and to the extent deducted in determining Net Income for such period, the sum of (i) Interest Expense for such period, (ii) provisions for taxes based on income, profits or capital (including federal, state, provincial, franchise, excise and similar taxes) net of tax refunds associated with such taxes, (iii) all amounts attributable to depreciation and amortization expense for such period, (iv) any extraordinary or non-recurring non-cash charges for such period, and any other non-cash charges or expenses for such period (but excluding any non-cash charge or expense in respect of an item that was included in Net Income in a prior period and any non-cash charge or expense that relates to the write-down or write-off of inventory), (v) cash dividends received by the Restricted Entities from the net income of Unrestricted Subsidiaries during such period, (vi) cash and non-cash charges associated with the Transactions, (vii) expenses reimbursed by a third party that is not a Credit Party, but only to the extent the Credit Parties actually receive payment in respect of such reimbursed expenses, (viii) (A) fees, costs and expenses relating to the Magnum Acquisition or any Permitted Acquisition (including cash-stay bonuses paid to employees, severance and reorganization costs and expenses in connection with any Permitted Acquisition), (B) fees, costs and expenses relating to any permitted issuance of Equity Interests, investment, debt incurrence (including a refinancing thereof, whether or not successful) or repayment, amortization or write-off (including discounts) of Debt, recapitalization, or any sale, transfer or other disposition of assets, (C) fees, costs and expenses relating to other Acquisitions which would have (if consummated) satisfied the requirements of the defined term Permitted Acquisitions and fees, costs and expenses relating to investments which would have (if consummated) satisfied the requirements of Section 6.3, and (D) purchase accounting adjustments in connection with Permitted Acquisitions, investments permitted by Section 6.3 and the Magnum Acquisition, (ix) non-cash costs or expenses relating to any equity-based compensation or equity-based incentive plan or any other management or employee benefit plan or agreement or any stock subscription or shareholder agreement, in each case of the Company or any Subsidiary for such period and funded with equity, (x) the amount of any fees, costs, expenses or charges incurred in connection with (A) Business Optimization Costs and Savings and (B) the closure, transfer or consolidation of facilities or other operations, (xi) any proceeds from business interruption insurance received by the Credit Parties during such period, to the extent the associated losses arising out of the event that resulted in the payment of such business interruption insurance proceeds were included in computing Net Income, and (xii) one-time litigation costs and expenses; provided, that the aggregate amount of additions to EBITDA pursuant to clauses (viii)(B), (viii)(C), (x) and (xii) shall not, in an aggregate amount
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exceed fifteen percent (15%) of EBITDA for such period; minus (b) without duplication and to the extent included in Net Income, (y) any cash payments made during such period in respect of non-cash charges described in clause (a)(v) taken in a prior period and (z) any extraordinary gains and any non-cash items of income for such period, all calculated for the Company and its Restricted Subsidiaries on a consolidated basis in accordance with GAAP. Further, EBITDA shall be subject to pro forma adjustments for Material Acquisitions (including annualization of EBITDA if the target of such Material Acquisition has less than four full quarters of operating results at the time of such acquisition) and Material Dispositions assuming that such transactions had occurred on the first day of the applicable determination period, which adjustments shall be made in accordance with the guidelines for pro forma presentations set forth by the SEC or in a manner otherwise reasonably acceptable to the Administrative Agent. As used in this definition, Material Acquisition means any Permitted Acquisition with consideration of $5.0 million or more and Material Disposition means any disposition with consideration of $5.0 million or more.
ECP means an eligible contract participant as defined in Section 1(a)(18) of the Commodity Exchange Act or any regulations promulgated thereunder and the applicable rules issued by the Commodity Futures Trading Commission and/or the SEC.
EEA Financial Institution means (a) any institution 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 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 any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
Electronic System means any electronic system, including e-mail, e-fax, web portal access for such Borrower, Intralinks®, ClearPar®, Debt Domain, Syndtrak and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent or any Issuing Lender and any of its respective Related Parties or any other Person, providing for access to data protected by passcodes or other security system.
Eligible Accounts means at any time, the Accounts of a Credit Party which the Administrative Agent determines in its Permitted Discretion are eligible as the basis for the extension of U.S. Revolving Loans, Canadian Loans and the issuance of Letters of Credit provided that Eligible Accounts shall not include any Account of a Credit Party:
(a) which is not subject to a first priority perfected security interest in favor of the Administrative Agent;
(b) which is subject to any Lien other than (i) a Lien in favor of the Administrative Agent and (ii) a Permitted Lien permitted by paragraph (d) or (h) of Section 6.2;
(c) (i) with respect to which the scheduled due date is more than sixty (60) days after the original invoice date, (ii) which is unpaid more than ninety (90) days after the date of the original invoice therefor or more than sixty (60) days after the original due date therefor, or (iii) which has been written off the books of the applicable Credit Party;
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(d) which is owing by an Account Debtor for which more than 50% of the Accounts owing by such Account Debtor and its Affiliates are ineligible pursuant to paragraph (c) above;
(e) which (i) is owing by an Account Debtor (other than an Account Debtor described in clause (ii) below) to the extent the aggregate amount of Accounts owing from such Account Debtor and its Affiliates to such Credit Party exceeds 20% of the aggregate amount of Eligible Accounts of all Credit Parties or (ii) is owing by an Account Debtor whose securities (or such Account Debtors parent companys securities) are rated BBB or better by S&P or Baa3 or better by Moodys to the extent the aggregate amount of Accounts owing from such Account Debtor and its Affiliates to such Credit Party exceeds 25% of the aggregate amount of Eligible Accounts of all Credit Parties, solely to the extent of such excess;
(f) with respect to which any covenant, representation or warranty contained in this Agreement or in the Security Agreements has been breached in any material respect;
(g) which (i) does not arise from the sale of goods or performance of services in the ordinary course of business, (ii) is not evidenced by an invoice or other documentation reasonably satisfactory to the Administrative Agent which has been sent to the Account Debtor, (iii) represents a progress billing, (iv) is contingent upon such Credit Partys completion of any further performance, (v) represents a sale on a bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment, cash-on-delivery or any other repurchase or return basis or (vi) relates to the payment of interest;
(h) for which the goods giving rise to such Account have not been shipped to the Account Debtor or for which the services giving rise to such Account have not been performed by the Credit Party or if such Account was invoiced more than once (unless such additional invoices were provided for a purpose other than the failure of the Account Debtor to timely make payment, provided that, in no event shall any such accounts be double-counted);
(i) with respect to which any check or other instrument of payment has been returned uncollected for any reason;
(j) which is owed by an Account Debtor which has (i) applied for, suffered, or consented to the appointment of any receiver, interim receiver, receiver manager, custodian, trustee, monitor, administrator, sequestrator or liquidator of its assets, (ii) had possession of all or a material part of its Property taken by any receiver, interim receiver, receiver manager, custodian, trustee or liquidator, (iii) filed, or had filed against it, any request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or voluntary or involuntary case under any state, provincial, territorial or federal bankruptcy laws (iv) admitted in writing its inability, or is generally unable to, pay its debts as they become due, (v) become insolvent, or (vi) ceased operation of its business;
(k) which is owed by any Account Debtor which has sold all or substantially all of its assets;
(l) which is owed by an Account Debtor that fails to satisfy at least one of the following requirements: (i) it maintains its chief executive office or principal place of business in the U.S. or Canada or (ii) it is organized under applicable law of the U.S., any state of the U.S., or the District of Columbia, Canada or any province or territory of Canada, unless in any such case, such Account is backed by a Letter of Credit acceptable to the Administrative Agent which is in the possession of, and is directly drawable by, the Administrative Agent;
(m) which is owed in any currency other than CAD or U.S. Dollars;
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(n) which is owed by (i) any Governmental Authority of any country other than the U.S. or Canada unless such Account is backed by a letter of credit reasonably acceptable to the Administrative Agent which is in the possession of, and is directly drawable by, the Administrative Agent, or (ii) any Governmental Authority of Canada or the U.S., or any department, agency, public corporation, or instrumentality thereof, unless the Financial Administration Act (Canada), as amended, or the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.), and any other steps necessary to perfect the Lien of the Administrative Agent in such Account have been complied with;
(o) which is owed by any Credit Party or any Affiliate of any Credit Party or any employee, officer, director, agent or stockholder of any Credit Party or any of its Affiliates;
(p) which is owed by an Account Debtor or any Affiliate of such Account Debtor to which a Credit Party is indebted, but only to the extent of such indebtedness, or is subject to any security, deposit, progress payment, retainage or other similar advance made by or for the benefit of an Account Debtor, in each case to the extent thereof;
(q) which is subject to any counterclaim, deduction, defense, setoff or dispute, but only to the extent of the amount of any such counterclaim, deduction, defense, setoff or dispute;
(r) which is evidenced by any promissory note, Chattel Paper or Instrument unless all steps necessary to perfect the Lien of the Administrative Agent in such promissory note, Chattel Paper or Instrument have been complied with in a manner reasonably satisfactory to the Administrative Agent;
(s) which is owed by an Account Debtor (i) located in any jurisdiction which requires filing of a Notice of Business Activities Report or other similar report in order to permit the Credit Party to seek judicial enforcement in such jurisdiction of payment of such Account, unless the Company has filed such report or qualified to do business in such jurisdiction, or (ii) which is a Sanctioned Person;
(t) with respect to which a Credit Party has made any agreement with the Account Debtor for any reduction thereof, other than discounts and adjustments given in the ordinary course of business but only to the extent of any such reduction, or any Account which was partially paid and the Credit Party created a new receivable for the unpaid portion of such Account;
(u) which does not comply in all material respects with the requirements of all applicable laws and regulations, whether federal, state, provincial, territorial or local, including, without limitation, the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the Federal Reserve Board;
(v) which is for goods that have been sold under a purchase order or pursuant to the terms of a contract or other agreement or understanding (written or oral) that indicates or purports that any Person (other than a Credit Party) has or has had an ownership interest in such goods, or which indicates any party (other than a Credit Party or the Administrative Agent) as payee or remittance party;
(w) which was created on cash on delivery terms;
(x) as to which the contract or agreement underlying such Account is governed by the laws of any jurisdictions other than (or, if no governing law is expressed therein, as to which, under applicable choice of law principles, such Account would not be governed by the laws of any of) (i) the United States, any state thereof or the District of Columbia or (ii) Canada or any province thereof; or
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(y) which the Administrative Agent otherwise determines is unacceptable in its Permitted Discretion.
In the event that an Account of a Credit Party which was previously an Eligible Account ceases to be an Eligible Account hereunder, such Credit Party or the Borrower Representative shall notify the Administrative Agent thereof on and at the time of submission to the Administrative Agent of the next Borrowing Base Certificate. In determining the amount of an Eligible Account of a Credit Party, the face amount of an Account may, in the Administrative Agents Permitted Discretion, be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that such Credit Party may be obligated to rebate to an Account Debtor pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received in respect of such Account but not yet applied by such Credit Party to reduce the amount of such Account.
Eligible Assignee means (a) a Lender (other than a Defaulting Lender); (b) an Affiliate of a Lender (other than a Defaulting Lender); (c) an Approved Fund; and (d) any other Person approved by (i) the Administrative Agent, (ii) unless an Event of Default has occurred and is continuing at the time any assignment is effected, the Borrower Representative; provided that, if the Borrower Representative shall fail to promptly (and in any event within ten (10) Business Days) approve or reject such Person as an Eligible Assignee, the Borrower Representative shall be deemed to have approved such Person as an Eligible Assignee and (iii) in the case of any assignment under the Facility, each Issuing Lender, in each case, such approval not to be unreasonably withheld or delayed; provided, however, that neither the Company nor an Affiliate of the Company nor any natural person shall qualify as an Eligible Assignee.
Eligible Inventory means at any time, the Inventory of a Credit Party which the Administrative Agent determines in its Permitted Discretion is eligible as the basis for the extension of U.S. Revolving Loans, Canadian Loans and the issuance of Letters of Credit provided that Eligible Inventory shall not include any Inventory:
(a) which is not subject to a first priority perfected Lien in favor of the Administrative Agent;
(b) which is subject to any Lien other than (i) a Lien in favor of the Administrative Agent and (ii) a Permitted Lien which does not have priority over the Lien in favor of the Administrative Agent, and (iii) a Permitted Lien permitted by paragraph (d) or (h) of Section 6.2;
(c) which is, in such Credit Partys good faith judgment, slow moving, obsolete, unmerchantable, defective, unfit for sale or not salable at prices approximating at least the cost of such Inventory in the ordinary course of business;
(d) with respect to which any covenant, representation or warranty contained in this Agreement or in the Security Agreements has been breached or is not true and which does not conform to all applicable standards imposed by any Governmental Authority;
(e) in which any Person other than such Borrower shall (i) have any direct or indirect ownership, interest or title or (ii) be indicated on any purchase order or invoice with respect to such Inventory as having or purporting to have an interest therein;
(f) which is not finished goods or which constitutes spare or replacement parts, subassemblies, packaging and shipping material, manufacturing supplies, samples, prototypes, displays or display items, bill-and-hold or ship-in-place goods, goods that are returned or marked for return, repossessed goods, defective or damaged goods, goods held on consignment, or goods which are not of a type held for sale in the ordinary course of business;
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(g) which is not located in the U.S. or Canada or is in transit with a common carrier from vendors and suppliers;
(h) which is located in any location leased by such Borrower unless (i) the lessor has delivered to the Administrative Agent a Collateral Access Agreement or (ii) a Reserve for rent, charges and other amounts due or to become due with respect to such facility has been established by the Administrative Agent in its Permitted Discretion; provided that, such Reserve shall be for a rental period of no more than ninety (90) days;
(i) which is located in any third party warehouse or is in the possession of a bailee (other than a third party processor) and is not evidenced by a Document, unless (i) such warehouseman or bailee has delivered to the Administrative Agent a Collateral Access Agreement and such other documentation as the Administrative Agent may require or (ii) an appropriate Reserve has been established by the Administrative Agent in its Permitted Discretion; provided that, such Reserve shall be for a rental period of no more than ninety (90) days;
(j) which is being processed offsite at a third party location or outside processor, or is in-transit to or from such third party location or outside processor, it being understood that Inventory being used by a customer in the ordinary course of business is not being processed;
(k) which is a discontinued product or component thereof;
(l) which is the subject of a consignment by such Borrower as consignor;
(m) which is perishable;
(n) which contains or bears any intellectual property rights licensed to such Borrower unless the Administrative Agent is satisfied that it may sell or otherwise Dispose of such Inventory without (i) infringing the rights of such licensor, (ii) violating any contract with such licensor, or (iii) incurring any liability with respect to payment of royalties other than royalties incurred pursuant to sale of such Inventory under the current licensing agreement;
(o) for which reclamation rights have been asserted by the seller;
(p) which has been acquired from a Sanctioned Person; or
(q) which the Administrative Agent otherwise determines is unacceptable in its Permitted Discretion.
In the event that Inventory of a Borrower which was previously Eligible Inventory ceases to be Eligible Inventory hereunder, such Borrower or the Borrower Representative shall notify the Administrative Agent thereof on and at the time of submission to the Administrative Agent of the next Borrowing Base Certificate.
Eligible Unbilled Accounts means, with respect to each Credit Party, each Account of a Credit Party that would be an Eligible Account but for the fact that such Account has not been invoiced, in each case arising in the ordinary course of business; provided that, no more than thirty (30) days have elapsed from the date on which the Credit Party recognizes such Account on its books and records until its issuance of an invoice with respect thereto.
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Enhanced Reporting Period means the period (a) commencing on (i) the day that an Event of Default occurs or (ii) the third consecutive day that (A) Availability falls below the greater of (x) $18.75 million and (y) 12.5% of the lesser of the Aggregate Commitments and the then effective Borrowing Base, and (b) continuing until, (i) with respect to the foregoing clause (a)(i), no Event of Default exists and (ii) with respect to the foregoing clause (a)(ii), Availability has been greater than or equal to the greater of (i) $18.75 million and (ii) 12.5% of the lesser of the Aggregate Commitments and the then effective Aggregate Borrowing Base during each of the preceding thirty (30) consecutive days.
Environment or Environmental shall have the meanings set forth in 42 U.S.C. § 9601(8).
Environmental Claim means any third party (including any Governmental Authority) action, lawsuit, claim, demand, regulatory action or proceeding, order, decree, consent agreement or written notice of potential or actual responsibility or violation which seeks to impose liability under any Environmental Law.
Environmental Law means all federal, provincial, territorial, state, foreign, and local or municipal laws, rules, regulations, ordinances, orders, decisions, enforceable agreements, and other Legal Requirements, including duties imposed under common law, now or hereafter in effect and relating to, or in connection with the Environment, including without limitation CERCLA, relating to (a) pollution, contamination, injury, destruction, loss, protection, cleanup, reclamation or restoration of the air, surface water, groundwater, land surface or subsurface strata, or other natural resources; (b) solid, gaseous or liquid waste generation, treatment, processing, recycling, reclamation, cleanup, storage, disposal or transportation; (c) exposure to pollutants, contaminants, hazardous or toxic substances, materials or wastes; or (d) the manufacture, processing, handling, transportation, distribution in commerce, use, storage or disposal of hazardous or toxic substances, materials or wastes.
Environmental Permit means any permit, license, order, approval, registration or other authorization required or issued under Environmental Law.
Equipment has the meaning assigned to such term in the U.S. Security Agreement or the Canadian Security Agreement, as applicable.
Equity Interests means with respect to any Person, any shares, interests, participation, or other equivalents (however designated) of corporate stock, capital stock, membership interests or partnership interests, beneficial interests in a trust (or any other ownership interests) of such Person and any warrants, options or other rights entitling the holder thereof to purchase or acquire any of the foregoing.
Equity Issuance means any issuance of equity securities or any other Equity Interests (including any preferred equity securities) by the Company, including any such issuance upon the exercise of warrants to purchase equity by the holders thereof.
Equity Issuance Proceeds means, with respect to any Equity Issuance, all cash and cash equivalent proceeds or cash equivalent investments received by the Company from such Equity Issuance (other than from any other Credit Party) after payment of, or provision for, all underwriter fees and expenses, SEC and blue sky fees, printing costs, fees and expenses of accountants, lawyers and other professional advisors, brokerage commissions and other out-of-pocket fees and expenses actually incurred in connection with such Equity Issuance.
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ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.
ERISA Affiliate means any trade or business (whether or not incorporated) that, together with any Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414(b), (c), (m), (n) or (o) of the Code or Section 4001(a)(14) of ERISA.
Eurodollar, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bears interest at a rate determined by reference to the Adjusted LIBO Rate.
Event of Default has the meaning assigned to such term in Section 7.1.
Exchange Rate means, on any Business Day, with respect to any calculation of the Dollar Equivalent Amount on such date, the rate at which a currency may be exchanged into Dollars, as set forth on such date on the relevant FWDS Series Reuters currency page at or about 11:00 a.m. New York City time on such date. In the event that such rate does not appear on any such Reuters page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Company or, in the absence of such agreement, such Exchange Rate shall instead be the Administrative Agents spot rate of exchange in the interbank market where its currency exchange operations in respect of such currency are then being conducted, at or about 10:00 A.M. local time at such date for the purchase of such currency with Dollars or the purchase of Dollars with such currency, as the case may be, for delivery two (2) Business Days later; provided that, if at the time of any such determination no such spot rate can reasonably be quoted, the Administrative Agent may use any reasonable method (including obtaining quotes from three or more market makers for such currency) as it deems appropriate to determine such rate and such determination shall be presumed correct absent manifest error.
Excluded Account means accounts that are (a) solely used for the purposes of making payments in respect of payroll, taxes and employees wages and benefits for the benefit of any Credit Party or any of its Subsidiaries, (b) zero balance accounts, (c) trust accounts and (d) other accounts with funds on deposit with an average weekly balance for two weeks of any four week period less than $500,000, with respect to accounts located in the United States and Cdn$500,000 with respect to accounts located in Canada, individually for any single account and $1.0 million, with respect to accounts located in the United States and Cdn$1.0 million with respect to accounts located in Canada in the aggregate for all such other accounts, or, in each case, the Dollar Equivalent Amount.
Excluded Collateral has the meaning given to such term in the applicable Security Agreement.
Excluded Domestic Holdco means any direct or indirect Domestic Subsidiary (including any Domestic Subsidiary that is a disregarded entity under the Code) of any Credit Party that has no material assets (held directly or indirectly) other than Equity Interests or indebtedness of one or more Foreign Subsidiaries that are controlled foreign corporations within the meaning of Section 957 of the Code.
Excluded Perfection Collateral means Property with respect to which the Administrative Agent has determined, in its reasonable discretion that the cost of perfecting a security interest in such Property are excessive in relation to the value of the Lien to be afforded thereby.
Excluded Subsidiary means any Domestic Subsidiary of any Credit Party (i) that is owned directly or indirectly by a Foreign Subsidiary or (ii) that is a FSHCO.
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Excluded Swap Obligation means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee 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 Guarantors failure for any reason to constitute an ECP at the time the Guarantee of such Guarantor or the grant of such security interest becomes or would become 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 Guarantee or security interest is or becomes illegal.
Excluded Taxes means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by 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, U.S. federal or withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan, Letter of Credit or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan, Letter of Credit or Commitment (other than pursuant to an assignment request by the Borrowers under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.17, amounts with respect to such Taxes were payable either to such Lenders assignor immediately before such Lender acquired the applicable interest in a Loan, Letter of Credit or Commitment or to such Lender immediately before it changed its lending office, (c) any Canadian federal withholding Taxes imposed on amounts payable to or for the account of such Lender or Issuing Lender with respect to an applicable interest in a Loan, Letter of Credit or Commitment as a result of having been made to such Recipient that, at the time of making such payment, (x) is a person with which a Credit Party does not deal at arms length (for the purposes of the ITA or (y) is a specified non-resident shareholder (as defined in subsection 18(5) of the ITA) of a Credit Party or does not deal at arms length (for the purposes of the ITA) with a specified shareholder (as defined in subsection 18(5) of the ITA) of a Credit Party, except, in each case, where such relationship or circumstance results 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, (d) Taxes attributable to such Recipients failure to comply with Section 2.17(f) and (e) any withholding Taxes imposed under FATCA.
Executive Officer means any Responsible Officer of a Restricted Subsidiary who is, as part of his/her employment with such Restricted Subsidiary, in contact with any Responsible Officer of the Company regarding the business and operations of such Restricted Subsidiary on a regular basis.
Existing Credit Agreement means that certain Credit Agreement, dated as of September 14, 2017, as amended, among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent and the other financial institutions party thereto.
Existing Letters of Credit means each letter of credit listed on Schedule II issued under the Existing Credit Agreement that is outstanding on the Closing Date.
Existing Nine Debt means all Debt and other obligations of the Company and its Subsidiaries under the Existing Credit Agreement.
Facility means the revolving credit facility described in Section 2.1(a).
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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, any agreement entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code and any fiscal or regulatory legislation or rules adopted pursuant to such intergovernmental agreement.
Federal Funds Effective Rate means, for any day, the rate calculated by the NYFRB based on such days federal funds transactions by depositary institutions (as determined in such manner as the NYFRB shall set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as the federal funds effective rate, provided that, if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
Federal Reserve Board means the Board of Governors of the Federal Reserve System or any of its successors.
Fee Letter means collectively (a) that certain agency fee letter, dated as of October 15, 2018, between the U.S. Borrower and JPMorgan Chase Bank, N.A. and (b) that certain upfront fee letter dated as of October 15, 2018, between the U.S. Borrower, JPMorgan Chase Bank, N.A. and the other parties thereto.
Financial Covenant Trigger Period means the period (a) commencing on the first day on which (i) the Borrowers Availability is less than the greater of (A) $18.75 million, and (B) 12.5% of the Loan Limit or (ii) a Default has occurred and (b) ending on the day immediately succeeding the 30th consecutive day on which (i) the Borrowers Availability is not less than the greater of (A) $18.75 million, and (B) 12.5% of the Loan Limit and (ii) no Default has been continuing.
Financial Officer means the chief financial officer, principal accounting officer, treasurer or controller of a Borrower.
First Tier Foreign Subsidiary means any Foreign Subsidiary the Equity Interests of which are held directly by the Company or a U.S. Credit Party.
Fixed Applicable Margin Period means the period commencing on the Closing Date and ending on the date on which a Compliance Certificate is delivered in accordance with Section 5.2(c) and the accompanying financial statements required under Sections 5.2(a) or 5.2(b), as the case may be.
Fixed Charge Coverage Ratio means, at any date, the ratio of (a) EBITDA for the four consecutive fiscal quarters of the Company ended on such date (or, if such date is the not the last day of the fiscal quarter, the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 5.2(a) or 5.2(b)) (or, prior to the first delivery of any such financial statements, with respect to the most recently available financial statements) for such period minus Unfinanced Capital Expenditures to (b) the sum of Fixed Charges for such period.
Fixed Charges means, for any period, without duplication, (a) cash Interest Expense, plus (b) scheduled principal payments on Funded Debt due in cash, whether or not paid, plus (c) expenses for taxes paid in cash, plus (d) Restricted Payments paid in cash (other than Restricted Payments permitted pursuant to Section 6.9(a), (c) or (d)), plus (e) cash payments of obligations under Capital Leases, all calculated for the Company and its Restricted Subsidiaries on a consolidated basis in accordance with GAAP.
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Flood Insurance Regulations means (a) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (b) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (c) the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended or recodified from time to time, (d) the Flood Insurance Reform Act of 2004 and (e) the Biggert-Waters Flood Reform Act of 2012, and any regulations promulgated thereunder
Foreign Lender means, with respect to the Company, any Lender that is organized under the laws of a jurisdiction other than that in which the Company is resident for tax purposes. For purposes of this definition (i) the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction, and (ii) Canada and each province and territory thereof shall be deemed to constitute a single jurisdiction.
Foreign Restricted Subsidiary means any Restricted Subsidiary of the Company that is a Foreign Subsidiary.
Foreign Subsidiary means any Subsidiary of the Company that is not a Domestic Subsidiary.
FSHCO means any Domestic Subsidiary with no material assets or business activities other than the ownership of Equity Interests in one or more controlled foreign corporations as defined in Section 957 of the Code.
Funded Debt means, on a consolidated basis for the Borrowers and their consolidated Restricted Subsidiaries, without duplication:
(a) all Debt of such Restricted Entity of the type described in clauses (a), (b), (c), (d), (f) and (j) of the definition of Debt but excluding any Debt permitted under Section 6.1(l);
(b) all Debt of such Restricted Entity of the type described in clause (e) of the definition of Debt other than (i) trade accounts payable incurred in the ordinary course of business, and (ii) contingent obligations of such Restricted Entity to pay in cash the deferred purchase price of Property to the extent, and only to the extent, (A) such obligations are contingent and (B) with respect to earn-out obligations, the amount of such earn-out obligations is not known and payable;
(c) all Debt of such Restricted Entity of the type described in clause (h) of the definition of Debt;
(d) all Debt of such Restricted Entity of the type described in clause (i) of the definition of Debt, but only to the extent such Debt is of the type that would be included in clause (a)-(c) above; and
(e) all Debt of others of the type included in clauses (a)-(d) above secured by any Lien on or in respect of any Property of such Restricted Entity, but if recourse is only to such Property, then only to the extent of the lesser of the amount of the Debt secured thereby and the fair market value of the Property subject to such Lien.
Funding Account means any Deposit Account of the U.S. Borrower or the Canadian Borrower to which the Administrative Agent is authorized by the Borrowers to transfer the proceeds of any Borrowings requested or authorized pursuant to this Agreement.
GAAP means United States generally accepted accounting principles as in effect from time to time, applied on a basis consistent with the requirements of Section 1.3.
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Governmental Authority means the government of the United States, Canada or any other nation, or of any political subdivision thereof, whether state, provincial, territorial 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).
Guarantor means any Person that now or hereafter executes a Guaranty, including (a) the Company, (b) each of the Wholly-Owned Domestic Restricted Subsidiaries of the U.S. Borrower or Wholly-Owned Restricted Subsidiaries of the Canadian Borrower listed on Schedule 4.11; and (c) each of the Wholly-Owned Domestic Restricted Subsidiaries of the U.S. Borrower or Wholly-Owned Restricted Subsidiaries of the Canadian Borrower that becomes a guarantor of all or a portion of the Secured Obligations and which has entered into either a Joinder Agreement or a new Guaranty.
Guaranty means the Guaranty Agreements, dated as of the Closing Date, among the Guarantors and the Administrative Agent for the benefit of the Secured Parties and each Guaranty Agreement executed and delivered after the Closing Date in substantially the same form as Exhibit C.
Hazardous Substance means any substance or material identified as hazardous or extremely hazardous pursuant to CERCLA and those regulated as hazardous or toxic under any other Environmental Law, including without limitation pollutants, contaminants, petroleum, petroleum products, radionuclides, and radioactive materials.
Hazardous Waste means any substance or material regulated or designated as a hazardous waste pursuant to any Environmental Law.
Impacted Interest Period has the meaning assigned to such term in the definition of LIBO Rate.
Indemnified Taxes means (a) taxes other than Excluded Taxes and (b) to the extent not otherwise described in (a), Other Taxes.
Indemnitee has the meaning assigned to such term in Section 9.1(b).
Interest Election Request means a request by the Borrower Representative to convert or continue a Borrowing in accordance with Section 2.8.
Interest Expense means, for any period and with respect to any Person, total cash interest expense of the Company and its Restricted Subsidiaries, Letter of Credit fees and other fees and expenses incurred by such Person in connection with any Debt for such period whether paid or accrued (including that attributable to obligations which have been or should be, in accordance with GAAP, recorded as Capital Leases; provided that, notwithstanding any changes in GAAP resulting from the implementation of lease accounting rules after the Closing Date, no lease payments shall be treated as Interest Expense to the extent that such lease payments would not have been treated as Interest Expense prior to such change in GAAP), including, without limitation, all commissions, discounts, and other fees and charges owed with respect to Letters of Credit and bankers acceptance financing, fees owed with respect to the Secured Obligations, and net costs under Swap Agreements entered into addressing interest rates, all as determined in conformity with GAAP; provided that, no amounts of the Unrestricted Subsidiaries Interest Expense (which, for the avoidance of doubt, the Company or any Restricted Subsidiary does not have liability to pay) shall be taken into account in calculating the Companys consolidated Interest Expense.
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Interest Payment Date means (a) with respect to any Base Rate Loan, the first day of each calendar quarter and the Maturity Date and (b) with respect to any Non-Base Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part (and, in the case of a Non-Base Rate Loan with an Interest Period of more than three (3) months duration, each day prior to the last day of such Interest Period that occurs at intervals of three (3) months duration after the first day of such Interest Period) and the Maturity Date.
Interest Period means for each Non-Base Rate Loan comprising part of the same Borrowing, the period commencing on the date such Non-Base Rate Loan is made or deemed made and ending on the last day of the period selected by the Borrower Representative pursuant to the provisions below and Section 2.8, and thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower Representative pursuant to the provisions below and Section 2.8. The duration of each such Interest Period shall be one (1), three (3), or six (6) months (or such longer or shorter period if agreed to by all the Lenders), in each case as the Borrower Representative may select, provided that:
(a) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided that if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day;
(b) any Interest Period which 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 in which it would have ended if there were a numerically corresponding day in such calendar month; and
(c) the Borrower Representative may not select any Interest Period for any Loan which ends after the Maturity Date.
Interpolated Rate shall mean, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate or to the next 1/100th of 1% with respect to any CDOR Rate Loan, as applicable) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) with respect to the Adjusted LIBO Rate (i) the LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available) that is shorter than the Impacted Interest Period, and (ii) the LIBO Screen Rate for the shortest period (for which the LIBO Screen Rate is available) that exceeds the Impacted Interest Period, in each case, at such time, and (b) with respect to any CDOR Rate Loan, (i) the applicable CDOR Screen Rate for the longest period (for which the CDOR Screen Rate is available) that is shorter than the Interest Period for such CDOR Rate Loan, and (ii) the applicable CDOR Screen Rate for the shortest period (for which the CDOR Screen Rate is available) that is longer than the Interest Period for such CDOR Rate Loan, in each case, at such time.
Inventory has the meaning assigned to such term in the U.S. Security Agreement or the Canadian Security Agreement, as applicable.
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 capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, or a purchase or other acquisition of any Debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. 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.
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ISP means, with respect to any Letter of Credit, the International Standby Practices 1998 published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).
Issuing Lender means each of (i) JPMorgan, (ii) Amegy, (iii) Wells Fargo, and (iv) with the consent of the Administrative Agent, any other Lender that agrees to act as an Issuing Lender, each in its capacity as the issuer of Letters of Credit pursuant to the terms of this Agreement. Each Issuing Lender may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Lender, in which case the term Issuing Lender shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. References herein and in the other Credit Documents to the Issuing Lender shall be deemed to refer to the Issuing Lender in respect of the applicable Letter of Credit or to each Issuing Lender, as the context requires.
ITA means the Income Tax Act (Canada), as amended.
Joinder Agreement means a joinder agreement substantially in the form attached to the Guaranty.
JPMCB Canada means JPMorgan Chase Bank, N.A., Toronto Branch.
JPMCB U.S. means JPMorgan Chase Bank, N.A.
JPMorgan means, collectively, JPMCB U.S. and/or JPMCB Canada, as the context requires.
LC Collateral Account has the meaning assigned to such term in Section 2.6(j).
LC Disbursement means any payment made by an Issuing Lender pursuant to a Letter of Credit.
LC Exposure means, at any time, the sum of (a) the aggregate undrawn amounts of all outstanding Letters of Credit plus (b) the aggregate amount of all LC Disbursements relating to Letters of Credit that have not been paid or reimbursed by or on behalf of the U.S. Borrower. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the aggregate LC Exposure.
LC Fronting Limit means, with respect to each Issuing Lender, initially, the amount set forth on Schedule I as its LC Fronting Limit and thereafter, amounts as may be agreed between each Issuing Lender and the Borrower Representative.
Lead Arranger means each of JPMCB U.S. and Wells Fargo Bank, National Association in its capacity as a lead arranger and bookrunner hereunder.
Legal Requirement means any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority, including, but not limited to, Regulations T, U, and X.
Lender means a Lender having a Commitment or if the Aggregate Commitments have been terminated, a lender that is owed Loans.
Lender Parties means the Lenders, the Issuing Lenders, and the Administrative Agent.
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Lending Office means, as to any Lender, the office or offices of such Lender described as such in such Lenders Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrowers and the Administrative Agent.
Letter of Credit Application means the applicable Issuing Lenders standard form letter of credit application for standby or commercial letters of credit which has been executed by a Borrower, the applicable Guarantor and accepted by the applicable Issuing Lender in connection with the issuance of a Letter of Credit.
Letter of Credit Documents means all Letters of Credit, Letter of Credit Applications and amendments thereof, and agreements, documents, and instruments entered into in connection therewith or relating thereto.
Letter of 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.
Letter of Credit Maximum Amount means $50.0 million; provided that, on and after the Maturity Date, the Letter of Credit Maximum Amount shall be zero.
Letter of Credit Obligations means any obligations of the U.S. Borrower under this Agreement in connection with the Letters of Credit.
Letters of Credit means the letters of credit issued pursuant to this Agreement for the account of the U.S. Borrower, and the term Letter of Credit means any one of them or each of them singularly, as the context may require, in such form as may be agreed by the U.S. Borrower and the applicable Issuing Lender.
Leverage Ratio means, at any date, the ratio of (a) total Funded Debt on such date to (b) EBITDA for the period of four consecutive fiscal quarters ended on such date (or, if such date is not the last day of a fiscal quarter, ended on the last day of the fiscal quarter most recently ended prior to such date).
LIBO Rate means, with respect to any Borrowing of Eurodollar Loans for any Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period; provided that, if the LIBO Screen Rate shall not be available at such time for such Interest Period (an Impacted Interest Period), then the LIBO Rate shall be the Interpolated Rate.
LIBO Screen Rate means, for any day and time, with respect to any Borrowing of Eurodollar Loans for any Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate for U.S. Dollars for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion); provided that, if the LIBO Screen Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
Lien means any mortgage, lien, pledge, hypothecation, charge, deed of trust, security interest, or encumbrance to secure or provide for the payment of any obligation of any Person, whether arising by contract, operation of law, or otherwise (including the interest of a vendor or lessor under any conditional sale agreement, Capital Lease, or other title retention agreement).
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Liquid Investments means (a) readily marketable direct full faith and credit obligations of the United States of America or obligations unconditionally guaranteed by the full faith and credit of the United States of America; (b) commercial paper issued by (i) any Lender or any Affiliate of any Lender or (ii) any commercial banking institutions or corporations rated at least P-1 by Moodys or A-1 by S&P; (c) certificates of deposit, time deposits, and bankers acceptances issued by (i) any of the Lenders or (ii) any other commercial banking institution which is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $250.0 million and rated Aa by Moodys or AA by S&P; (d) repurchase agreements which are entered into with any of the Lenders or any major money center banks included in the commercial banking institutions described in clause (c) and which are secured by readily marketable direct full faith and credit obligations of the government of the United States of America or any agency thereof; (e) investments in any money market fund which holds investments substantially of the type described in the foregoing clauses (a) through (d); and (f) other investments made through the Administrative Agent or its Affiliates. All the Liquid Investments described in clauses (a) through (d) above shall have maturities of not more than 365 days from the date of issue.
Liquidity means, as of a date of determination, the sum of (a) Availability plus (b) readily available unrestricted cash held in Deposit Accounts of any Credit Party in the United States (other than the Cash Collateral Accounts); provided that, such Deposit Accounts and the funds therein shall be unencumbered and free and clear of all Liens and other third party rights other than a Lien in favor of the Administrative Agent pursuant to Security Documents and the Liens described in Section 6.2(i).
LLC means any Person that is a limited liability company under the laws of its jurisdiction of formation.
Loan means each of the Loans (including Canadian Loans) made by the Lenders to either of the Borrowers pursuant to this Agreement.
Loan Limit means, at any time, the lesser of (a) the Aggregate Commitments and (b) the Aggregate Borrowing Base then in effect.
Magnum Acquisition means the direct or indirect acquisition by the U.S. Borrower of the total Equity Interests in Magnum Oil Tools International, Ltd and Magnum Oil Tools Canada Ltd (collectively the Magnum Targets) pursuant to the Magnum Purchase Agreement.
Magnum Canada has the meaning assigned to such term in Section 5.12(d).
Magnum Purchase Agreement means the securities purchase agreement dated as of October 15, 2018 among MOTI Holdco, LLC, the Borrowers and Warren Lynn Frazier, Garrett Lynn Frazier 2018 DG Trust, Derrick Chase Frazier 2018 DG Trust, Lynn Frazier Charitable Trust and Frazier Family Foundation, Inc.
Magnum Targets has the meaning assigned to such term in the definition of Magnum Acquisition.
Material Adverse Change means any event, development or circumstance that has had or would reasonably be expected to have a material adverse effect on (a) the business, operations, Property or financial condition of the Company and its Restricted Subsidiaries, taken as a whole; (b) the validity or enforceability of any Credit Document or any right or remedy of any Secured Party under any Credit Document, (c) the ability of the Company and the other Credit Parties, taken as a whole, to perform their obligations under the Credit Documents or (d) the Collateral, or the Administrative Agents Liens (on behalf of itself and the Secured Parties) on the Collateral and the priority of such Liens.
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Material Debt means Debt (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the Company and its Restricted Subsidiaries in an aggregate principal amount exceeding $15.0 million. For purposes of determining Material Debt, the principal amount of the obligations of any Borrower or any Restricted Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Borrower or such Restricted Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
Maturity Date means the earliest of (a) five (5) years after the Closing Date (the Scheduled Maturity Date), (b) the earlier termination in whole of the Commitments pursuant to Section 2.9 or Article VII or (c) April 28, 2023 to the extent that, on or before such date, the Senior Notes are not repurchased, redeemed or refinanced to have a maturity date at least one hundred eighty (180) days after the Scheduled Maturity Date.
Maximum Rate means the maximum nonusurious interest rate under applicable Legal Requirements.
Moodys means Moodys Investors Service, Inc. and any successor thereto which is a nationally recognized statistical rating organization.
Multiemployer Plan means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Company or any member of the Controlled Group is making or accruing an obligation to make contributions.
Net Income means, for any period and with respect to any Person, the net income for such period for such Person after taxes as determined in accordance with GAAP, excluding, however, (a) extraordinary items, including (i) any net non-cash gain or loss during such period arising from the sale, exchange, retirement or other Disposition of capital assets (such term to include all fixed assets and all securities) other than in the ordinary course of business, and (ii) any write-up or write-down of assets and (b) the cumulative effect of any change in GAAP.
Net Orderly Liquidation Value means, with respect to Inventory of any Person, the orderly liquidation value thereof as determined in a manner reasonably acceptable to the Administrative Agent by an appraiser reasonably acceptable to the Administrative Agent, net of all costs of liquidation thereof.
Net Proceeds means, in connection with any Disposition or any casualty loss of Collateral pursuant to Section 5.3(c), by any Restricted Entity, the proceeds thereof in the form of cash and Liquid Investments (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, and including casualty insurance settlements and condemnation awards, but in each case only as and when received), net of attorneys fees, accountants fees, investment banking fees, amounts required to be applied to the repayment of the Debt secured by a Lien expressly permitted hereunder on any asset that is the subject of such Disposition or such casualty loss of Collateral and other customary fees and expenses actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements).
Non-Base Rate Borrowing means a Borrowing of the Type calculated at the Adjusted LIBO Rate or CDOR, as the context requires.
Non-Base Rate Loan means (a) with respect to U.S. Loans (and calculations of interest with respect to LC Exposure), Eurodollar Loans, (b) with respect to Canadian Loans, to the extent denominated in U.S. Dollars, Eurodollar Loans, and (c) with respect to Canadian Loans, to the extent denominated in Canadian Dollars, CDOR Loans.
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Non-Consenting Lender means any Lender who does not agree to a consent, waiver or amendment which (a) requires the agreement of all Lenders or all affected Lenders in accordance with the terms of Section 9.2 and (b) has been agreed by the Required Lenders.
Non-Defaulting Lender means any Lender that is not then a Defaulting Lender or a Potential Defaulting Lender.
Note means a promissory note of a Borrower payable to a Lender in the amount of such Lenders Commitment, in the form provided by the Administrative Agent and reasonably acceptable to such Borrower.
Notice shall has the meaning assigned to such term in Section 9.9(b)(ii).
Notice of Borrowing means a notice of borrowing signed by the Borrower Representative in substantially the same form as Exhibit F or such other form as shall be reasonably approved by the Administrative Agent setting forth:
(i) the name of the Applicable Borrower;
(ii) the aggregate amount of the requested Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing, Eurodollar Borrowing, CBR Borrowing, CPR Borrowing or a CDOR Borrowing; and
(v) in the case of a Non-Base Rate Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term Interest Period.
NYFRB means the Federal Reserve Bank of New York.
NYFRB Rate means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that, if none of such rates are published for any day that is a Business Day, the term NYFRB Rate means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received to the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
Obligations means all principal, interest (including post-petition interest), fees, reimbursements, indemnifications, and other amounts now or hereafter owed by any of the Credit Parties to the Lenders, the Issuing Lenders, or the Administrative Agent under this Agreement and the Credit Documents, including the Letter of Credit Obligations and any increases, extensions, and rearrangements of those obligations under any amendments, supplements, and other modifications of the documents and agreements creating those obligations.
OFAC means The Office of Foreign Assets Control of the U.S. Department of the Treasury.
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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 taxes (other than a connection 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 Credit Document, or sold or assigned an interest in any Loan, Letter of Credit or Credit Document).
Other Taxes means all present or future stamp, court or documentary, intangible, recording, filing taxes or any other similar taxes, charges or levies imposed by any Governmental Authority arising from any payment made hereunder or under any other Credit Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Credit Document, except any such taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.14).
Overnight Bank Funding Rate means, for any day, the rate comprised of both overnight federal funds and overnight Eurodollar borrowings by U.S.-managed banking offices of depository institutions (as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).
Participant has the meaning assigned to such term in Section 9.7(c).
Participant Register has the meaning assigned to such term in Section 9.7(c).
Patriot Act means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
Payment Conditions shall be deemed to be satisfied with respect to an action or proposed action if:
(A) | no Default or Event of Default has occurred and is continuing or would result immediately after giving effect to such action or proposed action; |
(B) | immediately after giving effect to and at all times during the thirty (30) day period (or if less, the number of days that have elapsed since the Closing Date) immediately prior to such action or proposed action, the Borrowers shall have (1) (x) Availability calculated on a pro forma basis after giving effect to such action or proposed action of not less than the greater of (A) 15% of the Loan Limit and (B) $22.5 million, and (y) a Fixed Charge Coverage Ratio calculated on a pro forma basis after giving effect to such action or proposed action of not less than 1.00 to 1.00 or (2) Availability calculated on a pro forma basis after giving effect to such action or proposed action of not less than the greater of (A) 20% of the lesser of the Aggregate Commitments and the Aggregate Borrowing Base or (B) $30.0 million; and |
(C) | the Borrower Representative shall have delivered to the Administrative Agent a certificate in form and substance reasonably satisfactory to the Administrative Agent certifying as to the items described in (A) and (B) above and attaching calculations for item (B). |
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Payment in Full means (a) the Commitments have expired or been terminated and the payment in full in cash of all outstanding Loans and LC Disbursements, together with accrued and unpaid interest thereon, (b) the termination, expiration, or cancellation of all outstanding Letters of Credit (or alternatively, with respect to each such Letter of Credit, such Letters of Credit are Cash Collateralized or otherwise secured to the satisfaction of the applicable Issuing Lender), (c) the payment in full in cash of the accrued and unpaid fees, (d) the payment in full in cash of all reimbursable expenses and other Secured Obligations (other than unliquidated Obligations for which no claim has been made and other obligations expressly stated to survive such payment and termination of this Agreement), together with accrued and unpaid interest thereon, and (e) the termination of the Swap Agreement Obligations and the Banking Services Obligations or entering into other arrangements satisfactory to the Secured Parties that are counterparties thereto.
PBGC means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.
Permitted Acquisition means an Acquisition that is permitted under Section 6.4.
Permitted Debt has the meaning assigned to such term in Section 6.1.
Permitted Discretion means a determination made in good faith and in the exercise of reasonable (from the perspective of a secured asset based lender) business judgment.
Permitted Investments has the meaning assigned to such term in Section 6.3.
Permitted Liens has the meaning assigned to such term in Section 6.2.
Person means any natural person, partnership, corporation (including a business trust), joint stock company, trust, limited liability company, unlimited liability company, limited liability partnership, unincorporated association, joint venture, or other entity, or Governmental Authority, or any trustee, receiver, interim receiver, receiver manager, custodian, or similar official.
Plan means an employee benefit plan (other than a Multiemployer Plan) maintained for employees of the Company or any member of the Controlled Group and covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code.
Platform has the meaning assigned to such term in Section 9.9(b)(i).
Potential Defaulting Lender means, at any time, a Lender (a) as to which the Administrative Agent has notified the Company that an event of the kind referred to in clause (d) of the definition of Defaulting Lender has occurred in respect of any financial institution affiliate of such Lender, or (b) as to which the Administrative Agent or an Issuing Lender has in good faith determined and notified the Company and, in the case of any good faith determination and notification made by an Issuing Lender, the Administrative Agent, that such Lender or its direct or indirect parent company or a financial institution affiliate thereof has notified the Administrative Agent or the applicable Issuing Lender, or has stated publicly, that it will not comply with its funding obligations under any other loan agreement or credit agreement or other similar financing agreement. Any determination that a Lender is a Potential Defaulting Lender under any of clauses (a) or (b) above will be made by the Administrative Agent or, in the case of clause (b), an Issuing Lender, in its sole discretion acting in good faith.
PPSA means the Personal Property Security Act (Alberta), including the regulations thereto, as amended from time to time, and any other similar legislation of any Canadian province or territory; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest or other Lien on any Collateral is governed by the personal property security legislation or other applicable
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legislation with respect to personal property security in effect in a jurisdiction in Canada other than the Province of Alberta, PPSA shall refer instead to the Personal Property Security Act or such other applicable federal, provincial or territorial legislation (including the Civil Code of Québec) pertaining to the granting, perfecting, opposability, priority, ranking or enforcement of security interests, liens, hypothecs on personal or moveable property, and any successor statutes, together with any regulations thereunder, in each case as in effect from time to time.
Prepayment Event means:
(a) any sale, transfer or other Disposition (including pursuant to a sale and leaseback transaction) of any Property or asset of any Credit Party, other than Dispositions described in Section 6.05(a) and Dispositions between or among Credit Parties, resulting in Net Proceeds in excess of $2.5 million;
(b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any Property or asset of any Credit Party resulting in Net Proceeds in excess of $2.5 million.
Prime Rate means the per annum rate of interest established from time to time by JPMorgan as its prime rate for Dollar loans, which rate may not be the lowest rate of interest charged by such Lender to its customers.
Prior Claims shall mean all Liens created by applicable law (in contrast with Liens voluntarily granted), or interests similar thereto under applicable law, which rank or are capable of ranking prior or pari passu with the Liens created by the Canadian Security Agreement including for amounts owing for, or in respect of, employee source deductions, wages, vacation pay, goods and services taxes, sales taxes, harmonized sales taxes, municipal taxes, workers compensation, Quebec corporate taxes, pension fund obligations and overdue rents.
Property of any Person means any property or assets (whether real, personal, or mixed, tangible or intangible) of such Person.
Protective Advance has the meaning assigned to such term in Section 2.4.
Qualified ECP Counterparty means, in respect of any Swap Agreement, a Guarantor that (a) has total assets exceeding $10.0 million at the time any guaranty of obligations of any Credit Party owing to Swap Counterparties under any Swap Agreement or grant of the relevant security interest becomes effective or (b) otherwise constitutes an eligible contract participant under the Commodity Exchange Act.
Recipient means, as applicable, (a) the Administrative Agent, (b) any Lender and (c) any Issuing Lender, or any combination thereof (as the context requires).
Register has the meaning assigned to such term in Section 9.7(b).
Regulations T, U, and X means Regulations T, U, and X of the Federal Reserve Board, as each is from time to time in effect, and all official rulings and interpretations thereunder or thereof.
Related Parties means, with respect to any Person, such Persons Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Persons Affiliates.
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Release shall have the meaning set forth in CERCLA or under any other applicable Environmental Law.
Removal Effective Date has the meaning set forth in Section 8.6(b).
Report means reports prepared by the Administrative Agent or another Person showing the results of appraisals, field examinations or audits pertaining to the assets of the Credit Parties from information furnished by or on behalf of the Borrowers, which Reports may be distributed to the Lenders by the Administrative Agent.
Reportable Event means any of the events set forth in Section 4043(c) of ERISA (other than any such event not subject to the provision for 30-day notice to the PBGC under the regulations issued under such section).
Required Lenders means, (a) at any time when there are two (2) or more unaffiliated Lenders, two (2) or more unaffiliated Lenders holding more than 50% of (i) prior to the termination or expiration of the Commitments, the Aggregate Commitments and (ii) following the termination or expiration of the Commitments, the Aggregate Credit Exposure (with the aggregate amount of each Lenders risk participation and funded participation in the Letter of Credit Obligations and Canadian Loans being deemed held by such Lender for purposes of this definition) and (b) at any time when there is one Lender, such Lender; provided that the Commitments and Aggregate Credit Exposure of any Defaulting Lender shall be excluded for purposes of determining the Required Lenders.
Requirement of Law means, with respect to any Person, (a) the charter, articles or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person and (b) any statute, law (including common law), treaty, rule, regulation, code, ordinance, order, decree, writ, judgment, injunction or determination of any arbitrator or court or other Governmental Authority (including Environmental Laws), in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
Reserves means any and all reserves which the Administrative Agent deems necessary, in its Permitted Discretion, to maintain (including, without limitation, reserves for accrued and unpaid interest on the Secured Obligations, reserves applicable to Banking Services, volatility reserves, reserves for rent at locations leased by any Credit Party and for consignees, warehousemens and bailees charges, reserves for dilution of Accounts, reserves for Inventory shrinkage, reserves for customs charges and shipping charges related to any Inventory in transit, reserves for obligations of any of the Credit Parties owing to Swap Counterparties under any Swap Agreement, reserves for contingent liabilities of any Credit Party, reserves for uninsured losses of any Credit Party, reserves for uninsured, underinsured, un-indemnified or under-indemnified liabilities or potential liabilities with respect to any litigation and reserves for taxes, fees, assessments, and other governmental charges and, with respect to the Canadian Credit Parties, reserves for Prior Claims established in the Administrative Agents Permitted Discretion) with respect to the Collateral or any Credit Party.
Resignation Effective Date has the meaning assigned to such term in Section 8.6(a).
Response shall have the meaning set forth in CERCLA, and includes any equivalent action, howsoever defined, under any other applicable Environmental Law.
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Responsible Officer means (a) with respect to any Person that is a corporation, such Persons chief executive officer, president, chief financial officer, chief operating officer, general counsel, director of finance, treasurer, controller, or vice president, (b) with respect to any Person that is a limited liability company, if such Person has officers, then such Persons chief executive officer, president, chief financial officer, chief operating officer, general counsel, treasurer, or vice president, and if such Person is managed by members, then a chief executive officer, president, chief financial officer, chief operating officer, general counsel, treasurer or vice president of such Persons managing member, and if such Person is managed by managers, then a manager (if such manager is an individual) or a chief executive officer, president, chief financial officer, chief operating officer, general counsel, treasurer or vice president of such manager (if such manager is an entity), and (c) with respect to any Person that is a general partnership, limited partnership or a limited liability partnership, the chief executive officer, president, chief financial officer, chief operating officer, general counsel, treasurer or vice president of such Persons general partner or partners.
Restricted Entity means (a) the Borrowers and (b) each Restricted Subsidiary.
Restricted Payment means, with respect to any Person, any direct or indirect dividend or distribution (whether in cash, securities or other Property) or any direct or indirect payment of any kind or character (whether in cash, securities or other Property) in consideration for or otherwise in connection with any retirement, purchase, redemption or other acquisition of any Equity Interest of such Person, or any options, warrants or rights to purchase or acquire any such Equity Interest of such Person; provided that, the term Restricted Payment shall not include any dividend or distribution payable solely in Equity Interests of such Person or warrants, options or other rights to purchase such Equity Interests.
Restricted Subsidiary means (a) each Subsidiary of a Borrower on the Closing Date and (b) each other Subsidiary of a Borrower that is not an Unrestricted Subsidiary.
Revaluation Date shall mean (a) with respect to any Loan denominated in Canadian Dollars, each of the following: (i) the date of the Borrowing of such Loan and (ii) each date of a conversion into or continuation of such Loan pursuant to the terms of this Agreement; (b) with respect to any Letter of Credit denominated in Canadian Dollars, each of the following: (i) the date on which such Letter of Credit is issued, (ii) the first Business Day of each calendar month and (iii) the date of any amendment of such Letter of Credit that has the effect of increasing the face amount thereof; and (c) any additional date as the Administrative Agent may determine at any time when an Event of Default exists.
Revolving Exposure means, at any time, with respect to any Lender, the sum of such Lenders U.S. Exposure and the Canadian Exposure.
S&P means Standard & Poors Ratings Service, a division of The McGraw-Hill Companies, Inc., or any successor thereof which is a nationally recognized statistical rating organization.
Same Day Funds means with respect to disbursements and payments in Dollars, immediately available funds.
Sanctioned Entity means (a) a country or a government of a country, region or territory, (b) an agency of the government of a country, region or territory, (c) an organization directly or indirectly controlled by a country, region or territory or its government, (d) a Person resident in a country, region or territory, in each case, that is subject to a country, region or territory sanctions program administered and enforced by OFAC or other applicable Sanctions authority, including, without limitation, currently, the Crimea Region of Ukraine, Cuba, Iran, North Korea and Syria.
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Sanctioned Person means, at any time, (a) a Person named on any Sanctions-related list of designated Persons maintained by OFAC or other applicable Sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Entity or (c) any Person owned or Controlled by any such Person or Persons described in the foregoing clauses (a) or (b).
Sanctions means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, (b) the United Nations Security Council, the European Union, any European Union member state, Her Majestys Treasury of the United Kingdom, or (c) the Government of Canada.
SCF means, collectively, SCF-VII, L.P., a Delaware limited partnership, and its Affiliates (other than any portfolio company thereof).
SEC means, the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
Secured Obligations means (a) the Obligations, (b) the Banking Services Obligations owing by Credit Parties, and (c) obligations of any Credit Party owing to Swap Counterparties under any Swap Agreement, provided, that solely with respect to any Credit Party that is not an eligible contract participant under the Commodity Exchange Act, Excluded Swap Obligations of such Credit Party shall in any event be excluded from Secured Obligations owing by such Credit Party.
Secured Parties means the Lender Parties, the Banking Services Providers who are owed Banking Services Obligations and Swap Counterparties who are owed any Obligations.
Securities Account has the meaning assigned to such term in the UCC.
Security Agreements means, collectively, the U.S. Security Agreement and the Canadian Security Agreement.
Security Documents means the Security Agreements, including any supplements thereto and any and all other instruments, documents or agreements, now or hereafter executed by any Credit Party or any other Person to secure the Obligations.
Senior Notes means the 8.750% senior unsecured notes due 2023 issued by the Company.
Solvent means on the date of any determination (a) as to any U.S. Credit Party (i) the fair value of the assets of the Company is not less than the amount that will be required to pay the total liability on existing debts as they become absolute and matured, (ii) the present fair saleable value of the assets of the Company is not less than the amount that will be required to pay the probable liability on existing debts of the Company as they become absolute and matured and (iii) the Company is able to pay its debts or other obligations as they generally become absolute and matured and (b) as to any Canadian Credit Party, such Person shall not be an insolvent person as such term is defined in the Bankruptcy and Insolvency Act (Canada). The term debts as used in this paragraph includes any legal liability, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent and values of assets means the amount at which the assets (both tangible and intangible) in their entirety would change hands between a willing buyer and a willing seller, with a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under compulsion to act.
Statements has the meaning assigned to such term in Section 2.18(g).
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Statutory Reserve Rate means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentage (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Federal Reserve Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as Eurocurrency Liabilities in Regulation D of the Federal Reserve Board). Such reserve percentage shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
Subsidiary means, with respect to any Person (the holder) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the holder in the holders consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity, a majority of whose outstanding Voting Securities shall at any time be owned by the holder or one more Subsidiaries of the holder. Unless expressly provided otherwise, all references herein and in any other Credit Document to any Subsidiary or Subsidiaries means a Subsidiary or Subsidiaries of the Company.
Swap Agreement means any agreement with respect to any swap, forward, spot, future, credit default or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that, no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrowers or the Restricted Subsidiaries shall be a Swap Agreement.
Swap Agreement Obligations means any and all obligations of the Credit Parties, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements permitted hereunder with a Lender or an Affiliate of a Lender (including a Person that is a party to a Swap Agreement with the Borrowers or any of their Restricted Subsidiaries that entered into such Swap Agreement before or while such Person was a Lender or an Affiliate of a Lender, whether or not such Person at any time ceases to be a Lender or an Affiliate of a Lender, as the case may be), and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any such Swap Agreement transaction.
Swap Counterparty means Person that is a Lender or an Affiliate of a Lender or was a Lender or an Affiliate of a Lender at the time such Person entered into a Swap Agreement with a Credit Party.
Swap Obligation 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 or any rules or regulations promulgated thereunder.
Tangible Net Assets means (a) the consolidated net book value of all assets of the Company and its consolidated Restricted Subsidiaries minus (b) the consolidated net book value of all intangible assets of the Company and its consolidated Restricted Subsidiaries, calculated in each case based on the Companys consolidated balance sheet for the most recently ended fiscal quarter as to which its financial statements are available. Tangible Net Assets shall be subject to pro forma adjustments for Material Acquisitions and Material Dispositions.
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Tax Group has the meaning assigned to such term in Section 4.13.
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.
Termination Event means (a) a Reportable Event with respect to a Plan, (b) the withdrawal of the Company or any member of the Controlled Group from a Plan during a plan year in which it was a substantial employer as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under Section 4041(c) of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or (e) any other event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.
Transactions means, collectively, (a) the initial borrowings and other extensions of credit under this Agreement, (b) the Magnum Acquisition, (c) the refinancing of the Existing Nine Debt, (d) the issuance of the Senior Notes and (e) the payment of fees, commissions and expenses in connection with each of the foregoing.
Type has the meaning assigned to such term in Section 1.4.
UCC means the Uniform Commercial Code as in effect in the State of New York from time to time.
Unfinanced Capital Expenditures means, for any period, Capital Expenditures made during such period which are not financed (a) from the proceeds of any Debt (other than the Loans), (b) with the proceeds of the sale of an asset, (c) with capital contributions to the Credit Parties or the proceeds from the issuance of Equity Interests by the Credit Parties, in each case, other than capital contributions from or Equity Interest issuances to another Credit Party, (d) with casualty insurance proceeds or condemnation awards, (e) through a trade-in of existing assets, (f) as a part of an Investment permitted by Section 6.3 or a Permitted Acquisition, or (g) with any combination of the foregoing.
United States and U.S. means the United States of America.
Unrestricted Subsidiaries means any Subsidiary of the Company that has been designated as an Unrestricted Subsidiary in compliance with Section 5.7.
U.S. Availability means, at any time, an amount equal to (a) the U.S. Loan Limit, minus (b) the Aggregate U.S. Exposure (calculated, with respect to any Defaulting Lender, as if such Defaulting Lender had funded its Applicable Percentage of all outstanding U.S. Loans).
U.S. Borrower has the meaning assigned to such term in the preamble.
U.S. Borrowing Base means the sum of (a) 85% of the U.S. Credit Parties Eligible Accounts at such time, plus (b) 80% of the U.S. Credit Parties Eligible Unbilled Accounts at such time, in an aggregate amount, when combined with clause (b) of the definition of Canadian Borrowing Base, not to exceed $10.0 million, plus (c) the product of 85% multiplied by the Net Orderly Liquidation Value percentage identified in the most recent Inventory appraisal ordered by the Administrative Agent multiplied by the
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U.S. Credit Parties Eligible Inventory (valued at the lower of cost (FIFO) or market), minus (d) Reserves applicable to the U.S. Credit Parties established by the Administrative Agent in its Permitted Discretion; provided that, until both an acceptable appraisal and field exam with respect to the assets of the Magnum Targets are received by the Administrative Agent, the assets of the Magnum Targets included in the U.S. Borrowing Base shall be limited to 50% of the book value of the Accounts of the Magnum Targets that are U.S. Credit Parties; provided, further, that if such field exam and appraisal is not received on or prior to the date that is sixty (60) days after the Closing Date, no assets of the Magnum Targets shall be included in the U.S. Borrowing Base until such field examination and appraisal have been received by the Administrative Agent.
U.S. Collateral Deposit Account has the meaning assigned to such term in Section 5.13.
U.S. Concentration Account has the meaning assigned to such term in Section 5.10(c).
U.S. Credit Parties means (a) the U.S. Borrower and (b) each U.S. Domestic Subsidiary that has guaranteed the U.S. Secured Obligations pursuant to Section 5.12(b), and their successors and assigns. Notwithstanding anything to the contrary in this Agreement or in any other Credit Document, neither an Excluded Subsidiary nor a Foreign Subsidiary will be deemed a U.S. Credit Party.
U.S. Dollars and $ means lawful money of the United States.
U.S. Domestic Subsidiary means a Subsidiary organized under the laws of a jurisdiction located in the U.S.
U.S. Exposure means, with respect to any Lender at any time, the sum of (a) the outstanding principal amount of such Lenders U.S. Revolving Loans and LC Exposure as such time plus (b) an amount equal to such Lenders Applicable Percentage, if any, of the aggregate principal amount of all Protective Advances at such time.
U.S. Loan Limit means, at any time, the lesser of (a) the Aggregate Commitments (less the Aggregate Canadian Exposure) and (b) the U.S. Borrowing Base then in effect.
U.S. Loans means the U.S. Revolving Loans and the Protective Advances.
U.S. Obligations means all unpaid principal of and accrued and unpaid interest on the U.S. Loans, all LC Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), obligations and liabilities of any of the U.S. Credit Parties to any of the Lenders, the Administrative Agent, any Issuing Lender or any indemnified party, individually or collectively, existing on the Closing Date or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, in each case, arising by contract, operation of law or otherwise, arising or incurred under this Agreement or any of the other Credit Documents or in respect of any of the U.S. Loans or any of the Letters of Credit or other instruments at any time evidencing any thereof.
U.S. Person means a United States person within the meaning of Section 7701(a) (30) of the Code.
U.S. Revolving Loan means a Loan made to the U.S. Borrower pursuant to Section 2.1(a).
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U.S. Secured Obligations means all U.S. Obligations, together with all (a) Banking Services Obligations owing by U.S. Credit Parties to one or more Lenders or their respective Affiliates and (b) Swap Agreement Obligations owing by U.S. Credit Parties owing to one or more Lenders or their respective Affiliates (including a Person that is a party to a Swap Agreement with the U.S. Credit Parties that entered into such Swap Agreement before or while such Person was a Lender or an Affiliate of a Lender, whether or not such Person at any time ceases to be a Lender or an Affiliate of a Lender, as the case may be); provided, however, that the definition of U.S. Secured Obligations shall not create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support, as applicable) any Excluded Swap Obligations of such Guarantor for purposes of determining any obligations of any Guarantor.
U.S. Security Agreement means that certain Pledge and Security Agreement (including any and all supplements or joinders thereto), substantially in the form in Exhibit D-1, dated as of the date hereof, among the U.S. Credit Parties and the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, as the same may be amended, restated, supplemented or otherwise modified from time to time.
U.S. Tax Compliance Certificate has the meaning assigned to such term in Section 2.17(f) (ii) (B) (3).
Voting Securities means (a) with respect to any corporation (including any unlimited liability company), capital stock of such corporation having general voting power under ordinary circumstances to elect directors of such corporation (irrespective of whether at the time stock of any other class or classes shall have or might have special voting power or rights by reason of the happening of any contingency), (b) with respect to any partnership, any partnership interest or other ownership interest having general voting power to elect the general partner or other management of the partnership or other Person, and (c) with respect to any limited liability company, membership certificates or interests having general voting power under ordinary circumstances to elect managers of such limited liability company.
Wells Fargo has the meaning given to such term in the preamble.
Wholly-Owned means, as used in reference to a Restricted Subsidiary, any Restricted Subsidiary whose Equity Interest is owned 100%, either directly or indirectly, by the Borrowers.
Withholding Agent means a Borrower, any Guarantor and the Administrative Agent.
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.
Section 1.2 Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word from means from and including and the words to and until each means to but excluding.
Section 1.3 Accounting Terms; Changes in GAAP.
(a) All accounting terms not specifically defined in this Agreement shall be construed in accordance with GAAP applied on a consistent basis with those applied in the preparation of the audited financial statements delivered to the Administrative Agent for the fiscal year ended December 31, 2017 pursuant to Section 3.1(k), except as provided in Section 6.6.
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(b) Unless otherwise indicated, all financial statements of the Company, all calculations for compliance with covenants in this Agreement, all determinations of the Applicable Margin, and all calculations of any amounts to be calculated under the definitions in Section 1.1 shall be based upon the consolidated accounts of the Company and its Restricted Subsidiaries in accordance with GAAP and consistent with the principles of consolidation applied in preparing the Company financial statements referred to in Section 4.4. For the avoidance of doubt, references in this Agreement or in any other Credit Document to a Persons consolidated financial statements, financial position, financial condition, liabilities, etc. refer to the consolidated financial statements, financial position, financial condition, liabilities, etc. of such Person and its properly consolidated Subsidiaries (or subset thereof if expressly provided herein) which eliminate offsetting intercompany transactions.
(c) If at any time any change in, or the application of, GAAP would affect the computation of any financial ratio or requirement set forth in any Credit Document, and either the Company or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Company shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in, or application of, GAAP (subject to the approval of the Company and the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP (or its prior application) prior to such change in, or application of, GAAP and (ii) the Company 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, or application of, GAAP; provided further that, the accounting for operating leases and Capital Leases under GAAP as in effect on the Closing Date (including, without limitation, Accounting Standards Codification 480) shall apply for the purposes of determining compliance with the provisions of this Agreement with respect to operating leases and Capital Leases (it being understood, for the avoidance of doubt, that no operating leases, or obligations in respect of operating leases, shall be treated as Capital Leases hereunder).
Section 1.4 Classes and Types of Loans. Loans are distinguished by Classes and Type. The Type of a Loan refers to the Rate (as defined below) by reference to which interest on such Loan is determined. For purposes hereof, the term Rate shall include ABR, CBR, CPR, the Adjusted LIBO Rate and CDOR.
Section 1.5 Other Interpretive Provisions; UCC, PPSA Terms.
(a) Article, Section, Schedule, and Exhibit references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements (including this Agreement) are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified and shall include all schedules and exhibits thereto unless otherwise specified. Any reference herein to any law shall be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time. Any reference herein to any Person shall be construed to include such Persons successors and assigns (subject to the restrictions contained herein). The words hereof, herein, and hereunder and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term including means including, without limitation,. Paragraph headings have been inserted in this Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement.
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(b) Unless otherwise defined herein, the following terms, as well as all uncapitalized terms which are defined in the UCC (whether or not capitalized or uncapitalized in the same manner therein) on the date hereof are used herein as so defined: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Commodity Accounts, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Fixtures, General Intangibles, Goods, Instruments, Inventory, Letter of Credit Rights, Payment Intangibles, Proceeds, Securities Accounts, Supporting Obligations and Tangible Chattel Paper; provided that, if such terms are defined both in the UCC and the PPSA, in respect of the Canadian Credit Parties, such terms shall have the meaning herein ascribed to them in the PPSA. Other terms defined in the UCC or terms defined in the PPSA which are not otherwise defined in this Agreement or in any other Credit Document, as applicable, are used herein and/or therein as defined in the UCC or the PPSA, as the context requires.
Section 1.6 Exchange Rates; Currency Equivalents. Except for purposes of financial statements delivered by Credit Parties hereunder or calculating compliance with any covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Credit Documents shall be such Dollar Equivalent Amount as so determined by the Administrative Agent or the applicable Issuing Lender.
Section 1.7 Currency Matters; Currency Indemnity. The U.S. Borrower shall, and shall cause the other Credit Parties to, make payment relative to any Obligation with respect to Letters of Credit in the currency in which such Obligation was effected (the Agreed Currency). If any payment is received on account of any Obligation in any currency other than the Agreed Currency (the Other Currency) (whether voluntarily or pursuant to an order or judgment or the enforcement thereof or the realization of any Collateral under the Security Documents or the liquidation of a Credit Party or otherwise), such payment shall constitute a discharge of the liability of the Credit Parties hereunder and under the other Credit Documents in respect of such obligation only to the extent of the amount of the Agreed Currency which the relevant Issuing Lender is able to purchase with the amount of the Other Currency received by it on the Business Day next following such receipt in accordance with its normal banking procedures in the relevant jurisdiction and applicable law after deducting any costs of exchange. To the fullest extent permitted by applicable law, if the amount of the Other Currency received is insufficient to satisfy the obligation in the Agreed Currency in full, then the U.S. Borrower shall on demand indemnify the Issuing Lenders from and against any loss or cost arising out of or in connection with such deficiency; provided that, if the amount of the Agreed Currency so purchased is greater than the amount of the Agreed Currency due in respect of such liability immediately prior to such judgment or order, voluntary prepayment, realization of Collateral, liquidation of a Credit Party or otherwise, then the Administrative Agent or the Lenders, as the case may be, agree to return the amount of any excess to the U.S. Borrower (or to any other Person who may be entitled thereto under applicable law). To the fullest extent permitted by applicable law, the foregoing indemnity and agreement by each party shall constitute an obligation separate and independent from all other obligations contained in this Agreement and shall give rise to a separate and independent cause of action.
ARTICLE II
CREDIT FACILITIES
Section 2.1 Commitments.
(a) Generally. Subject to the terms and conditions set forth in this Agreement, each Lender severally (and not jointly) agrees to make U.S. Revolving Loans in Dollars to the U.S. Borrower in Dollars from time to time during the Availability Period; provided that, after giving effect to such Loans, (A) the sum of the aggregate outstanding amount of all Loans plus the LC Exposure shall not exceed the Aggregate Commitments, (B) no Lenders Revolving Exposure shall exceed such Lenders Commitment, (C) no Lenders U.S. Exposure shall exceed its Applicable Percentage of the U.S. Loan Limit, (D) the Aggregate U.S. Exposure shall not exceed the U.S. Loan Limit, (E) the Aggregate Canadian Exposure shall not exceed the Canadian Loan Limit, or (F) none of the U.S. Availability or the Availability may be less
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than zero, in each case, subject to the Administrative Agents authority, in its sole discretion, to make Protective Advances. Subject to the terms of this Agreement, the Borrowers may from time to time borrow, prepay, and reborrow Loans. No Lender (including the Administrative Agent) shall make any U.S. Loan to the Canadian Borrower.
(b) Change in Commitments.
(i) Defaulting Lender. At any time when a Lender is then a Defaulting Lender, the Borrowers, at their election, may elect to terminate such Defaulting Lenders Commitment hereunder; provided that, (A) such termination must be of all of the Defaulting Lenders Commitments, (B) the Borrowers shall pay all amounts owed by the Borrowers to such Defaulting Lender in such Lenders capacity as a Lender under this Agreement and under the other Credit Documents (including principal of and interest on the Loans owed to such Defaulting Lender, accrued Commitment Fees (subject to Section 2.15(a)(iii)), and Letter of Credit fees (subject to Section 2.15(a)(iii) but specifically excluding any amounts owing under Section 2.10 as result of such payment of such Loans) and shall deposit with the Administrative Agent into the Cash Collateral Account Cash Collateral in the amount equal to such Defaulting Lenders ratable share of the LC Exposure (including any such portion thereof that has been reallocated pursuant to Section 2.15), (C) a Defaulting Lenders Commitments may be terminated by the Borrowers under this Section 2.1(c)(iii) if and only if at such time, the Borrowers have elected, or are then electing, to terminate the Commitments of all then existing Defaulting Lenders, and (D) no Default has occurred and is continuing at the time of such election and termination. Upon written notice to the Defaulting Lender and Administrative Agent of the Borrowers election to terminate a Defaulting Lenders Commitments pursuant to this clause (i) and the payment and deposit of amounts required to be made by the Borrowers under clause (B) and (C) above, (1) such Defaulting Lender shall cease to be a Lender hereunder for all purposes except that such Lenders rights and obligations as a Lender under Section 2.9, Section 2.11, Section 2.13, Section 8.3 and Section 9.1 shall continue with respect to events and occurrences occurring before or concurrently with its ceasing to be a Lender hereunder, (2) such Defaulting Lenders Commitments shall be deemed terminated, and (3) such Defaulting Lender shall be relieved of its obligations hereunder as a Lender except as to its obligations under Section 8.3 and Section 9.1 and any other obligations that expressly survive, which obligations shall continue with respect to events and occurrences occurring before or concurrently with its ceasing to be a Lender hereunder, provided that, any such termination will not be deemed to be a waiver or release of any claim the Borrowers, the Administrative Agent, the Issuing Lender or any Lender may have against such Defaulting Lender.
(ii) All notices for a complete termination under clause (i) above delivered by the Borrowers may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrowers (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.
Section 2.2 Loans and Borrowings.
(a) Each Loan (other than a Canadian Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that, the Commitments of the Lenders are several and no Lender shall be responsible for any other Lenders failure to make Loans as required. Any Protective Advance shall be made in accordance with the procedures set forth in Sections 2.4 and 2.5. Any Canadian Loan shall be made in accordance with Section 2.24
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(b) Subject to Section 2.19, each Borrowing shall be comprised entirely of Base Rate Loans or Non-Base Rate Loans as the Borrower Representative may request in accordance herewith, provided that all Borrowings made on the Closing Date must be made as Base Rate Borrowings but may be converted into Non-Base Rate Borrowings in accordance with Section 2.4.
(c) At the commencement of each Interest Period for any Non-Base Rate Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 (or Cdn$100,000 in the case of CDOR Rate Loans) and not less than $1.0 million (or Cdn$1.0 million in the case of CDOR Rate Loans). Base Rate Borrowings may be in any amount. Borrowings of more than one Type and Class may be outstanding at the same time; provided that, there shall not at any time be more than a total of ten (10) Non-Base Rate Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower Representative shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.
Section 2.3 Requests for Borrowing; Notice of Borrowing.
(a) Notice of Borrowing. To request a Borrowing, the Borrower Representative shall notify the Administrative Agent in writing (delivered by hand or facsimile) in a form approved by the Administrative Agent and signed by the Borrower Representative or by telephone or through Electronic System if arrangements for doing so have been approved by the Administrative Agent, a Notice of Borrowing not later than: (i) in the case of a Non-Base Rate Borrowing, 10:00 a.m., Chicago time, three (3) Business Days before the date of the proposed Borrowing; or (ii) in the case of a Base Rate Borrowing, (A) of a U.S. Loan, noon, Chicago time, on the date of the proposed Borrowing and (B) of a Canadian Loan, 10:00 a.m., Chicago time, on the date of the proposed Borrowing; provided that, any such notice of a Base Rate Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.6(e) may be given not later than 9:00 a.m., Chicago time, on the date of such proposed Borrowing. Each such Notice of Borrowing shall be irrevocable.
(b) The Administrative Agent shall give each Lender prompt notice on the day of receipt of a timely Notice of Borrowing in writing (delivered by hand or facsimile) in a form approved by the Administrative Agent and signed by the Borrower Representative or by telephone or through Electronic System if arrangements for doing so have been approved by the Administrative Agent. Each Notice of Borrowing shall be by telephone or facsimile, and if by telephone, confirmed promptly in writing, specifying (i) the requested date of such Borrowing (which shall be a Business Day), (ii) the requested Type of Loans comprising such Borrowing, (iii) the aggregate amount of such Borrowing and (iv) if such Borrowing is to be comprised of Non-Base Rate Loans, the Interest Period to be applicable to each such Loan, which shall be a period contemplated by the definition of the term Interest Period. Each Lender shall before 2:00 p.m. (Chicago time) on the date of the proposed Borrowing, make available for the account of its Lending Office to the Administrative Agent at its address referred to in Section 9.9, or such other location as the Administrative Agent may specify by notice to the Lenders, in Same Day Funds, such Lenders Applicable Percentage of such Borrowing. Promptly upon the Administrative Agents receipt of such funds (but in any event not later than 4:00 p.m. (Chicago time) on the date of the proposed Borrowing) and provided that, the applicable conditions set forth in Article III have been satisfied, the Administrative Agent will make such funds available to the Applicable Borrower at its account with the Administrative Agent (specified in the Notice of Borrowing).
(c) Election of Type of Borrowing. If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be a Base Rate Borrowing. If no Interest Period is specified with respect to any requested Non-Base Rate Borrowing, then the Applicable Borrower shall be deemed to have selected an Interest Period of one months duration.
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Section 2.4 Protective Advances.
(a) Subject to the limitations set forth below, the Administrative Agent is authorized by the Borrowers and the Lenders, from time to time in the Administrative Agents sole discretion (but shall have absolutely no obligation), to make Loans to the U.S. Borrower in Dollars, on behalf of all Lenders, which the Administrative Agent, in its Permitted Discretion, deems necessary or desirable (i) to preserve or protect the Collateral, or any portion thereof, (ii) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (iii) to pay any other amount chargeable to or required to be paid by the Borrowers pursuant to the terms of this Agreement, including payments of reimbursable expenses (including costs, fees, and expenses as described in Section 9.1) and other sums payable under the Credit Documents (any of such Loans are herein referred to as Protective Advances); provided that, the aggregate amount of Protective Advances outstanding at any time shall not at any time exceed $10.0 million; and provided further that, upon making such Protective Advance (A) the Aggregate Credit Exposure after giving effect to the Protective Advances being made shall not exceed the Aggregate Commitment, (B) the Aggregate U.S. Exposure after giving effect to the Protective Advances shall not exceed the Aggregate Commitments less any Aggregate Canadian Exposure. Protective Advances may be made even if the conditions precedent set forth in Section 3.2 have not been satisfied. The Protective Advances shall be secured by the Liens in favor of the Administrative Agent in and to the Collateral and shall constitute Secured Obligations. All Protective Advances shall be Base Rate Borrowings. The making of a Protective Advance on any one occasion shall not obligate the Administrative Agent to make any Protective Advance on any other occasion. Any such revocation must be in writing and shall become effective prospectively upon the Administrative Agents receipt thereof. At any time that there is sufficient Availability and U.S. Availability and the conditions precedent set forth in Section 3.2 have been satisfied, the Administrative Agent may request the Lenders to make a U.S. Revolving Loan to repay a Protective Advance. At any other time the Administrative Agent may require the Lenders to fund their risk participations described in Section 2.4(b).
(b) Upon the making of a Protective Advance by the Administrative Agent (whether before or after the occurrence of a Default), each Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from the Administrative Agent, without recourse or warranty, an undivided interest and participation in such Protective Advance in proportion to its Applicable Percentage. From and after the date, if any, on which any Lender is required to fund its participation in any Protective Advance purchased hereunder, the Administrative Agent shall promptly distribute to such Lender, such Lenders Applicable Percentage of all payments of principal and interest and all proceeds of Collateral received by the Administrative Agent in respect of such Protective Advance.
Section 2.5 Cash Dominion.
(a) Subsequent to the Credit Parties compliance with Section 2.5(b), all Deposit Accounts, Securities Accounts and Commodities Accounts (other than any Excluded Account for so long as such account is an Excluded Account) of the Credit Parties shall be Controlled Accounts.
(b) The Credit Parties will, in connection with any Deposit Account, Securities Account or Commodity Account (other than any Excluded Account for so long as such account is an Excluded Account) established on or before the date that is thirty (30) days after the Closing Date (or such later date as the Administrative Agent may agree in its sole discretion), enter into and deliver to the Administrative Agent an Account Control Agreement and/or lockbox agreement, in each case in form and substance acceptable to the Administrative Agent, on or before the following dates (or, in each case, such later date as the Administrative Agent may agree in its sole discretion): (i) the date that is sixty (60) days after the Closing Date or (ii) with respect to any Deposit Account, Securities Account or Commodity Account (other than any Excluded Account for so long as such account is an Excluded Account) established on or after the date that is thirty (30) days after the Closing Date, promptly but in any event within thirty (30) days of the date such account is established.
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(c) Each Credit Party shall be subject to cash dominion at all times during a Cash Dominion Period. At any time that a Cash Dominion Event has occurred and is continuing, cash on hand and collections which are received into any Controlled Account, and to the extent necessary any securities (other than any Equity Interests of a Credit Party) held in any Securities Account shall be liquidated and the cash proceeds thereof, shall be swept on a daily basis into a blocked Concentration Account in the name of the U.S. Borrower or Canadian Borrower, as applicable, and held with and maintained by the Administrative Agent and subject to an Account Control Agreement and used to prepay Loans outstanding under this Agreement in accordance with Section 2.9. At any time during a Cash Dominion Period, all proceeds of the Funding Accounts shall be swept into the Concentration Account and any Loan shall be deposited into the Concentration Account that is maintained with the Administrative Agent.
Section 2.6 Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein, the U.S. Borrower may request the issuance of Letters of Credit for its own account or the account of any Restricted Subsidiary denominated in Dollars or CAD as the applicant thereof for the support of its or the other Credit Parties obligations, in a form reasonably acceptable to the Administrative Agent and the applicable Issuing Lender, at any time and from time to time during the Availability Period; provided, that Wells Fargo shall not be obligated to issue Letters of Credit in any currency other than Dollars. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of Letter of Credit Application or other agreement submitted by the U.S. Borrower to, or entered into by the U.S. Borrower with, the applicable Issuing Lender relating to any Letter of Credit, the terms and conditions of this Agreement shall control. The U.S. Borrower unconditionally and irrevocably agrees that, in connection with any Letter of Credit issued for the support of any Credit Partys obligations as provided in the first sentence of this paragraph, it will be fully responsible for the reimbursement of LC Disbursements in accordance with the terms hereof, the payment of interest thereon and the payment of fees due under Section 2.12(b) to the same extent as if it were the sole account party in respect of such Letter of Credit (hereby irrevocably waiving any defenses that might otherwise be available to it as a guarantor or surety of the obligations of such Restricted Subsidiary that is an account party in respect of any such Letter of Credit). Notwithstanding anything herein to the contrary, no Issuing Lender shall have any obligation hereunder to issue, and shall not issue, any Letter of Credit (i) the proceeds of which would be made available to any Person (A) to fund any activity or business of or with any Sanctioned Person, or in any country or territory that, at the time of such funding, is the subject of any Sanctions or (B) in any manner that would result in a violation of any Sanctions by any party to this Agreement, (ii) if any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the applicable Issuing Lender from issuing such Letter of Credit, or any Requirement of Law relating to the applicable Issuing Lender or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the applicable Issuing Lender shall prohibit, or request that the applicable Issuing Lender refrain from, the issuance of Letters of Credit generally or such Letter of Credit in particular or shall impose upon the applicable Issuing Lender with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the applicable Issuing Lender is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the applicable Issuing Lender any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the applicable Issuing Lender in good faith deems material to it, or (iii) if the issuance of such Letter of Credit would violate one or more policies of the applicable Issuing Lender applicable to Letters of Credit generally; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewith or in the implementation thereof, and (y) all requests, rules, guidelines,
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requirements 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 not to be in effect on the Closing Date for purposes of clause (ii) above, regardless of the date enacted, adopted, issued or implemented.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the U.S. Borrower shall deliver by hand or facsimile (or transmit through Electronic Systems, if arrangements for doing so have been approved by the applicable Issuing Lender) to the applicable Issuing Lender and the Administrative Agent prior to 9:00 am, Chicago time, at least three (3) Business Days prior to the requested date of issuance, amendment, renewal or extension, a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the currency of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the applicable Issuing Lender, the U.S. Borrower also shall submit a Letter of Credit Application on the applicable Issuing Lenders standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit, the U.S. Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the aggregate LC Exposure shall not exceed $50.0 million, (ii) the Revolving Exposure shall exceed the lesser of the Aggregate Commitment and the Aggregate Borrowing Base, (iii) the Aggregate U.S. Exposure shall not exceed the U.S. Loan Limit, (iv) the Aggregate Canadian Exposure shall not exceed the Canadian Loan Limit and (v) the aggregate face amount of drawn and undrawn Letters of Credit (that have not been Cash Collateralized) of the applicable Issuing Lender shall not exceed such Issuing Lenders LC Fronting Limit unless such Issuing Lender shall agree in its sole discretion.
(c) Expiration Date. Each Letter of Credit shall expire (or be subject to termination or non-renewal by notice from the applicable Issuing Lender to the beneficiary thereof) at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, including, without limitation, any automatic renewal provision, one year after such renewal or extension) and (ii) the date that is five (5) Business Days prior to the Maturity Date; provided, that any Letter of Credit with a one-year term may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (ii) above) and provided, further, that the applicable Issuing Lender may consent to an expiration date of a Letter of Credit which is on or after the date that is five (5) Business Days prior to the Maturity Date if such Letter of Credit has been Cash Collateralized on terms acceptable to such Issuing Lender at least five (5) Business Days prior to the Maturity Date. If any such Letter of Credit has not been Cash Collateralized on terms acceptable to such Issuing Lender at least five (5) Business Days prior to the Maturity Date, then the U.S. Borrower shall, on the date that is five (5) Business Days prior to the Maturity Date, notwithstanding any conditions to Borrowing set forth herein, be deemed to have requested, and the U.S. Borrower does hereby request under such circumstances, an ABR Borrowing in an amount equal to the LC Exposure of such Letter of Credit and such ABR Loans shall be provided to replace such LC Exposure.
(d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the applicable Issuing Lender or the Lenders, the applicable Issuing Lender hereby grants to each Lender, and each Lender hereby acquires from the applicable Issuing Lender, a participation in such Letter of Credit equal to such Lenders Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, the U.S. Borrower hereby absolutely and unconditionally
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agrees to pay in the currency of the LC Disbursement to the Administrative Agent, for the account of the applicable Issuing Lender, such Lenders Applicable Percentage of each LC Disbursement made by the applicable Issuing Lender and not reimbursed by the U.S. Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the U.S. Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If any Issuing Lender shall make any LC Disbursement in respect of a Letter of Credit, the U.S. Borrower shall reimburse such LC Disbursement by paying in the currency of such LC Disbursement to the Administrative Agent an amount equal to such LC Disbursement (i) not later than 11:00 a.m., Chicago time, on the date that such LC Disbursement is made, if the Borrower Representative shall have received notice of such LC Disbursement prior to 9:00 a.m., Chicago time, on such date, or, (ii) if such notice has not been received by the Borrower Representative prior to such time on such date, then not later than 11:00 a.m., Chicago time, on (A) the Business Day that the Borrower Representative receives such notice, if such notice is received prior to 9:00 a.m., Chicago time, on the day of receipt, or (B) the Business Day immediately following the day that the Borrower Representative receives such notice, if such notice is not received prior to such time on the day of receipt; provided that, the U.S. Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.3 or 2.5 that such payment be financed with a Base Rate Borrowing in U.S. Dollars equal to the Dollar Equivalent Amount of such LC Disbursement) and, to the extent so financed, the U.S. Borrowers obligation to make such payment shall be discharged and replaced by the resulting Base Rate Borrowing. If the U.S. Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the U.S. Borrower in respect thereof and such Lenders Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the U.S. Borrower in U.S. Dollars, in the same manner as provided in Section 2.7 with respect to Loans made by such Lender (and Section 2.7 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Lender the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the U.S. Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the applicable Issuing Lender or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse the applicable Issuing Lender, then to such Lenders and the Issuing Lenders as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse an Issuing Lender for any LC Disbursement (other than the funding of Base Rate Loans as contemplated above) shall not constitute a Loan and shall not relieve the U.S. Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The U.S. Borrowers obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein or herein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) any payment by an Issuing Lender under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the U.S. Borrowers obligations hereunder. None of the Administrative Agent, the
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Lenders, any Issuing Lender or any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of an Issuing Lender; provided that the foregoing shall not be construed to excuse the Issuing Lenders from liability to the U.S. Borrower to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrowers to the extent permitted by applicable law) suffered by any Borrower that are caused by an Issuing Lenders failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of an Issuing Lender (as finally determined by a court of competent jurisdiction), the applicable Issuing Lender shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the applicable Issuing Lender may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. Each Issuing Lender shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The applicable Issuing Lender shall promptly notify the Administrative Agent and the Borrower Representative by telephone (confirmed by facsimile) of such demand for payment and whether such Issuing Lender has made or will make an LC Disbursement thereunder; provided that, any failure to give or delay in giving such notice shall not relieve the U.S. Borrower of its obligation to reimburse such Issuing Lender and the Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If an Issuing Lender shall make any LC Disbursement, then, unless the U.S. Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the U.S. Borrower reimburses such LC Disbursement, at the rate per annum then applicable to Base Rate Loans and such interest shall be payable on the date when such reimbursement is due; provided that, if the U.S. Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(d) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the applicable Issuing Lender, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section to reimburse the applicable Issuing Lender shall be for the account of such Lender to the extent of such payment.
(i) Replacement of an Issuing Lender. An Issuing Lender may be replaced at any time by written agreement among the Borrower Representative, the Administrative Agent, the replaced Issuing Lender and the successor Issuing Lender. The Administrative Agent shall notify the Lenders of any such replacement of an Issuing Lender. At the time any such replacement shall become effective, the U.S. Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Lender pursuant to Section 2.12(b). From and after the effective date of any such replacement, (A) the successor Issuing Lender shall have all the rights and obligations of the Issuing Lender under this Agreement with respect to Letters of Credit to be issued thereafter and (B) references herein to the term Issuing Lender shall be deemed to refer to such successor or to any previous Issuing Lender, or to such successor and all previous Issuing Lenders, as the context shall require. After the replacement of an Issuing Lender hereunder, the replaced Issuing Lender shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Lender under this Agreement with respect to Letters of Credit then outstanding and issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.
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(j) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrower Representative receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure representing greater than 50% of the aggregate LC Exposure) demanding the deposit of Cash Collateral pursuant to this paragraph, the U.S. Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders (the LC Collateral Account), an amount in cash equal to one hundred three percent (103%) of the amount of the LC Exposure as of such date plus accrued and unpaid interest thereon; provided that, the obligation to deposit such Cash Collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to any Borrower described in clause (g) of Article VII. Such deposit shall be held by the Administrative Agent as Collateral for the payment and performance of the U.S. Secured Obligations. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over the LC Collateral Account and the U.S. Borrower hereby grants the Administrative Agent a security interest in the LC Collateral Account and all money or other assets on deposit therein or credited thereto. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the U.S. Borrowers risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in the LC Collateral Account. Moneys in the LC Collateral Account shall be applied by the Administrative Agent to reimburse each Issuing Lender for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the U.S. Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure representing greater than 50% of the aggregate LC Exposure), be applied to satisfy other Secured Obligations. If the U.S. Borrower is required to provide an amount of Cash Collateral hereunder as a result of the occurrence of such an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the U.S. Borrower within three (3) Business Days after all such Events of Default have been cured or waived as confirmed in writing by the Administrative Agent.
(k) LC Exposure Determination. For all purposes of this Agreement, the amount of a Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof 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 the time of determination.
(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, any Restricted Subsidiary, the U.S. Borrower shall be obligated to reimburse each Issuing Lender hereunder for any and all drawings under any Letter of Credit issued under the Facility by such Issuing Lender. The U.S. Borrower hereby acknowledges that the issuance of Letters of Credit for the account of its Restricted Subsidiaries inures to the benefit of the U.S. Borrower, and that the U.S. Borrowers business derives substantial benefits from the businesses of such Restricted Subsidiaries.
(m) Reports from Issuing Lenders. Each Issuing Lender (other than the Administrative Agent or any of its Affiliates) shall, upon any issuance of a Letter of Credit or any drawing under a Letter of Credit by such Issuing Lender, provide the Administrative Agent and each other Issuing Lender with a list of all Letters of Credit issued by such Issuing Lender that are outstanding at such time; provided that, upon written request from the Administrative Agent, the applicable Issuing Lender shall thereafter notify the Administrative Agent in writing on each Business Day of all Letters of Credit issued on the prior Business Day by such Issuing Lender.
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(n) Existing Letters of Credit. The Existing Letters of Credit will automatically, without any further action on the part of any Person, be deemed to be Letters of Credit issued hereunder. Without limiting the foregoing (i) each such Existing Letter of Credit shall be included in the calculation of the LC Exposure, (ii) all liabilities of the Credit Parties with respect to such Existing Letters of Credit shall constitute Obligations and (iii) each Lender shall have reimbursement obligations with respect to such Existing Letters of Credit as provided in Section 2.6(e).
Section 2.7 Funding of Borrowings.
(a) Each Lender shall make each Loan to be made by such Lender hereunder on the proposed date thereof solely by wire transfer of immediately available funds by 2:00 p.m., Chicago time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders in an amount equal to such Lenders Applicable Percentage; provided, that Canadian Loans shall be made as provided in Section 2.24. The Administrative Agent will make such Loans available to the Applicable Borrower by promptly crediting the funds so received in the aforesaid account of the Administrative Agent to the Funding Account; provided that, Base Rate Loans made to finance the reimbursement of (i) an LC Disbursement as provided in Section 2.6(e) shall be remitted by the Administrative Agent to the applicable Issuing Lender and (ii) a Protective Advance shall be retained by the Administrative Agent.
(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lenders share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Applicable 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 Lender and the Applicable Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Applicable Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate (in the case of Dollar denominated amounts) or the Administrative Agents cost of funds (in the case of CAD denominated amounts) and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Applicable Borrower, the interest rate applicable to Base Rate Loans. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lenders Loan included in such Borrowing.
Section 2.8 Interest Elections.
(a) Each Borrowing initially shall be of the Type specified in the applicable Notice of Borrowing and, in the case of a Non-Base Rate Borrowing, shall have an initial Interest Period as specified in such Notice of Borrowing. Thereafter, the Borrower Representative may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Non-Base Rate Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower Representative may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing, provided that, a Borrowing in one currency may only be converted to another type of Borrowing denominated in the same currency as the Borrowing to be so converted. This Section shall not apply to Protective Advances, which may not be converted or continued.
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(b) To make an election pursuant to this Section, the Borrower Representative shall notify the Administrative Agent of such election by telephone or through Electronic System, if arrangements for doing so have been approved by the Administrative Agent, by the time that a Notice of Borrowing would be required under Section 2.3 if the Borrower Representative were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery, Electronic System or facsimile to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower Representative.
(c) Each telephonic and written Interest Election Request (including requests submitted through Electronic System) shall specify the following information in compliance with Section 2.2:
(i) the name of the Applicable Borrower and the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be a Base Rate Borrowing or a Non-Base Rate Borrowing; and
(iv) if the resulting Borrowing is a Non-Base Rate Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term Interest Period.
If any such Interest Election Request requests a Non-Base Rate Borrowing but does not specify an Interest Period, then the Borrowers shall be deemed to have selected an Interest Period of one months duration.
(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lenders portion of each resulting Borrowing.
(e) If the Borrower Representative fails to deliver a timely Interest Election Request with respect to a Non-Base Rate Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to a Base Rate Borrowing. Notwithstanding any contrary provision hereof, if a Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower Representative, then, so long as a Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Non-Base Rate Borrowing and (ii) unless repaid, each Non-Base Rate Borrowing shall be converted to a Base Rate Borrowing at the end of the Interest Period applicable thereto.
Section 2.9 Increase, Reduction and Termination of Commitments.
(a) Unless previously terminated, the Commitments shall terminate on the Maturity Date.
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(b) The Borrowers may at any time terminate the Commitments upon Payment in Full of the Secured Obligations.
(c) The Borrowers may from time to time reduce the Commitment; provided that, (i) each reduction of the Commitment shall be in an amount that is an integral multiple of $1.0 million and not less than $5.0 million and (ii) the Borrowers shall not terminate or reduce such Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, (A) the Revolving Exposure would exceed the lesser of the Aggregate Commitments and the Aggregate Borrowing Base, (B) the Aggregate U.S. Exposure would exceed the U.S. Loan Limit or (C) the Aggregate Canadian Exposure would exceed the Canadian Loan Limit.
(d) The Canadian Borrower may from time to time reduce the Canadian Sublimit; provided that, (i) each reduction shall be in an amount that is an integral multiple of $1.0 million and not less than $1.0 million and (ii) the Canadian Borrower shall not terminate or reduce the Canadian Sublimit if, after giving effect to any concurrent prepayment of the Canadian Loans in accordance with Section 2.11, the Aggregate Canadian Exposure would exceed the Canadian Loan Limit.
(e) The Borrower Representative shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b), (c) or (d) of this Section at least three (3) Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower Representative pursuant to this Section shall be irrevocable; provided that, a notice of termination of the Commitments delivered by the Borrower Representative may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower Representative (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.
(f) The Borrowers shall have the right to increase the Commitment by obtaining additional Commitments, either from one or more of the Lenders or another lending institution provided that, (i) any such request for an increase shall be in a minimum amount of $5.0 million, (ii) after giving effect thereto, the sum of the total of the additional Commitments does not exceed $50.0 million, (iii) the Administrative Agent and the Issuing Lenders have approved the identity of any such new Lender, such approvals not to be unreasonably withheld, (iv) any such new Lender assumes all of the rights and obligations of a Lender hereunder, and (v) the procedure described in Section 2.9(g) has been satisfied. Nothing contained in this Section 2.9 shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Commitment hereunder at any time.
(g) Any amendment hereto for such an increase or addition shall be in form and substance satisfactory to the Administrative Agent and shall only require the written signatures of the Administrative Agent, the Borrower Representative and each Lender being added or increasing its Commitment, subject only to the approval of the Required Lenders if any such increase or addition would cause the Commitments to exceed $250.0 million. As a condition precedent to such an increase or addition, the Borrowers shall deliver to the Administrative Agent (i) a certificate of each Credit Party signed by an authorized officer of such Credit Party (A) certifying and attaching the resolutions adopted by such Credit Party approving or consenting to such increase, and (B) in the case of the Borrowers, certifying that, before and after giving effect to such increase or addition, (1) the representations and warranties contained in Article III and the other Credit Documents are true and correct in all material respects with the same effect as though made on and as of the date of such increase or addition (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and
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correct in all material respects only as of such specified date, and that any representation or warranty which is subject to any materiality qualifier shall be required to be true and correct in all respects), (2) no Default exists and (3) the Borrowers are in compliance (on a pro forma basis after giving effect to any additional Borrowings to be made on the effective date of such increase or addition) with any then operative covenant contained in Section 6.1(i) or 6.18 and (ii) legal opinions and documents consistent with those delivered on the Closing Date, to the extent reasonably requested by the Administrative Agent.
(h) On the effective date of any such increase or addition, (i) any Lender increasing (or, in the case of any newly added Lender, extending) its Commitment shall make available to the Administrative Agent such amounts in immediately available funds as the Administrative Agent shall determine, for the benefit of the other Lenders, as being required in order to cause, after giving effect to such increase or addition and the use of such amounts to make payments to such other Lenders, each Lenders portion of the outstanding Loans of all the Lenders to equal its revised Applicable Percentage of such outstanding Loans, and the Administrative Agent shall make such other adjustments among the Lenders with respect to the Loans then outstanding and amounts of principal, interest, Commitment Fees and other amounts paid or payable with respect thereto as shall be necessary, in the opinion of the Administrative Agent, in order to effect such reallocation and (ii) to the extent necessary to implement the matters set forth in clause (i) above, the Borrowers shall be deemed to have repaid and reborrowed all outstanding Loans as of the date of any increase (or addition) in the Commitments (with such reborrowing to consist of the Types of Loans, with related Interest Periods if applicable, specified in a notice delivered by the Borrower Representative, in accordance with the requirements of Section 2.3). The deemed payments made pursuant to clause (ii) of the immediately preceding sentence shall be accompanied by payment of all accrued interest on the amount prepaid and, in respect of each Non- Base Rate Loan, shall be subject to indemnification by the Borrowers pursuant to the provisions of Section 2.16 if the deemed payment occurs other than on the last day of the related Interest Periods. Within a reasonable time after the effective date of any increase or addition, the Administrative Agent shall, and is hereby authorized and directed to, revise Schedule I to reflect such increase or addition and shall distribute such revised Schedule I to each of the Lenders and the Borrower Representative, whereupon such revised Schedule I shall replace the old Schedule I and become part of this Agreement.
Section 2.10 Repayment of Loans. Evidence of Debt.
(a) The Applicable Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each applicable Lender the then unpaid principal amount of each Canadian Loan or U.S. Loan, as applicable, on the Maturity Date and (ii) to the Administrative Agent the then unpaid amount of each Protective Advance on the earlier of the Maturity Date and demand by the Administrative Agent.
(b) At all times during a Cash Dominion Period, on each Business Day, the Administrative Agent shall apply all funds credited to the U.S. Concentration Account on such Business Day or the immediately preceding Business Day (at the discretion of the Administrative Agent, whether or not immediately available) first to prepay any Protective Advances that may be outstanding and any other U.S. Obligations that are then due and payable, pro rata, second to prepay the U.S. Loans, third if an Event of Default exists and is continuing, to Cash Collateralize outstanding LC Exposure, fourth to prepay any Canadian Obligations that are then due and payable, and fifth to prepay the Canadian Loans. At all times during a Cash Dominion Period, on each Business Day, the Administrative Agent shall apply all funds credited to the Canadian Concentration Account on such Business Day or the immediately preceding Business Day (at the discretion of the Administrative Agent, whether or not immediately available) first to any Canadian Obligations that are then due and payable, pro rata, and second to prepay the Canadian Loans. Notwithstanding the foregoing, to the extent that any funds credited to a Concentration Account constitute Net Proceeds, the application of such Net Proceeds shall be subject to Section 2.11(c).
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(c) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Debt of the Applicable Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.
(d) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Applicable Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lenders share thereof.
(e) The entries made in the accounts maintained pursuant to paragraph (c) or (d) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that, the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Loans in accordance with the terms of this Agreement.
(f) Any Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Applicable Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.7) be represented by one or more promissory notes in such form.
Section 2.11 Prepayment of Loans.
(a) The Borrowers shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (e) of this Section and, if applicable, payment of any break funding expenses under Section 2.16.
(b) In the event and on such occasion that (i) the Aggregate Credit Exposure exceeds the lesser of (A) the Aggregate Commitment and (B) the Aggregate Borrowing Base, (ii) the Aggregate U.S. Exposure exceeds the U.S. Loan Limit, or (iii) the Aggregate Canadian Exposure exceeds the Canadian Loan Limit, the Applicable Borrower shall prepay the applicable Loans and LC Exposure or Cash Collateralize LC Exposure in an account with the Administrative Agent pursuant to Section 2.6(j), as applicable, in an aggregate amount equal to such excess.
(c) In the event and on each occasion that any Net Proceeds are received by or on behalf of any Credit Party in respect of any Prepayment Event, the Applicable Borrower shall, promptly after such Net Proceeds are received by any Credit Party, prepay the applicable Obligations and, if any Event of Default exists and is continuing, Cash Collateralize the LC Exposure as set forth in Section 2.11(d) below, in an aggregate amount equal to 100% of the Net Proceeds of such Prepayment Event; provided that, if no Cash Dominion Period is in effect, if the Borrower Representative shall deliver to the Administrative Agent a certificate of a Financial Officer to the effect that the Credit Parties intend to apply the Net Proceeds from such event (or a portion thereof specified in such certificate), within one hundred eighty (180) days after receipt of such Net Proceeds, to acquire (or replace or rebuild) real property, Equipment or other tangible assets (excluding Inventory) to be used in the business of the applicable Credit Parties, and certifying that no Default has occurred and is continuing, then either (i) so long as no Cash Dominion Period is in effect, no prepayment shall be required pursuant to this paragraph in respect of the Net Proceeds specified in such certificate or (ii) if a Cash Dominion Period is in effect, then, if the Net Proceeds specified in such certificate are to be applied to acquire, replace or rebuild such assets by (A) the
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U.S. Borrower, such Net Proceeds of a U.S. Borrower shall be applied by the Administrative Agent (1) first to reduce the outstanding principal balance of the U.S. Loans until paid in full and second to reduce the outstanding principal balance of the Canadian Loans if the applicable Property or asset is owned by a U.S. Credit Party or (2) to reduce the outstanding principal balance of the Canadian Loans (in each case without a permanent reduction of the Commitments) and upon such application, the Administrative Agent may in its Permitted Discretion, establish a Reserve against the Aggregate Borrowing Base, the U.S. Borrowing Base, and/or the Canadian Borrowing Base, as applicable, in an amount not to exceed the amount of such proceeds so applied, (B) the Canadian Borrower, such Net Proceeds of the Canadian Borrower shall be applied by the Administrative Agent to reduce the outstanding balance of the Canadian Loans, and (C) any Credit Party that is not a Borrower, such Net Proceeds shall be deposited in a Cash Collateral Account for the U.S. Credit Parties or the Canadian Credit Parties, and in the case of either (A) or (B), thereafter, such funds shall be made available to the applicable Credit Parties as follows:
(1) the Borrower Representative shall request a Borrowing (specifying that the request is to use Net Proceeds pursuant to this Section) or the applicable Credit Party shall request a release from the Cash Collateral Account be made in the amount needed;
(2) so long as the conditions set forth in Section 4.2 have been met, the applicable Lenders shall make such Borrowing or the Administrative Agent shall release funds from the Cash Collateral Account; and
(3) in the case of Net Proceeds applied against any Borrowing, the Reserve established with respect to such insurance proceeds shall be reduced by the amount of such Borrowing;
provided that to the extent of any such Net Proceeds therefrom that have not been so applied by the end of such 180 day period, a prepayment shall be required at such time in an amount equal to such Net Proceeds that have not been so applied. Notwithstanding the foregoing, in no event will U.S. Obligations be repaid pursuant to this Section 2.11(c) if such Net Proceeds are received by any Restricted Subsidiary that is an Excluded Subsidiary or a Foreign Subsidiary.
(d) All such amounts pursuant to Section 2.11(c) shall be applied, first to prepay any Protective Advances that may be outstanding, pro rata, and second to prepay the Loans without a corresponding reduction in the Commitments and, if an Event of Default exists and is continuing to Cash Collateralize outstanding LC Exposure.
(e) The Borrower Representative shall notify the Administrative Agent by telephone (confirmed by facsimile) or through Electronic System, if arrangements for doing so have been approved by the Administrative Agent, of any prepayment hereunder not later than (i) 10:00 a.m., Chicago time, (A) in the case of prepayment of a Non-Base Rate Borrowing, three (3) Business Days before the date of prepayment, or (B) in the case of prepayment of a Base Rate Borrowing, one (1) Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.9, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.9. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.2. Each prepayment of a Borrowing shall be applied first to Base Rate Borrowings and second to Non-Base Rate Borrowings and otherwise ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by (i) accrued interest to the extent required by Section 2.13 and (ii) break funding payments, if any, pursuant to Section 2.16.
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Section 2.12 Fees.
(a) Commitment Fee. The Borrowers agree to pay to the Administrative Agent for the account of each Lender a Commitment Fee, which shall accrue at 0.50% per annum, with a reduction to 0.375% per annum for so long as greater than 50% of the Commitments are drawn, of the average daily amount of such Lenders Available Commitment during the period from and including the Closing Date to but excluding the date on which the Commitments terminate. Accrued Commitment Fees shall be payable quarterly in arrears on the first day of each calendar quarter and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof. All Commitment Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed, (including the first day but excluding the last day).
(b) Fees for Letters of Credit. The U.S. Borrower agrees to pay:
(i) to the Administrative Agent for the pro rata benefit of and for the account of each Lender, a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Margin used to determine the interest rate applicable to Eurodollar Loans on the average daily amount of such Lenders applicable LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding the later of the date on which such Lenders Commitment terminates and the date on which such Lender ceases to have any applicable LC Exposure; and
(ii) to each Issuing Lender, a fronting fee in an amount to be agreed between such Issuing Lender and the Borrower Representative for each Letter of Credit issued by such Issuing Lender, which fee shall be due and payable in advance on the date of the issuance of the Letter of Credit, and, in the case of an increase or extension only, on the date of such increase or such extension.
Participation fees accrued through and including the last day of each calendar quarter shall be payable on the first day of each calendar quarter following such last day, commencing on the first such date to occur after the Closing Date; provided that, all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. All other fees payable to the Issuing Lenders pursuant to this paragraph shall be payable within ten (10) days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
(c) The Borrowers agree to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrowers and the Administrative Agent as set forth in the Fee Letter.
(d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the applicable Issuing Lender, in the case of fees payable to it) for distribution, in the case of Commitment Fees and participation fees, to the Lenders. Fees paid shall not be refundable under any circumstances.
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Section 2.13 Interest.
(a) The Loans comprising (i) each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin, (ii) each CBR Borrowing shall bear interest at the Canadian Base Rate plus the Applicable Margin and (iii) each CPR Borrowing shall bear interest at the Canadian Prime Rate plus the Applicable Margin.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin and Loans comprising each CDOR Borrowing shall bear interest at the CDOR Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin.
(c) Each Protective Advance shall bear interest at the Alternate Base Rate plus the Applicable Margin for U.S. Revolving Loans plus, at the option of the Required Lenders, 2% per annum.
(d) Notwithstanding the foregoing, during the occurrence and continuance of an Event of Default, the Administrative Agent or the Required Lenders may, at their option, by notice to the Borrower Representative (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 9.2 requiring the consent of each Lender directly and adversely affected thereby for reductions in interest rates), declare that (i) all Loans (other than Protective Advances) shall bear interest at 2% plus the rate otherwise applicable to such Loans as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount outstanding hereunder (other than Protective Advances), such amount shall accrue at 2% plus the rate applicable to such fee or other obligation as provided hereunder.
(e) Accrued interest on each Loan (for Base Rate Loans, accrued through the last day of the prior calendar quarter) shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Commitments; provided that, (i) interest accrued pursuant to paragraph (d) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of a Base Rate Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Non-Base Rate Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
(f) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate, the Canadian Base Rate, the Canadian Prime Rate or CDOR Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Canadian Base Rate, Canadian Prime Rate, CDOR Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.
(g) For purposes of disclosure pursuant to the Interest Act (Canada), the annual rates of interest or fees to which the rates of interest or fees provided in this Agreement and the other Credit Documents (and stated herein or therein, as applicable, to be computed on the basis of 360 days or any other period of time less than a calendar year) are equivalent are the rates so determined multiplied by the actual number of days in the applicable calendar year and divided by 360 or such other period of time, respectively. The principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement and the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields. The Administrative Agent agrees that if requested in writing by the Borrower Representative it shall calculate the nominal and effective per annum rate of interest on any outstanding Borrowing at any time and provide such information to the Borrower Representative, provided
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that any error in any such calculation, or any failure to provide such information on request, shall not relieve the Borrowers or any of the other Credit Parties of any of its obligations under this Agreement or any other Credit Documents, nor result in any liability to the Administrative Agent or the Lenders. Each Borrower hereby irrevocably agrees not to plead or assert, whether by way of defence or otherwise, in any proceeding relating to the Credit Documents, that the interest payable under the Credit Documents and the calculation thereof has not been adequately disclosed to any Borrower or Credit Party, whether pursuant to Section 4 of the Interest Act (Canada) or any other applicable law or legal principle.
(h) If any provision of this Agreement or of any of the other Credit Documents would obligate any Credit Party to make any payment of interest or other amount payable to the Lenders in an amount or calculated at a rate which would be prohibited by law or would result in a receipt by the Lenders of interest at a criminal rate (as such terms are construed under the Criminal Code (Canada)) then, notwithstanding such provisions, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by the Lenders of interest at a criminal rate, such adjustment to be effected, to the extent necessary, as follows: (1) firstly, by reducing the amount or rate of interest required to be paid to the Lenders under this Section 2.13 and (2) thereafter, by reducing any fees, commissions, premiums and other amounts required to be paid to the Lenders which would constitute interest for purposes of Section 347 of the Criminal Code (Canada). Notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if the Lenders shall have received an amount in excess of the maximum permitted by that section of the Criminal Code (Canada), the Credit Parties shall be entitled, by notice in writing to the Administrative Agent, to obtain reimbursement from the Lenders in an amount equal to such excess and, pending such reimbursement, such amount shall be deemed to be an amount payable by the Lenders to the Borrowers. Any amount or rate of interest referred to in this Section 2.13 shall be determined in accordance with generally accepted actuarial practices and principles as an effective annual rate of interest over the term that the applicable Loan remains outstanding on the assumption that any charges, fees or expenses that fall within the meaning of interest (as defined in the Criminal Code (Canada)) shall, if they relate to a specific period of time, be pro-rated over that period of time and otherwise be pro-rated over the period from the Closing Date to the Maturity Date and, in the event of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Administrative Agent shall be conclusive for the purposes of such determination.
Section 2.14 Alternate Rate of Interest.
(a) If prior to the commencement of any Interest Period for a Eurodollar Borrowing, or CDOR Rate Borrowing, as applicable:
(i) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the LIBO Rate or the CDOR Rate, as applicable (including, without limitation, because the LIBO Screen Rate is not available or published on a current basis) for such Interest Period; or
(ii) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate, the LIBO Rate or the CDOR Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower Representative and the Lenders via telephone or Electronic System as provided in Section 9.1 as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower Representative and the Lenders that the circumstances giving rise to such notice no longer exist, (A) any Interest Election Request that requests the conversion of
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any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing or CDOR Rate Borrowing, as applicable, shall be ineffective and any such Eurodollar Borrowing or CDOR Rate Borrowing, as applicable, shall be repaid or converted into an ABR Borrowing or CPR Borrowing, as applicable, on the last day of the then current Interest Period applicable thereto, and (B) if any Notice of Borrowing requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing or CPR Borrowing, as applicable.
(b) If at any time the Administrative Agent determines (which determination shall be conclusive absent manifest error) that (i) the circumstances set forth in clause (a)(i) have arisen and such circumstances are unlikely to be temporary or (ii) the circumstances set forth in clause (a)(i) have not arisen but the supervisor for the administrator of the LIBO Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the LIBO Screen Rate shall no longer be used for determining interest rates for loans, then the Administrative Agent and the Borrower Representative shall endeavor to establish an alternate rate of interest to the LIBO Rate that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable (but for the avoidance of doubt, such related changes shall not include a reduction of the Applicable Margin). Notwithstanding anything to the contrary in Section 9.2, such amendment shall become effective without any further action or consent of any other party to this Agreement so long as the Administrative Agent shall not have received, within five (5) Business Days of the date notice of such alternate rate of interest and other related changes (including, to the extent necessary, corresponding changes to the definition of Applicable Margin and other definitions referenced therein) is provided to the Lenders, a written notice from the Required Lenders stating that such Required Lenders object to such amendment. Until an alternate rate of interest shall be determined in accordance with this clause (b) (but, in the case of the circumstances described in clause (ii) of the first sentence of this Section 2.14(b), only to the extent the LIBO Screen Rate for such Interest Period is not available or published at such time on a current basis), (x) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective, and (y) if any Notice of Borrowing requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that, if such alternate rate of interest shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
Section 2.15 Increased Costs; Illegality.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or an Issuing Lender;
(ii) impose on any Lender or Issuing Lender or the London interbank market any other condition, cost or expense (in each case, other than taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; or
(iii) 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;
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and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting into or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, Issuing Lender or such other Recipient of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender, Issuing Lender or such other Recipient hereunder (whether of principal, interest or otherwise), then the Applicable Borrower will pay to such Lender, Issuing Lender or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, Issuing Lender or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered.
(b) If any Lender or Issuing Lender determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lenders or Issuing Lenders capital or on the capital of such Lenders or Issuing Lenders holding company, if any, as a consequence of this Agreement, the Commitments of, or the Loans made by, or participations in Letters of Credit or Canadian Loans held by, such Lender, or the Letters of Credit issued by such Issuing Lender, to a level below that which such Lender or Issuing Lender or such Lenders or Issuing Lenders holding company could have achieved but for such Change in Law (taking into consideration such Lenders or Issuing Lenders policies and the policies of such Lenders or Issuing Lenders holding company with respect to capital adequacy and liquidity), then from time to time the Applicable Borrower will pay to such Lender or Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or Issuing Lender or such Lenders or Issuing Lenders holding company for any such reduction suffered.
(c) A certificate of a Lender or Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or Issuing Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower Representative and shall be conclusive absent manifest error. The Applicable Borrower shall pay such Lender or Issuing Lender, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.
(d) If any Lender shall notify the Borrower Representative that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or that any central bank or other Governmental Authority asserts that it is unlawful, for such Lender or its Lending Office to perform its obligations under this Agreement to make, maintain, or fund any Eurodollar Loans of such Lender then outstanding hereunder, (a) the Applicable Borrower shall, no later than 11:00 a.m. (New York City time) (i) if not prohibited by law, on the last day of the Interest Period for each outstanding Eurodollar Loan, or (ii) if required by such notice, on the second Business Day following its receipt of such notice, prepay all of the Eurodollar Loans of such Lender then outstanding, together with accrued interest on the principal amount prepaid or defeased to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.10 as a result of such prepayment or defeasance being made on such date, (b) such Lender shall simultaneously make a Base Rate Loan to the Applicable Borrower on such date in an amount equal to the aggregate principal amount of the Eurodollar Loans prepaid to such Lender, and (c) the right of the Applicable Borrower to select Eurodollar Loans from such Lender for any subsequent Borrowing shall be suspended until such Lender shall notify the Borrower Representative that the circumstances causing such suspension no longer exist. Each Lender agrees to use commercially reasonable efforts (consistent with its internal policies and legal and regulatory restrictions) to designate a different Lending Office if the making of such designation would avoid the effect of this paragraph and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.
Section 2.16 Breakage Costs. In the event of (a) the payment of any principal of any Non-Base Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or as a result of any prepayment pursuant to Section 2.11), (b) the conversion of any Non-Base Rate Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow,
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convert, continue or prepay any Non-Base Rate Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.9(e) and is revoked in accordance therewith), or (d) the assignment of any Non-Base Rate Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower Representative pursuant to Section 2.19 or 9.2(d), then, in any such event, the Applicable Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Non-Base Rate Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Non-Base Rate Loan had such event not occurred, at the Adjusted LIBO Rate or the CDOR Rate that would have been applicable to such Non-Base Rate Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Non-Base Rate Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for Dollar deposits of a comparable amount and period from other banks in the Eurodollar market, or for the CAD deposits of a comparable amount and period to such CDOR Rate Loan from other banks in the Canadian bankers acceptance market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower Representative and shall be conclusive absent manifest error. The Applicable Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.
Section 2.17 Withholding of Taxes; Gross-Up.
(a) Payments Free of Taxes. Any and all payments by or on account of any obligation of any Credit Party under any Credit Document shall be made without deduction or withholding for any taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such tax is an Indemnified Tax, then the sum payable by the applicable Credit Party shall be increased as necessary so that after such deduction or withholding of Indemnified Taxes has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.17) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(b) Payment of Other Taxes by the Borrowers. The applicable Credit Party shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes.
(c) Evidence of Payment. As soon as practicable after any payment of taxes by any Credit Party to a Governmental Authority pursuant to this Section 2.17, such Credit Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(d) Indemnification by the Credit Parties. The Credit Parties shall jointly and severally indemnify each Recipient, within ten (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) payable or paid by such Recipient on any payment by or on account of any Credit Party under any Credit Document or required to be withheld or deducted from such payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified
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Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Credit Party by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Credit Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Credit Parties to do so), (ii) any taxes attributable to such Lenders failure to comply with the provisions of Section 9.7(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Credit Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Credit Document or otherwise payable by the Administrative Agent to such Lender from any other source against any amount due to the Administrative Agent under this paragraph (e).
(f) Status of Lenders.
(i) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments made under any Credit Document shall deliver to the Borrower Representative and the Administrative Agent, at the time or times reasonably requested by the Borrower Representative or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower Representative 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 Representative or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower Representative or the Administrative Agent as will enable the Borrowers 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 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lenders 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, in the event that any Borrower is a U.S. Person,
(A) any Lender that is a U.S. Person shall deliver to the Borrower Representative 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 Representative or the Administrative Agent), an executed 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 Representative and the Administrative Agent (in such number of copies as shall be reasonably 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 Representative or the Administrative Agent), whichever of the following is applicable:
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(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 Credit Document, an executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, 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 Credit Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, 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) in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, an executed 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 G-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 a 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) an executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable; or
(4) to the extent a Foreign Lender is not the Beneficial Owner, an executed 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 G-2 or Exhibit G-3, an executed 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 G-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 Representative and the Administrative Agent (in such number of copies as shall be reasonably 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 Representative 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 Borrowers or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Credit Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender 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 Lender shall deliver to the Borrower Representative and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower Representative 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 Representative or the Administrative Agent as may be necessary for the Borrowers and
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the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lenders 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.
(iii) On or before the date on which JPMorgan Chase Bank, N.A. (and any successor or replacement Administrative Agent) becomes the Administrative Agent hereunder, it shall deliver to the Borrower Representative executed copies of either (i) IRS Form W-9, or (ii) IRS Form W-8ECI (with respect to any payments to be received on its own behalf) and IRS Form W-8IMY (for all other payments), establishing that each Borrower can make payments to the Administrative Agent without deduction or withholding of any taxes imposed by the United States, including taxes imposed under FATCA.
Each Recipient 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 Representative and the Administrative Agent in writing of its legal inability to do so.
(g) Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any taxes as to which it has been indemnified pursuant to this Section 2.17 (including by the payment of additional amounts pursuant to this Section 2.17), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.17 with respect to the taxes giving rise to such refund), net of all out-of-pocket expenses (including taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-tax position than the indemnified party would have been in if the tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts giving rise to such refund had never been paid. This paragraph (g) shall not be construed to require any indemnified party to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the indemnifying party or any other Person.
(h) Survival. Each partys obligations under this Section 2.17 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Credit Document.
(i) Defined Terms. For purposes of this Section 2.17, the term Lender includes any Issuing Lender and the term applicable law includes FATCA.
Section 2.18 Payments Generally; Allocation of Proceeds; Sharing of Set-Offs.
(a) The Applicable Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 2:00 p.m., Chicago time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the
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next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 10 South Dearborn Street, Floor L2, Chicago, Illinois, except payments to be made directly to the applicable Issuing Lender or Canadian Lender as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17, and 9.1 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in the currency in which the applicable Obligations are denominated, and, if not otherwise specified, in Dollars.
(b) Any proceeds of Collateral received by the Administrative Agent (i) not constituting either (A) a specific payment of principal, interest, fees or other sum payable under the Credit Documents (which shall be applied as specified by the Borrower Representative), (B) a mandatory prepayment (which shall be applied in accordance with Section 2.11) or (C) amounts to be applied from a Concentration Account when full cash dominion is in effect (which shall be applied in accordance with Section 2.10(b)) or (ii) after an Event of Default has occurred and is continuing and the Administrative Agent so elects or the Required Lenders so direct, shall:
(i) with respect to Collateral of U.S. Credit Parties (U.S. Payments), be applied ratably first, to pay any fees, indemnities, or expense reimbursements owing by the Credit Parties including amounts then due to the Administrative Agent and the Issuing Lenders from the Borrowers (other than in connection with Banking Services Obligations or Swap Agreement Obligations), second, to pay any fees, indemnities or expense reimbursements then due to the Lenders from the Credit Parties (other than in connection with Banking Services Obligations or Swap Agreement Obligations), third, to pay interest due in respect of the Protective Advances, fourth, to pay the principal of the Protective Advances, fifth, to pay interest then due and payable on the Loans (other than the Protective Advances) ratably, sixth, to prepay principal on the Loans (other than the Protective Advances) and unreimbursed LC Disbursements owing by the Credit Parties, seventh, to pay an amount to the Administrative Agent equal to one hundred three percent (103%) of the aggregate LC Exposure, to be held as cash Collateral for such Obligations, eighth, to pay any amounts owing from Credit Parties with respect to Banking Services Obligations and Swap Agreement Obligations up to and including the amount most recently provided to the Administrative Agent pursuant to Section 2.22, and ninth, to the payment of any other Secured Obligation due to the Administrative Agent or any Secured Party by the Credit Parties. Notwithstanding the foregoing amounts received from any Credit Party shall not be applied to any Excluded Swap Obligation of such Credit Party. Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Borrower Representative, or unless a Default is in existence, neither the Administrative Agent nor any Lender shall apply any payment which it receives to any Non-Base Rate Loan of a Class, except (a) on the expiration date of the Interest Period applicable thereto or (b) in the event, and only to the extent, that there are no outstanding Base Rate Loans of the same Class and, in any such event, the Borrowers shall pay the break funding payment required in accordance with Section 2.16. The Administrative Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Secured Obligations.
(ii) with respect to Collateral of Canadian Credit Parties (Canadian Payments), be applied ratably: first, to pay any fees, indemnities, or expense reimbursements owing by the Canadian Credit Parties including amounts then due to the Administrative Agent and the Issuing Lenders from the Canadian Borrower (other than in connection with Banking Services Obligations or Swap Agreement Obligations), second, to pay any fees, indemnification or expense reimbursements then due to the Lenders from the Canadian Credit Parties (other than in connection with Banking Services Obligations or Swap Agreement Obligations), third, to pay interest then due and payable on the Canadian Loans ratably,
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fourth, to prepay principal on the Canadian Loans, fifth, to pay any amounts owing with respect to Banking Services Obligations and Swap Agreement Obligations of the Canadian Credit Parties up to and including the amount most recently provided to the Administrative Agent pursuant to Section 2.22, and sixth, to the payment of any other Secured Obligation due to the Administrative Agent or any Lender by the Canadian Credit Parties.
(iii) Notwithstanding anything else in this Section 2.18(b)(i) to the contrary, any portion of the U.S. Payments otherwise payable on behalf of Secured Obligations of the Canadian Credit Parties pursuant to Section 2.18(b)(i) may be temporarily held in reserve pending the receipt of Canadian Payments and, upon receipt of any Canadian Payments, 100% of such Canadian Payments shall be applied in accordance with Section 2.18(b)(ii) and thereby reduce by an equivalent amount the application of U.S. Payments to the Secured Obligations of the Canadian Credit Parties pursuant to Section 2.18(b)(i).
(c) At the election of the Administrative Agent, all payments of principal, interest, LC Disbursements, fees, premiums, reimbursable expenses (including, without limitation, all reimbursement for fees, costs and expenses pursuant to Section 9.1), and other sums payable under the Credit Documents, may be paid from the proceeds of Borrowings made hereunder whether made following a request by the Borrower Representative pursuant to Section 2.3 or a deemed request as provided in this Section or may be deducted from any Deposit Account of the Applicable Borrower maintained with the Administrative Agent. The Applicable Borrower hereby irrevocably authorizes (i) the Administrative Agent to make a Borrowing for the purpose of paying each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Credit Documents and agrees that all such amounts charged shall constitute Loans and that all such Borrowings shall be deemed to have been requested pursuant to Section 2.3, 2.4 or 2.5, as applicable, and (ii) the Administrative Agent to charge any Deposit Account of any Applicable Borrower maintained with the Administrative Agent for each payment of principal, interest and fees as it becomes due from the Applicable Borrower hereunder or any other amount due under the Credit Documents.
(d) If, except as otherwise expressly provided herein, any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements and Canadian Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and Canadian Loans and accrued interest thereon than the proportion received by any other similarly situated Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the applicable Loans and participations in LC Disbursements and Canadian Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by all such Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements and Canadian Loans; provided that, (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrowers pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements and Canadian Loans to any assignee or Participant, other than to the Borrowers or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each 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 such Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower in the amount of such participation. Notwithstanding anything to the contrary in this Agreement, a Lender may not exercise any right of set-off or counterclaim against, or otherwise apply, Collateral of a Canadian Credit Party to, or with respect to, any of the U.S. Obligations.
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(e) Unless the Administrative Agent shall have received notice from the Borrower Representative prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or an Issuing Lender hereunder that the Applicable Borrower will not make such payment, the Administrative Agent may assume that the Applicable Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the applicable Issuing Lender, as the case may be, the amount due. In such event, if the Applicable Borrower has not in fact made such payment, then each of the Lenders or the applicable Issuing Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or applicable Issuing Lender 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 Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
(f) If any Lender shall fail to make any payment required to be made by it hereunder, then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lenders obligations hereunder until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account as Cash Collateral for, and application to, any future funding obligations of such Lender hereunder. Application of amounts pursuant to (i) and (ii) above shall be made in any order determined by the Administrative Agent in its discretion.
(g) The Administrative Agent may from time to time provide the Borrowers with account statements or invoices with respect to any of the Secured Obligations (the Statements). The Administrative Agent is under no duty or obligation to provide Statements, which, if provided, will be solely for the Borrowers convenience. Statements may contain estimates of the amounts owed during the relevant billing period, whether of principal, interest, fees or other Secured Obligations. If the Applicable Borrower pays the full amount indicated on a Statement on or before the due date indicated on such Statement, the Applicable Borrower shall not be in default of payment with respect to the billing period indicated on such Statement; provided, that acceptance by the Administrative Agent, on behalf of the Lenders, of any payment that is less than the total amount actually due at that time (including but not limited to any past due amounts) shall not constitute a waiver of the Administrative Agents or the Lenders right to receive Payment in Full at another time.
Section 2.19 Mitigation Obligations; Replacement of Lenders.
(a) If (i) any Lender requests compensation under Section 2.15 or (ii) the Applicable Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall 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, such designation or assignment (1) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (2) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Applicable Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) If (i) any Lender requests compensation under Section 2.15, (ii) any of the Borrowers are required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or (iii) any Lender becomes a Defaulting Lender, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance
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with and subject to the restrictions contained in Section 9.7), all its interests, rights (other than its existing rights to payments pursuant to Section 2.15 or 2.17) and obligations under this Agreement and other Credit Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that, (1) the Borrowers shall have received the prior written consent of the Administrative Agent (and in circumstances where its consent would be required under Section 9.7, each Issuing Lender), which consent shall not unreasonably be withheld, (2) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Canadian Loans, if any, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts) and (3) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.
Section 2.20 Defaulting Lender Provisions. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a) fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.12(a);
(b) such Defaulting Lender shall not have the right to vote on any issue on which voting is required (other than to the extent expressly provided in Section 9.2(b)) and the Commitment and Revolving Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 9.2) or under any other Credit Document; provided, that, except as otherwise provided in Section 9.2, this clause (b) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender directly and adversely affected thereby;
(c) if any LC Exposure or Canadian Exposure exists at the time a Lender becomes a Defaulting Lender then:
(i) all or any part of the LC Exposure or Canadian Exposure of such Defaulting Lender shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent that (x) the conditions set forth in Section 4.2 are satisfied at the time of such reallocation (and, unless the Borrower Representative shall have otherwise notified the Administrative Agent at such time, the Company shall be deemed to have represented and warranted that such conditions are satisfied at such time) and (y) the sum of all Non-Defaulting Lenders Revolving Exposures plus such Defaulting Lenders LC Exposure does not exceed the total of all Non-Defaulting Lenders Commitments;
(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Company shall within one (1) Business Day following notice by the Administrative Agent (x) first, Cash Collateralize, for the benefit of the applicable Issuing Lender, the Companys obligations corresponding to such Defaulting Lenders applicable LC Exposure or Canadian Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.6(j) for so long as such LC Exposure or Canadian Exposure is outstanding;
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(iii) if the Company Cash Collateralizes any portion of such Defaulting Lenders LC Exposure pursuant to clause (ii) above, the Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b) with respect to such Defaulting Lenders applicable LC Exposure during the period such Defaulting Lenders applicable LC Exposure is Cash Collateralized;
(iv) if the LC Exposure of the Non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Sections 2.12(a) and 2.12(b) shall be adjusted in accordance with such Non-Defaulting Lenders Applicable Percentages; and
(v) if all or any portion of such Defaulting Lenders LC Exposure or Canadian Exposure is neither reallocated nor Cash Collateralized pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of any Issuing Lender or any other Lender hereunder, all letter of credit fees payable under Section 2.12(b) with respect to such Defaulting Lenders LC Exposure or Canadian Exposure shall be payable to the applicable Issuing Lender or Canadian Lender until and to the extent that such LC Exposure or Canadian Exposure is reallocated and/or Cash Collateralized; and
(d) If (i) a Bankruptcy Event or a Bail-In Action with respect to the parent of any Lender shall occur following the date hereof and for so long as such event shall continue or (ii) an Issuing Lender or Canadian Lender has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, such Issuing Lender or Canadian Lender shall not be required to issue, amend or increase any Letter of Credit or make any Canadian Loan, unless such Issuing Lender or Canadian Lender, as the case may be, shall have entered into arrangements with the Borrowers or such Lender, satisfactory to such Issuing Lender or Canadian Lender, as the case may be, to defease any risk to it in respect of such Lender hereunder.
(e) In the event that the Administrative Agent, the Borrower Representative, the Canadian Lenders and the Issuing Lenders agree that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the LC Exposure and Canadian Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lenders Commitment and on the date of such readjustment such Lender shall purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.
Section 2.21 Returned Payments. If after receipt of any payment which is applied to the payment of all or any part of the Obligations (including a payment effected through exercise of a right of setoff), the Administrative Agent or any Lender is for any reason compelled to surrender such payment or proceeds to any Person because such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other reason (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion), then the Obligations or part thereof intended to be satisfied shall be revived and continued and this Agreement shall continue in full force as if such payment or proceeds had not been received by the Administrative Agent or such Lender. The provisions of this Section 2.21 shall be and remain effective notwithstanding any contrary action which may have been taken by the Administrative Agent or any Lender in reliance upon such payment or application of proceeds. The provisions of this Section 2.21 shall survive the termination of this Agreement.
Section 2.22 Banking Services and Swap Agreements. Each Lender or Affiliate thereof providing Banking Services for, or having Swap Agreements with, any Credit Party or any Subsidiary or Affiliate of a Credit Party shall deliver to the Administrative Agent, promptly after entering into such Banking Services or Swap Agreements, written notice setting forth the aggregate amount of all Banking Services Obligations and Swap Agreement Obligations of such Credit Party or Subsidiary or Affiliate
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thereof to such Lender or Affiliate (whether matured or unmatured, absolute or contingent). In addition, each such Lender or Affiliate thereof shall deliver to the Administrative Agent, from time to time after a significant change therein or upon a request therefor, a summary of the amounts due or to become due in respect of such Banking Services Obligations and Swap Agreement Obligations. The most recent information provided to the Administrative Agent shall be used in determining the amounts to be applied in respect of such Banking Services Obligations and/or Swap Agreement Obligations pursuant to Section 2.18(b) and which tier of the waterfall, contained in Section 2.18(b), such Banking Services Obligations and/or Swap Agreement Obligations will be placed.
Section 2.23 Excess Resulting From Exchange Rate Change. With respect to the Commitments, if on any Revaluation Date following one or more fluctuations in the Exchange Rate of the CAD against the Dollar, (i) Aggregate Credit Exposure exceeds the lesser of the Aggregate Commitment and the Aggregate Borrowing Base or (ii) the Aggregate Canadian Exposure exceeds the Canadian Loan Limit, the Applicable Borrower shall, within two (2) Business Days of notice from the Administrative Agent (x) make the necessary payments or repayments to reduce such Revolving Exposure to an amount necessary to eliminate such excess or (y) maintain or cause to be maintained with the Administrative Agent (for the benefit of the Secured Parties) deposits as continuing collateral security for the Obligations in an amount equal to or greater than the amount of such excess, such deposits to be maintained in such form and upon such terms as are acceptable to the Administrative Agent. Without limiting the foregoing provisions, the Administrative Agent shall, on the first Business Day of each month or more frequently in the sole discretion of the Administrative Agent, make the necessary exchange rate calculations to determine whether any such excess exists on such date and advise the Borrower Representative such excess exists.
Section 2.24 Canadian Loans.
(a) Subject to the terms and conditions set forth herein, each Canadian Lender agrees to make Canadian Loans to the Canadian Borrower in Dollars and CAD an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Canadian Loans exceeding the aggregate Canadian Sublimit, (ii) the sum of the aggregate outstanding amount of all Loans plus the LC Exposure exceeding the Aggregate Commitments, (iii) any Lenders Revolving Exposure exceeding such Lenders Commitment, (iv) the Aggregate Canadian Exposure exceeding the Canadian Loan Limit, or (v) the U.S. Availability or the Availability being less than zero. Within the foregoing limits and subject to the terms and conditions set forth herein, the Canadian Borrower may borrow, prepay and reborrow Canadian Loans. The Canadian Lenders shall make each Canadian Loan available to the Borrowers by means of a credit to the Funding Account, and each Canadian Lender shall make its ratable portion of the requested Canadian Loan (such ratable portion to be calculated based upon such Canadian Lenders Canadian Applicable Percentage).
(b) Any Canadian Lender may by written notice given to the Canadian Administrative Agent require the Lenders to acquire participations on such Business Day in all or a portion of the Canadian Loans outstanding. Such notice shall specify the aggregate amount of Canadian Loans in which the Lenders will participate. Promptly upon receipt of such notice, the Canadian Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lenders Applicable Percentage of such Canadian Loan or Loans. Each Lender hereby absolutely and unconditionally agrees, promptly upon receipt of such notice from the Canadian Administrative Agent (and in any event, if such notice is received by 11:00 a.m., Chicago time, on a Business Day no later than 4:00 p.m., Chicago time on such Business Day and if received after 11:00 a.m., Chicago time, on a Business Day means no later than 9:00 a.m. Chicago time on the immediately succeeding Business Day), to pay to the Canadian Administrative Agent, for the account of the applicable Canadian Lender, the Dollar Equivalent of such Lenders Applicable Percentage of such Canadian Loan or Loans. Each Lender acknowledges and agrees that its obligation to acquire participations in Canadian Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any
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circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.7 with respect to Loans made by such Lender (and Section 2.7 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Canadian Administrative Agent shall promptly pay to the Canadian Lender the amounts so received by it from the Lenders. The Canadian Administrative Agent shall notify the Borrower Representative of any participations in any Canadian Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Canadian Loan shall be made to the Canadian Administrative Agent and not to the Canadian Lender. Any amounts received by the Canadian Lender from the Canadian Borrower (or other party on behalf of the Canadian Borrower) in respect of a Canadian Loan after receipt by the Canadian Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Canadian Administrative Agent; any such amounts received by the Canadian Administrative Agent shall be promptly remitted by the Canadian Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the Canadian Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the Canadian Lender or to the Canadian Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the Canadian Borrower for any reason. The purchase of participations in a Canadian Loan pursuant to this paragraph shall not relieve the Canadian Borrower of any default in the payment thereof.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to the Closing Date. The obligations of each Lender to make Loans on the Closing Date and for the Issuing Lenders to issue or confirm any initial Letters of Credit shall be subject to the satisfaction or waiver (in accordance with Section 9.2 of this Agreement) of the following conditions:
(a) Documentation. The Administrative Agent shall have received this Agreement and all attached Exhibits and Schedules, in form and substance reasonably satisfactory to the Administrative Agent and the Lenders, and fully executed by all parties hereto.
(b) Acquisition. The Administrative Agent shall have received a copy of the Magnum Purchase Agreement certified as being true and correct by a duly authorized officer of the Borrower Representative. The Magnum Acquisition shall have been, or shall substantially concurrently be, consummated in accordance with the terms of the Magnum Purchase Agreement without giving effect to any amendment, change or supplement or waiver of any provision thereof, in each case, in any manner that is materially adverse to the interests of the Lenders or the Administrative Agent (in each case in their capacities as such) without the prior written consent (not to be unreasonably withheld, delayed or conditioned) of the Administrative Agent.
(c) Representations. The representations and warranties (i) made by the Credit Parties under Sections 4.1, 4.2, 4.3, 4.15, 4.19 and 4.20 of this Agreement and (ii) made by the Magnum Targets and their affiliates in the Magnum Purchase Agreement as are material to the interests of the Lenders, but only to the extent that the breach of any such representations results in the Company or any of its affiliates having the right to terminate its obligations under the Magnum Purchase Agreement (after giving effect to any applicable notice and cure period) or otherwise decline to consummate the Magnum Acquisition, shall be true and correct in all material respects on the Closing Date.
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(d) Solvency Certificate. The Administrative Agent shall have received a certificate in form and substance reasonably satisfactory to the Administrative Agent from a Responsible Officer of the Company certifying that, (i) before giving effect to the initial Borrowings made hereunder on the Closing Date, the Credit Parties, taken as a whole, are Solvent and (ii) after giving effect to the initial Borrowings made hereunder on the Closing Date and the other Transactions, the Credit Parties, taken as a whole, are Solvent.
(e) No Material Adverse Change. Since October 15, 2018, no Material Adverse Effect (as defined in the Magnum Purchase Agreement) has occurred.
(f) USA Patriot Act; Beneficial Ownership Certification. The Administrative Agent shall have received (i) all documentation and other information that is required by regulatory authorities under applicable know your customer and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act and (ii) to the extent the Company qualifies as a legal entity customer under the Beneficial Ownership Regulation, at least five (5) Business Days prior to the Closing Date, any Lender that has requested, in a written notice to the Company at least ten (10) Business Days prior to the Closing Date, a Beneficial Ownership Certification in relation to the Company shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied).
(g) Payment of Fees. The Company shall have paid the fees and expenses required to be paid as of the Closing Date by Section 2.12(d), Section 2.12(e) and Section 9.1(a) (other than legal fees) or any other provision of a Credit Document (including, for the avoidance of doubt, the Fee Letter). The Company shall have paid the legal fees for the Administrative Agents counsel as required under Section 9.1 to the extent such fees have been invoiced at least three (3) Business Days prior to the Closing Date.
(h) Borrowing Base Certificate. The Administrative Agent shall have received a Borrowing Base Certificate which calculates the Canadian Borrowing Base and the U.S. Borrowing Base as of September 30, 2018.
(i) Documentation. The Administrative Agent shall have received the following, duly executed by all the parties thereto, in form and substance reasonably satisfactory to the Administrative Agent and the Lenders, and, where applicable, fully executed by all parties thereto:
(i) a Note payable to each Lender requesting a Note;
(ii) the Guaranty and the Security Agreements, together with such other documents, agreements, or instruments necessary to create an Acceptable Security Interest in the Collateral;
(iii) certificates of insurance naming the Administrative Agent as loss payee or lenders loss payable with respect to property insurance, or additional insured with respect to liability insurance, and covering the Credit Parties Properties with such insurance carriers, for such amounts and covering such risks as required by Section 5.3;
(iv) a secretarys certificate from each Credit Party certifying and appending such Credit Partys (A) officers incumbency, (B) authorizing resolutions, (C) organizational documents, and (D) governmental approvals, if any, with respect to the Credit Documents to which such Person is a party;
(v) a certificate from an authorized officer of the Company dated as of the Closing Date stating that as of such date all conditions precedent set forth in this Section 3.1 have been met or waived;
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(vi) certificates of status or good standing for each Credit Party in the state in which each such Person is organized, which certificates shall be (A) dated as of a recent date or (B) otherwise effective on the Closing Date;
(vii) a legal opinion of (A) Vinson & Elkins LLP as outside counsel to the Credit Parties and (B) local counsel in each relevant jurisdiction, in form and substance reasonably acceptable to the Administrative Agent; and
(j) Field Examinations. The Administrative Agent or its designee shall have conducted a field examination of the Accounts and Inventory of the Credit Parties (other than the Magnum Targets) and such other information or materials as the Administrative Agent shall include within the scope of such field examination and audit, all of which shall be in form and substance reasonably satisfactory to the Administrative Agent. The Administrative Agent acknowledges and agrees that this condition (k) has been satisfied.
(k) Delivery of Financial Statements; Projections. With respect to the Company and its Subsidiaries, the Administrative Agent shall have received (i) the audited consolidated balance sheets of the Company and its Subsidiaries and the Magnum Targets as of the end of the fiscal years ended December 31, 2017 and December 31, 2016 and related audited and consolidated statements of operations, changes in shareholders equity or partners capital and cash flows of each of the Company and its Subsidiaries and the Magnum Targets for such fiscal years; (ii) the unaudited consolidated balance sheets and related statements of operations, changes in shareholders equity or partners capital and cash flows of each of the Company and its Subsidiaries and the Magnum Targets for each fiscal quarter of Nine Energy and the Magnum Targets that started after December 31, 2017 and ended at least forty-five (45) days prior to the Closing Date; and (iii) (A) a pro forma statement of operations of the Company and its Subsidiaries (including the Magnum Targets) for the fiscal year ended December 31, 2017, (B) a pro forma statement of operations of the Company and its Subsidiaries (including the Magnum Targets) for the latest interim period (and the comparative period of the prior year) of the Company covered by the financial statements specified in clause (i), and (C) a pro forma balance sheet as of the last day of the latest quarterly period of the Company and its Subsidiaries (including the Magnum Targets).
(l) Refinancing; Payment in Full of Funded Debt. Prior to, or concurrently with, the making of the initial Loans hereunder, all outstanding obligations owing with respect to the Existing Nine Debt (subject to Section 2.6(n)) shall have been paid in full and the Administrative Agent shall have received evidence that on the Closing Date, after giving effect to the Transactions, neither the Borrowers nor any of their Subsidiaries shall have Funded Debt except for (i) Funded Debt under this Facility and the Senior Notes and (ii) any Funded Debt of the Borrowers or the Magnum Targets and their respective Subsidiaries incurred in respect of short term debt for working capital, capital leases, purchase money debt or equipment financings or deferred purchase price obligations (excluding earn out obligations under the Magnum Purchase Agreement) up to an aggregate amount not exceeding $3.0 million. Such evidence may include (without limitation) one or more pay-off letters (or such other evidence) in form and substance reasonably satisfactory to the Administrative Agent with respect to any such Funded Debt being refinanced with the initial Loans to be made hereunder; and arrangements reasonably satisfactory to the Administrative Agent shall have been made with any Person holding any Lien securing any such Funded Debt, for the release and delivery of such UCC (or equivalent) termination statements, mortgage releases, releases of assignments of leases and rents, and other instruments, in each case in proper form for recording or filing, as the Administrative Agent shall have requested to release and terminate of record the Liens securing such Funded Debt.
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(m) Availability. The Administrative Agent shall have received evidence satisfactory to it that, immediately after giving effect to the Transactions, (a) Availability on the Closing Date shall not be less than $60.0 million and (b) Liquidity shall not be less than $80.0 million.
(n) Appraisals. The Administrative Agent shall have received an appraisal of certain Credit Parties Inventory from one or more firms reasonably satisfactory to the Administrative Agent, which appraisal shall be satisfactory to the Administrative Agent. The Administrative Agent acknowledges and agrees that this condition (o) has been satisfied.
(o) Closing Date. The Closing Date shall have occurred on or prior to December 31, 2018.
Section 3.2 Conditions Precedent to Each Credit Extension After Closing Date. The obligation of each Lender to make any Credit Extension on the occasion of each Borrowing (excluding the initial Borrowing), the obligation of each Issuing Lender to make any Credit Extension after the Closing Date and any reallocation provided in Section 2.20, in each case, shall be subject to the satisfaction or waiver (in accordance with Section 9.2 of this Agreement) of the following conditions as of the date of such Borrowing, such Credit Extension or such reallocation:
(a) Representations and Warranties. As of the date of the making of such Credit Extension, Borrowing or reallocation, the representations and warranties made by any Credit Party or any officer of any Credit Party contained in the Credit Documents shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on such date, except that any representation and warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) only as of such specified date and each request for the making of any Borrowing, Credit Extension or reallocation, and the making of such Borrowing, Credit Extension or reallocation shall be deemed to be a reaffirmation of such representations and warranties. Each of the giving of the applicable Notice of Borrowing or Letter of Credit Application, the acceptance by the Applicable Borrower of the proceeds of such Borrowing, Credit Extension or reallocation, shall constitute a representation and warranty by the Applicable Borrower that on the date of such Borrowing, Credit Extension or reallocation, as applicable, the foregoing condition has been met.
(b) Event of Default. As of the date of each Borrowing, Credit Extension or reallocation, no Default or Event of Default shall exist, and the making of such Borrowing, Credit Extension or reallocation would not cause a Default or Event of Default. Each of the giving of the applicable Notice of Borrowing or Letter of Credit Application, the acceptance by the Applicable Borrower of the proceeds of such Borrowing, Credit Extension or reallocation, shall constitute a representation and warranty by the Applicable Borrower that on the date of such Borrowing, Credit Extension or reallocation, as applicable, the foregoing condition has been met.
(c) Availability. After giving effect to any Borrowing or the issuance, amendment, renewal or extension of any Letter of Credit, (i) Availability and (ii) as applicable, Canadian Availability or U.S. Availability shall not be less than zero.
Each Borrowing after the Closing Date and each issuance, amendment, renewal or extension of a Letter of Credit after the Closing Date shall be deemed to constitute a representation and warranty by the Borrowers on the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section.
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Section 3.3 Determinations Under Section 3.1 and Section 3.2. For purposes of determining compliance with any of the conditions specified in Section 3.1 and Section 3.2, each Lender 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 the Lenders unless an officer of the Administrative Agent responsible for the transactions contemplated by the Credit Documents shall have received written notice from such Lender prior to the Credit Extensions hereunder specifying its objection thereto and such Lender shall not have made available to the Administrative Agent such Lenders Credit Extensions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
From and after the Closing Date, each Borrower represents and warrants as follows:
Section 4.1 Organization. Each Borrower and each of its Restricted Subsidiaries is duly and validly organized and existing and in good standing under the laws of its jurisdiction of incorporation, formation or organization and is authorized to do business and is in good standing in all jurisdictions in which such qualifications or authorizations are necessary except where the failure to be so qualified or authorized could not reasonably be expected to result in a Material Adverse Change. As of the Closing Date, each Credit Partys type of organization and jurisdiction of incorporation, formation or organization are set forth on Schedule 4.1.
Section 4.2 Authorization. The execution, delivery, and performance by each Credit Party of each Credit Document to which such Credit Party is a party and the consummation of the Transactions and any related transactions contemplated thereby (a) are within such Credit Partys organizational powers, (b) have been duly authorized by all necessary corporate, limited liability company or partnership action, as applicable, of such Credit Party, (c) do not contravene any articles or certificate of incorporation or formation, bylaws, partnership or limited liability company agreement or other equivalent organization documents, as applicable, binding on or affecting such Credit Party, (d) do not contravene any law or any contractual restriction binding on or affecting such Credit Party except for immaterial laws or contractual restrictions the noncompliance with which would not reasonably be expected to be adverse to any Secured Party, (e) do not result in or require the creation or imposition of any Lien prohibited by this Agreement, and (f) do not require any authorization or approval or other action by, or any notice or filing with, any Governmental Authority except for immaterial authorizations, approvals, other actions, notices or filings the failure to obtain of which would not reasonably be expected to be adverse to any Secured Party. At the time of each Credit Extension, such Credit Extension and the use of the proceeds of such Credit Extension are within the Applicable Borrowers corporate powers, have been duly authorized by all necessary action, do not contravene (i) the Applicable Borrowers certificate or articles of incorporation, bylaws or other organizational documents, or (ii) any Legal Requirement or any contractual restriction binding on or affecting the Applicable Borrower, will not result in or require the creation or imposition of any Lien prohibited by this Agreement, and do not require any authorization or approval or other action by, or any notice or filing with, any Governmental Authority.
Section 4.3 Enforceability. The Credit Documents have each been duly executed and delivered by each Credit Party that is a party thereto and each Credit Document constitutes the legal, valid, and binding obligation of each Credit Party that is a party thereto enforceable against such Credit Party in accordance with its terms, except as limited by applicable Debtor Relief Laws or similar laws at the time in effect affecting the rights of creditors generally and to the effect of general principles of equity whether applied by a court of law or equity.
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Section 4.4 Financial Condition.
(a) The Borrower Representative has delivered to the Lenders the financial statements identified in Section 3.1(k) and such financial statements were prepared in accordance with GAAP and fairly present, in all material respects, the consolidated financial condition and results of operations and cash flows of the Persons covered thereby as of the respective dates thereof for the periods covered therein, subject, in the case of unaudited financial statements, to normal year-end adjustments and the absence of footnotes. As of the date of the aforementioned financial statements, there were no material contingent obligations, liabilities for taxes, unusual forward or long-term commitments, or unrealized or anticipated losses of the applicable Persons, except as disclosed therein and adequate reserves for such items have been made in accordance with GAAP.
(b) Since October 15, 2018, after giving pro forma effect to the Transactions, no event or condition has occurred that could reasonably be expected to result in a Material Adverse Change.
Section 4.5 Ownership and Liens; Real Property. Each Restricted Entity (i) has good and marketable fee simple title to, or a valid leasehold interest or easement in, all material real property, and good title to all material personal Property, used in its business, and (ii) none of the Property owned by the Borrowers or a Restricted Subsidiary is subject to any Lien except Permitted Liens.
Section 4.6 True and Complete Disclosure. All written factual information (whether delivered before or after the date of this Agreement) prepared by or on behalf of the Borrowers and their Restricted Subsidiaries and furnished to any Lender Party for purposes of or in connection with this Agreement or any other Credit Document, taken as a whole, does not contain any material misstatement of fact or omit to state any material fact necessary to make the statements therein not misleading as of the date such information is dated or certified. There is no fact known to any Responsible Officer of any Credit Party on the date of this Agreement that has not been disclosed to the Administrative Agent that could reasonably be expected to result in a Material Adverse Change. All projections, estimates, budgets, and pro forma financial information furnished by the Company or any of its Restricted Subsidiaries (or on behalf of the Company or any such Restricted Subsidiary), were prepared on the basis of assumptions, data, information, tests, or conditions (including current and reasonably foreseeable business conditions) believed to be reasonable at the time such projections, estimates, and pro forma financial information were furnished (it being recognized by the Lender Parties, however, that projections as to future events are not to be viewed as facts and that results during the period(s) covered by such projections may differ from the projected results and that such differences may be material and that the Credit Parties make no representation that such projections will be realized).
Section 4.7 Litigation. There are no actions, suits, or proceedings pending or, to any Restricted Entitys knowledge, threatened against the Company or any Restricted Subsidiary, at law, in equity, or in admiralty, or by or before any Governmental Authority, which could reasonably be expected to result in a Material Adverse Change. Additionally, except as disclosed in writing to the Administrative Agent, there is no pending or, to the knowledge of any Restricted Entity, threatened action or proceeding instituted against the Company or any Restricted Subsidiary which seeks to adjudicate the Company or any Restricted Subsidiary as bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any Debtor Relief Law, or seeking the entry of an order for relief or the appointment of a receiver, interim receiver, receiver manager, custodian, trustee or other similar official for it or for any substantial part of its Property.
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Section 4.8 Compliance with Agreements.
(a) No Restricted Entity is a party to any indenture, loan or credit agreement or any lease or any other types of agreement or instrument or subject to any charter or corporate restriction or provision of applicable law or governmental regulation the performance of or compliance with which could reasonably be expected to cause a Material Adverse Change. No Restricted Entity is in default under or with respect to any contract, agreement, lease or any other types of agreement or instrument to which any Restricted Entity is a party and which could reasonably be expected to cause a Material Adverse Change. To the knowledge of the Credit Parties, no Restricted Entity is in default under, or has received a notice of default under, any contract, agreement, lease or any other document or instrument to which any Restricted Entity is a party which is continuing and which, if not cured, could reasonably be expected to cause a Material Adverse Change.
(b) No Default has occurred and is continuing.
Section 4.9 Pension Plans.
(a) Except for matters that could not reasonably be expected to result in a Material Adverse Change, all Plans are in compliance with all applicable provisions of ERISA, (b) no Termination Event has occurred with respect to any Plan that would result in an Event of Default under Section 7.1(j), and, except for matters that could not reasonably be expected to result in a Material Adverse Change, each Plan has complied with and been administered in accordance with applicable provisions of ERISA and the Code, (c) no accumulated funding deficiency (as defined in Section 302 of ERISA) has occurred with respect to any Plan, and for plan years after December 31, 2007, no unpaid minimum required contribution exists with respect to any Plan, and there has been no excise tax imposed under Section 4971 of the Code with respect to any Plan, (d) the present value of all benefits vested under each Plan (based on the assumptions used to fund such Plan) did not, as of the last annual valuation date applicable thereto, exceed the value of the assets of such Plan allocable to such vested benefits in an amount that could reasonably be expected to result in a Material Adverse Change, (e) neither the Company nor any member of the Controlled Group has had a complete or partial withdrawal from any Multiemployer Plan for which there is any unsatisfied withdrawal liability that could reasonably be expected to result in a Material Adverse Change or an Event of Default under Section 7.1(i), and (f) neither the Company nor any member of the Controlled Group has incurred any liability as a result of a Multiemployer Plan being in reorganization or insolvent that could reasonably be expected to result in a Material Adverse Change. Based upon GAAP existing as of the date of this Agreement and current factual circumstances, no Restricted Entity has any reason to believe that the annual cost during the term of this Agreement to the Company or any Subsidiary for post-retirement benefits to be provided to the current and former employees of the Company or any Subsidiary under Plans that are welfare benefit plans (as defined in Section 3(1) of ERISA) could, in the aggregate, reasonably be expected to cause a Material Adverse Change.
(b) Each Canadian Credit Party is in compliance with the requirements of all federal or provincial or territorial laws applicable to any Canadian Pension Plan, except where the failure to so comply would not reasonably be expected to result in a Material Adverse Change. No fact or situation that may reasonably be expected to result in a Material Adverse Change exists in connection with any Canadian Pension Plan. No Canadian Credit Party has any material withdrawal liability in connection with a Canadian Pension Plan that is a multi-employer pension plan under applicable federal or provincial pension standards legislation in Canada. No Canadian Pension Event has occurred that would reasonably be expected to have a Material Adverse Change. No Lien has arisen, choate or inchoate, in respect of any Canadian Credit Party or their Property in connection with any Canadian Pension Plan (save for contribution amounts not yet due).
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(c) As of the Closing Date, no Credit Party contributes to, sponsors or maintains a Canadian Pension Plan which contains a defined benefit provision as defined in subsection 147.1(i) of the ITA (a Canadian Defined Benefit Plan).
Section 4.10 Environmental Condition. Except as set forth on Schedule 4.10:
(a) Permits, Etc. Each Restricted Entity (i) has obtained all material Environmental Permits necessary for the ownership and operation of its Properties and the conduct of its businesses; (ii) is and, during the relevant time periods specified under applicable statutes of limitation, has been in material compliance with all terms and conditions of such Environmental Permits and with all other material requirements of applicable Environmental Laws; (iii) has not received written notice of any material violation or alleged material violation of any Environmental Law or Environmental Permit; and (iv) is not subject to any actual or contingent Environmental Claim which could reasonably be expected to cause a Material Adverse Change.
(b) Certain Liabilities. To each Restricted Entitys knowledge, none of the present or previously owned or operated Property of any Restricted Entity or of any Subsidiary thereof, wherever located, (i) has been placed on or proposed to be placed on the National Priorities List, the Comprehensive Environmental Response Compensation Liability Information System list, or their state or local analogs, or have been otherwise investigated, designated, listed, or identified by a Governmental Authority as a potential site for removal, remediation, cleanup, closure, restoration, reclamation, or other response activity under any Environmental Laws; (ii) is subject to a Lien, arising under or in connection with any Environmental Laws, that attaches to any revenues or to any Property owned or operated by any Restricted Entity, wherever located, which could reasonably be expected to cause a Material Adverse Change; or (iii) has been the site of any Release of Hazardous Substances or Hazardous Wastes from present or past operations which has caused at the site or at any third-party site any condition that has resulted in or could reasonably be expected to result in the need for Response that could cause a Material Adverse Change.
(c) Certain Actions. Without limiting the foregoing, (i) all necessary material notices have been properly filed, and no further material action is required under current applicable Environmental Law as to each Response or other restoration or remedial project required to be undertaken by a Borrowers, any of its Subsidiaries or any of a Borrowers or such Subsidiarys former Subsidiaries pursuant to any Environmental Law, on any of their presently or formerly owned or operated Property and (ii) the present and, to the Credit Parties knowledge, future liability, if any, of the Company or of any of its Subsidiaries which could reasonably be expected to arise in connection with requirements under Environmental Laws is not expected to result in a Material Adverse Change.
Section 4.11 Subsidiaries. As of the Closing Date, the Company has no Subsidiaries other than those listed on Schedule 4.11, each of which is a Restricted Subsidiary hereunder. Each Restricted Subsidiary (including any such Restricted Subsidiary formed or acquired subsequent to the Closing Date) has complied with the requirements of Section 5.6.
Section 4.12 Investment Company Act. No Restricted Entity is an investment company or a company controlled by an investment company within the meaning of the Investment Company Act of 1940, as amended.
Section 4.13 Taxes. Proper and accurate (in all material respects), federal and all material state, provincial, territorial local and foreign tax returns, reports and statements required to be filed (after giving effect to any extension granted in the time for filing) by each Restricted Entity or any member of an affiliated group of such Restricted Entities as determined under Section 1504 of the Code (hereafter collectively called the Tax Group) have been filed with the appropriate Governmental Authorities, and
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all material taxes and other impositions due and payable with respect to such tax returns have been timely paid prior to the date on which any fine, penalty, interest, late charge or loss may be added thereto for non-payment thereof except where contested in good faith and by appropriate proceeding and for which adequate reserves have been established in compliance with GAAP. No Restricted Entity nor any member of the Tax Group has given, or been requested to give, a waiver of the statute of limitations relating to the payment of any federal, state, provincial, territorial, local or foreign taxes. Proper and accurate amounts have been withheld by the Restricted Entities and all other members of the Tax Group from their employees and in respect of payments to any other Persons for all periods to comply in all material respects with the tax, social security and unemployment withholding provisions of applicable federal, state, provincial, territorial, local and foreign law.
Section 4.14 Permits, Licenses, etc. Each Restricted Entity possesses all permits, licenses, patents, patent rights or licenses, trademarks, trademark rights, trade names rights, and copyrights which are material to the conduct of its business. Each Restricted Entity manages and operates its business in accordance with all applicable Legal Requirements except where the failure to so manage or operate could not reasonably be expected to result in a Material Adverse Change; provided that, this Section 4.14 does not apply with respect to Environmental Permits.
Section 4.15 Use of Proceeds. The proceeds of the Loans will be used by the Company for the purposes described in Section 6.6. No Credit Party is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U). No proceeds of any Loan will be used to purchase or carry any margin stock in violation of Regulation T, U, or X.
Section 4.16 Condition of Property; Casualties. The material Properties used or to be used in the continuing operations of the Restricted Entities, taken as a whole, are in good working order and condition, normal wear and tear excepted. Neither the business nor the material Properties of any Restricted Entity has been affected as a result of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or other labor disturbance, embargo, requisition or taking of Property or cancellation of contracts, permits or concessions by a Governmental Authority, riot, activities of armed forces or acts of God or of any public enemy, which effect could reasonably be expected to cause a Material Adverse Change.
Section 4.17 Insurance. Each Borrower and each Restricted Subsidiary carries insurance (which may be carried by the U.S. Borrower on a consolidated basis) with reputable insurers in respect of such of their respective Properties, in such amounts and against such risks as is customarily maintained by other Persons of similar size engaged in similar businesses or, self-insure to the extent that is customary for Persons of similar size engaged in similar businesses.
Section 4.18 Security Interest. The provisions of the Security Documents create legal and valid Liens on all of the Collateral in favor of the Administrative Agent, for the benefit of the Secured Parties and each Credit Party has authorized the filing of financing statements sufficient when filed to perfect the Lien created by the Security Documents to the extent such Lien can be perfected by filing financing statements. When such financing statements (including, to the extent required to perfect in Equity Interests of Canadian Restricted Subsidiaries not constituting Excluded Collateral, PPSA financing statements in Canada) are filed in the offices noted therein, the Administrative Agent will have a valid and perfected security interest in all Collateral that is capable of being perfected by filing financing statements (excluding, for perfection purposes, the Excluded Perfection Collateral).
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Section 4.19 OFAC; Anti-Terrorism; Anti-Corruption Laws; Sanctions(a) .
(a) Neither the Company nor any Subsidiary of the Company is in violation of any Sanctions. Neither the Company nor any Subsidiary of the Company, nor any of their respective officers, directors, nor to the knowledge of the Company, any of their respective employees or agents (i) is a Sanctioned Person or a Sanctioned Entity, (ii) has assets located in Sanctioned Entities, or (iii) derives revenues from Investments in, or transactions with Sanctioned Persons or Sanctioned Entities. No proceeds of any Loan will be used to fund any operations in, finance any Investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.
(b) Neither the Company nor any Subsidiary, nor any of their directors or officers, nor to the knowledge of the Company, any agent, employee or other person acting on behalf of the Company or any of its Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of any Anti-Corruption Laws. Furthermore, each Borrower and its Affiliates, and to the knowledge of the Borrowers, each Credit Party and each of their Restricted Subsidiaries has conducted their businesses in compliance with Anti-Corruption Laws and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
Section 4.20 Solvency. Before and after giving effect to the making of each Credit Extension after the Closing Date, the Company and its Restricted Subsidiaries are, when taken as a whole, Solvent.
Section 4.21 EEA Financial Institution. No Credit Party is an EEA Financial Institution.
Section 4.22 Qualified ECP Counterparty. Each Borrower is a Qualified ECP Counterparty.
ARTICLE V
AFFIRMATIVE COVENANTS
Commencing on the Closing Date and until Payment in Full, each Borrower covenants and agrees with the Lenders that it shall and shall cause the Restricted Subsidiaries to comply with the following covenants:
Section 5.1 Organization. Each Credit Party shall, and shall cause each of its respective Restricted Subsidiaries to, preserve and maintain its partnership, limited liability company or corporate existence, rights, franchises and privileges in the jurisdiction of its organization. Each Credit Party shall, and shall cause each of its respective Restricted Subsidiaries to qualify and remain qualified as a foreign business entity in each jurisdiction in which qualification is necessary or desirable in view of its business and operations or the ownership of its Properties, except where failure to so qualify could not reasonably be expected to cause a Material Adverse Change. Nothing contained in this Section 5.1 shall prevent any transaction permitted by Section 6.6 or Section 6.7.
Section 5.2 Reporting.
(a) Annual Financial Reports. (i) The Borrower Representative shall provide, or shall cause to be provided, to the Administrative Agent, as soon as available, but in any event within ninety (90) days after the end of each fiscal year of the Company (commencing with the fiscal year ended December 31, 2018), the audited consolidated balance sheet of the Company and its Subsidiaries (and, to the extent that any Unrestricted Subsidiaries existed during the applicable period, consolidating balance sheets of the Company and its Subsidiaries, including Unrestricted Subsidiaries) as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders equity and cash flows of the Company and its Subsidiaries (and, to the extent that any Unrestricted Subsidiaries existed during the applicable period, consolidating statements of income or operations, shareholders equity and cash flows of the Company and its Subsidiaries, including Unrestricted Subsidiaries) for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and
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prepared in accordance with GAAP. Such consolidated statements shall be audited and accompanied by a report and opinion of PriceWaterhouseCoopers LLC or other independent certified public accountant of recognized standing reasonably acceptable to the Administrative Agent, which report and opinion shall be prepared in accordance with GAAP 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, and such consolidated and, if applicable, consolidating statements to be certified by the chief executive officer, chief financial officer, director of finance, treasurer or controller of the Borrower Representative to the effect that such statements fairly present the financial condition, results of operations, shareholders equity and cash flows of the Company and its Subsidiaries in all material respects in accordance with GAAP.
(b) Quarterly Financial Reports. (i) The Borrower Representative shall provide, or shall cause to be provided, to the Administrative Agent, as soon as available, but in any event within forty-five (45) days after the end of the first three fiscal quarters of each fiscal year of the Company, the consolidated balance sheets of the Company and its Subsidiaries (and, to the extent that any Unrestricted Subsidiaries existed during the applicable period, consolidating balance sheets of the Company and its Subsidiaries, including Unrestricted Subsidiaries) as at the end of such fiscal quarter, and the related consolidated statements of income or operations, shareholders equity and cash flows of the Company and its Subsidiaries (and, to the extent that any Unrestricted Subsidiaries existed during the applicable period, consolidating statements of income or operations, shareholders equity and cash flows of the Company and its Subsidiaries, including Unrestricted Subsidiaries) for such fiscal quarter and for the portion of the Companys 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, such consolidated statements and, if applicable consolidating statements to be certified by the chief executive officer, chief financial officer, director of finance, treasurer or controller of the Company as fairly presenting the financial condition, results of operations, shareholders equity and cash flows of the Company and its Subsidiaries, in all material respects, in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.
(c) Compliance Certificate. Concurrently with the delivery of the financial statements referred to in Section 5.2(a) and Section 5.2(b) and upon any calculation of the Fixed Charge Coverage Ratio pursuant to Section 6.18, the Borrower Representative shall provide to the Administrative Agent a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower Representative and attaching thereto detailed supporting information for the calculations made thereunder.
(d) Annual Budget. As soon as available and in any event within sixty (60) days after the end of each fiscal year of the Company, the Company shall provide to the Administrative Agent an annual budget consisting of projected balance sheets, income statements and cash flow statements for the immediately following fiscal year and reasonably detailed on a quarterly basis.
(e) Defaults. The Credit Parties shall provide to the Administrative Agent promptly, but in any event within five (5) Business Days after a Responsible Officer of any Credit Party obtains knowledge thereof, a notice of any Default, together with a statement of a Responsible Officer of the Company setting forth the details of such Default and the actions which the Credit Parties have taken and propose to take with respect thereto.
(f) Other Creditors. The Credit Parties shall provide to the Administrative Agent promptly after the giving or receipt thereof, copies of any material default notices given or received by the Company or by any of its Restricted Subsidiaries pursuant to the terms of any indenture, loan agreement, credit agreement, or similar agreement evidencing Debt in an amount in excess of $3.0 million.
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(g) Litigation. The Credit Parties shall provide to the Administrative Agent promptly after the commencement thereof, notice of all actions, suits, and proceedings before any Governmental Authority, affecting any Restricted Entity that could reasonably be expected to result in a Material Adverse Change.
(h) Environmental Notices. Promptly upon, and in any event no later than fifteen (15) days after, the receipt thereof, or the acquisition of knowledge thereof, by any Executive Officer of any Restricted Entity, the Credit Parties shall provide the Administrative Agent with a copy of any form of request, claim, complaint, order, notice, summons or citation received from any Governmental Authority or any other Person, (i) concerning violations or alleged violations of Environmental Laws, which seeks to impose liability therefore in excess of $3.0 million, (ii) concerning any action or omission on the part of any of the Credit Parties or any of their former Subsidiaries in connection with Hazardous Waste or Hazardous Substances which could reasonably result in the imposition of liability in excess of $3.0 million or requiring that action be taken to respond to or clean up a Release of Hazardous Substances or Hazardous Waste into the Environment and such action or clean-up could reasonably be expected to exceed $3.0 million, including without limitation any information request related to, or notice of, potential responsibility under CERCLA which could reasonably result in the imposition of liability in excess of $3.0 million, or (iii) concerning the filing of a Lien (other than a Permitted Lien) upon, against or in connection with any Credit Party, any Subsidiary, or any of their respective former Subsidiaries, or any of their leased or owned Property, wherever located pursuant to any Environmental Law.
(i) Material Changes. The Credit Parties shall provide to the Administrative Agent prompt written notice of any condition or event of which any Responsible Officer of any Credit Party obtains knowledge and which could reasonably be expected to result in a Material Adverse Change.
(j) Termination Events. As soon as possible and in any event (i) within thirty (30) days after the Company or any member of the Controlled Group knows that any Termination Event described in clause (a) of the definition of Termination Event with respect to any Plan has occurred, and (ii) within ten (10) days after the Company or any member of the Controlled Group knows that any other Termination Event with respect to any Plan has occurred, the Credit Parties shall provide to the Administrative Agent a statement of an authorized officer of the Company describing such Termination Event and the action, if any, which the Company or any Affiliate of the Company proposes to take with respect thereto;
(k) Termination of Plans. Promptly and in any event within five (5) Business Days after receipt thereof by the Company or any member of the Controlled Group from the PBGC, the Credit Parties shall provide to the Administrative Agent copies of each notice received by the Company or any such member of the Controlled Group of the PBGCs intention to terminate any Plan or to have a trustee appointed to administer any Plan;
(l) Other ERISA Notices. Promptly and in any event within five (5) Business Days after receipt thereof by the Company or any member of the Controlled Group from a Multiemployer Plan sponsor, the Credit Parties shall provide to the Administrative Agent a copy of each notice received by the Company or any member of the Controlled Group concerning the imposition or amount of withdrawal liability imposed on the Company or any member of the Controlled Group pursuant to Section 4202 of ERISA;
(m) Termination of Canadian Plans. Promptly and in any event within five Business Days after a Canadian Credit Party knows that a Canadian Pension Event has occurred, the Credit Parties shall provide the Administrative Agent with a statement of an authorized officer of the Credit Party describing such Canadian Pension Event and the action, if any, which the Credit Party proposes to take thereto;
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(n) Other Governmental Notices. Promptly and in any event within five (5) Business Days after receipt thereof by the Company or any Restricted Subsidiary, the Credit Parties shall provide to the Administrative Agent a copy of any notice, summons, citation, or proceeding seeking to modify, revoke, or suspend any contract, license, permit, or agreement with any Governmental Authority the modification, revocation or suspension of which could reasonably be expected to result in a Material Adverse Change;
(o) Disputes; etc. The Credit Parties shall provide to the Administrative Agent prompt written notice of (i) any claims, legal or arbitration proceedings, proceedings before any Governmental Authority, or disputes, or to the knowledge of any Credit Party, any such actions threatened, or affecting the Company or any Restricted Subsidiary, in any event, which could reasonably be expected to cause a Material Adverse Change, or any material labor controversy of which any Credit Party has knowledge resulting in or reasonably considered to be likely to result in a strike against the Company or any Restricted Subsidiary, and (ii) any claim, judgment, Lien or other encumbrance (other than a Permitted Lien) affecting any Property of the Company or any Restricted Subsidiary, if the value of the claim, judgment, Lien, or other encumbrance affecting such Property shall exceed $3.0 million;
(p) Management Letters; Other Accounting Reports. Promptly upon receipt thereof (to the extent permitted by the Companys auditors), a copy of each management letter submitted to the Company or any Restricted Subsidiary by independent accountants in connection with any annual, interim or special audit made by them of the books of the Company and its Restricted Subsidiaries, and a copy of any response by the Company or any Restricted Subsidiary of the Company, or the board of directors or managers (or other applicable governing body) of the Company or any Restricted Subsidiary of the Company, to such letter;
(q) Borrowing Base Certificates. As soon as available but in any event within twenty-five (25) days of the end of each calendar month, and at such other times as may be necessary to re-determine Availability or as may be requested by the Administrative Agent, as of the period then ended, a Borrowing Base Certificate and supporting information in connection therewith including, without limitation, together with any additional reports with respect to the U.S. Borrowing Base and the Canadian Borrowing Base as the Administrative Agent may reasonably request; provided that, during an Enhanced Reporting Period, in addition to the foregoing, on the third (3) Business Day of each week, Borrower Representative shall deliver a Borrowing Base Certificate, with respect to the prior week.
(r) Collateral Reporting; Borrowing Base.
(i) As soon as available but in any event within twenty-five (25) days of the end of each calendar month (and weekly during an Enhanced Reporting Period, on the third (3rd) Business Day of each week) and at such other times as may be requested by the Administrative Agent, as of the period then ended, all delivered electronically in a text formatted file acceptable to the Administrative Agent;
(A) a detailed aging of the Credit Parties Accounts, including all invoices aged by invoice date and due date (with an explanation of the terms offered), prepared in a manner reasonably acceptable to the Administrative Agent, together with a summary specifying the name, address, and balance due for each Account Debtor;
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(B) a schedule detailing the Credit Parties Inventory, in form satisfactory to the Administrative Agent, by location (showing Inventory in transit, any Inventory located with a third party under any consignment, bailee arrangement, or warehouse agreement), by product type, and by volume on hand, which Inventory shall be valued at the lower of cost (determined on a first-in, first-out basis) or market and adjusted for Reserves as the Administrative Agent has previously indicated to the Borrower Representative are deemed by the Administrative Agent to be appropriate;
(C) a worksheet of calculations prepared by the Credit Parties to determine Eligible Accounts and Eligible Inventory, such worksheets detailing the Accounts and Inventory excluded from Eligible Accounts and Eligible Inventory and the reason for such exclusion; and
(D) as soon as available but in any event within twenty (20) days of the end of each calendar month and at such other times as may be requested by the Administrative Agent, as of the month then ended, a schedule and aging of the Borrowers accounts payable, delivered electronically in a text formatted file acceptable to the Administrative Agent;
(ii) Promptly upon the Administrative Agents request:
(A) copies of invoices issued by the Borrowers in connection with any Accounts, credit memos, shipping and delivery documents, and other information related thereto;
(B) copies of purchase orders, invoices, and shipping and delivery documents in connection with any Inventory purchased by any Credit Party; and
(C) a schedule detailing the balance of all intercompany accounts of the Credit Parties.
(s) Customer List. Concurrently with the annual field examination and at any time promptly upon the Administrative Agents request, an updated customer list for each Credit Party, which list shall state the customers name, mailing address and phone number, delivered electronically in a text formatted file acceptable to the Administrative Agent and certified as true and correct by a Financial Officer of the Borrower Representative;
(t) Other Documentation.
(i) Promptly upon the Administrative Agents request, as of the period then ended, the Borrowers sales journal, cash receipts journal (identifying trade and non-trade cash receipts) and debit memo/credit memo journal.
(ii) Concurrently with the annual field examination and at any time promptly upon the Administrative Agents request, a certificate of good standing or the substantive equivalent available in the jurisdiction of incorporation, formation or organization for each Credit Party from the appropriate governmental officer in such jurisdiction.
(u) Intellectual Property. If, subsequent to the Closing Date, a Credit Party shall acquire or obtain any Inventory that contains or bears intellectual property rights licensed to any Credit Party that may be sold or otherwise disposed of without (i) infringing the rights of such licensor, (ii) violating any contract with such licensor, or (iii) incurring any liability with respect to payment of royalties other than royalties incurred pursuant to the sale of such Inventory under the current licensing agreement, then the Company shall provide an annex with each Borrowing Base Certificate delivered to the Administrative Agent pursuant to Section 8.2(f) immediately following the date that such Inventory is
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acquired or obtained, notifying the Administrative Agent of such acquisition, which annex shall specify all reasonable details (including the location, title, patent number(s) and issue date) as to the Inventory so acquired or obtained and the intellectual property rights licensed to the Credit Party in connection therewith.
(v) Other Information. Subject to the confidentiality provisions of Section 9.8, the Credit Parties shall provide to the Administrative Agent such other information respecting the business, operations, or Property of the Company or any Restricted Subsidiary, financial or otherwise, as any Lender through the Administrative Agent may reasonably request.
Documents required to be delivered pursuant to Section 5.2(a) or Section 5.2(b) (to the extent 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 earliest of such date (i) on which such documents are delivered by e-mail to the Administrative Agent, (ii) on which the Company posts such documents, or provides a link thereto on the Companys website on the Internet or (iii) on which such documents are posted on the Companys 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: (A) the Company shall deliver paper copies of such documents to the Administrative Agent upon its reasonable request to the Company to deliver such paper copies and (B) the Company shall arrange for the prompt notification of the Administrative Agent (by facsimile or electronic mail) of the posting of any such documents pursuant to clause (ii) or (iii) (unless posted by the Administrative Agent). The Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Company with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
Section 5.3 Insurance.
(a) Each Credit Party shall, and shall cause each of its Restricted Subsidiaries to, carry and maintain all such insurance in such amounts and against such risks as is customarily maintained by other Persons of similar size engaged in similar businesses and with reputable insurers.
(b) Copies of all certificates of insurance for policies covering the Property or business of the Credit Parties, and endorsements and renewals thereof, shall be delivered by the Company to and retained by the Administrative Agent. At the request of the Administrative Agent, copies of such policies of insurance, certified as true and correct copies of such documents by a Responsible Officer of the Company shall be delivered by the Company to and retained by the Administrative Agent. All policies of property insurance with respect to the Collateral either shall have attached thereto a lenders loss payable endorsement in favor of the Administrative Agent for its benefit and the ratable benefit of the Secured Parties or name the Administrative Agent as loss payee for its benefit and the ratable benefit of the Secured Parties, in either case, in form reasonably satisfactory to the Administrative Agent, and all policies of liability insurance shall name the Administrative Agent for its benefit and the ratable benefit of the Secured Parties as an additional insured. All policies or certificates of insurance shall set forth the coverage, the limits of liability, the name of the carrier, the policy number and the period of coverage. All such policies shall contain a provision that notwithstanding any contrary agreements between the Company, its Restricted Subsidiaries, and the applicable insurance company, such policies will not be canceled or allowed to lapse without renewal without at least thirty (30) days (or such shorter period as such insurance company may require and which is acceptable to the Administrative Agent) prior written notice to the Administrative Agent.
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(c) Prior to the occurrence and continuance of an Event of Default or Cash Dominion Period, (i) all Net Proceeds of property insurance received by a Credit Party for the casualty loss of Property which constitutes Collateral not in excess of $2.5 million shall be paid directly to the applicable Credit Party to repair or replace the damaged or destroyed Property covered by such policy; provided that, such Credit Party shall make such repair or replace such Property within one hundred eighty (180) days from the receipt of such proceeds and (ii) the remaining amount of such proceeds and any amount of proceeds that were paid to such Credit Party as permitted under clause (i) above and not used toward the repair or replacement of such Property within the one hundred eighty (180) days required under such clause (i), shall be paid directly to the Administrative Agent and if necessary, assigned to the Administrative Agent to be, at the election of the Administrative Agent, (A) applied in accordance with Section 7.6(b) of this Agreement, whether or not the Secured Obligations are then due and payable, or (B) returned to such Credit Party to repair or replace the damaged or destroyed Property covered by such policy or to make such other Investments permitted under Section 6.2 of this Agreement.
(d) After the occurrence and during the continuance of an Event of Default, if requested by the Administrative Agent, all proceeds of insurance of any Credit Party, including any casualty insurance proceeds, property insurance proceeds, proceeds from actions, and any other proceeds, shall be paid directly to the Administrative Agent and if necessary, assigned to the Administrative Agent, to be applied in accordance with Section 7.6(b) of this Agreement, whether or not the Secured Obligations are then due and payable.
(e) In the event that any insurance proceeds are paid to any Credit Party in violation of clause (d) or clause (e), such Credit Party shall hold the proceeds in trust for the Administrative Agent, segregate the proceeds from the other funds of such Credit Party, and promptly pay the proceeds to the Administrative Agent with any necessary endorsement. Upon the request of the Administrative Agent, each Credit Party shall execute and deliver to the Administrative Agent any additional assignments and other documents as may be necessary to enable the Administrative Agent to directly collect the proceeds as set forth herein.
Section 5.4 Compliance with Laws. Each Credit Party shall, and shall cause each of its Restricted Subsidiaries to, comply with Legal Requirements (including Environmental Laws) which are applicable to such Restricted Entity, including the operations, business or Property of such Restricted Entity and maintain all related permits necessary for the ownership and operation of such Restricted Entitys Property and business, except in any case where the failure to so comply could not reasonably be expected to result in a Material Adverse Change.
Section 5.5 Taxes. Each Credit Party shall, and shall cause each of its Restricted Subsidiaries to pay and discharge all material taxes, assessments, and other charges and claims related thereto imposed on the Company or any of its Restricted Subsidiaries prior to the date on which penalties attach other than any tax, assessment, charge, or claims which is being contested in good faith and for which adequate reserves have been established in compliance with GAAP.
Section 5.6 Security. The Company agrees that at all times, the Administrative Agent shall have an Acceptable Security Interest in the applicable Collateral as required below, subject to any permitted releases pursuant to the terms of this Agreement or the Security Documents, to secure the performance and payment of the Secured Obligations as set forth in the Security Documents. The Company shall, and shall cause each Restricted Subsidiary to take such actions, including execution and delivery of any Security Documents necessary to create, perfect and maintain an Acceptable Security Interest in favor of the Administrative Agent in the following Property, whether now owned or hereafter acquired: (i) all Equity Interests issued by any Subsidiary (other than a Foreign Subsidiary) and held by a Wholly-Owned Domestic Restricted Subsidiary or the Company; (ii) (x) 100% of Equity Interests issued by First Tier Foreign Subsidiaries which are owned by the Company or any Wholly-Owned Domestic Restricted Subsidiary and are not Voting Securities and (y) 65% of the outstanding Voting Securities issued by any such First Tier Foreign Subsidiary; and (iii) all other Properties of the Credit Parties and their respective Domestic Restricted Subsidiaries, in each case, other than Excluded Collateral.
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For the avoidance of doubt, notwithstanding the preceding provisions of this Section 5.6 or any other provisions of the Credit Documents, none of the Property of any Foreign Subsidiary shall ever serve as Collateral or other security for the U.S. Obligations and no actions outside of the United States shall be required with respect to any Collateral granted by the U.S. Credit Parties other than the filing of a PPSA or similar financing statement with respect to Equity Interests in First Tier Foreign Subsidiaries which are owned by the Company or any Wholly-Owned Domestic Restricted Subsidiary.
Section 5.7 Designations with Respect to Subsidiaries.
(a) Any Subsidiary formed or acquired after the Closing Date shall be deemed a Restricted Subsidiary unless initially designated by the Company as an Unrestricted Subsidiary in accordance with the terms of this Section 5.7(a) or subsequently designated by the Company as an Unrestricted Subsidiary in accordance with Section 5.7(b). No Borrower may acquire or form any new Subsidiary or initially designate such new Subsidiary as an Unrestricted Subsidiary unless each of the following conditions are satisfied in connection with such acquisition, formation or designation:
(i) immediately before and after giving effect to such acquisition, formation, or designation, no Default shall exist and be continuing;
(ii) the Company shall deliver to the Administrative Agent each of the items set forth in Schedule 5.7 attached hereto with respect to each Subsidiary created after the Closing Date (and not initially designated as an Unrestricted Subsidiary) to the extent required in Schedule 5.7;
(iii) the Company shall otherwise be in compliance with Section 5.6 and Section 6.3; and
(iv) such designation shall occur either (A) concurrently with the acquisition or formation of such new Subsidiary or (B) prior to such new Subsidiary becoming a Credit Party.
(b) The Company may designate any Restricted Subsidiary that was created or acquired after the Closing Date as an Unrestricted Subsidiary and may designate any Unrestricted Subsidiary as a Restricted Subsidiary; provided that, (i) before and after giving effect to such designation, no Default shall exist, (ii) if such designation is to make a Restricted Subsidiary an Unrestricted Subsidiary, the Company can demonstrate compliance with Section 6.1 - Section 6.3, Section 6.7, Section 6.8, Section 6.14, Section 6.16 - Section 6.18 as of the date of such designation, both before and after giving effect to such designation, in such detail as is reasonably acceptable to the Administrative Agent, (iii) if such designation is to make a Credit Party an Unrestricted Subsidiary, no such designation may be made if such Credit Party has received from any Restricted Entity a Disposition that would not have been permitted under Section 6.7 had such Credit Party been an Unrestricted Subsidiary at the time of such Disposition, (iv) if such designation is to make an Unrestricted Subsidiary a Restricted Subsidiary, such Restricted Subsidiary shall deliver to the Administrative Agent each of the items set forth in Schedule 5.7 to the extent required therein, (v) only two such designations may be made as to any particular Subsidiary, (vi) such designation shall be made effective as of a quarter end, and (vii) at the time of any such designation of a Restricted Subsidiary as an Unrestricted Subsidiary, Restricted Subsidiaries shall account for at least eighty-five percent (85%) of the Tangible Net Assets and the Net Income of the Company, each on a consolidated basis.
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(c) The Company shall deliver to the Administrative Agent (i) with respect to any designation of an Unrestricted Subsidiary, prior to or concurrently with such designation and (ii) otherwise, within twenty (20) Business Days of any such designation, a certificate of a Responsible Officer of the Company stating the effective date of such designation and stating that the applicable foregoing conditions have been satisfied.
Section 5.8 Books and Records; Inspection; Field Examinations. Each Credit Party shall and shall cause each Restricted Subsidiary to maintain, in all material respects, proper, complete and consistent books of record with respect to such Persons operations, affairs, and financial condition. Each Credit Party will permit any representatives designated by the Administrative Agent or any Lender (including employees of the Administrative Agent, any Lender or any consultants, accountants, lawyers, agents and appraisers retained by the Administrative Agent), upon reasonable prior notice, (a) once during any 12-month period and (b) one additional time (for a total of two (2) such times during any 12-month period) at any time when Availability falls below the greater of (i) $26.25 million and (ii) 17.5% of the lesser of the Aggregate Commitment and Aggregate Borrowing Base, to conduct at such Credit Partys premises field examinations of such Credit Partys assets, liabilities, books and records, including examining and making extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants. Each Credit Party acknowledges that the Administrative Agent, after exercising its rights of inspection, may prepare and distribute to the Lenders certain Reports pertaining to such Credit Partys assets for internal use by the Administrative Agent and the Lenders. The Applicable Borrower shall be responsible for the costs and expenses of (a) one (1) field examination during any 12-month period and (b) one (1) additional field examination (for a total of two (2) such field examinations during any 12-month period) conducted at any time when Availability falls below the greater of (i) $26.25 million and (ii) 17.5% of the lesser of the Aggregate Commitment and Aggregate Borrowing Base. Additionally, there shall be no limitation on the number or frequency of field examinations if an Event of Default has occurred and is continuing, and the Applicable Borrower shall be responsible for the costs and expenses of any field examinations conducted while an Event of Default has occurred and is continuing.
Section 5.9 Maintenance of Property. Each Credit Party shall, and shall cause each of its Restricted Subsidiaries to, maintain their owned, leased, or operated material Property, taken as a whole, in good condition and repair, except for normal wear and tear; and shall abstain from, and cause each of its Restricted Subsidiaries to abstain from, knowingly or willfully permitting the commission of waste or other injury, destruction, or loss of natural resources, or the occurrence of pollution, contamination, or any other condition in, on or about the owned or operated Property involving the Environment that could reasonably be expected to result in Response activities and that could reasonably be expected to cause a Material Adverse Change.
Section 5.10 Controlled Accounts
(a) Within the time periods set forth in Section 2.5(b), each U.S. Credit Party shall execute and deliver to the Administrative Agent Account Control Agreements for each Deposit Account (other than Excluded Accounts) maintained by such U.S. Credit Party (each, a U.S. Collateral Deposit Account).
(b) Within the time periods set forth in Section 2.5(b), each Canadian Credit Party shall execute and deliver to JPMCB Canada as the Administrative Agent, an Account Control Agreement for each Deposit Account (other than Excluded Accounts) maintained by such Canadian Credit Party (each, a Canadian Collateral Deposit Account and collectively with each U.S. Collateral Deposit Account, the Collateral Deposit Accounts).
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(c) Subject to the time periods referenced above, each Credit Party shall direct all of its Account Debtors to forward payments directly to Collateral Deposit Accounts subject to Account Control Agreements. During a Cash Dominion Period the Administrative Agent shall have sole access to the Collateral Deposit Accounts and each Credit Party shall take all actions necessary to grant the Administrative Agent such access. At no time during a Cash Dominion Period shall any Credit Party remove any item from a Collateral Deposit Account without the Administrative Agents prior written consent. If any Credit Party should refuse or neglect to notify any Account Debtor to forward payments directly to a Collateral Deposit Account subject to an Account Control Agreement after notice from the Administrative Agent, the Administrative Agent shall be entitled to make such notification directly to such Account Debtor. If notwithstanding the foregoing instructions, any Credit Party receives any proceeds of any Collateral, such Credit Party shall receive such payments as the Administrative Agents trustee, and shall promptly deposit all cash, checks or other similar payments related to or constituting payments made in respect of Collateral received by it to a Collateral Deposit Account. During a Cash Dominion Period, all funds deposited into any Collateral Deposit Account subject to a Collateral Deposit Account, as applicable, will be swept on a daily basis into a U.S. collection account maintained by such Credit Party with the Administrative Agent (the U.S. Concentration Account) or a Canadian collection account maintained by such Credit Party with the Administrative Agent (the Canadian Concentration Account and collectively with the U.S. Concentration Account, the Concentration Accounts and each a Concentration Account). The Administrative Agent shall hold and apply funds received into the Concentration Account as provided by the terms of Section 2.10(b).
Section 5.11 Appraisals. At any time that the Administrative Agent requests, each Borrower will, and will cause each Restricted Subsidiary to, provide the Administrative Agent with appraisals or updates thereof of its Inventory prepared on a basis satisfactory to the Administrative Agent, such appraisals and updates to include, without limitation, information required by any applicable Requirement of Law. The Applicable Borrower shall be responsible for the costs and expenses of (a) one Inventory appraisal during any period of twelve (12) consecutive calendar months and (b) one additional Inventory appraisal in the event that Availability falls below the greater of (i) $26.25 million and (ii) 17.5% of the lesser of the Aggregate Commitment and Aggregate Borrowing Base. Additionally, there shall be no limitation on the number or frequency of appraisals if an Event of Default has occurred and is continuing, and the Applicable Borrower shall be responsible for the costs and expenses of any such appraisals conducted while an Event of Default has occurred and is continuing.
Section 5.12 Post-Closing; Further Assurances.
(a) For a period of sixty (60) days after the Closing Date (or such later date as the Administrative Agent may agree), the Applicable Borrower shall exert commercially reasonable efforts to obtain each Collateral Access Agreement to be provided pursuant to Section 4.12 of the Security Agreement.
(b) Subject to any applicable Requirement of Law, each U.S. Credit Party will cause each of its U.S. Domestic Subsidiaries that is a Restricted Subsidiary, other than an Excluded Subsidiary, formed or acquired after the date of this Agreement to become a U.S. Credit Party by executing a Guaranty Agreement. Upon execution and delivery thereof, each such U.S. Domestic Subsidiary (i) shall automatically become a Guarantor hereunder and thereupon shall have all of the rights, benefits, duties and obligations in such capacity under the Credit Documents and (ii) will grant Liens to the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, in any Property of such Credit Party which constitutes Collateral. Subject to any applicable Requirement of Law, the Canadian Borrower will cause each of its Subsidiaries, other than an Excluded Subsidiary, formed or acquired after the date of this Agreement to become a Canadian Credit Party by executing a guaranty of the Canadian Obligations.
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(c) If any material assets (other than material assets of a type that would constitute Excluded Collateral) are acquired by any Credit Party after the Closing Date (other than assets constituting Collateral under the U.S. Security Agreement or the Canadian Security Agreement that become subject to the Lien thereunder upon acquisition thereof), the Borrower Representative will (i) notify the Administrative Agent thereof and, if requested by the Administrative Agent or the Required Lenders, cause such assets to be subjected to a Lien securing the Secured Obligations or Canadian Secured Obligations, as the case may be, and (ii) take, and cause each applicable Credit Party to take, such actions as shall be necessary or reasonably requested by the Administrative Agent to grant and perfect such Liens, all at the expense of the Applicable Borrower.
(d) Within sixty (60) days after the Closing Date (subject to extension as may be agreed by the Administrative Agent in its sole discretion), (i) the Canadian Borrower will cause Magnum Oil Tools Canada Ltd. ( Magnum Canada) to deliver to the Administrative Agent stock certificates and stock powers executed in blank, and any other documents, agreements or instruments necessary to perfect an Acceptable Security Interest in the Collateral and (ii) the Administrative Agent shall have received a customary perfection opinion from local counsel to the Canadian Borrower, in form and substance reasonably acceptable to the Administrative Agent, related to the pledged Equity Interests in Magnum Canada.
ARTICLE VI
NEGATIVE COVENANTS
Commencing on the Closing Date and until Payment in Full, each Borrower covenants and agrees with the Lenders that it shall and shall cause the Restricted Subsidiaries to comply with the following covenants:
Section 6.1 Debt. No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to, create, assume, incur, suffer to exist, or in any manner become liable, directly, indirectly, or contingently in respect of, any Debt other than the following (collectively, the Permitted Debt):
(a) (i) the Obligations, and (ii) the Banking Services Obligations;
(b) Debt existing on the date hereof, including Debt relating to the Senior Notes, and set forth in Schedule 6.1 and extensions, refinancings, refundings, replacements and renewals of any such Debt subject to the last sentence of this Section 6.1.
(c) intercompany Debt incurred by any Credit Party owing to any other Credit Party; so long as such Debt is also permitted as an Investment under Section 6.3(e)(i); provided that, (i) to the extent such Debt is evidenced by an unsecured intercompany note, the Administrative Agent shall have a first priority Lien in such intercompany note and the receivable evidenced thereby and (ii) such Debt shall be subordinated to the Obligations on terms reasonably acceptable to the Administrative Agent;
(d) intercompany Debt incurred by any Foreign Restricted Subsidiary that is not a Credit Party and owing to any Credit Party or Restricted Subsidiary; provided that, (i) such Debt is evidenced by an unsecured intercompany note, (ii) to the extent owed to a Credit Party, the Administrative Agent shall have a first priority Lien in such intercompany note and the receivable evidenced thereby, and (iii) the aggregate outstanding amount of all Debt pursuant to this clause (d) does not exceed (x) $5.0 million and (y) an additional $5.0 million to the extent that the Payment Conditions are met at the time of such incurrence;
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(e) purchase money debt or Capital Leases (including extensions, refinancings, refundings, replacements and renewals of thereof subject to the last paragraph of this Section 6.1, and including those set forth on Schedule 6.1) in an aggregate outstanding principal amount not to exceed $40.0 million at any time;
(f) Swap Agreements permitted under Section 6.16;
(g) Debt arising from the endorsement of instruments for collection in the ordinary course of business;
(h) Debt incurred by any Foreign Restricted Subsidiary under overdraft lines of credit made available for the purpose of supporting the operations of any Foreign Restricted Subsidiary in any jurisdiction that is not a Sanctioned Entity (and including extensions, refinancings, refundings, replacements and renewals thereof subject to the last paragraph of this Section 6.1); provided, that the aggregate outstanding principal amount of such Debt permitted under this clause (h) shall not exceed $5.0 million at any time;
(i) unsecured Debt of the Company evidenced by bonds, debentures, notes or other similar instruments (including extensions, refinancings, refundings, replacements and renewals of thereof subject to the last sentence of this Section 6.1); provided that, (i) the scheduled maturity date of such Debt shall not be earlier than one year after the Maturity Date, (ii) such Debt shall not have any amortization or other requirement to purchase, redeem, retire, defease or otherwise make any payment in respect thereof, other than at scheduled maturity thereof and mandatory prepayments which are customary with respect to such type of Debt and that are triggered upon change in control and sale of all or substantially all assets, (iii) the aggregate amount of such Debt shall not exceed $200.0 million, (iv) the Companys pro forma Leverage Ratio after giving effect to the incurrence or issuance of such Debt for the four most recent fiscal quarters for which financial statements are available shall be less than 2.50:1:00 and (v) the agreements and instruments governing such Debt shall not contain (A) (x) any financial maintenance covenants that are more restrictive than those in this Agreement, or (y) any other affirmative or negative covenants that are, taken as a whole, materially more restrictive than those set forth in this Agreement; provided that, the inclusion of any covenant that is customary with respect to such type of Debt and that is not found in this Agreement shall not be deemed to be more restrictive for purposes of this clause (A), (B) any restriction on the ability of the Company or any of its Restricted Subsidiaries to amend, modify, restate or otherwise supplement this Agreement or the other Credit Documents, (C) any restrictions on the ability of any Subsidiary of the Company to guarantee the Secured Obligations (as such Secured Obligations may be amended, supplemented, modified, or amended and restated), provided that, a requirement that any such Subsidiary also guarantee such Debt shall not be deemed to be a violation of this clause (C), (D) any restrictions on the ability of any Restricted Subsidiary or the Company to pledge assets as collateral security for the Secured Obligations (as such Secured Obligations may be amended, supplemented, modified, or amended and restated), or (E) any restrictions on the ability of any Restricted Subsidiary or the Company to incur Debt under this Agreement or any other Credit Document;
(j) any guaranty of Debt so long as such underlying Debt is otherwise permitted hereunder;
(k) Debt of any Restricted Entity that is non-recourse to any other Restricted Entity and that is assumed by such Restricted Entity in connection with any Permitted Acquisition (or, if such Restricted Subsidiary is acquired as part of such Permitted Acquisition, existing prior thereto) and the refinancing and renewal thereof; provided, however, that (i) such Debt exists at the time of such Permitted Acquisition at least in the amounts assumed in connection therewith and is not drawn down, created or increased in contemplation of or in connection with such Permitted Acquisition, (ii) that such Debt is not recourse to any other Restricted Entity or any Property thereof prior to the date of such Permitted Acquisition, and (iii) the aggregate principal amount of Debt outstanding pursuant to this clause (k) shall not exceed $10.0 million at any time;
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(l) Debt arising from the financing of insurance premium of any Restricted Entity, so long as (i) such Debt shall not be in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the underlying term of such insurance policy, (ii) any unpaid amount of such Debt is fully cancelled upon termination of the underlying insurance policy, and (iii) the aggregate principal amount of Debt outstanding pursuant to this clause (l) shall not exceed $10.0 million at any time;
(m) secured Debt not otherwise permitted under the preceding provisions of this Section 6.1 (including extensions, refinancings, refundings, replacements and renewals of thereof subject to the last sentence of this Section 6.1); provided that, (i) the aggregate principal amount of such Debt shall not exceed $10.0 million at any time and (ii) the Properties encumbered by any Lien securing such Debt shall not be Collateral or any Property that is required to be Collateral under Section 5.6;
(n) unsecured Debt not otherwise permitted under the preceding provisions of this Section 6.1 (including extensions, refinancings, refundings, replacements and renewals of thereof subject to the last sentence of this Section 6.1); provided that, the aggregate outstanding principal amount of Debt permitted under this clause (n) shall not exceed, at the time such Debt is incurred (after giving effect to the incurrence thereof), $30.0 million;
(o) unsecured Debt constituting earn-out obligations, contingent obligations or similar obligations of any Restricted Entity arising from or relating to the Magnum Acquisition or any Permitted Acquisition; and
(p) Debt in respect of performance bonds, bid bonds, appeal bonds, surety bonds and similar obligations, in each case provided in the ordinary course of business.
Any extensions, refinancings, refundings, replacements and renewals of Debt as permitted above in this Section 6.1 shall be subject to the following conditions: (A) any such refinancing Debt is in an aggregate principal amount not greater than the aggregate principal amount of the Debt being renewed or refinanced, plus the amount of any premiums required to be paid thereon and reasonable fees and expenses associated therewith and an amount equal to any unutilized active commitment under the Debt being renewed or refinanced and (B) the covenants, events of default, subordination and other provisions thereof (including any guarantees thereof) shall be, in the aggregate, no less favorable to the Company and its Subsidiaries than those contained in the Debt being renewed or refinanced; provided that, the foregoing conditions are not, and shall not be construed as, an increase in any dollar limit already provided in Section 6.1 above nor an amendment of any specific requirement set forth in Section 6.1 above, including the specific requirements under clause (i) above.
Section 6.2 Liens. No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to, create, assume, incur, or suffer to exist any Lien on the Property of any Credit Party or any Restricted Subsidiary, whether now owned or hereafter acquired, or assign any right to receive any income, other than the following (collectively, the Permitted Liens):
(a) Liens securing the Secured Obligations pursuant to the Security Documents;
(b) Liens imposed by law, such as materialmens, mechanics, carriers, workmens and repairmens liens, landlords liens and other similar liens, and such Liens granted under contract with such materialmen, mechanic, carrier, workmen, repairmen and landlord, in any case, arising in the ordinary course of business securing obligations which are not overdue for a period of more than thirty (30) days or are being contested in good faith by appropriate procedures or proceedings and for which adequate reserves have been established;
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(c) Liens arising in the ordinary course of business out of pledges or deposits under workers compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation to secure public or statutory obligations;
(d) Liens for taxes, assessments, or other governmental charges which are not yet due and payable or which are being actively contested in good faith by appropriate proceedings and for which adequate reserves have been established in compliance with GAAP;
(e) undetermined or inchoate Liens, rights of distress and charges incidental to current operations that have not at such time been filed or exercised, or of which written notice has not been duly given in accordance with applicable law or which although filed or registered, relate to obligations not due or delinquent or, if due, the validity of such Lien is being contested in good faith by appropriate actions diligently conducted;
(f) Liens securing purchase money debt or Capital Lease obligations permitted under Section 6.1(e); provided that, each such Lien encumbers only the Property purchased in connection with the creation of any such purchase money debt or the subject of any such Capital Lease, and all proceeds thereof (including insurance proceeds);
(g) Liens arising from PPSA or precautionary UCC financing statements regarding operating leases;
(h) encumbrances consisting of easements, zoning restrictions, servitudes or other restrictions on the use of real property that do not (individually or in the aggregate) materially affect the value of the assets encumbered thereby or materially impair the ability of any Credit Party to use such assets in its business;
(i) Liens arising solely by virtue of any statutory or common law provision relating to bankers liens, rights of set-off or similar rights and remedies and burdening only Deposit Accounts or other funds maintained with a depository institution;
(j) Liens on cash or securities with an aggregate value not to exceed $3.0 million pledged to secure performance of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations and other obligations of a like nature incurred in the ordinary course of business;
(k) judgment and attachment Liens not giving rise to an Event of Default, provided that, (i) any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired and (ii) no action to enforce such Lien has been commenced;
(l) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods entered into in the ordinary course of business or Liens arising by operation of law under Article 2 of the UCC or by contract in favor of a reclaiming seller of goods or buyer of goods (including purchase money security interests in favor of vendors in the ordinary course of business);
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(m) Liens solely on cash earnest money deposits made in connection with any letter of intent or purchase agreement permitted hereunder;
(n) Lien arising by reason of deposits with or giving of any form of security to any Governmental Authority for any purpose at any time as required by applicable law as a condition to the transaction of any business or the exercise of any privilege or license;
(o) Liens created pursuant to joint venture agreements and related documents (to the extent requiring a Lien on the Equity Interest owned by the Company or Restricted Entity in the applicable joint venture is required thereunder) having ordinary and customary terms (including with respect to Liens) and entered into in the ordinary course of business and securing obligations other than Debt;
(p) Liens encumbering Property of the Restricted Entities which is not Collateral (as defined in the Security Agreements) or Property required to be Collateral under Section 5.6 and securing Debt permitted under Section 6.1(m);
(q) Liens encumbering Properties not constituting Collateral (as defined in the Security Agreements) of Foreign Subsidiaries securing Debt permitted under Section 6.1(h);
(r) Liens on Property of a Person which becomes a Restricted Subsidiary after the date hereof, to the extent that (i) such Liens are in existence at the time such Person becomes a Restricted Subsidiary and were not created in anticipation thereof and (ii) the Debt secured by such Liens does not thereafter increase in amount; and
(s) Liens existing as of the date hereof and set forth on Schedule 6.2.
The permitted existence of any Permitted Liens or any other Liens shall not be interpreted to expressly or impliedly subordinate any Liens granted in favor of the collateral agent and the other Secured Parties as there is no intention to subordinate the Liens granted in favor of the collateral agent and the other Secured Parties.
Section 6.3 Investments. No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to, make or hold (including pursuant to any merger with, or as a Division Successor pursuant to the Division of, any Person that was not a Wholly-Owned Subsidiary prior to such merger or Division) any Investment other than the following (collectively, the Permitted Investments):
(a) Investments in the form of trade credit to customers of a Restricted Entity arising in the ordinary course of business and represented by accounts from such customers;
(b) Liquid Investments;
(c) Investments made prior to the Closing Date as specified in the attached Schedule 6.3(c);
(d) Investments in any Unrestricted Subsidiary by any Credit Party (including the creation of any Unrestricted Subsidiary in compliance with Section 5.7); provided that, (i) the aggregate amount of all such Investments permitted under this clause (d), does not exceed $5.0 million (other than as a result of appreciation), (ii) if any Restricted Payments made by Unrestricted Subsidiaries are included in the calculation of EBITDA of any period for any purpose under this Agreement, then no Investments may be made by any Restricted Entity in such applicable Unrestricted Subsidiary during such period (under this clause (d) or otherwise) unless the Credit Party would otherwise be in compliance with the applicable covenant without taking into account such Restricted Payments from the Unrestricted Subsidiaries, and (iii) any such Investment that constitutes an Equity Interest or intercompany Debt shall become Collateral to the extent required by Section 5.6;
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(e) (i) Investments by any Credit Party in any other Credit Party, (ii) Investments by any Domestic Restricted Subsidiary that is not Credit Party in any other Domestic Restricted Subsidiary that is not Credit Party, (iii) Investments by any Foreign Restricted Subsidiary in any other Foreign Restricted Subsidiary and (iv) Investments by any Credit Party in a Foreign Restricted Subsidiary to the extent permitted under Section 6.1(d);
(f) Investments in the form of Permitted Acquisitions; provided that, if such Permitted Acquisition involves a Subsidiary, such Acquisition otherwise complies with this Agreement, including Section 5.7 as to Wholly-Owned Restricted Subsidiaries and clause (d) above with respect to Investments in any Unrestricted Subsidiary;
(g) Investments consisting of the creation and de minimis (on both an individual basis and on an aggregate basis with any other entities capitalized pursuant to this clause (e)) initial capitalization of any additional Restricted Subsidiaries in compliance with Section 5.6 and Section 5.7;
(h) loans or advances to (x) directors, officers and employees of any Restricted Entity for expenses or other payments incident to such Persons employment or association with any Restricted Entity and (y) former owners of Equity Interests in any Restricted Entity in connection with or relating to their acquisition of Equity Interests in such Restricted Entity; provided that, the aggregate amount of such loans and advances pursuant to this Section 6.3(h) shall not exceed $5.0 million;
(i) Investments (including debt obligations and Equity Interests) and other assets received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement or delinquent obligations of, or other disputes with, customers and suppliers arising in the ordinary course of business or received upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;
(j) Investments in the form of mergers, amalgamations and consolidations of Restricted Entities in compliance with Section 6.7(a); provided that, if such Investment involves a Subsidiary, such Investment otherwise complies with this Agreement, including Section 5.7 as to Restricted Subsidiaries and clause (d) above with respect to any Subsidiary that is not a Credit Party;
(k) Capital Expenditures and Investments to the extent funded exclusively with Equity Issuance Proceeds (of Equity Interests not constituting Disqualified Equity Interests);
(l) Investments with respect to which the Payment Conditions are satisfied on a pro forma basis for such Investment; and
(m) other Investments in an aggregate amount not to exceed $7.5 million (other than as a result of appreciation), during the term hereof.
Section 6.4 Acquisitions. No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to, make an Acquisition in a single transaction or related series of transactions other than:
(a) mergers, amalgamations and consolidations permitted by Section 6.7(a);
(b) any Acquisition approved by the Required Lenders; or
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(c) any Acquisition with respect to which the Payment Conditions are satisfied on a pro forma basis.
Section 6.5 Agreements Restricting Liens. No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to, create, incur, assume or permit to exist any contract, agreement or understanding which in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its Property, whether now owned or hereafter acquired, to secure the Secured Obligations or restricts any Restricted Subsidiary from paying Restricted Payments to any Borrower, or which requires the consent of or notice to other Persons in connection therewith other than:
(a) this Agreement and the Security Documents;
(b) agreements governing Debt permitted by Section 6.1(e) to the extent such restrictions govern only the assets financed pursuant to such Debt and the proceeds thereof;
(c) agreements governing Debt permitted by Section 6.1 (k), and (m) to the extent such restrictions do not apply to Collateral or Properties which are required to be Collateral under Section 5.6 and such agreements do not require the direct or indirect granting of any Lien securing such Debt or other obligation by virtue of the granting of Liens on or pledge of Collateral to secure the Secured Obligations;
(d) any prohibition or limitation that (i) exists pursuant to applicable requirements of a Governmental Authority, (ii) restricts subletting or assignment of leasehold interests contained in any lease governing a leasehold interest of the Company or a Restricted Subsidiary and customary provisions in other contracts restricting assignment thereof, or (iii) exists in any agreement in effect at the time a Subsidiary becomes a Restricted Subsidiary of the Company, so long as such agreement was not entered into in contemplation of such Person becoming a Restricted Subsidiary; and
(e) any prohibition or limitation that exists in any contract to which a Credit Party is a party on the date hereof so long as (i) such prohibition or limitation is generally applicable and does not specifically address any of the Secured Obligations or the Liens granted under the Credit Documents, and (ii) the noncompliance of such prohibition or limitation would not reasonably be expected to be adverse to any Secured Party.
Section 6.6 Use of Proceeds; Use of Letters of Credit. No Credit Party shall, nor shall it permit any of its Subsidiaries to (a) use the proceeds of the Loans for any purpose other than (i) to repay the Existing Nine Debt, (ii) to pay a portion of the consideration for the Magnum Acquisition, (iii) for the payment of fees and expenses related to the Transactions, (iv) for working capital purposes of the Company and the Restricted Subsidiaries and (v) for other general corporate purposes of the Company and the Restricted Subsidiaries, including Permitted Acquisitions, Permitted Investments and permitted Restricted Payments; (b) use the proceeds of the Letters of Credit for any purposes other than (i) working capital purposes of the Company and the Restricted Subsidiaries and (ii) other general corporate purposes of the Company and the Restricted Subsidiaries. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, use any part of the proceeds of the Loans or the Letters of Credit for any purpose which violates, or is inconsistent with, Regulations T, U, or X. Neither Borrower will request any Borrowing or Letter of Credit, and each Borrower shall not use, and shall ensure that their Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Entity, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
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Section 6.7 Corporate Actions; Accounting Changes.
(a) No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to, merge, amalgamate or consolidate with or into, any other Person or consummate a Division as the Dividing Person after the Closing Date, except:
(i) that the Company may merge or amalgamate with any of its Wholly-Owned Restricted Subsidiaries and any Credit Party may merge, amalgamate or be consolidated with or into any other Credit Party; provided that, immediately after giving effect to any such proposed transaction no Default would exist and, in the case of any such merger or amalgamation to which the Company is a party, the Company is the surviving entity;
(ii) that any Foreign Restricted Subsidiary may merge, amalgamate or be consolidated with or into any other Foreign Restricted Subsidiary; provided that, immediately after giving effect to any such proposed transaction no Default would exist;
(iii) that any Restricted Entity that is not a Credit Party may merge, amalgamate or consolidate with any other Restricted Entity that is not a Credit Party;
(iv) any other merger, amalgamation or consolidation to effect a Permitted Acquisition under Section 6.4(c), subject to the conditions set forth therein;
(v) any Restricted Subsidiary may dissolve, liquidate or wind up its affairs at any time; provided, that (A) the assets of any such dissolving Restricted Subsidiary that is a Domestic Subsidiary become owned by the Company or another Domestic Restricted Subsidiary and (B) to the extent that the dissolving Restricted Subsidiary is a Credit Party, the assets of any such dissolving Restricted Subsidiary that is a Credit Party become owned by the Company or another Credit Party and provided further that such dissolution, liquidation or winding up, as applicable, could not reasonably be expected to have a Material Adverse Change. Any such Subsidiary may effect the same by merger, amalgamation or consolidation; and
(vi) any Restricted Subsidiary that is an LLC may consummate a Division as the Dividing Person if, immediately upon the consummation of the Division, the assets of the applicable Dividing Person are held by one or more Restricted Subsidiaries at such time, or, with respect to assets not so held by one or more Restricted Subsidiaries, such Division in the aggregate would otherwise result in a Disposition permitted by Section 6.8.
(b) No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to, (i) without at least fifteen (15) days (or such shorter period as agreed to by the Administrative Agent) prior written notice to the Administrative Agent, change its name, change its jurisdiction of incorporation, formation or organization, change its organizational identification number or reorganize in another jurisdiction, (ii) amend, supplement, modify or restate its articles or certificate of incorporation or formation, limited partnership agreement, bylaws, limited liability company agreements, or other equivalent organizational documents, in any manner that could reasonably be expected to be materially adverse to the Lenders, (iii) change the method of accounting employed in the preparation of the financial statements referred to in Section 4.4 unless such changes are required to conform to GAAP or such changes are to conform the accounting practices of the Company and its Restricted Subsidiaries and notice of such changes have been delivered to the Administrative Agent prior to effecting such changes or (iv) change the fiscal year end of a Borrower.
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(c) The Company shall not reorganize in any jurisdiction other than the United States, any State thereof or the District of Columbia. The Canadian Borrower shall not reorganize in any jurisdiction other than Canada or any province or territory thereof.
Section 6.8 Disposition of Assets. No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to, make a Disposition other than:
(a) Disposition by any Restricted Entity (other than a Credit Party) of any of its Properties to any Credit Party; provided that, at the reasonable request of the Administrative Agent, the receiving Credit Party shall ratify, grant and confirm the Liens on such assets (and any other related Collateral) pursuant to documentation reasonably satisfactory to the Administrative Agent;
(b) Disposition by any Credit Party of any of its Properties to any other Credit Party; provided that (i) any Disposition by a U.S. Credit Party to a Canadian Credit Party must be made in the ordinary course of business and (ii) at the reasonable request of the Administrative Agent, the receiving Credit Party shall ratify, grant and confirm the Liens on such assets (and any other related Collateral) pursuant to documentation reasonably satisfactory to the Administrative Agent;
(c) Disposition by any Restricted Entity that is not a Credit Party of any of its Properties to any Domestic Restricted Subsidiary that is not a Credit Party; provided that, if such Property is an Equity Interest that is Collateral or otherwise required to be Collateral under Section 5.6, then at the reasonable request of the Administrative Agent, the receiving Restricted Entity (other than a Foreign Subsidiary) shall ratify, grant and confirm the Liens on such Equity Interest (and any other related Collateral) pursuant to documentation reasonably satisfactory to the Administrative Agent;
(d) Sale of Inventory in the ordinary course of business and Disposition of cash or Liquid Investments in the ordinary course of business;
(e) Disposition of worn out, obsolete or surplus Property in the ordinary course of business and the abandonment or other Disposition of patents, trademarks and copyrights that, in the reasonable judgment of the Company and its Restricted Subsidiaries, should be replaced or is no longer economically practicable to maintain or useful in the conduct of the business of the Company and its Restricted Subsidiaries taken as a whole;
(f) mergers, amalgamations and consolidations in compliance with Section 6.7(a);
(g) Dispositions of Permitted Investments;
(h) assignments and licenses of patents, trademarks or copyrights of any Restricted Entity in the ordinary course of business;
(i) Disposition of any assets required under Legal Requirements;
(j) Dispositions of Equipment by any Credit Party in the ordinary course of business the proceeds of which are reinvested in the acquisition of Equipment of comparable value and type within ninety (90) days and on which the Administrative Agent has an Acceptable Security Interest;
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(k) Dispositions of Equipment by any Foreign Restricted Subsidiary in the ordinary course of business;
(l) Dispositions of Equity Interests in a joint venture or Unrestricted Subsidiary;
(m) leases of real or personal property in the ordinary course of business;
(n) Dispositions of Property permitted by Section 6.15; and
(o) Disposition of Properties not otherwise permitted under the preceding clauses of this Section 6.8; provided that, such Disposition, taken together with all such other Dispositions completed since the Closing Date, does not exceed ten percent (10%) of the Tangible Net Assets in the aggregate and calculated at the time of such subject Disposition; provided, that, at least seventy-five percent (75%) of the consideration for each Disposition effected pursuant to this Section 6.8(n) shall be cash or Liquid Investments.
Section 6.9 Restricted Payments. No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to make any Restricted Payments except that:
(a) (i) the Restricted Subsidiaries of a Borrower may make Restricted Payments to another Borrower or any other Credit Party, and (ii) the Foreign Restricted Subsidiaries may make Restricted Payments to any Credit Party;
(b) so long as no Default exists or would result from the making of such Restricted Payment, a Borrower or any Restricted Subsidiary may (i) make cash Restricted Payments to existing and former officers, directors, and employees of the Company or such Restricted Subsidiary; provided, that such Restricted Payments are in consideration for the retirement, purchase, or redemption of any of the Equity Interests of such Restricted Entity, or any option, warrant or other right to purchase or acquire such Equity Interest, in any event, held by such Person and (ii) make repurchases, redemptions or exchanges of Equity Interests of the Company deemed to occur upon exercise of stock options or exchange of exchangeable shares if such Equity Interests represent a portion of the exercise price of such options and may make repurchases, redemptions or other acquisitions or retirements for value of Equity Interests of the Company made in lieu of withholding taxes in connection with any exercise or exchange of stock options, warrants or other similar rights, in an aggregate amount with respect to this clause (b) not to exceed $5.0 million in the aggregate per fiscal year; provided that any amounts permitted but not used pursuant to this clause (b) may be carried over to next fiscal year but not thereafter.
(c) a Borrower may declare and pay dividends with respect to its common stock payable solely in additional shares of its common stock, and, with respect to its preferred stock, payable solely in additional shares of such preferred stock (not constituting Disqualified Equity Interests) or in shares of its common stock;
(d) the Company may make Restricted Payments to purchase, redeem, retire, or otherwise acquire its Equity Interests, to the extent such Restricted Payments are made from the substantially concurrent receipt by the Company of Net Proceeds from capital contributions or the substantially concurrent issuance of new Equity Interests of the Company (not constituting Disqualified Equity Interests); and
(e) the Company may make Restricted Payments so long as the Payment Conditions are satisfied.
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Section 6.10 Certain Payments, Prepayments and Redemptions of Debt. No Credit Party will, nor will it permit any Restricted Subsidiary to, make, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Debt, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Debt, except:
(a) payment of Debt created under the Loan Documents;
(b) payment of scheduled payments, required payments and redemptions as and when due in respect of any Debt permitted under Section 6.1;
(c) refinancings of Debt to the extent permitted by Section 6.1;
(d) payment of secured Debt that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Debt to the extent such sale or transfer is permitted by the terms of Section 6.5; and
(e) the Credit Parties may made payments in respect of Debt not otherwise permitted by this Section 6.10 so long as the Payment Conditions are satisfied.
Section 6.11 Affiliate Transactions. No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of transactions (including, but not limited to, the purchase, sale, lease or exchange of Property, the making of any Investment, the giving of any guaranty, the assumption of any obligation or the rendering of any service) with any of their Affiliates that are not Restricted Entities other than:
(a) such transaction or series of transactions are arms length transactions entered into on terms that are not materially less favorable to the Borrowers or any Restricted Subsidiary, as applicable, than those that could be obtained in a comparable arms length transaction with a Person that is not such an Affiliate;
(b) the agreements described on Schedule 6.11; provided that, the terms thereof may not be amended, supplemented or otherwise modified unless such amended, supplemented or otherwise modified terms complies with clause (a) above;
(c) the Restricted Payments permitted under Section 6.8;
(d) Permitted Investments in the form of Equity Interests of Subsidiaries, including the purchase or acquisition thereof and capital contributions in connection therewith; and
(e) reasonable and customary director, officer and employee compensation (including bonuses) and other benefits (including retirement, health, stock option and other benefit plans).
Section 6.12 Line of Business. No Credit Party shall, and shall not permit any of its Restricted Subsidiaries to, change the character of the Companys and its Restricted Subsidiaries collective business as conducted on the date of this Agreement, or engage in any type of business not reasonably related to, or a normal extension of, the Companys and its Restricted Subsidiaries collective business as presently conducted.
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Section 6.13 Hazardous Materials. No Credit Party (a) shall, nor shall it permit any of its Subsidiaries to, create, handle, transport, use, or dispose of any Hazardous Substance or Hazardous Waste, except in the ordinary course of its business and except in compliance with Environmental Law other than to the extent that such non-compliance could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change or in any liability on the Lenders or the Administrative Agent, and (b) shall, nor shall it permit any of its Subsidiaries to, Release any Hazardous Substance or Hazardous Waste into the Environment and shall not permit any Credit Partys or any Subsidiarys Property to be subjected to any Release of Hazardous Substance or Hazardous Waste, except in compliance with Environmental Law other than to the extent that such non-compliance could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change or in any material liability on the Lenders or the Administrative Agent.
Section 6.14 Compliance with ERISA. Except for matters that could not reasonably be expected to cause a Material Adverse Change, no Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly: (a) engage in any transaction in connection with which the Company or any Subsidiary could be subjected to either a civil penalty assessed pursuant to Section 502(c), (i) or (l) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code; (b) terminate, or permit any member of the Controlled Group to terminate, any Plan in a manner, or take any other action with respect to any Plan, which could result in any liability to the Borrowers, any Subsidiary or any member of the Controlled Group to the PBGC; (c) fail to make, or permit any member of the Controlled Group to fail to make, full payment when due of all amounts which, under the provisions of any Plan, agreement relating thereto or applicable law, the Borrowers, a Subsidiary or member of the Controlled Group is required to pay as contributions thereto; (d) permit to exist, or allow any Subsidiary or any member of the Controlled Group to permit to exist, any accumulated funding deficiency (or unpaid minimum required contribution for plan years after December 31, 2007) within the meaning of Section 302 of ERISA or Section 412 of the Code, whether or not waived, with respect to any Plan; (e) permit, or allow any member of the Controlled Group to permit, the actuarial present value of the benefit liabilities (as actuarial present value of the benefit liabilities shall have the meaning specified in Section 4041 of ERISA) under any Plan that is regulated under Title IV of ERISA to exceed the current value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities; (f) contribute to or assume an obligation to contribute to, or permit any member of the Controlled Group to contribute to or assume an obligation to contribute to, any Multiemployer Plan; (g) acquire, or permit any member of the Controlled Group to acquire, an interest in any Person that causes such Person to become a member of the Controlled Group if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained, or contributed to, (1) any Multiemployer Plan, or (2) any other Plan that is subject to Title IV of ERISA under which the actuarial present value of the benefit liabilities under such Plan exceeds the current value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities; (h) incur, or permit any member of the Controlled Group to incur, a liability to or on account of a Plan under Sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; or (i) contribute to or assume an obligation to contribute to any employee welfare benefit plan, as defined in Section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such entities, that may not be terminated by such entities in their sole discretion at any time without any liability.
Section 6.15 Sale and Leaseback Transactions. No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to, sell or transfer to a Person any Property, whether now owned or hereafter acquired, if at the time or thereafter the Company or a Restricted Subsidiary shall lease as lessee such Property or any part thereof or other Property which the Company or a Restricted Subsidiary intends to use for substantially the same purpose as the Property sold or transferred; provided that, the Restricted Entities may effect such transactions with Property that is not Collateral so long as such transactions do not exceed $10.0 million in the aggregate during the term hereof and if such Restricted Entity is a Foreign Restricted Subsidiary, the cash proceeds of such transaction are distributed or otherwise transferred to a Credit Party for repayment of Loans pursuant to Section 2.5.
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Section 6.16 Limitation on Hedging. No Credit Party shall, nor shall it permit any of its Restricted Subsidiaries to, (a) purchase, assume, or hold a speculative position in any commodities market or futures market or enter into any Swap Agreement for speculative purposes; or (b) be party to or otherwise enter into any Swap Agreement which is entered into for reasons other than as a part of its normal business operations as a risk management strategy and/or hedge against changes resulting from market conditions related to the Borrowers or their Restricted Subsidiaries operations; provided that, for the avoidance of doubt, any Restricted Entity may enter into Swap Agreement (A) to mitigate risk to which such Restricted Entity has actual exposure, (B) to effectively cap, collar or exchange interest rates (from floating to fixed rates, from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or Investment of any Restricted Entities and (C) consisting of spot and forward delivery foreign exchange contracts entered into in the ordinary course of business and not for speculative purposes.
Section 6.17 No Material Amendments. No Credit Party will, nor will they permit any of their respective Restricted Subsidiaries to, amend, modify or waive any of its rights under any agreement relating to any Material Debt if the effect of such amendment, modification or waiver would be materially adverse to the Lenders.
Section 6.18 Fixed Charge Coverage Ratio. At any time during a Financial Covenant Trigger Period, the Fixed Charge Coverage Ratio of the Company, as of the last day of the most recent fiscal quarter for which financial statements are available shall not be less than 1.00 to 1.00.
Section 6.19 Establishment of Canadian Defined Benefit Plan. No Credit Party shall, without the prior written consent of the Administrative Agent, (a) establish or contribute to any Canadian Defined Benefit Plan, or (b) acquire an interest in any Person if such Person sponsors, administers, maintains or contributes to, or has any liability in respect of any Canadian Defined Benefit Plan, unless such acquisition would not result in a Credit Party assuming any liability or obligation in respect of any such Canadian Defined Benefit Plan.
ARTICLE VII
DEFAULT AND REMEDIES
Section 7.1 Events of Default. The occurrence of any of the following events shall constitute an Event of Default under this Agreement and any other Credit Document:
(a) Payment Failure. Any Credit Party (i) fails to pay any principal when due under this Agreement or (ii) fails to pay, within three (3) Business Days of when due, any other amount due under this Agreement or any other Credit Document, including payments of interest fees, reimbursements, and indemnifications;
(b) False Representation or Warranties. Any representation or warranty made or deemed to be made by any Credit Party or any officer thereof in this Agreement, in any other Credit Document or in any certificate delivered in connection with this Agreement or any other Credit Document is incorrect, false or otherwise misleading in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) at the time it was made or deemed made;
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(c) Breach of Covenant. (i) Any breach by any Credit Party of any of the covenants in Section 5.2(a), Section 5.2(e) or Article VI of this Agreement or the corresponding covenants in any Guaranty; or (ii) any breach by any Credit Party of any other covenant or agreement contained in this Agreement or any other Credit Document and such breach shall remain unremedied for a period of thirty (30) days after the earliest of (A) the date any Responsible Officer of the Company has actual knowledge of such breach, (B) the date any Executive Officer of any Restricted Subsidiary has actual knowledge of such breach, and (C) the date written notice thereof shall have been given to the Company by any Lender Party;
(d) Guaranties. (i) Any material provision in the Guaranties shall at any time (before the Guaranties expire in accordance with their terms) and for any reason be determined by a court of competent jurisdiction to cease to be in full force and effect and valid and binding on the Guarantors party thereto or shall be contested by any Guarantor party thereto or by a Borrower; (ii) the Company or any Guarantor shall deny in writing that it has any liability or obligation under the Guaranties; or (iii) any Guarantor shall cease to exist other than as expressly permitted by the terms of this Agreement;
(e) Security Documents. Any Security Document shall at any time and for any reason cease to create an Acceptable Security Interest with respect to any Collateral having a fair market value, individually or in the aggregate, in excess of $2.5 million (unless released or terminated pursuant to the terms of such Security Document) or any material provisions thereof shall cease to be in full force and effect and valid and binding on the Credit Party that is a party thereto or any such Person shall so state in writing (unless released or terminated pursuant to the terms of such Security Document);
(f) Cross-Default. (i) Any Restricted Entity shall fail to pay any principal of or premium or interest on its Debt which is outstanding in a principal amount of at least $15.0 million, individually or when aggregated with all such Debt of the Restricted Entities so in default (but excluding Debt owing to the Lenders hereunder) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; (ii) any other event shall occur or condition shall exist under any agreement or instrument relating to Debt of the Restricted Entities which is outstanding in a principal amount of at least $15.0 million individually or when aggregated with all such Debt of the Restricted Entities so in default (but excluding Debt owing to the Lenders hereunder), and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of, or to permit the redemption of such Debt by the holder of, such Debt prior to the stated maturity thereof; or (iii) any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment); provided that, for purposes of this paragraph (f), the principal amount of the obligations in respect of Swap Agreements at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that would be required to be paid if such Swap Agreements were terminated at such time;
(g) Bankruptcy and Insolvency. (i) Except as otherwise permitted under this Agreement, any Restricted Entity shall terminate its existence or dissolve or (ii) any Restricted Entity (A) admits in writing its inability to pay its Debts generally as they become due; makes an assignment for the benefit of its creditors; consents to or acquiesces in the appointment of a receiver, interim receiver, receiver manager, custodian, liquidator, fiscal agent, or trustee (or similar official) of itself or any of its Property; files a petition, application, case or proceeding under any Debtor Relief Law; or consents to any reorganization, arrangement, workout, liquidation, dissolution, or similar relief or (B) shall have had, without its consent: any court enter an order appointing a receiver, interim receiver, receiver manager, custodian, liquidator, fiscal agent, or trustee (or similar official) of itself or any of its Property; any petition, application, case or proceeding filed against it seeking reorganization, arrangement, workout, liquidation, dissolution or similar relief under any Debtor Relief Law and such petition, application, case or proceeding shall not be dismissed, stayed, or set aside for an aggregate of 60 days, whether or not consecutive;
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(h) Adverse Judgment. Any Restricted Entity suffers final non-appealable judgments against any of them since the date of this Agreement that results in an aggregate amount, less any insurance proceeds covering such judgments which are received or as to which the insurance carriers have not denied, greater than $15.0 million and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgments or (ii) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgments, by reason of a pending appeal or otherwise, shall not be in effect;
(i) Termination Events. Any Termination Event with respect to a Plan shall have occurred, and, thirty (30) days after notice thereof shall have been given to the Company by the Administrative Agent, such Termination Event shall not have been corrected and shall have created and caused to be continuing a material risk of Plan termination or liability for withdrawal from the Plan as a substantial employer (as defined in Section 4001(a)(2) of ERISA), which termination could reasonably be expect to result in a liability of, or liability for withdrawal could reasonably be expected to be, greater than $15.0 million;
(j) Multiemployer Plan Withdrawals. The Company or any member of the Controlled Group as employer under a Multiemployer Plan shall have made a complete or partial withdrawal from such Multiemployer Plan and such withdrawing employer shall have incurred a withdrawal liability in an annual amount exceeding $15.0 million;
(k) Canadian Pension Events. Any Canadian Pension Event shall have occurred, and such Canadian Pension Event could reasonably be expected to result in a liability of greater than $10.0 million;
(l) Invalidity of Credit Agreement. Any material provision of this Agreement shall cease to be in full force and effect and valid and binding on the Company or the Company shall so state in writing (except as permitted by the terms of this Agreement or as waived in accordance with Section 9.2); or
(m) Change in Control. The occurrence of a Change in Control.
Section 7.2 Optional Acceleration of Maturity. If any Event of Default (other than an Event of Default under Section 7.1(g)) shall have occurred and be continuing, then, and in any such event,
(a) the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower Representative, declare that the obligation of each Lender and each Issuing Lender to make Credit Extensions shall be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower Representative, declare all outstanding Loans, all interest thereon, and all other amounts payable under this Agreement to be forthwith due and payable, whereupon such Loans, all such interest, and all such amounts shall become and be forthwith due and payable in full, without presentment, demand, protest or further notice of any kind (including, without limitation, any notice of intent to accelerate or notice of acceleration), all of which are hereby expressly waived by the Borrower Representative,
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(b) the Company shall, on demand of the Administrative Agent at the request or with the consent of the Required Lenders, deposit with the Administrative Agent into the Cash Collateral Account an amount of cash equal to 103% of the outstanding LC Exposure as security for the Secured Obligations to the extent the Letter of Credit Obligations are not otherwise paid or Cash Collateralized at such time, and
(c) the Administrative Agent shall at the request of, or may with the consent of, the Required Lenders proceed to enforce its rights and remedies under the Security Documents, the Guaranties, or any other Credit Document by appropriate proceedings.
Section 7.3 Automatic Acceleration of Maturity. If any Event of Default pursuant to Section 7.1(g) shall occur,
(a) the obligation of each Lender and each Issuing Lender to make Credit Extensions shall immediately and automatically be terminated and all Loans, all interest on the Loans, and all other amounts payable under this Agreement shall immediately and automatically become and be due and payable in full, without presentment, demand, protest or any notice of any kind (including, without limitation, any notice of intent to accelerate or notice of acceleration), all of which are hereby expressly waived by the Borrower Representative,
(b) the Company shall, on demand of the Administrative Agent at the request or with the consent of the Required Lenders, deposit with the Administrative Agent into the Cash Collateral Account an amount of cash equal to 103% of the outstanding LC Exposure as security for the Secured Obligations to the extent the Letter of Credit Obligations are not otherwise paid or Cash Collateralized at such time, and
(c) the Administrative Agent shall at the request of, or may with the consent of, the Required Lenders proceed to enforce its rights and remedies under the Security Documents, the Guaranties, or any other Credit Document by appropriate proceedings.
Section 7.4 Set-off. If an Event of Default shall have occurred and be continuing, each Lender Party, and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Legal Requirement, 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 Party or any such Affiliate to or for the credit or the account of a Borrower against any and all of the obligations of a Borrower now or hereafter existing under this Agreement or any other Credit Document to such Lender Party or Affiliate, irrespective of whether or not such Lender Party or Affiliate shall have made any demand under this Agreement or any other Credit Document and although such obligations of a Borrower may be contingent or unmatured or are owed to a branch or office of such Lender Party or Affiliate 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 2.15 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, the Issuing Lenders and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Secured Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of the Administrative Agent, each Lender, each Issuing Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that the Administrative Agent, such Lender, such Issuing Lender or their respective Affiliates may have. Each Lender and Issuing Lender agrees to notify the Borrower Representative 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.
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Section 7.5 Remedies Cumulative, No Waiver. No right, power, or remedy conferred to any Lender, Administrative Agent, or any Issuing Lender in this Agreement or the Credit Documents, or now or hereafter existing at law, in equity, by statute, or otherwise shall be exclusive, and each such right, power, or remedy shall to the full extent permitted by law be cumulative and in addition to every other such right, power or remedy. No course of dealing and no delay in exercising any right, power, or remedy conferred to any Lender, Administrative Agent, or Issuing Lender in this Agreement and the Credit Documents or now or hereafter existing at law, in equity, by statute, or otherwise shall operate as a waiver of or otherwise prejudice any such right, power, or remedy. Any Lender, the Administrative Agent, or any Issuing Lender may take action to eliminate the circumstances giving rise to any Event of Default (it being understood that taking such action shall not waive such Event of Default). No notice to or demand upon the Company shall entitle the Company to similar notices or demands in the future.
Section 7.6 Application of Payments.
(a) Prior to Event of Default. Prior to an Event of Default, all payments made hereunder shall be applied as directed by the Applicable Borrower, but such payments are subject to the terms of this Agreement, including the application of prepayments according to Section 2.11.
(b) After Event of Default. If an Event of Default has occurred and is continuing, any amounts received or collected from, or on account of assets held by, any Credit Party shall be applied to the Secured Obligations by the Administrative Agent in the order and manner set forth in Section 2.18(b) but subject to the marshaling rights of the Administrative Agent and Lenders.
Notwithstanding the foregoing, amounts received from the Company or any Guarantor that is not an eligible contract participant under the Commodity Exchange Act shall not be applied to any Excluded Swap Obligations.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE ISSUING LENDER
Section 8.1 Appointment, Powers, and Immunities.
(a) Appointment and Authority. Each Lender and Issuing Lender hereby (a) irrevocably appoints JPMorgan to act on its behalf as the Administrative Agent hereunder and under the other Credit Documents, and (b) 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 VIII are solely for the benefit of the Lender Parties, and neither the Company nor any other Credit Party shall 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 Credit 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 Legal Requirement. 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) 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, act as the financial advisor or in any other advisory capacity
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for and generally engage in any kind of business with the Company 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. JPMorgan (and any successor acting as Administrative Agent) and their respective Affiliates may accept fees and other consideration from the Company or any Subsidiary or Affiliate of a Subsidiary for services in connection with this Agreement or otherwise without having to account for the same to the Lenders or the Issuing Lenders.
(c) Exculpatory Provisions. The Administrative Agent (which term as used in this Section 8.1(c) shall include its Related Parties) shall not have any duties or obligations except those expressly set forth herein and in the other Credit Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(ii) 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 Credit 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 Credit 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 Credit Document or Legal Requirement, 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
(iii) shall not, except as expressly set forth herein and in the other Credit Documents, have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to any Credit Party or any of their respective Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of their respective Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken by it (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 Section 7.1 and Section 1.1) 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 to the Administrative Agent in writing by the Borrower Representative, a Lender or an Issuing Lender. In the event that the Administrative Agent receives such a notice of the occurrence of a Default, the Administrative Agent shall (subject to Section 9.2) take such action with respect to such Default or Event of Default as shall reasonably be directed by the Required Lenders, provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interest of the Secured Parties.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any recital, statement, warranty or representation (whether written or oral) made in or in connection with this Agreement or any other Credit 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 value, validity, enforceability, effectiveness, enforceability,
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sufficiency or genuineness of this Agreement, any other Credit Document or any other agreement, instrument or document, (v) the inspection of, or to inspect, the Property (including the books and records) of any Credit Party or any Subsidiary or Affiliate thereof, (vi) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent, or (vii) any litigation or collection proceedings (or to initiate or conduct any such litigation or proceedings) under any Credit Document unless requested by the Required Lenders in writing and it receives indemnification satisfactory to it from the Lenders.
Section 8.2 Reliance by Administrative Agent and Issuing Lenders. The Administrative Agent and each Issuing Lender shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document, writing or other communication (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 not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Credit Extension or any conversion or continuance of a Loan that by its terms must be fulfilled to the satisfaction of a Lender or an Issuing Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender or Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or Issuing Lender prior to the making of such Credit Extension or conversion or continuance of a Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Company), 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.
Section 8.3 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Credit Document by or through any one or more sub-agents appointed by the Administrative Agent. 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 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 non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub agents.
Section 8.4 Indemnification.
(a) INDEMNITY OF ADMINISTRATIVE AGENT. THE LENDERS SEVERALLY AGREE TO INDEMNIFY THE ADMINISTRATIVE AGENT AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE RELATED PARTIES (TO THE EXTENT NOT REIMBURSED BY THE APPLICABLE BORROWER), RATABLY ACCORDING TO THE RESPECTIVE PRINCIPAL AMOUNTS OF THE LOANS THEN HELD BY EACH OF THEM (OR IF NO PRINCIPAL OF THE LOANS IS AT THE TIME OUTSTANDING, RATABLY ACCORDING TO THE RESPECTIVE COMMITMENTS HELD BY EACH OF THEM IMMEDIATELY PRIOR TO THE TERMINATION, EXPIRATION OR FULL REDUCTION OF EACH SUCH COMMITMENT), FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY CREDIT DOCUMENT OR ANY ACTION TAKEN
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OR OMITTED BY SUCH ADMINISTRATIVE AGENT UNDER THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING SUCH INDEMNITEES OWN NEGLIGENCE REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL), AND INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES, PROVIDED THAT, NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNITEES GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER AGREES TO REIMBURSE THE ADMINISTRATIVE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE (DETERMINED AS SET FORTH ABOVE IN THIS PARAGRAPH) OF (i) ANY OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE COUNSEL FEES) INCURRED BY THE ADMINISTRATIVE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, OR AMENDMENT, AND (ii) ANY OUT-OF-POCKET EXPENSES (INCLUDING COUNSEL FEES) INCURRED BY THE ADMINISTRATIVE AGENT IN CONNECTION WITH ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, IN ANY EVENT, INCLUDING LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND TO THE EXTENT THAT THE ADMINISTRATIVE AGENT IS NOT REIMBURSED FOR SUCH BY THE APPLICABLE BORROWER.
(b) INDEMNITY OF ISSUING LENDER. THE LENDERS SEVERALLY AGREE TO INDEMNIFY THE ISSUING LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE RELATED PARTIES (TO THE EXTENT NOT REIMBURSED BY THE APPLICABLE BORROWER), RATABLY ACCORDING TO THE RESPECTIVE PRINCIPAL AMOUNTS OF THE LOANS THEN HELD BY EACH OF THEM (OR IF NO PRINCIPAL OF THE LOANS IS AT THE TIME OUTSTANDING, RATABLY ACCORDING TO THE RESPECTIVE COMMITMENTS HELD BY EACH OF THEM IMMEDIATELY PRIOR TO THE TERMINATION, EXPIRATION OR FULL REDUCTION OF EACH SUCH COMMITMENT), FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE ISSUING LENDER OR ANY OF ITS RELATED PARTIES IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY CREDIT DOCUMENT OR ANY ACTION TAKEN OR OMITTED BY THE ISSUING LENDER UNDER THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING SUCH INDEMNITEES OWN NEGLIGENCE REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL), AND INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES, PROVIDED THAT, NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNITEES GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
Section 8.5 Non-Reliance on Administrative Agent and Other Lenders. Each Lender Party acknowledges and agrees that it has, independently and without reliance upon the Administrative Agent or any other Lender Party 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 Party also acknowledges and agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender Party or any of their Related Parties, and based on such
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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 Credit Document or any related agreement or any document furnished hereunder or thereunder. Except for notices, reports, and other documents and information expressly required to be furnished to the Lenders or an Issuing Lender by the Administrative Agent hereunder and for other information in the Administrative Agents possession which has been requested by a Lender and for which such Lender pays the Administrative Agents expenses in connection therewith, the Administrative Agent shall not have any duty or responsibility to provide any Lender or Issuing Lender with any credit or other information concerning the affairs, financial condition, or business of any Credit Party or any of its Subsidiaries or Affiliates that may come into the possession of the Administrative Agent or any of its Affiliates.
Section 8.6 Resignation of Administrative Agent or an Issuing Lender.
(a) The Administrative Agent or an Issuing Lender may at any time give notice of its resignation to the other Lender Parties and the Borrower Representative. Upon receipt of any such notice of resignation, (i) with respect to the Administrative Agent, the Required Lenders shall have the right, with the prior written consent of the Borrower Representative (which consent is not required if a Default or Event of Default has occurred and is continuing and which consent shall not be unreasonably withheld or delayed), to appoint a successor Administrative Agent and (ii) with respect to an Issuing Lender, the Required Lenders shall have the right, with the prior written consent of the Borrower Representative (which consent is not required if a Default or Event of Default has occurred and is continuing and which consent shall not be unreasonably withheld or delayed) to appoint a successor Issuing Lender, which shall be a Lender. If no such successor Administrative Agent or Issuing Lender shall have been so appointed (and, if with respect to an Issuing Lender, there is no remaining Issuing Lender) and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent or Issuing Lender 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 or Issuing Lender, as applicable, may on behalf of the Lenders and the applicable Issuing Lender, appoint a successor agent or Issuing Lender meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation by the Administrative Agent or an Issuing Lender shall become effective in accordance with such notice on the Resignation Effective Date.
(b) 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 Legal Requirement, by notice in writing to the Borrower Representative and such Person remove such Person as Administrative Agent and, in consultation with the Borrower Representative, appoint a successor. If no such successor shall have been so appointed by Required Lenders and shall have accepted such appointment within thirty (30) days (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) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable), (i) the retiring or removed Administrative Agent or Issuing Lender, as applicable, shall be discharged from its duties and obligations hereunder and under the other Credit Documents (except that (y) in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Lenders under any of the Credit Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed and (z) the retiring Issuing Lender shall remain the Issuing Lender with respect to any Letters of Credit outstanding on the effective date of its resignation and the provisions affecting the applicable Issuing Lender with respect to such Letters of Credit shall inure to the benefit of the retiring Issuing Lender until the termination of all such Letters of Credit); provided, that promptly after request therefor by the retiring Issuing Lender, the
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Borrower Representative shall request from the successor Issuing Lender replacement Letters of Credit to replace Letters of Credit issued by the retiring Issuing Lender and (ii) all payments, communications and determinations provided to be made by, to or through the retiring or removed Administrative Agent or Issuing Lender, as applicable, shall instead be made by or to each applicable class of Lenders, until such time as the Required Lenders, appoint a successor Administrative Agent or Issuing Lender as provided for above in this paragraph. Upon the acceptance of a successors appointment as Administrative Agent or Issuing Lender 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 or Issuing Lender, as applicable, and the retiring or removed Administrative Agent or Issuing Lender, as applicable, shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents. The fees payable by the Borrower Representative to a successor Administrative Agent or Issuing Lender, as applicable shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower Representative and such successor. After the retiring or removed Administrative Agents or Issuing Lenders resignation or removal hereunder and under the other Credit Documents, the provisions of this Article and Section 9.1 and Section 2.6(j) shall continue in effect for the benefit of such retiring or removed Administrative Agent and the Issuing Lender, 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 or Issuing Lender, as applicable, was acting as Administrative Agent or Issuing Lender.
Section 8.7 Collateral Matters.
(a) The Administrative Agent is authorized on behalf of the Secured Parties, without the necessity of any notice to or further consent from the Secured Parties, from time to time, to take any actions with respect to any Collateral or Security Documents which may be necessary to perfect and maintain Acceptable Security Interests in and Liens upon the Collateral granted pursuant to the Security Documents. The Administrative Agent is further authorized (but not obligated) on behalf of the Secured Parties, without the necessity of any notice to or further consent from the Secured Parties, from time to time, to take any action (other than enforcement actions requiring the consent of, or request by, the Required Lenders as set forth in Section 7.2 or Section 7.3 above) in exigent circumstances as may be reasonably necessary to preserve any rights or privileges of the Lenders under the Credit Documents or applicable Legal Requirement.
(b) The Lenders hereby, and any other Secured Party by accepting the benefit of the Liens granted pursuant to the Security Documents, irrevocably authorize the Administrative Agent to (i) release any Lien granted to or held by the Administrative Agent upon any Collateral (a) upon Payment in Full; (b) constituting Property sold or to be sold or Disposed of as part of or in connection with any Disposition permitted under this Agreement or any other Credit Document; (c) constituting Property in which no Credit Party owned an interest at the time the Lien was granted or at any time thereafter; or (d) constituting Property leased to any Credit Party under a lease which has expired or has been terminated in a transaction permitted under this Agreement or is about to expire and which has not been, and is not intended by such Credit Party to be, renewed or extended; and (ii) release a Guarantor from its obligations under the Guaranty and any other applicable Credit Document if such Person ceases to be a Restricted Subsidiary as a result of a transaction permitted under this Agreement.
(c) Upon request by the Administrative Agent at any time, the Secured Parties will confirm in writing the Administrative Agents authority to release or subordinate its interest in particular types or items of Property, or to release any Guarantor from its obligations under its Guaranty pursuant to this Section 8.7. 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 Agents Lien thereon, or any certificate prepared by any Credit Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Secured Parties or any other Lender Party for any failure to monitor or maintain any portion of the Collateral.
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(d) Notwithstanding anything contained in any of the Credit Documents to the contrary, the Credit Parties, the Administrative Agent, and each Secured Party hereby agree that no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guaranties, it being understood and agreed that all powers, rights and remedies under the Guaranties and under the Security Documents may be exercised solely by Administrative Agent on behalf of the Secured Parties in accordance with the terms hereof and the other Credit Documents.
(e) By accepting the benefit of the Liens granted pursuant to the Security Documents, each Secured Party hereby agrees to the terms of this Section 8.7.
(f) 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 by 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 (i) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Sections 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions, or (ii) at any other sale, 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 by the Administrative Agent at the direction of the Required Lenders 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 shall vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the Equity Interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase). In connection with any such bid (A) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to such acquisition vehicle or vehicles (B) each of the Secured Parties ratable interests in the Obligations which were credit bid shall be deemed without any further action under this Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale, (C) the Administrative Agent shall be authorized 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, and the governing documents shall provide for, control by the vote of the Required Lenders or their permitted assignees under the terms of this Agreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 9.2), (D) the Administrative Agent on behalf of such acquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Obligations which were credit bid, interests, whether as equity, partnership, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and (E) to the extent that Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (including as a result of another bid being higher or better, because the amount of Obligations assigned to the acquisition vehicle exceeds the amount of Obligations credit bid by the acquisition vehicle or otherwise), such Obligations shall automatically be reassigned to the Secured Parties pro rata and the Equity Interests and/or debt instruments issued by any acquisition vehicle on account of such Obligations shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action. Notwithstanding that
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the ratable portion of the Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (B) above, each Secured Party shall execute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured Party which will receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid.
Section 8.8 No Other Duties, etc. Anything herein to the contrary notwithstanding, none of the Bookrunners, Arrangers, and Documentation Agent listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Credit Documents, except in its capacity, as applicable, as the Administrative Agent, Lender or Issuing Lender hereunder.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. The Company shall pay, within thirty (30) days of invoice, (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable out-of-pocket fees, charges and disbursements of counsel for the Administrative Agent; provided that, counsel shall be limited to (x) one counsel to such Persons, taken as a whole and one local counsel in each relevant jurisdiction, taken as a whole and (y) solely in the event of a conflict of interest, one additional counsel (and, if necessary, one local counsel in each relevant jurisdiction or for each matter) to each group of similarly situated affected Persons), 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 Credit 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 the applicable Issuing Lender 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 any Lender Party (including the fees, charges and disbursements of any counsel for any Lender Party), in connection with the enforcement or protection of its rights, (A) in connection with this Agreement and the other Credit Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring, negotiations or legal proceedings in respect of such Loans or Letters of Credit.
(b) Indemnification by the Company. The Company shall, and does hereby indemnify, the Administrative Agent (and any sub-agent thereof), each Lender and each Issuing Lender, 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 reasonable fees, charges and disbursements of any counsel for any Indemnitee; provided that, counsel shall be limited to (x) one counsel to such Persons, taken as a whole and one local counsel in each relevant jurisdiction, taken as a whole and (y) solely in the event of a conflict of interest, one additional counsel (and, if necessary, one local counsel in each relevant jurisdiction or for each matter) to each group of similarly situated affected indemnified Persons), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Company or any other Credit Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Credit Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, 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 Credit Documents, (ii) any Loan or Letter
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of Credit or the use or proposed use of the proceeds therefrom (including any refusal by an Issuing Lender 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 Release of Hazardous Substance on or from any Property owned or operated by the Company or any of its Subsidiaries, or any Environmental Claim related in any way to the Company 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 Company or any other Credit Party, 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 are determined by a court of competent jurisdiction by final and nonappealable judgment in favor on the Company or such other Credit Party to have resulted (x) from the bad faith, gross negligence or willful misconduct of such Indemnitee, (y) from a claim brought by the Company or any other Credit Party against an Indemnitee for breach in bad faith of such Indemnitees material obligations hereunder or under any other Credit Document or (z) a dispute among or between Indemnitees (except to the extent that such indemnified loss was incurred by or asserted against the Administrative Agent, any arranger or Issuing Lender in its capacity as such) and not involving any act or omission of the Credit Parties or any of their Affiliates. THIS SECTION 9.1(b) SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN TAXES THAT REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM.
(c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Legal Requirement, no Credit Party shall assert, agrees not to 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 Credit 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. To the fullest extent permitted by applicable Legal Requirement, no Indemnitee shall assert, agrees not to assert, and hereby waives, any claim against any Credit Party or any Affiliate thereof, 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 Credit Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby. For the avoidance of doubt, the parties hereto acknowledge and agree that a claim for indemnity under Section 9.1(b) above, to the extent covered thereby, is a claim of direct or actual damages. 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 Credit 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.
(d) Survival. Without prejudice to the survival of any other agreement hereunder, the agreements in this Section shall survive the resignation of the Administrative Agent and any Issuing Lender, the replacement of any Lender, the termination of the Aggregate Commitments, termination or expiration of all Letters of Credit, and the repayment, satisfaction or discharge of all the other Obligations.
(e) Payments. All amounts due under this Section 9.1 shall, unless otherwise set forth above, be payable not later than ten (10) days after demand therefor.
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(f) Reimbursement by Lenders. To the extent that the Company for any reason fail 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, including the Canadian Administrative Agent), an Issuing 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 Issuing Lender, or such Related Party, as the case may be, such Lenders pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lenders share of the Aggregate Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender); provided that, with respect to such unpaid amounts owed to the Administrative Agent or the applicable Issuing Lender solely in its capacity as such, only the Lenders under the Facility shall be required to pay such unpaid amounts, such payment to be made severally among them based on such Lenders Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided further that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent, including the Canadian Administrative Agent), or Issuing 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), the applicable Issuing Lender in connection with such capacity. The obligations of the Lenders under this subsection (f) are subject to the provisions of Section 2.1(c)(i).
Section 9.2 Waivers and Amendments. Subject to Section 2.14(b) and Section 9.2(c) below, no amendment or waiver of any provision of this Agreement or any other Credit Document (other than the Fee Letter), nor consent to any departure by any Credit Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders and the Borrower Representative, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that:
(a) no amendment, waiver, or consent shall, unless in writing and signed by all the Lenders and the Borrower Representative (in addition to such other parties that may be required under this Section 9.2), to change the number of Lenders which shall be required for the Lenders to take any action hereunder or under any other Credit Document (including the definition of Required Lenders);
(b) no amendment, waiver, or consent shall, unless in writing and signed by all the Lenders and the Borrower Representative, do any of the following: (i) waive any of the conditions specified in Section 3.1 or Section 3.2, (ii) reduce the principal or interest amounts payable hereunder or under any other Credit Document (provided that, the consent of the Required Lenders shall be sufficient to waive or reduce the increased portion of interest resulting from Section 2.13(a)), (iii) release all or substantially all of the Guarantors from their respective obligations under any Guaranty except as specifically provided in the Credit Documents or release the Company from its obligations under the Guaranty, or (iv) release all or substantially all of the Collateral except as permitted under Section 8.7(b) or subordinate the Administrative Agents Lien on any material portion of the Collateral;
(c) no amendment, waiver, or consent shall, unless in writing and signed by each Lender directly and adversely affected thereby, do any of the following: (i) postpone any date fixed for any interest, fees or other amounts payable hereunder, extend the Maturity Date with respect to Loans or extend the expiration of any Letter of Credit to a date after the Maturity Date with respect to Loans, (ii) reduce any fees or other amounts payable hereunder or under any other Credit Document (other than the principal or interest) with respect to Loans or (iii) amend Section 2.18(d), Section 2.20, Section 7.6, or this Section 9.2;
(d) no amendment, waiver, or consent shall, unless in writing and signed by all the Lenders and the Borrower Representative increase the advance rates set forth in the definition of Canadian Borrowing Base or U.S. Borrowing Base, add new categories of eligible assets, or modify the categories of eligible assets or components of the Canadian Borrowing Base or U.S. Borrowing Base if the result thereof is to increase the amounts available to be borrowed, without the written consent of each Lender;
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(e) no Commitment of a Lender, no Canadian Sublimit of any Canadian Lender or any obligations of a Lender may be increased without such Lenders written consent;
(f) no amendment, waiver, or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Administrative Agent under this Agreement or any other Credit Document; and
(g) no amendment, waiver or consent shall, unless in writing and signed by the applicable Issuing Lender in addition to the Lenders required above to take such action, affect the rights or duties of the applicable Issuing Lender under this Agreement or any other Credit Document.
Notwithstanding the foregoing, (a) the Borrower Representative and Administrative Agent may amend this Agreement and the other Credit Documents without the consent of any Lender (i) to cure any ambiguity, omission, mistake, error, defect or inconsistency, (ii) to add a Guarantor with respect to the Loans or Collateral to secure the Loans, (iii) to make administrative changes that do not adversely affect the rights of any Lender or (iv) make changes that enhance the rights of the Lenders. For the avoidance of doubt, no Lender or any Affiliate of a Lender shall have any voting rights under this Agreement or any Credit Document as a result of the existence of obligations owed to it under Swap Agreements or Banking Services Obligations.
If, in connection with any proposed amendment, waiver or consent requiring the consent of all of the Lenders or each Lender directly and adversely affected thereby, the consent of the Required Lenders is obtained, but the consent of other necessary Lenders is not obtained (any such Lender whose consent is necessary but has not been obtained being referred to herein as a Non-Consenting Lender), then the Borrower Representative may elect to replace a Non-Consenting Lender as a Lender party to this Agreement, provided that, concurrently with such replacement, (i) another bank or other entity which is reasonably satisfactory to the Borrower Representative, the Administrative Agent and the Issuing Lenders shall agree, as of such date, to purchase for cash the Loans and other Obligations due to the Non-Consenting Lender pursuant to an Assignment and Assumption and to become a Lender for all purposes under this Agreement and to assume all obligations of the Non-Consenting Lender to be terminated as of such date and to comply with the requirements of Section 9.7, and (ii) the Borrowers shall pay to such Non-Consenting Lender in Same Day Funds on the day of such replacement (1) all interest, fees and other amounts then accrued but unpaid to such Non-Consenting Lender by the Borrowers hereunder to and including the date of termination, including without limitation payments due to such Non-Consenting Lender under Sections 2.15 and 2.17, and (2) an amount, if any, equal to the payment which would have been due to such Lender on the day of such replacement under Section 2.16 had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the replacement Lender.
Section 9.3 Severability. In case one or more provisions of this Agreement or the other Credit Documents shall be invalid, illegal or unenforceable in any respect under any applicable Legal Requirement, the validity, legality, and enforceability of the remaining provisions contained herein or therein shall not be affected or impaired thereby.
Section 9.4 Survival of Representations and Obligations. All representations and warranties contained in this Agreement or made in writing by or on behalf of the Credit Parties in connection herewith shall survive the execution and delivery of this Agreement and the other Credit Documents, the making of Credit Extensions and any investigation made by or on behalf of the Lenders, none of which investigations shall diminish any Lenders right to rely on such representations and warranties. Without limiting the
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provisions hereof which expressly provide for the survival of obligations, all obligations of the Company or any other Credit Party provided for in Section 2.8(c), Section 2.10, Section 2.11, Section 2.13(c), and Section 9.1(a), Section 9.1(b), Section 9.1(c) and Section 9.1(e) and all of the obligations of the Lenders in Section 8.3, Section 9.1(c) and Section 9.1(f) shall survive any termination of this Agreement, Payment in Full, and termination or expiration of all Letters of Credit.
Section 9.5 Binding Effect. This Agreement shall become effective when it shall have been executed by the Credit Parties, and the Administrative Agent, and when the Administrative Agent shall have, as to each Lender, either received a counterpart hereof executed by such Lender or been notified by such Lender that such Lender has executed it.
Section 9.6 Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender Party or pursuant to a transaction permitted under Section 6.7(a) and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (a) to an Eligible Assignee in accordance with the provisions of Section 9.7, (b) by way of participation in accordance with the provisions of Section 9.7(c), or (c) by way of pledge or assignment of a security interest subject to the restrictions of Section 9.7(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 Section 9.7(e) and, to the extent expressly contemplated hereby, the Related Parties of the Administrative Agent and each Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.
Section 9.7 Lender Assignments and Participations.
(a) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided, that:
(i) except in the case of an assignment of the entire remaining amount of the assigning Lenders applicable Commitment and the Loans under such Commitment at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender, the aggregate amount of the applicable Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable 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 $5.0 million unless the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower Representative otherwise consent (each such consent not to be unreasonably withheld or delayed);
(ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lenders rights and obligations under this Agreement with respect to the applicable Class of Loans or the applicable Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Facilities on a non-pro rata basis;
(iii) any assignment of a Commitment or a Loan must be approved by the Issuing Lenders, unless the Person that is the proposed assignee is itself a Lender with a Commitment or an outstanding Loan (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and
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(iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that, the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment, and the Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (b) 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 Lenders 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 Section 2.10, Section 2.11, Section 2.13(b) and Section 9.1 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 Lenders having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph 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 paragraph (c) of this Section. For the avoidance of doubt, (a) commitments to fund U.S. Loans and Canadian Loans may only be assigned on a ratable basis and (b) no assignment of a commitment to fund U.S. Loans or Canadian Loans may be made without a ratable assignment of an obligation to fund Canadian Loans or U.S. Loans, respectively.
(b) Register. The Administrative Agent, acting solely for this purpose as a nonfiduciary agent of the Credit Parties, shall maintain at its address referred to in Section 9.9 a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, the Commitments, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the Register). The entries in the applicable Register shall be conclusive absent manifest error, and each Borrower and the Lender Parties shall treat each Person whose name is recorded in the applicable Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. Each Borrower hereby agrees that the Administrative Agent acting as its nonfiduciary agent solely for the purpose set forth above in this clause (b), shall not subject the Administrative Agent to any fiduciary or other implied duties, all of which are hereby waived by the Borrowers.
(c) Participations. Any Lender may at any time, without the consent of, or notice to, the Applicable Borrower or the Administrative Agent, sell participations to any Person (other than a natural person) (each, a Participant) in all or a portion of such Lenders rights and/or obligations under this Agreement (including all or a portion of its Commitments and/or the Loans owing to it); provided that, (i) such Lenders 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 Applicable Borrower and the Lender Parties shall continue to deal solely and directly with such Lender Party in connection with such Lender Partys rights and obligations under this Agreement. 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
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will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clauses (a)-(e) of Section 9.2 (that adversely affects such Participant). Subject to paragraph (d) of this Section, the Applicable Borrower agrees that each Participant shall be entitled to the benefits of, and subject to the requirements of, Section 2.10, Section 2.11 and Section 2.13 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (a) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 7.4 as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(d) as though it were a Lender.
Each Lender that sells a participation shall, acting solely for this purpose as a nonfiduciary agent of the Credit Parties, maintain a register in the United States on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participants interest in the Obligations under the Credit Documents (the Participant Register) and no Lender shall have any obligation to disclose any information contained in any Participant Register (including the identity of any Participant or any information relating to the Participants interests under this Agreement) except to the extent that such disclosure is necessary to ensure that the rights and obligations reflected in such register, or in any Register, are 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. Each Borrower hereby agrees that each Lender acting as its nonfiduciary agent solely for the purpose set forth above in this clause (c) shall not subject such Lender to any fiduciary or other implied duties, all of which are hereby waived by the Borrowers.
(d) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 2.11 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant (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), unless the sale of the participation to such Participant is made with the Applicable Borrowers prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.13 unless the Applicable Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Applicable Borrower, to comply with Section 2.15(d), in which case Section 2.13 shall be applied as if such Participant had become a Lender and had acquired its interest by assignment pursuant to paragraph (a) of this Section; provided that, in no event shall such Participant be entitled to receive any greater payment under Section 2.13 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, 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.
(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 to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any other central bank having jurisdiction over such Lender; 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.
Section 9.8 Confidentiality. Each of the Administrative Agent, each Issuing Lender and each Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates directors, officers, employees and agents, including accountants, legal counsel and other advisors on a need-to-know basis who are involved in evaluating, approving, structuring or administering the Loans and the Commitments (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 requested by any regulatory authority or any self-regulatory authority or agency possessing investigative powers and the ability to sanction
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members for non-compliance, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as, or otherwise consistent with, those of this Section 9.8, to (i) any assignee (other than any non-Eligible Assignee) of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Credit Parties and their obligations, (g) with the consent of the Company, (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, any Issuing Lender or any Lender on a nonconfidential basis from a source other than a Credit Party or (i) to the Administrative Agent, any Issuing Lender or any Lender or Affiliate thereof. For the purposes of this Section, Information means all information received from any Restricted Entity relating to any Restricted Entity or its business, other than any such information that is available to the Administrative Agent, any Issuing Lender or any Lender on a nonconfidential basis prior to disclosure by any Restricted Entity and other information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry provided that, in the case of information received from any Restricted Entity after the date hereof, such information shall be deemed confidential to the extent a reasonable person would understand it to be confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 9.8 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. In addition, the Administrative Agent and each Lender may disclose the existence of this Agreement and the information about this Agreement to service providers to the Administrative Agent and the Lenders in connection with the administration and management of this Agreement and the other Credit Documents.
Each Lender acknowledges that information furnished to it pursuant to this Agreement or the other Credit Documents may include material non-public information concerning the Company and its Affiliates and its Related Parties or its respective securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including federal and state securities laws.
All information, including requests for waivers and amendments, furnished by the Company or the Administrative Agent pursuant to, or in the course of administering, this Agreement or the other Credit Documents will be syndicate-level information, which may contain material non-public information about the Company and its Affiliates and its Related Parties or its respective securities. Accordingly, each Lender represents to the Company and the Administrative Agent that it has identified in its Administrative Questionnaire a credit contact who may receive information that may contain material non-public information in accordance with its compliance procedures and applicable law, including federal and state securities laws.
Section 9.9 Notices, etc.
(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (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 facsimile as follows: (i) if to a Borrower, at the applicable address (or facsimile numbers) set forth on Schedule I or if to any other Credit Party, at the address of the Borrower Representative set forth on Schedule I; (ii) if to the Administrative Agent or an Issuing Lender, at the applicable address (or facsimile numbers) set forth on Schedule I; and
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(iii) if to a Lender, to it at its address (or facsimile number) set forth in its Administrative Questionnaire. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).
(b) Electronic Communications.
(i) The Company and the Lenders agree that the Administrative Agent may make any material delivered by the Company to the Administrative Agent, as well as any amendments, waivers, consents, and other written information, documents, instruments and other materials relating to the Company, any of its Subsidiaries, or any other materials or matters relating to this Agreement, the Notes or any of the transactions contemplated hereby (collectively, the Communications) available to the Lenders by posting such notices on an electronic delivery system (which may be provided by the Administrative Agent, an Affiliate of the Administrative Agent, or any Person that is not an Affiliate of the Administrative Agent), such as IntraLinks, or a substantially similar Electronic System (the Platform). The Company acknowledges that (i) the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution, (ii) the Platform is provided as is and as available and (iii) none of the Administrative Agent nor any of its Affiliates warrants the accuracy, completeness, timeliness, sufficiency, or sequencing of the Communications posted on the Platform. The Administrative Agent and its Affiliates expressly disclaim with respect to the Platform any liability for errors in transmission, incorrect or incomplete downloading, delays in posting or delivery, or problems accessing the Communications posted on the Platform and any liability for any losses, costs, expenses or liabilities that may be suffered or incurred in connection with the Platform. No warranty of any kind, express, implied or statutory, including, without limitation, 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 the Administrative Agent or any of their respective Affiliates in connection with the Platform. In no event shall the Administrative Agent or any of its Related Parties have any liability to the Company or the other Credit Parties, any Lender Party or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Credit Partys or any Lender Partys transmission of communications through the Platform.
(ii) Each Lender agrees that notice to it (as provided in the next sentence) (a Notice) specifying that any Communication has been posted to the Platform shall for purposes of this Agreement constitute effective delivery to such Lender of such information, documents or other materials comprising such Communication. Each Lender agrees (i) to notify, on or before the date such Lender becomes a party to this Agreement, the Administrative Agent in writing of such Lenders e-mail address to which a Notice may be sent (and from time to time thereafter to ensure that the Administrative Agent has on record an effective e-mail address for such Lender) and (ii) that any Notice may be sent to such e-mail address.
(c) Change of Address, Etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.
Section 9.10 Usury Not Intended. It is the intent of each Credit Party and each Lender Party in the execution and performance of this Agreement and the other Credit Documents to contract in strict compliance with applicable usury laws, including conflicts of law concepts, governing the Loans of each Lender including such applicable laws of the State of New York, if any, and the United States of America
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from time to time in effect. In furtherance thereof, the Lender Parties and the Credit Parties stipulate and agree that none of the terms and provisions contained in this Agreement or the other Credit Documents shall ever be construed to create a contract to pay, as consideration for the use, forbearance or detention of money, interest at a rate in excess of the Maximum Rate and that for purposes of this Agreement interest shall include the aggregate of all charges which constitute interest under such laws that are contracted for, charged or received under this Agreement; and in the event that, notwithstanding the foregoing, under any circumstances the aggregate amounts taken, reserved, charged, received or paid on the Loans, include amounts which by applicable Legal Requirement are deemed interest which would exceed the Maximum Rate, then such excess shall be deemed to be a mistake and each Lender receiving same shall credit the same on the principal of its Obligations (or if such Obligations shall have been paid in full, refund said excess to the Applicable Borrower). In the event that the maturity of the Obligations are accelerated by reason of any election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest may never include more than the Maximum Rate, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited on the applicable Obligations (or, if the applicable Obligations shall have been paid in full, refunded to the Applicable Borrower of such interest). In determining whether or not the interest paid or payable under any specific contingencies exceeds the Maximum Rate, the Credit Parties and the Lender Parties shall to the maximum extent permitted under applicable law amortize, prorate, allocate and spread in equal parts during the period of the full stated term of the Obligations all amounts considered to be interest under applicable law at any time contracted for, charged, received or reserved in connection with the Obligations. The provisions of this Section shall control over all other provisions of this Agreement or the other Credit Documents which may be in apparent conflict herewith.
Section 9.11 Usury Recapture. In the event the rate of interest chargeable under this Agreement at any time is greater than the Maximum Rate, the unpaid principal amount of the Loans shall bear interest at the Maximum Rate until the total amount of interest paid or accrued on the Loans equals the amount of interest which would have been paid or accrued on the Loans if the stated rates of interest set forth in this Agreement had at all times been in effect. In the event, upon Payment in Full of the Loans, the total amount of interest paid or accrued under the terms of this Agreement and the Loans is less than the total amount of interest which would have been paid or accrued if the rates of interest set forth in this Agreement had, at all times, been in effect, then the Applicable Borrower shall, to the extent permitted by applicable Legal Requirement, pay the Administrative Agent for the account of the applicable Lenders an amount equal to the difference between (i) the lesser of (A) the amount of interest which would have been charged on its Loans if the Maximum Rate had, at all times, been in effect and (B) the amount of interest which would have accrued on its Loans if the rates of interest set forth in this Agreement had at all times been in effect and (ii) the amount of interest actually paid under this Agreement on its Loans. In the event the Lenders ever receive, collect or apply as interest any sum in excess of the Maximum Rate, such excess amount shall, to the extent permitted by applicable Legal Requirement, be applied to the reduction of the principal balance of the Loans, and if no such principal is then outstanding, such excess or part thereof remaining shall be paid to the Applicable Borrower.
Section 9.12 Judgment Currency. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due from the Applicable Borrower hereunder in the currency expressed to be payable herein (the specified currency) into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with usual and customary banking procedures the Administrative Agent could purchase the specified currency with such other currency at any of the Administrative Agents offices in the United States of America on the Business Day preceding that on which final judgment is given. The obligations of the Applicable Borrower in respect of any sum due to any Lender Party hereunder shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day
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following receipt by such Lender, the applicable Issuing Lender or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such other currency such Lender, the applicable Issuing Lender or the Administrative Agent (as the case may be) may in accordance with normal, reasonable banking procedures purchase the specified currency with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Lender, the applicable Issuing Lender or the Administrative Agent, as the case may be, in the specified currency, the Applicable Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender, the applicable Issuing Lender or the Administrative Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds (a) the sum originally due to any Lender, the applicable Issuing Lender or the Administrative Agent, as the case may be, in the specified currency and (b) any amounts shared with other Lenders as a result of allocations of such excess as a disproportionate payment to such Lender under Section 2.12, each Lender, Issuing Lender or the Administrative Agent, as the case may be, agrees to promptly remit such excess to the Applicable Borrower.
Section 9.13 Payments Set Aside. To the extent that any payment by or on behalf of the Company is made to any Lender Party, or any Lender Party 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 any Lender Party 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 Issuing Lender 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 Effective Rate from time to time in effect, in the applicable currency of such recovery or payment. The obligations of the Lenders and the Issuing Lenders under clause (b) of the preceding sentence shall survive Payment in Full and the termination of this Agreement.
Section 9.14 Governing Law. This Agreement, the Notes and the other Credit Documents (other than such Credit Documents which expressly provide otherwise) shall be governed by, and construed and enforced in accordance with, the laws of the State of New York. Each Letter of Credit shall be governed by either (i) the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, or (ii) the ISP, in either case, including any subsequent revisions thereof approved by a Congress of the International Chamber of Commerce and adhered to by the applicable Issuing Lender.
Section 9.15 Submission to Jurisdiction. EACH PARTY TO THIS AGREEMENT 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 COUNTY 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 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 LEGAL REQUIREMENT, 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
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OTHER MANNER PROVIDED BY APPLICABLE LEGAL REQUIREMENT. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
Section 9.16 Waiver of Venue. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, 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 IN ANY COURT REFERRED TO IN SECTION 9.15. EACH OF THE PARTIES HERETO HEREBY AGREES THAT SECTIONS 5-1401 AND 4-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS AGREEMENT AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
Section 9.17 Service of Process.
(a) Each Borrower hereby irrevocably appoints the Borrower Representative as its agent for service of process and agrees that the Borrower Representative shall be the agent for service of process with respect to any action or proceeding pertaining to each Borrower and service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail, postage prepaid, to the Borrower Representative.
(b) Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 9.9.
(c) Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable Legal Requirement.
Section 9.18 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or by e-mail PDF copy shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 9.19 Electronic Execution of Assignments. The words execution, signed, signature, and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures 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 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.
Section 9.20 Waiver of Jury. 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 CREDIT 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,
127
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 CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 9.21 USA Patriot Act. Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies each Credit Party that pursuant to the requirements of the Patriot Act it is required to obtain, verify and record information that identifies such Credit Party, which information includes the name and address of such Credit Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify such Credit Party in accordance with the Patriot Act.
Section 9.22 Canadian AML.
(a) Each Borrower (a) acknowledges that, pursuant to the AML Legislation, the Lenders and the Administrative Agent may be required to obtain, verify and record information regarding each Credit Party, its directors, authorized signing officers, direct or indirect shareholders or other Persons in control of each Credit Party, and the transactions contemplated hereby. Each Credit Party shall promptly provide all such information, including supporting documentation and other evidence, as may be reasonably requested by any Lender or the Administrative Agent, or any prospective assign or participant of a Lender or the Administrative Agent, in order to comply with any applicable AML Legislation, whether now or hereafter in existence.
(b) If the Administrative Agent has ascertained the identity of each Credit Party or any authorized signatories of each Credit Party for the purposes of applicable AML Legislation, then the Administrative Agent:
(i) shall be deemed to have done so as an agent for each Lender, and this Agreement shall constitute a written agreement in such regard between each Lender and the Administrative Agent within the meaning of applicable AML legislation; and
(ii) shall provide to each Lender copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness.
Notwithstanding Section 9.22(b) and except as may otherwise be agreed in writing, each of the Lenders agrees that the Administrative Agent has no obligation to ascertain the identity of each Credit Party or any authorized signatories of each Credit Party on behalf of any Lender, or to confirm the completeness or accuracy of any information it obtains from each Credit Party or any such authorized signatory in doing so.
Section 9.23 Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Credit 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 Credit Document 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
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(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) conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, 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 Credit 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.
Section 9.24 Integration. THIS AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTERS SET FORTH HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
Section 9.25 No Fiduciary Duty, etc. Each Borrower acknowledges and agrees that no Secured Party will have any obligations except those obligations with respect to the Facility expressly set forth herein and in the other Credit Documents, and each Secured Party is acting solely in the capacity of an arms length contractual counterparty to each Borrower with respect to the Credit Documents and the transactions contemplated therein and not as a financial advisor or a fiduciary to, or an agent of, such Borrower or any other person. Each Borrower agrees that it will not assert any claim against any Secured Party based on an alleged breach of fiduciary duty by such Secured Party in connection with this Agreement and the transactions contemplated hereby. Additionally, each Borrower acknowledges and agrees that no Secured Party is advising such Borrower as to any legal, tax, investment, accounting, regulatory or any other matters in any jurisdiction. Each Borrower shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Secured Parties shall have no responsibility or liability to such Borrower with respect thereto.
ARTICLE X
THE BORROWER REPRESENTATIVE
Section 10.1 Appointment; Nature of Relationship(a) . The Company is hereby appointed by each of the Borrowers as its contractual representative (herein referred to as the Borrower Representative) hereunder and under each other Credit Document, and each of the Borrowers irrevocably authorizes the Borrower Representative to act as the contractual representative of such Borrower with the rights and duties expressly set forth herein and in the other Credit Documents. The Borrower Representative agrees to act as such contractual representative upon the express conditions contained in this Article X. Additionally, the Borrowers hereby appoint the Borrower Representative as their agent to receive all of the proceeds of the Loans in the Funding Accounts of the Borrowers, at which time the Borrower Representative shall promptly disburse such Loans to the appropriate Borrower(s), provided that, in the case of a Loan, such amount shall not exceed the Availability, U.S. Availability or Canadian Availability, as applicable. The Administrative Agent and the Lenders, and their respective officers, directors, agents or employees, shall not be liable to the Borrower Representative or any Borrower for any action taken or omitted to be taken by the Borrower Representative or the Borrowers pursuant to this Section 10.1.
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Section 10.2 Powers. The Borrower Representative shall have and may exercise such powers under the Credit Documents as are specifically delegated to the Borrower Representative by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Borrower Representative shall have no implied duties to the Borrowers, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Credit Documents to be taken by the Borrower Representative.
Section 10.3 Employment of Agents. The Borrower Representative may execute any of its duties as the Borrower Representative hereunder and under any other Credit Document by or through authorized officers.
Section 10.4 Notices. Each Borrower shall immediately notify the Borrower Representative of the occurrence of any Default or Event of Default hereunder referring to this Agreement describing such Default or Event of Default and stating that such notice is a notice of default. In the event that the Borrower Representative receives such a notice, the Borrower Representative shall give prompt notice thereof to the Administrative Agent and the Lenders. Any notice provided to the Borrower Representative hereunder shall constitute notice to each Borrower on the date received by the Borrower Representative.
Section 10.5 Successor Borrower Representative. Upon the prior written consent of the Administrative Agent, the Borrower Representative may resign at any time, such resignation to be effective upon the appointment of a successor Borrower Representative. The Administrative Agent shall give prompt written notice of such resignation to the Lenders.
Section 10.6 Execution of Credit Documents; Borrowing Base Certificate. The Borrowers hereby empower and authorize the Borrower Representative, on behalf of the Borrowers, to execute and deliver to the Administrative Agent and the Lenders the Credit Documents and all related agreements, certificates, documents, or instruments as shall be necessary or appropriate to effect the purposes of the Credit Documents, including, without limitation, the Borrowing Base Certificates and the Compliance Certificates. Each Borrower agrees that any action taken by the Borrower Representative or the Borrowers in accordance with the terms of this Agreement or the other Credit Documents, and the exercise by the Borrower Representative of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Borrowers.
[Remainder of this page intentionally left blank. Signature pages follow.]
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EXECUTED as of the date first above written.
BORROWER | NINE ENERGY SERVICE, INC. | |||||
By: | /s/ Ann G. Fox | |||||
Name: | Ann G. Fox | |||||
Title: | President and Chief Executive Officer | |||||
BORROWER | NINE ENERGY CANADA INC. | |||||
By: | /s/ Ann G. Fox | |||||
Name: | Ann G. Fox | |||||
Title: | President and Chief Executive Officer |
Signature page to Credit Agreement
ADMINISTRATIVE AGENT, ISSUING LENDER AND A LENDER | JPMORGAN CHASE BANK, N.A. | |||||
By: | /s/ Arina Mavilian | |||||
Name: | Arina Mavilian | |||||
Title: | Authorized Signatory |
Signature page to Credit Agreement
ADMINISTRATIVE AGENT for Canadian Loans | JPMORGAN CHASE BANK, N.A.. TORONTO BRANCH | |||||
By: | /s/ Auggie Marchetti | |||||
Name: | Auggie Marchetti | |||||
Title: | Authorized Officer |
Signature page to Credit Agreement
LENDER AND AN ISSUING LENDER |
WELLS FARGO BANK, NATIONAL ASSOCIATION | |||||
By: | /s/ Anand Sekaran | |||||
Name: | Anand Sekaran | |||||
Title: | Authorized Signatory | |||||
LENDER | WELLS FARGO CAPITAL FINANCE CORPORATION CANADA | |||||
By: | /s/ David G. Phillips | |||||
Name: | David G. Phillips | |||||
Title: | Senior Vice President Credit Officer, Canada Wells Fargo Capital Finance Corporation, Canada |
Signature page to Credit Agreement
LENDER | GOLDMAN SACHS BANK USA | |||||
By: | /s/ Thomas Manning | |||||
Name: | Thomas M. Manning | |||||
Title: | Vice President Authorized Signatory |
Signature page to Credit Agreement
ISSUING LENDER AND A LENDER | Zions Bancorporation, N.A. dba Amegy Bank | |||||
By: | /s/ Rachel Pletcher | |||||
Name: | Rachel Pletcher | |||||
Title: | Vice President |
Signature page to Credit Agreement
SCHEDULE I
COMMITMENTS, CONTACT INFORMATION
ADMINISTRATIVE AGENT AND ISSUING LENDER | ||
Notices: Principal/Interest/Fees
JPMorgan Chase Bank, N.A. 712 Main Street, 5th Floor Houston, Texas 77002
Attn: Phone: Fax: Email: |
Documentation Contact
JPMorgan Chase Bank, N.A. 712 Main Street, 5th Floor Houston, Texas 77002
Attn: Phone: Fax: Email: | |
ISSUING LENDER | ||
Notices:
Zions Bancorporation, N.A. dba Amegy Bank 1801 Main Street Houston, Texas 77002
Attn: Fax: Email: |
Documentation Contact:
Zions Bancorporation, N.A. dba Amegy Bank 1717 West Loop South, 23rd Floor Houston, Texas 77027
Attn: Phone: Email: | |
Notices:
Wells Fargo Bank, National Association 14241 Dallas Parkway, Suite 900 Dallas, Texas 75254
Attn: Phone: Email: |
Documentation Contact:
Wells Fargo Bank, National Association 14241 Dallas Parkway, Suite 900 Dallas, Texas 75254
Attn: Phone: Email: | |
CREDIT PARTIES |
Borrowers:
Nine Energy Service, Inc. Nine Energy Canada Inc.
Other Guarantors: Beckman Production Services, Inc. Beckman Production Services, Inc. Big Lake Services, LLC Big Lake Services Holdco, LLC CDK Intermediate, LLC CDK Perforating, LLC |
Address c/o Nine Energy Service, Inc. 2001 Kirby Drive, Suite 200 Houston, Texas 77019 Attn: Ann Fox Fax: 713-227-7850 |
CDK Perforating Holdings, Inc. Crest Pumping Technologies, LLC Dak-Tana Wireline, LLC J & R Well Service, LLC Nine Downhole Technologies, LLC Nine Energy Service, LLC Northern Production Company, LLC Northern States Completions, Inc. Peak Pressure Control, LLC R & S Well Service, Inc. RedZone Coil Tubing, LLC RedZone Holdco, LLC SJL Well Service, LLC MOTI Holdco, LLC Magnum Oil Tools International, LTD Magnum Oil Tools GP, LLC Magnum Oil Tools Canada Ltd. |
COMMITMENTS
LENDERS |
TOTAL COMMITMENTS |
CANADIAN SUBLIMIT |
LC FRONTING LIMIT |
|||||||||
JPMorgan Chase Bank, N.A. |
$ | 85,000,000.00 | | $ | 10,000,000.00 | |||||||
JPMorgan Chase Bank, N.A., Toronto Branch |
| $ | 13,750,000.00 | |||||||||
Wells Fargo Bank, National Association |
$ | 65,000,000.00 | | $ | 10,000,000.00 | |||||||
Wells Fargo Capital Finance Corporation Canada |
| $ | 8,125,000.00 | | ||||||||
Goldman Sachs Bank USA |
$ | 25,000,000.00 | $ | 3,125,000.00 | N/A | |||||||
Zions Bancorporation, N.A. dba Amegy Bank |
$ | 25,000,000.00 | N/A | $ | 10,000,000.00 | |||||||
|
|
|
|
|
|
|||||||
TOTAL |
$ | 200,000,000.00 | $ | 25,000,000.00 | $ | 30,000,000.00 | ||||||
|
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|
|
SCHEDULE II
EXISTING LETTER OF CREDIT
That certain Letter of Credit No. SBFTX300457, issued by ZB, N.A dba Amegy Bank, in the amount of $450,000, for the account of Beckman Production Services, Inc. in favor of Zurich American Insurance Company.
SCHEDULE 4.1
ORGANIZATIONAL INFORMATION
Entity Name |
Type of Organization |
Jurisdiction of Formation | ||
Beckman Production Services, Inc. (Delaware) |
Corporation | Delaware | ||
Beckman Production Services, Inc. (Michigan) |
Corporation | Michigan | ||
Big Lake Services Holdco, LLC | Limited Liability Company | Delaware | ||
Big Lake Services, LLC | Limited Liability Company | Delaware | ||
CDK Intermediate, LLC | Limited Liability Company | Delaware | ||
CDK Perforating Holdings, Inc. | Corporation | Delaware | ||
CDK Perforating, LLC | Limited Liability Company | Texas | ||
Crest Pumping Technologies, LLC |
Limited Liability Company | Delaware | ||
Dak-Tana Wireline, LLC | Limited Liability Company | Delaware | ||
J & R Well Service, LLC | Limited Liability Company | Michigan | ||
Nine Downhole Technologies, LLC | Limited Liability Company | Delaware | ||
Nine Energy Canada Inc. | Corporation | Alberta, Canada | ||
Nine Energy Service, LLC | Limited Liability Company | Delaware | ||
Nine Energy Service, Inc. | Corporation | Delaware | ||
Northern Production Company, LLC |
Limited Liability Company | Wyoming | ||
Northern States Completions, Inc. |
Corporation | Delaware | ||
Peak Pressure Control, LLC | Limited Liability Company | Texas | ||
R & S Well Service, Inc. | Limited Liability Company | Wyoming | ||
RedZone Coil Tubing, LLC | Limited Liability Company | Texas | ||
RedZone Holdco, LLC | Limited Liability Company | Delaware | ||
SJL Well Service, LLC | Limited Liability Company | Oklahoma | ||
MOTI Holdco, LLC | Limited Liability Company | Delaware | ||
Magnum Oil Tools GP, LLC | Limited Liability Company | Texas | ||
Magnum Oil Tools International, LTD | Limited Partnership | Texas | ||
Magnum Oil Tools Canada Ltd. | Corporation | Alberta, Canada |
SCHEDULE 4.10
ENVIRONMENTAL CONDITIONS
None.
SCHEDULE 4.11
SUBSIDIARIES
Entity Name: |
Beckman Production Services, Inc. (Delaware) |
Beckman Production Services, Inc. (Michigan) |
Big Lake Services Holdco, LLC |
Big Lake Services, LLC |
CDK Intermediate, LLC |
CDK Perforating Holdings, Inc. |
CDK Perforating, LLC |
Crest Pumping Technologies, LLC |
Dak-Tana Wireline, LLC |
First Call Well Services, LLC |
J & R Well Service, LLC |
Nine Downhole Technologies, LLC |
Nine Energy Canada Inc. |
Nine Energy Service, LLC |
Northern Production Company, LLC |
Northern States Completions, Inc. |
Peak Pressure Control, LLC |
R & S Well Service, Inc. |
RedZone Coil Tubing, LLC |
RedZone Holdco, LLC |
SJL Well Service, LLC |
MOTI Holdco, LLC |
Magnum Oil Tools GP, LLC |
Magnum Oil Tools International, LTD |
Magnum Oil Tools Canada Ltd. |
Frac Technology AS |
Nine Downhole Norway AS |
SCHEDULE 5.7
REQUIREMENTS FOR NEW SUBSIDIARIES
Within 30 days of (i) creating a new Subsidiary or acquiring a new Subsidiary, and (ii) 20 Business Days of designating an Unrestricted Subsidiary as a Restricted Subsidiary under Section 5.7(b), the Administrative Agent shall have received each of the following to the extent applicable:
(a) Guaranty. A joinder and supplement to the applicable Guaranty executed by such Subsidiary if such Subsidiary is either a Wholly-Owned Domestic Restricted Subsidiary or a Wholly-Owned Restricted Subsidiary organized or incorporated under the federal laws of Canada or those of a province or territory of Canada (a Canadian Restricted Subsidiary);
(b) Security Agreement. A joinder and/or supplement to the applicable Security Agreement (1) if such Subsidiary is either a Wholly-Owned Domestic Restricted Subsidiary or a Canadian Restricted Subsidiary, executed by such new Subsidiary and (ii) if such new Subsidiary is a Domestic Subsidiary, a Subsidiary organized or incorporated under the federal laws of Canada or those of a province or territory of Canada or a First Tier Foreign Subsidiary, executed by the applicable Borrower and any other Credit Party that owns Equity Interests in such new Subsidiary, together with, if applicable, stock certificates and stock powers executed in blank, UCC-1 financing statements, and any other documents, agreements, or instruments necessary to create and perfect an Acceptable Security Interest in the Collateral described in the Security Agreement, as so supplemented, which joinder and/or supplement will grant a Lien in, among other things, 100% of the Equity Interests of such new Subsidiary owned by the US Borrower or any other Credit Party (but in the case of any First Tier Foreign Subsidiary of a U.S. Credit Party limited to no greater than 65% of the Voting Securities issued by such First Tier Foreign Subsidiary);
(c) Corporate Documents. A secretarys certificate from such new Wholly-Owned Domestic Restricted Subsidiary or Canadian Restricted Subsidiary certifying such Subsidiarys (1) officers incumbency, (ii) authorizing resolutions, (iii) organizational documents, (iv) necessary governmental approvals, and (v) certificate of good standing from the state in which each such Person is organized dated a date not earlier than 15 days prior to date of delivery or otherwise in effect on the date of delivery;
(d) Patriot Act; Beneficial Ownership Certification. (i) All documentation and other information that is required by regulatory authorities under applicable know your customer and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act and (ii) to the extent such Subsidiary qualifies as a legal entity customer under the Beneficial Ownership Regulation, a Beneficial Ownership Certification in relation to such Subsidiary to the extent requested by a Lender or the Administrative Agent; and
(e) Opinion of Counsel. If reasonably requested by the Administrative Agent, an opinion of counsel in form and substance reasonably acceptable to the Administrative Agent related to such new Restricted Subsidiary and substantially similar to the legal opinions delivered at the Funding Date with respect to the other Restricted Subsidiaries in existence on the Funding Date.
SCHEDULE 6.1
PERMITTED DEBT
None.
SCHEDULE 6.2
PERMITTED LIENS
Lien in favor of Air Liquide Industrial US LP granted by RedZone Coil Tubing, LLC encumbering Vessel - TW, S/N S1541, 13000 GAL Vaporizer - Thermax, S/N A6632-1 hose fill stand assem - acme S/N 44728 Telemetry - Dataquest, S/N FF793DE0.
Lien in favor of Air Liquide Industrial US LP granted by RedZone Coil Tubing, LLC encumbering Vessel 241105-1-5 Vessel VT13000-S1541 exchanger A6632-1 assembly 44728 telemetry FF793DE0 Vessel VT13000 exchanger A6762-1 telemetry 2563035 assembly 46806 assembly 241105-2-4.
Lien in favor of Rowley Brothers, Inc. dba Rowleys Wholesale granted by Beckman Production Services, Inc. encumbering the following described equipment, and any equipment previously loaned or which may be added or substituted for the following equipment, pursuant to a Loaned Equipment Agreement between Secured Party and Debtor dated 10/08/2012: 2-S3338 Samson 330 poly tank 5:1 pump with electronic meter, including 957 mini regulatore and 2051 1/4 steel nipple pre-installed on unit from factory.
Lien in favor of First Fleet Corporation granted by Nine Energy Service, Inc. encumbering the following described equipment: 1 new 2016 Mack GU813 Day Cab Tractor w/pumps VIN 1M1AX16Y6GM032506, 2 new 2018 Mack GU713R with LV201 6x4 CH Pump Down Logging IMaxx VINs 1M2AX09C4JM040360 and 1M2AX07Y0KM040971, and 2 new 2019 Mack GR64F with LV20-050i 6x4 CH Pump Down Logging IMaxx VINs 1M2GR3GCXKM004716 and 1M2GR3GC8KM004715.
SCHEDULE 6.3
PERMITTED INVESTMENTS
1. Promissory Note dated June 30, 2014, made by Kevin Palma in favor of Nine Energy Service, Inc., in the original principal amount of $532,052.73.
2. Promissory Note dated June 30, 2014, made by Christopher Cole Ortowski in favor of Nine Energy Service, Inc., in the original principal amount of $3,547,056.28.
3. Promissory Note dated June 30, 2014, made by Cody Joe Ortowski in favor of Nine Energy Service, Inc., in the original principal amount of $3,547,056.28.
4. Promissory Note dated April 4, 2018, made by Kenneth D. Preston in favor of Nine Energy Service, Inc., in the original principal amount of $1,250,000.00.
5. Promissory Note dated April 4, 2018, made by Christopher A. Payson, in favor of Nine Energy Service, Inc., in the original principal amount of $1,250,000.00.
SCHEDULE 6.11
PERMITTED AFFILIATE TRANSACTIONS
Commercial Lease Agreement dated January 1, 2018, by and between WTF Properties, LLC, as landlord, and Magnum Oil Tools International, LTD, as tenant, for those certain premises located at 5511 State Street, Midland, Midland County, Texas 79703.
Commercial Lease Agreement dated February 1, 2018 (as amended by that certain First Amendment to Commercial Lease Agreement dated April 1, 2018, and as further amended), by and between WTF Properties, LLC, as landlord, and Magnum Oil Tools International, LTD, as tenant, for those certain premises located at 5655 Bear Lane, Corpus Christi, Nueces County, Texas 78405.
EXHIBIT A
[FORM OF]
ASSIGNMENT AND ASSUMPTION
This Assignment and Assumption (the Assignment and Assumption) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the Assignor) and [Insert name of Assignee] (the Assignee). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the Credit Agreement), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex I attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth fully herein.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, effective as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignors rights and obligations in its capacity as a Lender 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 (including any letters of credit and guarantees 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) 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 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 pursuant to clauses (i) and (ii) above being referred to herein collectively as the Assigned Interest). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.
1 Assignor: |
||
2. Assignee: |
[an Affiliate of [identify Lender]1] | |
3. Borrowers: |
Nine Energy Service, Inc., as U.S. Borrower, and Nine Energy Canada Inc., as Canadian Borrower | |
4. Administrative Agent: |
JPMorgan Chase Bank, N.A., as the Administrative Agent under the Credit Agreement | |
5. Credit Agreement: |
The Credit Agreement dated as of October 25, 2018 among Nine Energy Service, Inc., as U.S. Borrower, Nine Energy Canada Inc., as Canadian Borrower, the Lenders party thereto, the Issuing Lenders, and JPMorgan Chase Bank N.A., as Administrative Agent. | |
Assigned Interest: |
1 | Include as applicable. |
Facility Assigned |
Aggregate Amount of Commitment/Loans for all Lenders |
Amount of Commitment/Loans Assigned |
Percentage Assigned of Commitment/Loans2 |
|||||||||
$ | $ | % | ||||||||||
$ | $ | % | ||||||||||
$ | $ | % |
Effective Date: , 20 [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
The Assignee agrees to deliver to the Administrative Agent a completed administrative questionnaire in which the Assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Borrowers and their Affiliates and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the Assignees compliance procedures and applicable laws, including federal and state securities laws.
2 | Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. |
2
The terms set forth in this Assignment and Assumption are hereby agreed to:
ASSIGNOR: | ||
[NAME OF ASSIGNOR] | ||
By: |
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Name: |
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Title: |
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Signature Page
Assignment and Assumption
ASSIGNEE: | ||
[NAME OF ASSIGNEE] | ||
By: |
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Name: |
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Title: |
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[Consented to and]3 Accepted: | ||
JPMORGAN CHASE BANK N.A., as Administrative Agent | ||
By: |
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Name: |
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Title: |
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[Consented to:]4 | ||
[NAME OF RELEVANT PARTY] | ||
By: |
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Name: |
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Title: |
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3 | To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. |
4 | To be added only if the consent of either Borrower and/or other parties (e.g. Issuing Lender) is required by the terms of the Credit Agreement. |
Signature Page
Assignment and Assumption
ANNEX I
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the 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, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any collateral thereunder, (iii) the financial condition of the Borrowers, any of their Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement or (iv) the performance or observance by the Borrowers, any of their Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement.
1.2 Assignee. The 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 satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (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 Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.2 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the 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 Credit Agreement, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.
2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the 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 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.
Annex I
EXHIBIT C-1
[FORM OF]
GUARANTY AGREEMENT
This Guaranty Agreement dated as of October [25], 2018 (as amended, supplemented, amended and restated or otherwise modified from time to time, this Guaranty) is executed by each of the undersigned (individually a Guarantor and collectively, the Guarantors), in favor of JPMorgan Chase Bank, N.A., as Administrative Agent (as defined below) for the ratable benefit of the Secured Parties (as defined in the Credit Agreement referred to herein).
INTRODUCTION
A. This Guaranty is given in connection with that certain Credit Agreement dated as of October 25, 2018 (as amended, supplemented, amended and restated or otherwise modified from time to time, the Credit Agreement), by and among Nine Energy Service, Inc. (the Borrower), Nine Energy Canada Inc., the lenders party thereto from time to time (the Lenders), the Issuing Lenders (as defined in the Credit Agreement) and JPMorgan Chase Bank, N.A., as the Administrative Agent (in such capacity, the Administrative Agent).
B. Each Guarantor is a Domestic Restricted Subsidiary (as defined in the Credit Agreement) of the Borrower and (i) the transactions contemplated by the Credit Agreement and the other Credit Documents (as defined in the Credit Agreement), (ii) the Swap Agreements (as defined in the Credit Agreement) entered into by any Credit Party with a Swap Counterparty (as defined in the Credit Agreement), and (iii) the Banking Services provided by any Lender or any Affiliate of a Lender to any Credit Party, each are (a) in furtherance of such Domestic Restricted Subsidiarys corporate purposes, (b) necessary or convenient to the conduct, promotion or attainment of such Domestic Restricted Subsidiarys business, and (c) for such Domestic Restricted Subsidiarys direct or indirect benefit.
C. The Borrower is a party to this Guaranty in order to guarantee the Secured Obligations (as defined in the Credit Agreement) to the extent that the Secured Obligations were directly incurred by a Credit Party other than the Borrower.
Each Guarantor is executing and delivering this Guaranty (i) to induce the Lenders to provide and to continue to provide Loans under the Credit Agreement, (ii) to induce the Issuing Lenders to provide and to continue to provide Letters of Credit under the Credit Agreement, and (iii) intending it to be a legal, valid, binding, enforceable and continuing obligation of such Guarantor.
NOW, THEREFORE, in consideration of the premises, each Guarantor hereby agrees as follows:
Section 1. Definitions. All capitalized terms not otherwise defined in this Guaranty that are defined in the Credit Agreement shall have the meanings assigned to such terms by the Credit Agreement.
Section 2. Guaranty.
(a) The Guarantors hereby, jointly and severally, absolutely, unconditionally and irrevocably guarantee the punctual and complete payment and performance, when due, whether at the stated maturity, by acceleration or otherwise, of all Secured Obligations, whether absolute or contingent and whether for principal, interest (including, without limitation, interest that but for the existence of a bankruptcy, reorganization or similar proceeding would accrue), fees, amounts owing in respect of Letter of Credit Obligations, amounts required to be provided as collateral, indemnities, expenses or otherwise (collectively, the Guaranteed Obligations). Without limiting the generality of the foregoing, each Guarantors liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Borrower or any other Credit Party to the Secured Parties but for the fact that they are unenforceable or not allowable due to insolvency or the existence of a bankruptcy, reorganization or similar proceeding involving the Borrower or any Credit Party.
(b) In order to provide for just and equitable contribution among the Guarantors, the Guarantors agree that in the event a payment shall be made on any date under this Guaranty by any Guarantor (the Funding Guarantor), each other Guarantor (each a Contributing Guarantor) shall indemnify the Funding Guarantor in an amount equal to the amount of such payment, in each case multiplied by a fraction the numerator of which shall be the net worth of the Contributing Guarantor as of such date and the denominator of which shall be the aggregate net worth of all the Contributing Guarantors together with the net worth of the Funding Guarantor as of such date. Any Contributing Guarantor making any payment to a Funding Guarantor pursuant to this Section 2(b) shall be subrogated to the rights of such Funding Guarantor to the extent of such payment.
(c) Anything contained in this Guaranty to the contrary notwithstanding, the obligations of each Guarantor under this Guaranty on any date shall be limited to a maximum aggregate amount equal to the largest amount that would not, on such date, render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code of the United States or any applicable provisions of comparable laws relating to bankruptcy, insolvency, or reorganization, or relief of debtors (collectively, the Fraudulent Transfer Laws), but only to the extent that any Fraudulent Transfer Law has been found in a final non-appealable judgment of a court of competent jurisdiction to be applicable to such obligations as of such date, in each case:
(i) after giving effect to all liabilities of such Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws, but specifically excluding:
(A) any liabilities of such Guarantor in respect of intercompany indebtedness to the Borrower or other affiliates of the Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder;
(B) any liabilities of such Guarantor under this Guaranty; and
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(C) any liabilities of such Guarantor under each of its other guarantees of and joint and several co-borrowings of Debt, in each case entered into on the date this Guaranty becomes effective, which contain a limitation as to maximum amount substantially similar to that set forth in this Section 2(c) (each such other guarantee and joint and several co-borrowing entered into on the date this Guaranty becomes effective, a Competing Guaranty) to the extent such Guarantors liabilities under such Competing Guaranty exceed an amount equal to (1) the aggregate principal amount of such Guarantors obligations under such Competing Guaranty (notwithstanding the operation of that limitation contained in such Competing Guaranty that is substantially similar to this Section 2(c)), multiplied by (2) a fraction (i) the numerator of which is the aggregate principal amount of such Guarantors obligations under such Competing Guaranty (notwithstanding the operation of that limitation contained in such Competing Guaranty that is substantially similar to this Section 2(c)), and (ii) the denominator of which is the sum of (x) the aggregate principal amount of the obligations of such Guarantor under all other Competing Guaranties (notwithstanding the operation of those limitations contained in such other Competing Guaranties that are substantially similar to this Section 2(c)), (y) the aggregate principal amount of the obligations of such Guarantor under this Guaranty (notwithstanding the operation of this Section 2(c)), and (z) the aggregate principal amount of the obligations of such Guarantor under such Competing Guaranty (notwithstanding the operation of that limitation contained in such Competing Guaranty that is substantially similar to this Section 2(c)); and
(D) after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of such Guarantor pursuant to applicable Legal Requirement or pursuant to the terms of any agreement (including any such right of contribution under Section 2(b)).
(d) The Borrower, unconditionally and irrevocably, with respect to each other Guarantor, guarantees such Guarantors guarantee under Section 2(a) of any Swap Agreements constituting Secured Obligations. The obligations of the Borrower under this Section 2.1(d) shall remain in full force and effect until Payment in Full. The Borrower intends that this Section 2.1(d) constitutes, and this Section 2.1(d) shall be deemed to constitute, a guarantee or other agreement for the benefit of each other Guarantor for all purposes of section 1a(18)(A)(v)(II) of the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute (the Commodity Exchange Act).
Section 3. Guaranty Absolute. Until Payment in Full, each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Credit Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Administrative Agent, the Issuing Lenders, any Lender, any Banking Service Provider or any Swap Counterparty with respect thereto but subject to Section 2(c) above. The obligations of each Guarantor under this Guaranty are independent of the Guaranteed Obligations or any other obligations of any other Person under the Credit Documents or in connection with any Swap Agreement or Banking Services,
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and a separate action or actions may be brought and prosecuted against a Guarantor to enforce this Guaranty, irrespective of whether any action is brought against any Guarantor or any other Person or whether any Guarantor or any other Person is joined in any such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor, to the extent not prohibited by applicable Legal Requirement, hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Credit Document or any agreement or instrument relating thereto or any part of the Guaranteed Obligations being irrecoverable;
(b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other obligations of any Person under the Credit Documents or any agreement or instrument relating to Swap Agreements with a Swap Counterparty or Banking Services with a Banking Services Provider, or any other amendment or waiver of or any consent to departure from any Credit Document or any agreement or instrument relating to Swap Agreements with a Swap Counterparty or Banking Services with a Banking Services Provider, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the either Borrower or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral for all or any of the Guaranteed Obligations or any other obligations of any other Person under the Credit Documents or any other assets of any Guarantor;
(e) any change, restructuring or termination of the corporate structure or existence of any Guarantor;
(f) any failure of any Lender, the Administrative Agent, any Issuing Lender, or any other Secured Party to disclose to any Guarantor any information relating to the business, condition (financial or otherwise), operations, properties or prospects of any Person now or in the future known to the Administrative Agent, the Issuing Lenders, any Lender or any other Secured Party (and each Guarantor hereby irrevocably waives any duty on the part of any Secured Party to disclose such information);
(g) any signature of any officer of any Guarantor being mechanically reproduced in facsimile or otherwise; or
(h) any other circumstance or any existence of or reliance on any representation by any Secured Party that might otherwise constitute a defense available to, or a discharge of, any Guarantor or any other guarantor, surety or other Person.
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Section 4. Continuation and Reinstatement, Etc. Each Guarantor agrees that, to the extent that payments of any of the Guaranteed Obligations are made, or any Secured Party receives any proceeds of Collateral, and such payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, or otherwise required to be repaid, then to the extent of such repayment the Guaranteed Obligations shall be reinstated and continued in full force and effect as of the date such initial payment or collection of proceeds occurred.
EACH GUARANTOR SHALL DEFEND AND INDEMNIFY EACH SECURED PARTY FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE UNDER THIS SECTION 4 (INCLUDING REASONABLE ATTORNEYS FEES AND EXPENSES) IN THE DEFENSE OF ANY SUCH ACTION OR SUIT, INCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE ARISING AS A RESULT OF THE INDEMNIFIED SECURED PARTYS OWN NEGLIGENCE BUT EXCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE THAT IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED SECURED PARTYS GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH INDEMNIFIED SECURED PARTY BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL.
Section 5. Waivers and Acknowledgments.
(a) Each Guarantor, to the extent not prohibited by applicable Legal Requirement, hereby waives promptness, diligence, presentment, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that any Secured Party protect, secure, perfect or insure any Lien or any property or exhaust any right or take any action against the Borrower or any other Person or any collateral.
(b) Each Guarantor, to the extent not prohibited by applicable Legal Requirement, hereby irrevocably waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.
(c) Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from (i) the financing arrangements involving any Guarantor contemplated by the Credit Documents, (ii) the Swap Agreements entered into by a Credit Party with a Swap Counterparty, and (iii) the Bank Services provided to any Credit Party, and that the waivers set forth in this Guaranty are knowingly made in contemplation of such benefits.
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Section 6. Subrogation and Subordination.
(a) No Guarantor will exercise any rights that it may now have or hereafter acquire against any Credit Party to the extent that such rights arise from the existence, payment, performance or enforcement of such Guarantors obligations under this Guaranty or any other Credit Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against any Credit Party, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Credit Party, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, until after Payment in Full. If any amount shall be paid to a Guarantor in violation of the preceding sentence at any time prior to or on the Payment in Full, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Administrative Agent to be credited and applied to the Guaranteed Obligations and any and all other amounts payable by the Guarantors under this Guaranty, whether matured or unmatured, in accordance with the terms of the Credit Documents.
(b) Each Guarantor agrees that all Subordinated Guarantor Obligations (as hereinafter defined) are and shall be subordinate and inferior in rank, preference and priority to all obligations of such Guarantor in respect of the Guaranteed Obligations hereunder, and such Guarantor shall, if requested by the Administrative Agent, execute or cause, if applicable, a Restricted Subsidiary to execute, a subordination agreement reasonably satisfactory to the Administrative Agent to more fully set out the terms of such subordination. Each Guarantor agrees that none of the Subordinated Guarantor Obligations shall be secured by a lien or security interest on any assets of such Guarantor or any ownership interests in any Subsidiary of such Guarantor. Subordinated Guarantor Obligations means any and all obligations and liabilities of a Guarantor owing to any other Guarantor or any Restricted Subsidiary, direct or contingent, due or to become due, now existing or hereafter arising, including, without limitation, all future advances, with interest, attorneys fees, expenses of collection and costs.
Section 7. Representations and Warranties. Each Guarantor hereby represents and warrants as follows:
(a) There are no conditions precedent to the effectiveness of this Guaranty. Such Guarantor benefits from executing this Guaranty.
(b) Such Guarantor has, independently and without reliance upon the Administrative Agent, any Lender or any other Secured Party and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Guaranty, and such Guarantor has established adequate means of obtaining from each Credit Party on a continuing basis information pertaining to, and is now and on a continuing basis will be completely familiar with, the business, condition (financial and otherwise), operations, properties and prospects of each Credit Party.
(c) The obligations of such Guarantor under this Guaranty are the valid, binding and legally enforceable obligations of such Guarantor, (except as limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time in effect affecting the rights of creditors generally and (ii) general principles of equity whether applied by a court of law or equity), and the execution and delivery of this Guaranty by such Guarantor has been duly and validly authorized in all respects by all requisite corporate, limited
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liability company or partnership actions on the part of such Guarantor, and the Person who is executing and delivering this Guaranty on behalf of such Guarantor has full power, authority and legal right to so do, and to observe and perform all of the terms and conditions of this Guaranty on such Guarantors part to be observed or performed.
Section 8. Right of Set-Off. Upon the occurrence and during the continuance of any Event of Default, any Lender, the Administrative Agent, any Issuing Lender and any other Secured Party and each of their Affiliates is hereby authorized at any time, 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 and other indebtedness at any time owing by such Secured Party or any such Affiliates to or for the credit or the account of each Guarantor against any and all of the obligations of the Guarantors now or hereafter existing under this Guaranty, irrespective of whether or not such Secured Party shall have made any demand under this Guaranty and although such obligations may be contingent and unmatured; 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 2.20 of the Credit Agreement 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, the Issuing Lender and the Lenders, and (y) the 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. Such Secured Party shall promptly notify the affected Guarantor after any such set-off and application is made, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Secured Parties under this Section 8 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which any Secured Party may have.
Section 9. Amendments, Etc. No amendment or waiver of any provision of this Guaranty and no consent to any departure by any Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the affected Guarantor and the Administrative Agent in accordance with Section 9.2 of the Credit Agreement, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
Section 10. Notices, Etc. All notices and other communications provided for hereunder shall be sent in the manner provided for in Section 9.9 of the Credit Agreement, in writing and hand delivered with written receipt, telecopied, sent by facsimile, sent by a nationally recognized overnight courier, or sent by certified mail, return receipt requested, if to a Guarantor, at its address for notices specified in Schedule II to the Security Agreement, and if to the Administrative Agent, the Issuing Lenders or any Lender, at its address specified in or pursuant to the Credit Agreement. All such notices and communications shall be effective when delivered.
Section 11. No Waiver: Remedies. No failure on the part of the Administrative Agent or any other Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.
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Section 12. Continuing Guaranty: Assignments under the Credit Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until Payment in Full, (b) be binding upon each Guarantor and its successors and assigns, (c) inure to the benefit of and, subject to Section 8.7(d) of the Credit Agreement, be enforceable by the Administrative Agent, each Lender, each Issuing Lender, each other Secured Party and their respective successors, and, in the case of transfers and assignments made in accordance with the Credit Agreement, transferees and assigns, and (d) inure to the benefit of and be enforceable by a Swap Counterparty and each of its successors, transferees and assigns to the extent such successor, transferee or assign is a Lender or an Affiliate of a Lender. Without limiting the generality of the foregoing clause (c), subject to Section 9.7 of the Credit Agreement, any Lender may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitment, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, subject, however, in all respects to the provisions of the Credit Agreement. Each Guarantor acknowledges that upon any Person becoming a Lender, the Administrative Agent or an Issuing Lender in accordance with the Credit Agreement, such Person shall be entitled to the benefits hereof.
Section 13. Governing Law. This Guaranty shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.
Section 14. Submission to Jurisdiction. EACH GUARANTOR PARTY TO THIS GUARANTY 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 COUNTY 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 GUARANTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE GUARANTORS PARTY 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 LEGAL REQUIREMENT, IN SUCH FEDERAL COURT. EACH OF THE GUARANTORS PARTY 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 GUARANTY SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
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Section 15. Waiver of Venue. EACH GUARANTOR PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, 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 GUARANTY IN ANY COURT REFERRED TO IN SECTION 14. EACH OF THE PARTIES HERETO HEREBY AGREES THAT SECTIONS 5-1401 AND 4-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS GUARANTY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
Section 16. Service of Process. Each Guarantor party hereto irrevocably consents to service of process in the manner provided for in Section 9.17 of the Credit Agreement. Nothing in this Guaranty will affect the right of any party hereto to serve process in any other manner permitted by applicable Legal Requirement.
Section 17. Waiver of Jury. EACH GUARANTOR PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH GUARANTOR 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 CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 18. Indemnification. Each Guarantor shall, and does hereby indemnify, the Administrative Agent (and any sub-agent thereof), each Lender and the Issuing Lender, 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 reasonable fees, charges and disbursements of any counsel for any Indemnitee; provided that counsel shall be limited to (x) one counsel to such Persons, taken as a whole and one local counsel in each relevant jurisdiction, taken as a whole and (y) solely in the event of a conflict of interest, one additional counsel (and, if necessary, one local counsel in each relevant jurisdiction or for each matter) to each group of similarly situated affected indemnified persons), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Guarantor arising out of, in connection with, or as a result of (i) the execution or delivery of this Guaranty or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder, the consummation of the transactions contemplated hereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Guaranty or (ii) any actual or prospective claim, litigation, investigation or proceeding relating to the foregoing, whether based on contract, tort or any other theory, whether brought by
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a third party or by any Guarantor, 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 are determined by a court of competent jurisdiction by final and nonappealable judgment in favor of such other Guarantor to have resulted (x) from the bad faith, gross negligence or willful misconduct of such Indemnitee or (y) a dispute among or between Indemnitees (except to the extent that such indemnified loss was incurred by or asserted against the Administrative Agent, any arranger or Issuing Lender in its capacity as such) and not involving any act or omission of the Guarantors or any of their Affiliates. THIS SECTION 18 SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN TAXES THAT REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM.
Section 19. Additional Guarantors. Wholly-Owned Domestic Restricted Subsidiaries of Borrower (a) may from time to time enter into this Guaranty as a Guarantor and (b) the other Credit Parties shall cause their Wholly-Owned Domestic Restricted Subsidiaries to become Guarantors hereunder to the extent required to comply with Section 5.7 of the Credit Agreement. Upon execution and delivery after the date hereof by the Administrative Agent and such Wholly- Owned Domestic Restricted Subsidiary of an instrument in the form of Annex 1, such Wholly- Owned Domestic Restricted Subsidiary shall become a Guarantor hereunder with the same force and effect as if originally named as a Guarantor herein. The execution and delivery of any instrument adding an additional Guarantor as a party to this Guaranty shall not require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Guaranty.
Section 20. USA Patriot Act. Each Secured Party that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any other Secured Party) hereby notifies each Guarantor that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))(the Act), it is required to obtain, verify and record information that identifies such Guarantor, which information includes the name and address of such Guarantor and other information that will allow such Secured Party or the Administrative Agent, as applicable, to identify such Guarantor in accordance with the Act. Following a request by any Secured Party, each Guarantor shall promptly furnish all documentation and other information that such Secured Party reasonably requests in order to comply with its ingoing obligations under the applicable know your customer and anti-money laundering rules and regulations, including the Act.
Section 21. No Fiduciary Duty, etc. The Guarantors hereby acknowledge and agree that no Secured Party will have any obligations except those obligations with respect to the Facilities expressly set forth in the Credit Agreement and in the other Credit Documents, and each Secured Party is acting solely in the capacity of an arms length contractual counterparty to the Guarantors with respect to the Credit Documents and the transactions contemplated therein and not as a financial advisor or a fiduciary to, or an agent of, any Guarantor or any other person. Each Guarantor agrees that it will not assert any claim against any Secured Party based on an alleged breach of fiduciary duty by such Secured Party in connection with the Credit Documents
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and the transactions contemplated thereby. Additionally, each Guarantor acknowledges and agrees that no Secured Party is advising it as to any legal, tax, investment, accounting, regulatory or any other matters in any jurisdiction. Each Guarantor shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Secured Parties shall have no responsibility or liability to any Guarantor with respect thereto.
Section 22. NOTICE OF FINAL AGREEMENT. THIS GUARANTY AND THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF 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.
[Remainder of this page intentionally left blank.]
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The Administrative Agent and each Guarantor has caused this Guaranty to be duly executed as of the date first above written.
GUARANTORS: | ||
BECKMAN PRODUCTION SERVICES, INC. (DELAWARE) | ||
BECKMAN PRODUCTION SERVICES, INC. (MICHIGAN) | ||
BIG LAKE SERVICES HOLDCO, LLC BIG LAKE SERVICES, LLC | ||
CDK INTERMEDIATE, LLC | ||
CDK PERFORATING HOLDINGS, INC. CDK PERFORATING, LLC | ||
CREST PUMPING TECHNOLOGIES, LLC DAK-TANA WIRELINE, LLC | ||
J & R WELL SERVICE, LLC | ||
NINE DOWNHOLE TECHNOLOGIES, LLC NINE ENERGY SERVICE, INC. | ||
NINE ENERGY SERVICE, LLC | ||
NORTHERN PRODUCTION COMPANY, LLC NORTHERN STATES COMPLETIONS, INC. PEAK PRESSURE CONTROL, LLC | ||
R & S WELL SERVICE, INC. REDZONE COIL TUBING, LLC REDZONE HOLDCO, LLC | ||
SJL WELL SERVICE, LLC MAGNUM OIL TOOLS GP, LLC | ||
MAGNUM OIL TOOLS INTERNATIONAL, LTD MOTI HOLDCO, LLC | ||
By: |
| |
Name: Ann G. Fox | ||
Title: President, Chief Executive Officer |
[Signature Page to Guaranty]
ADMINISTRATIVE AGENT:
JPMORGAN CHASE BANK, N.A. | ||
By: |
| |
Name: | ||
Title: |
[Signature Page to Guaranty]
Annex 1 to the Guaranty Agreement
SUPPLEMENT NO. dated as of (the Supplement), to the Guaranty Agreement dated as of [], 20[] (as amended, supplemented or otherwise modified from time to time, the Guaranty Agreement), among Nine Energy Service, Inc., a Delaware corporation (the Borrower), each Domestic Restricted Subsidiary of the Borrower party thereto (together with the Borrower, individually, a Guarantor and collectively, the Guarantors) and JPMorgan Chase Bank, N.A., as administrative agent (the Administrative Agent) for the benefit of the Secured Parties (as defined in the Credit Agreement referred to herein).
A. Reference is made to the Credit Agreement dated as of October 25, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), among the Borrower, Nine Energy Canada Inc., the lenders from time to time party thereto (the Lenders), the Issuing Lenders (as defined in the Credit Agreement), and JPMorgan Chase Bank, N.A., as Administrative Agent.
B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Guaranty Agreement and the Credit Agreement.
C. The Guarantors have entered into the Guaranty Agreement in order to induce the Lenders to make Loans and the Issuing Lenders to issue Letters of Credit. Section 19 of the Guaranty Agreement provides that additional Domestic Restricted Subsidiaries of the Borrower may become Guarantors under the Guaranty Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Domestic Restricted Subsidiary of the Borrower (the New Guarantor) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Guarantor under the Guaranty Agreement in order to induce the Lenders to make additional Loans and the Issuing Lenders to issue additional Letters of Credit and as consideration for Loans previously made and Letters of Credit previously issued.
Accordingly, the Administrative Agent and the New Guarantor agree as follows:
SECTION 1. In accordance with Section 19 of the Guaranty Agreement, the New Guarantor by its signature below becomes a Guarantor under the Guaranty Agreement with the same force and effect as if originally named therein as a Guarantor and the New Guarantor hereby (a) guarantees the Guaranteed Obligations, (b) agrees to all the terms and provisions of the Guaranty Agreement applicable to it as a Guarantor thereunder and (c) represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct in all material respects on and as of the date hereof. Each reference to a Guarantor in the Guaranty Agreement shall be deemed to include the New Guarantor. The Guaranty Agreement is hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it by all requisite corporate, limited liability company or partnership action and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
Annex I-1
SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Guarantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by fax transmission shall be as effective as delivery of a manually executed counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Guaranty Agreement shall remain in full force and effect.
SECTION 5. Governing Law. This Supplement shall be deemed a contract under, and shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, applicable to contracts made and to be performed entirely within such state, including without regard to conflicts of laws principles.
SECTION 6. Submission to Jurisdiction. NEW GUARANTOR 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 COUNTY 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 SUPPLEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND NEW GUARANTOR 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 LEGAL REQUIREMENT, IN SUCH FEDERAL COURT. NEW GUARANTOR 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 SUPPLEMENT SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS SUPPLEMENT AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
SECTION 7. Waiver of Venue. NEW GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, 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 SUPPLEMENT IN ANY COURT REFERRED TO IN SECTION 6. NEW GUARANTOR HEREBY AGREES THAT SECTIONS 5-1401 AND 4-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS SUPPLEMENT AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
Annex I-2
SECTION 8. Service of Process. New Guarantor irrevocably consents to service of process in the manner provided for in Section 9.17 of the Credit Agreement. Nothing in this Supplement will affect the right of any party hereto to serve process in any other manner permitted by applicable law.
SECTION 9. Waiver of Jury. NEW GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUPPLEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). NEW GUARANTOR (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 SUPPLEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Guaranty Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision hereof in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 11. All communications and notices hereunder shall be in writing and given as provided in Section 10 of the Guaranty Agreement.
THIS SUPPLEMENT, THE GUARANTY AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT REFERRED TO IN THIS SUPPLEMENT, 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 HERETO.
Annex I-3
IN WITNESS WHEREOF, the New Guarantor and the Administrative Agent have duly executed this Supplement to the Guaranty Agreement as of the day and year first above written.
[Name of New Guarantor] | ||
By: |
| |
Name: | ||
Title: | ||
JPMORGAN CHASE BANK, N.A., as Administrative Agent | ||
By: |
| |
Name: | ||
Title: |
EXHIBIT C-2
[FORM OF]
CANADIAN GUARANTY AGREEMENT
This Canadian Guaranty Agreement dated as of October [25], 2018 (as amended, supplemented, amended and restated or otherwise modified from time to time, this Guaranty) is executed by each of the undersigned (individually a Guarantor and collectively, the Guarantors), in favor of JPMorgan Chase Bank, N.A., Toronto Branch, as Administrative Agent (in such capacity, the Administrative Agent) for the ratable benefit of the Secured Parties (as defined in the Credit Agreement referred to herein).
INTRODUCTION
A. This Guaranty is given in connection with that certain Credit Agreement dated as of October 25, 2018 (as amended, supplemented, amended and restated or otherwise modified from time to time, the Credit Agreement), by and among Nine Energy Service, Inc. (the U.S. Borrower), Nine Energy Canada Inc. (the Borrower), the lenders party thereto from time to time (the Lenders), the Issuing Lenders (as defined in the Credit Agreement) and JPMorgan Chase Bank, N.A., as the administrative agent.
B. Each Guarantor is a Wholly-Owned Restricted Subsidiary (as defined in the Credit Agreement) of the Borrower and organized under the federal laws of Canada or those of a province or territory of Canada (each, a Canadian Restricted Subsidiary) and (i) the transactions contemplated by the Credit Agreement and the other Credit Documents (as defined in the Credit Agreement), (ii) the Swap Agreements (as defined in the Credit Agreement) entered into by any Canadian Credit Party with a Swap Counterparty (as defined in the Credit Agreement), and (iii) the Banking Services provided by any Lender or any Affiliate of a Lender to any Canadian Credit Party, each are (a) in furtherance of such Canadian Restricted Subsidiarys corporate purposes, (b) necessary or convenient to the conduct, promotion or attainment of such Canadian Restricted Subsidiarys business, and (c) for such Canadian Restricted Subsidiarys direct or indirect benefit.
C. The Borrower is a party to this Guaranty in order to guarantee the Canadian Secured Obligations (as defined in the Credit Agreement) to the extent that the Canadian Secured Obligations were directly incurred by a Canadian Credit Party other than the Borrower.
Each Guarantor is executing and delivering this Guaranty (i) to induce the Lenders to provide and to continue to provide Loans to the Borrower under the Credit Agreement, and (ii) intending it to be a legal, valid, binding, enforceable and continuing obligation of such Guarantor.
NOW, THEREFORE, in consideration of the premises, each Guarantor hereby agrees as follows:
Section 1. Definitions. All capitalized terms not otherwise defined in this Guaranty that are defined in the Credit Agreement shall have the meanings assigned to such terms by the Credit Agreement.
Section 2. Guaranty.
(a) The Guarantors hereby, jointly and severally, absolutely, unconditionally and irrevocably guarantee to and in favor of the Administrative Agent on behalf of the Secured Parties the punctual and complete payment and performance, when due, whether at the stated maturity, by acceleration or otherwise, of all Canadian Secured Obligations, whether absolute or contingent and whether for principal, interest (including, without limitation, interest that but for the existence of a bankruptcy, winding-up, insolvency, receivership, reorganization, liquidation, arrangement or similar proceeding would accrue), fees, amounts required to be provided as collateral, indemnities, expenses or otherwise (collectively, the Guaranteed Obligations). Without limiting the generality of the foregoing, each Guarantors liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Borrower or any other Canadian Credit Party to the Secured Parties but for the fact that they are unenforceable or not allowable due to insolvency or the existence of a bankruptcy, winding-up, insolvency, receivership, reorganization, liquidation, arrangement or similar proceeding involving the Borrower or any Canadian Credit Party.
(b) In order to provide for just and equitable contribution among the Guarantors, the Guarantors agree that in the event a payment shall be made on any date under this Guaranty by any Guarantor (the Funding Guarantor), each other Guarantor (each a Contributing Guarantor) shall indemnify the Funding Guarantor in an amount equal to the amount of such payment, in each case multiplied by a fraction the numerator of which shall be the net worth of the Contributing Guarantor as of such date and the denominator of which shall be the aggregate net worth of all the Contributing Guarantors together with the net worth of the Funding Guarantor as of such date. Any Contributing Guarantor making any payment to a Funding Guarantor pursuant to this Section 2(b) shall be subrogated to the rights of such Funding Guarantor to the extent of such payment.
(c) Anything contained in this Guaranty to the contrary notwithstanding, the obligations of each Guarantor under this Guaranty on any date shall be limited to a maximum aggregate amount equal to the largest amount that would not, on such date, render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code of the United States or any applicable provisions of comparable laws relating to bankruptcy, insolvency, or reorganization, or relief of debtors (collectively, the Fraudulent Transfer Laws), but only to the extent that any Fraudulent Transfer Law has been found in a final non-appealable judgment of a court of competent jurisdiction to be applicable to such obligations as of such date, in each case:
(i) after giving effect to all liabilities of such Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws, but specifically excluding:
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(A) any liabilities of such Guarantor in respect of intercompany indebtedness to the Borrower or other affiliates of the Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder;
(B) any liabilities of such Guarantor under this Guaranty; and
(C) any liabilities of such Guarantor under each of its other guarantees of and joint and several co-borrowings of Debt, in each case entered into on the date this Guaranty becomes effective, which contain a limitation as to maximum amount substantially similar to that set forth in this Section 2(c) (each such other guarantee and joint and several co-borrowing entered into on the date this Guaranty becomes effective, a Competing Guaranty) to the extent such Guarantors liabilities under such Competing Guaranty exceed an amount equal to (1) the aggregate principal amount of such Guarantors obligations under such Competing Guaranty (notwithstanding the operation of that limitation contained in such Competing Guaranty that is substantially similar to this Section 2(c)), multiplied by (2) a fraction (i) the numerator of which is the aggregate principal amount of such Guarantors obligations under such Competing Guaranty (notwithstanding the operation of that limitation contained in such Competing Guaranty that is substantially similar to this Section 2(c)), and (ii) the denominator of which is the sum of (x) the aggregate principal amount of the obligations of such Guarantor under all other Competing Guaranties (notwithstanding the operation of those limitations contained in such other Competing Guaranties that are substantially similar to this Section 2(c)), (y) the aggregate principal amount of the obligations of such Guarantor under this Guaranty (notwithstanding the operation of this Section 2(c)), and (z) the aggregate principal amount of the obligations of such Guarantor under such Competing Guaranty (notwithstanding the operation of that limitation contained in such Competing Guaranty that is substantially similar to this Section 2(c)); and
(D) after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of such Guarantor pursuant to applicable Legal Requirement or pursuant to the terms of any agreement (including any such right of contribution under Section 2(b)).
(d) The Borrower, unconditionally and irrevocably, with respect to each other Guarantor, guarantees such Guarantors guarantee under Section 2(a) of any Swap Agreements constituting Secured Obligations. The obligations of the Borrower under this Section 2.1(d) shall remain in full force and effect until Payment in Full. The Borrower intends that this Section 2.1(d) constitutes, and this Section 2.1(d) shall be deemed to constitute, a guarantee or other agreement for the benefit of each other Guarantor for all purposes of section 1a(18)(A)(v)(II) of the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute (the Commodity Exchange Act).
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Section 3. Guaranty Absolute. Until Payment in Full, each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Credit Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Administrative Agent, any Lender, any Banking Service Provider or any Swap Counterparty with respect thereto but subject to Section 2(c) above. The obligations of each Guarantor under this Guaranty are independent of the Guaranteed Obligations or any other obligations of any other Person under the Credit Documents or in connection with any Swap Agreement or Banking Services, and a separate action or actions may be brought and prosecuted against a Guarantor to enforce this Guaranty, irrespective of whether any action is brought against any Guarantor or any other Person or whether any Guarantor or any other Person is joined in any such action or actions. The liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor, to the extent not prohibited by applicable Legal Requirement, hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Credit Document or any agreement or instrument relating thereto or any part of the Guaranteed Obligations being irrecoverable;
(b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other obligations of any Person under the Credit Documents or any agreement or instrument relating to Swap Agreements with a Swap Counterparty or Banking Services with a Banking Services Provider, or any other amendment or waiver of or any consent to departure from any Credit Document or any agreement or instrument relating to Swap Agreements with a Swap Counterparty or Banking Services with a Banking Services Provider, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the either Borrower or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral, or any taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral for all or any of the Guaranteed Obligations or any other obligations of any other Person under the Credit Documents or any other assets of any Guarantor;
(e) any change, restructuring or termination of the corporate structure or existence of any Guarantor;
(f) any failure of any Lender, the Administrative Agent or any other Secured Party to disclose to any Guarantor any information relating to the business, condition (financial or otherwise), operations, properties or prospects of any Person now or in the future known to the Administrative Agent, any Lender or any other Secured Party (and each Guarantor hereby irrevocably waives any duty on the part of any Secured Party to disclose such information);
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(g) any signature of any officer of any Guarantor being mechanically reproduced in facsimile or otherwise; or
(h) any other circumstance or any existence of or reliance on any representation by any Secured Party that might otherwise constitute a defense available to, or a discharge of, any Guarantor or any other guarantor, surety or other Person.
Section 4. Continuation and Reinstatement, Etc. Each Guarantor agrees that, to the extent that payments of any of the Guaranteed Obligations are made, or any Secured Party receives any proceeds of Collateral, and such payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, or otherwise required to be repaid, then to the extent of such repayment the Guaranteed Obligations shall be reinstated and continued in full force and effect as of the date such initial payment or collection of proceeds occurred.
EACH GUARANTOR SHALL DEFEND AND INDEMNIFY EACH SECURED PARTY FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE UNDER THIS SECTION 4 (INCLUDING REASONABLE ATTORNEYS FEES AND EXPENSES) IN THE DEFENSE OF ANY SUCH ACTION OR SUIT, INCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE ARISING AS A RESULT OF THE INDEMNIFIED SECURED PARTYS OWN NEGLIGENCE BUT EXCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE THAT IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED SECURED PARTYS GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT; PROVIDED, HOWEVER, THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH INDEMNIFIED SECURED PARTY BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL.
Section 5. Waivers and Acknowledgments.
(a) Each Guarantor, to the extent not prohibited by applicable Legal Requirement, hereby waives promptness, diligence, presentment, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that any Secured Party protect, secure, perfect or insure any Lien or any property or exhaust any right or take any action against the Borrower or any other Person or any Collateral.
(b) Each Guarantor, to the extent not prohibited by applicable Legal Requirement, hereby irrevocably waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.
(c) Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from (i) the financing arrangements involving any Guarantor contemplated by the Credit Documents, (ii) the Swap Agreements entered into by a Canadian Credit Party with a Swap Counterparty, and (iii) the Bank Services provided to any Canadian Credit Party, and that the waivers set forth in this Guaranty are knowingly made in contemplation of such benefits.
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Section 6. Subrogation and Subordination.
(a) No Guarantor will exercise any rights that it may now have or hereafter acquire against any Canadian Credit Party to the extent that such rights arise from the existence, payment, performance or enforcement of such Guarantors obligations under this Guaranty or any other Credit Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against any Canadian Credit Party, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Canadian Credit Party, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, until after Payment in Full. If any amount shall be paid to a Guarantor in violation of the preceding sentence at any time prior to or on the Payment in Full, such amount shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Administrative Agent to be credited and applied to the Guaranteed Obligations and any and all other amounts payable by the Guarantors under this Guaranty, whether matured or unmatured, in accordance with the terms of the Credit Documents.
(b) Each Guarantor agrees that all Subordinated Guarantor Obligations (as hereinafter defined) are and shall be subordinate and inferior in rank, preference and priority to all obligations of such Guarantor in respect of the Guaranteed Obligations hereunder, and such Guarantor shall, if requested by the Administrative Agent, execute or cause, if applicable, a Restricted Subsidiary to execute, a subordination agreement reasonably satisfactory to the Administrative Agent to more fully set out the terms of such subordination. Each Guarantor agrees that none of the Subordinated Guarantor Obligations shall be secured by a lien or security interest on any assets of such Guarantor or any ownership interests in any Subsidiary of such Guarantor. Subordinated Guarantor Obligations means any and all obligations and liabilities of a Guarantor owing to any other Guarantor or any Restricted Subsidiary, direct or contingent, due or to become due, now existing or hereafter arising, including, without limitation, all future advances, with interest, attorneys fees, expenses of collection and costs.
Section 7. Representations and Warranties. Each Guarantor hereby represents and warrants as follows:
(a) There are no conditions precedent to the effectiveness of this Guaranty. Such Guarantor benefits from executing this Guaranty.
(b) Such Guarantor has, independently and without reliance upon the Administrative Agent, any Lender or any other Secured Party and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Guaranty, and such Guarantor has established adequate means of obtaining from each Credit Party on a continuing basis information pertaining to, and is now and on a continuing basis will be completely familiar with, the business, condition (financial and otherwise), operations, properties and prospects of each Canadian Credit Party.
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(c) The obligations of such Guarantor under this Guaranty are the valid, binding and legally enforceable obligations of such Guarantor, (except as limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time in effect affecting the rights of creditors generally and (ii) general principles of equity whether applied by a court of law or equity), and the execution and delivery of this Guaranty by such Guarantor has been duly and validly authorized in all respects by all requisite corporate, limited liability company or partnership actions on the part of such Guarantor, and the Person who is executing and delivering this Guaranty on behalf of such Guarantor has full power, authority and legal right to so do, and to observe and perform all of the terms and conditions of this Guaranty on such Guarantors part to be observed or performed.
Section 8. Right of Set-Off. Upon the occurrence and during the continuance of any Event of Default, any Lender, the Administrative Agent, and any other Secured Party and each of their Affiliates is hereby authorized at any time, 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 and other indebtedness at any time owing by such Secured Party or any such Affiliates to or for the credit or the account of each Guarantor against any and all of the obligations of the Guarantors now or hereafter existing under this Guaranty, irrespective of whether or not such Secured Party shall have made any demand under this Guaranty and although such obligations may be contingent and unmatured; 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 2.20 of the Credit Agreement 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 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. Such Secured Party shall promptly notify the affected Guarantor after any such set-off and application is made, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Secured Parties under this Section 8 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which any Secured Party may have.
Section 9. Amendments, Etc. No amendment or waiver of any provision of this Guaranty and no consent to any departure by any Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the affected Guarantor and the Administrative Agent in accordance with Section 9.2 of the Credit Agreement, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
Section 10. Notices, Etc. All notices and other communications provided for hereunder shall be sent in the manner provided for in Section 9.9 of the Credit Agreement, in writing and hand delivered with written receipt, telecopied, sent by facsimile, sent by a nationally recognized overnight courier, or sent by certified mail, return receipt requested, if to a Guarantor, at its address for notices specified in Schedule II to the Security Agreement, and if to the Administrative Agent or any Lender, at its address specified in or pursuant to the Credit Agreement. All such notices and communications shall be effective when delivered.
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Section 11. No Waiver: Remedies. No failure on the part of the Administrative Agent or any other Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.
Section 12. Continuing Guaranty: Assignments under the Credit Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until Payment in Full, (b) be binding upon each Guarantor and its successors and assigns, (c) inure to the benefit of and, subject to Section 8.7(d) of the Credit Agreement, be enforceable by the Administrative Agent, each Lender, each other Secured Party and their respective successors, and, in the case of transfers and assignments made in accordance with the Credit Agreement, transferees and assigns, and (d) inure to the benefit of and be enforceable by a Swap Counterparty and each of its successors, transferees and assigns to the extent such successor, transferee or assign is a Lender or an Affiliate of a Lender. Without limiting the generality of the foregoing clause (c), subject to Section 9.7 of the Credit Agreement, any Lender may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitment, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, subject, however, in all respects to the provisions of the Credit Agreement. Each Guarantor acknowledges that upon any Person becoming a Lender or the Administrative Agent in accordance with the Credit Agreement, such Person shall be entitled to the benefits hereof.
Section 13. Governing Law. This Guaranty shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.
Section 14. Submission to Jurisdiction. EACH GUARANTOR PARTY TO THIS GUARANTY 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 COUNTY 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 GUARANTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE GUARANTORS PARTY 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 LEGAL REQUIREMENT, IN SUCH FEDERAL COURT. EACH OF THE GUARANTORS PARTY 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 GUARANTY SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
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Section 15. Waiver of Venue. EACH GUARANTOR PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, 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 GUARANTY IN ANY COURT REFERRED TO IN SECTION 14. EACH OF THE PARTIES HERETO HEREBY AGREES THAT SECTIONS 5-1401 AND 4-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS GUARANTY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
Section 16. Service of Process. Each Guarantor party hereto irrevocably consents to service of process in the manner provided for in Section 9.17 of the Credit Agreement. Nothing in this Guaranty will affect the right of any party hereto to serve process in any other manner permitted by applicable Legal Requirement.
Section 17. Waiver of Jury. EACH GUARANTOR PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH GUARANTOR 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 CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 18. Indemnification. Each Guarantor shall, and does hereby indemnify, the Administrative Agent (and any sub-agent thereof), each Lender 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 reasonable fees, charges and disbursements of any counsel for any Indemnitee; provided that counsel shall be limited to (x) one counsel to such Persons, taken as a whole and one local counsel in each relevant jurisdiction, taken as a whole and (y) solely in the event of a conflict of interest, one additional counsel (and, if necessary, one local counsel in each relevant jurisdiction or for each matter) to each group of similarly situated affected indemnified persons), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Guarantor arising out of, in connection with, or as a result of (i) the execution or delivery of this Guaranty or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder, the consummation of the transactions contemplated hereby, or, in the case of the Administrative Agent (and any sub- agent thereof) and its Related Parties only, the administration of this Guaranty or (ii) any actual
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or prospective claim, litigation, investigation or proceeding relating to the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Guarantor, 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 are determined by a court of competent jurisdiction by final and nonappealable judgment in favor of such other Guarantor to have resulted (x) from the bad faith, gross negligence or willful misconduct of such Indemnitee or (y) a dispute among or between Indemnitees (except to the extent that such indemnified loss was incurred by or asserted against the Administrative Agent or any arranger) and not involving any act or omission of the Guarantors or any of their Affiliates. THIS SECTION 18 SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN TAXES THAT REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM ANY NON- TAX CLAIM.
Section 19. Additional Guarantors. Canadian Restricted Subsidiaries (a) may from time to time enter into this Guaranty as a Guarantor and (b) the other Canadian Credit Parties shall cause their Canadian Restricted Subsidiaries to become Guarantors hereunder to the extent required to comply with Section 5.7 of the Credit Agreement. Upon execution and delivery after the date hereof by the Administrative Agent and such Canadian Restricted Subsidiary of an instrument in the form of Annex 1, such Canadian Restricted Subsidiary shall become a Guarantor hereunder with the same force and effect as if originally named as a Guarantor herein. The execution and delivery of any instrument adding an additional Guarantor as a party to this Guaranty shall not require the consent of any other Guarantor hereunder. The rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any new Guarantor as a party to this Guaranty.
Section 20. USA Patriot Act. Each Secured Party that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any other Secured Party) hereby notifies each Guarantor that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))(the Act), it is required to obtain, verify and record information that identifies such Guarantor, which information includes the name and address of such Guarantor and other information that will allow such Secured Party or the Administrative Agent, as applicable, to identify such Guarantor in accordance with the Act. Following a request by any Secured Party, each Guarantor shall promptly furnish all documentation and other information that such Secured Party reasonably requests in order to comply with its ingoing obligations under the applicable know your customer and anti-money laundering rules and regulations, including the Act.
Section 21. CAML. (a) Each Guarantor (a) acknowledges that, pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), the Criminal Code (Canada) and the United Nations Act (Canada), including the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism (Canada) and the United Nations Al-Qaida and Taliban Regulations (Canada) promulgated under the United Nations Act (Canada), and other applicable anti-money laundering, anti-terrorist financing, government sanction and know your client laws, in each case, applicable to Secured Parties operating in
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Canada or any of its provinces or territories (collectively, including any rules, regulations, directives, guidelines or orders thereunder, CAML), the Secured Parties may be required to obtain, verify and record information regarding each Guarantor, its directors, authorized signing officers, direct or indirect shareholders or other Persons in control of each Guarantor, and the transactions contemplated hereby. Each Guarantor shall promptly provide all such information, including supporting documentation and other evidence, as may be reasonably requested by any Secured Party, or any prospective assign or participant thereof, in order to comply with any applicable CAML, whether now or hereafter in existence.
(b) If the Administrative Agent has ascertained the identity of each Guarantor or any authorized signatories of each Guarantor for the purposes of applicable CAML, then the Administrative Agent:
(i) shall be deemed to have done so as an agent for each Secured Party, and this Guarantee shall constitute a written agreement in such regard between each such Secured Party and the Administrative Agent within the meaning of applicable CAML legislation; and
(ii) shall provide to each Secured Party copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness.
(c) Notwithstanding Section 21(b) and except as may otherwise be agreed in writing, each of the Secured Parties agrees that the Administrative Agent has no obligation to ascertain the identity of each Guarantor or any authorized signatories of each Guarantor on behalf of any Secured Party, or to confirm the completeness or accuracy of any information it obtains from each Guarantor or any such authorized signatory in doing so.
Section 22. Judgment Currency. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due from a Guarantor in the currency expressed to be payable herein (the specified currency) into another currency, each Guarantor agrees, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with usual and customary banking procedures the Administrative Agent could purchase the specified currency with such other currency at any of the Administrative Agents offices in the United States of America on the Business Day preceding that on which final judgment is given. The obligations of any Guarantor in respect of any sum due to any Secured Party shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Secured Party or the Administrative Agent (as the case may be) of any sum adjudged to be so due in such other currency such Secured Party or the Administrative Agent (as the case may be) may in accordance with normal, reasonable banking procedures purchase the specified currency with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Secured Party or the Administrative Agent, as the case may be, in the specified currency, each Guarantor agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Secured Party or the Administrative Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds (a) the sum originally due to any Secured Party or the Administrative Agent, as the case may be, in the specified currency and (b) any amounts shared with other Secured Parties as a result of allocations of such excess as a disproportionate payment to such Secured Party under Section 2.12 of the Credit Agreement, each Secured Party or the Administrative Agent, as the case may be, agrees to promptly remit such excess to the Borrower.
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Section 23. No Fiduciary Duty, etc. The Guarantors hereby acknowledge and agree that no Secured Party will have any obligations except those obligations with respect to the Facilities expressly set forth in the Credit Agreement and in the other Credit Documents, and each Secured Party is acting solely in the capacity of an arms length contractual counterparty to the Guarantors with respect to the Credit Documents and the transactions contemplated therein and not as a financial advisor or a fiduciary to, or an agent of, any Guarantor or any other person. Each Guarantor agrees that it will not assert any claim against any Secured Party based on an alleged breach of fiduciary duty by such Secured Party in connection with the Credit Documents and the transactions contemplated thereby. Additionally, each Guarantor acknowledges and agrees that no Secured Party is advising it as to any legal, tax, investment, accounting, regulatory or any other matters in any jurisdiction. Each Guarantor shall consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and the Secured Parties shall have no responsibility or liability to any Guarantor with respect thereto.
Section 24. NOTICE OF FINAL AGREEMENT. THIS GUARANTY AND THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF 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.
[Remainder of this page intentionally left blank.]
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The Administrative Agent and each Guarantor has caused this Guaranty to be duly executed as of the date first above written.
GUARANTOR[S] | ||
[ ] |
By: |
| |
Name: | ||
Title: |
[Signature Page to Guaranty]
ADMINISTRATIVE AGENT: | ||
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH |
By: |
|
Name: | ||
Title: |
[Signature Page to Guaranty]
Annex 1 to the Guaranty Agreement
SUPPLEMENT NO. dated as of (the Supplement), to the Guaranty Agreement dated as of [], 20[] (as amended, supplemented or otherwise modified from time to time, the Guaranty Agreement), among Nine Energy Canada Inc. (the Borrower), each Canadian Restricted Subsidiary of the Borrower party thereto (together with the Borrower, individually, a Guarantor and collectively, the Guarantors) and JPMorgan Chase Bank, N.A., Toronto Branch, as administrative agent (the Administrative Agent) for the benefit of the Secured Parties (as defined in the Credit Agreement referred to herein).
A. Reference is made to the Credit Agreement dated as of October 25, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), among the Borrower, Nine Energy Service, Inc., the lenders from time to time party thereto (the Lenders), the Issuing Lenders (as defined in the Credit Agreement), and JPMorgan Chase Bank, N.A., as administrative agent.
B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Guaranty Agreement and the Credit Agreement.
C. The Guarantors have entered into the Guaranty Agreement in order to induce the Lenders to make Loans. Section 19 of the Guaranty Agreement provides that additional Canadian Restricted Subsidiaries of the Borrower may become Guarantors under the Guaranty Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Canadian Restricted Subsidiary of the Borrower (the New Guarantor) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Guarantor under the Guaranty Agreement in order to induce the Lenders to make additional Loans and as consideration for Loans previously made and Letters of Credit previously issued.
Accordingly, the Administrative Agent and the New Guarantor agree as follows: SECTION 1. In accordance with Section 19 of the Guaranty Agreement, the New
Guarantor by its signature below becomes a Guarantor under the Guaranty Agreement with the same force and effect as if originally named therein as a Guarantor and the New Guarantor hereby (a) guarantees the Guaranteed Obligations, (b) agrees to all the terms and provisions of the Guaranty Agreement applicable to it as a Guarantor thereunder and (c) represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct in all material respects on and as of the date hereof. Each reference to a Guarantor in the Guaranty Agreement shall be deemed to include the New Guarantor. The Guaranty Agreement is hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the Administrative Agent and the other Secured Parties that this Supplement has been duly authorized, executed and delivered by it by all requisite corporate, limited liability company or partnership action and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
Annex I-1
SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Guarantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by fax transmission shall be as effective as delivery of a manually executed counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Guaranty Agreement shall remain in full force and effect.
SECTION 5. Governing Law. This Supplement shall be deemed a contract under, and shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, applicable to contracts made and to be performed entirely within such state, including without regard to conflicts of laws principles.
SECTION 6. Submission to Jurisdiction. NEW GUARANTOR 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 COUNTY 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 SUPPLEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND NEW GUARANTOR 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 LEGAL REQUIREMENT, IN SUCH FEDERAL COURT. NEW GUARANTOR 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 SUPPLEMENT SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS SUPPLEMENT AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
SECTION 7. Waiver of Venue. NEW GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, 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 SUPPLEMENT IN ANY COURT REFERRED TO IN SECTION 6. NEW GUARANTOR HEREBY AGREES THAT SECTIONS 5-1401 AND 4-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS SUPPLEMENT AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
Annex I-2
SECTION 8. Service of Process. New Guarantor irrevocably consents to service of process in the manner provided for in Section 9.17 of the Credit Agreement. Nothing in this Supplement will affect the right of any party hereto to serve process in any other manner permitted by applicable law.
SECTION 9. Waiver of Jury. NEW GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUPPLEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). NEW GUARANTOR (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 SUPPLEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and in the Guaranty Agreement shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision hereof in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 11. All communications and notices hereunder shall be in writing and given as provided in Section 10 of the Guaranty Agreement.
THIS SUPPLEMENT, THE GUARANTY AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT REFERRED TO IN THIS SUPPLEMENT, 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 HERETO.
Annex I-3
IN WITNESS WHEREOF, the New Guarantor and the Administrative Agent have duly executed this Supplement to the Guaranty Agreement as of the day and year first above written.
[Name of New Guarantor] | ||
By: |
| |
Name: | ||
Title: | ||
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as Administrative Agent | ||
By: |
| |
Name: | ||
Title: |
EXHIBIT D-1
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT, dated as of October [25], 2018 (as amended, supplemented, amended and restated or otherwise modified from time to time, this Security Agreement), is by and among NINE ENERGY SERVICE, INC., a Delaware corporation (the Borrower), each Domestic Subsidiary (as defined in the Credit Agreement (as hereinafter defined)) of the Borrower party hereto from time to time (collectively with the Borrower, the Grantors and individually, a Grantor), and JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity, the Administrative Agent) for the ratable benefit of the Secured Parties (as defined in the Credit Agreement referred to herein).
W I T N E S S E T H:
WHEREAS, this Security Agreement is entered into in connection with that certain Credit Agreement dated as of the date hereof (as amended, supplemented, amended and restated or otherwise modified from time to time, the Credit Agreement), by and among the Borrower, Nine Energy Canada Inc., the lenders party thereto from time to time (the Lenders), the Issuing Lenders (as defined in the Credit Agreement) and JPMorgan Chase Bank, N.A., as Administrative Agent; and
WHEREAS, pursuant to the terms of the Credit Agreement, and in consideration of the credit extended by the Lenders to the Borrower and the letters of credit issued by the Issuing Lenders for the account of the Borrower or any subsidiary of the Borrower, the Grantors have executed and delivered the Guaranty (as defined in the Credit Agreement); and
WHEREAS, as a condition precedent to the initial extension of credit under the Credit Agreement, each Grantor is required to execute and deliver this Security Agreement; and
WHEREAS, it is in the best interests of each Grantor to execute this Security Agreement inasmuch as each Grantor will derive substantial direct and indirect benefits from (i) the transactions contemplated by the Credit Agreement and the other Credit Documents (as defined in the Credit Agreement), (ii) the Swap Agreements (as defined in the Credit Agreement) entered into by the Borrower or any other U.S. Credit Party (as defined in the Credit Agreement) with a Swap Counterparty (as defined in the Credit Agreement), and (iii) the Banking Services (as defined in the Credit Agreement) provided by any Banking Services Provider to the Borrower or any other U.S. Credit Party, and each Grantor is willing to execute, deliver and perform its obligations under this Security Agreement to secure the U.S. Secured Obligations (as defined in the Credit Agreement).
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor agrees, for the benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Terms. The following capitalized terms when used in this Security Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):
Administrative Agent has the meaning set forth in the preamble. Borrower has the meaning set forth in the preamble.
Certificated Equipment means any Equipment the ownership of which is evidenced by, or under any applicable Legal Requirement is required to be evidenced by, a certificate of title.
Collateral has the meaning set forth in Section 2.1(a).
Collateral Access Agreement means any landlord waiver or other agreement, in form and substance reasonably satisfactory to the Administrative Agent, between the Administrative Agent and any third party (including any bailee, consignee, customs broker, or other similar Person) in possession of any Collateral or any landlord of any real property where any Collateral is located, as such landlord waiver or other agreement may be amended, restated, supplemented or otherwise modified from time to time.
Collateral Account has the meaning set forth in Section 4.3(b).
Collateral Report means any certificate (including any Borrowing Base Certificate), report or other document delivered by any Grantor to the Administrative Agent or any Lender with respect to the Collateral pursuant to any Credit Document.
Computer Hardware and Software Collateral means (a) all computer and other electronic data processing hardware, integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware, including all operating system software, utilities and application programs in whatsoever form owned by a Grantor or leased or licensed to Grantor, (b) software programs (including both source code, object code and all related applications and data files), designed for use on the computers and electronic data processing hardware described in clause (a) above owned by a Grantor or leased or licensed to a Grantor, (c) all firmware associated therewith, (d) all documentation (including flow charts, logic diagrams, manuals, guides, specifications, training materials, charts and pseudo codes) with respect to such hardware, software and firmware described in the preceding clauses (a) through (c), and (e) all rights with respect to all of the foregoing, including copyrights (including renewal rights) and trade secrets rights, contract rights of a Grantor with respect to all or any of the foregoing, licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications and any substitutions, replacements, improvements, error corrections, updates, additions or model conversions of any of the foregoing.
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Control shall have the meaning set forth in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.
Control Agreement means an authenticated record in form and substance reasonably satisfactory to the Administrative Agent, that provides for the Administrative Agent (for the benefit of the Secured Parties) to have Control over certain Collateral.
Copyright Collateral means all copyrights of any Grantor, registered or unregistered and whether published or unpublished, now or hereafter in force throughout the world including all of such Grantors rights, titles and interests in and to all copyrights registered in the United States Copyright Office or anywhere else in the world, including those copyright registrations or applications therefor set forth in Schedule III-C hereto, and registrations and recordings thereof and all applications for registration thereof, whether pending or in preparation, all copyright licenses, the right to sue for past, present and future infringements of any of the foregoing, all rights corresponding thereto, all extensions and renewals of any thereof and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and Proceeds of suit, which are owned or licensed by such Grantor.
Credit Agreement has the meaning set forth in the first recital.
Distributions means all cash, cash dividends, stock dividends, other distributions, liquidating dividends, shares of stock resulting from (or in connection with the exercise of) stock splits, reclassifications, warrants, options, non-cash dividends, and all other distributions or payments (whether similar or dissimilar to the foregoing) on or with respect to, or on account of, any Pledged Interest or other rights or interests constituting Collateral.
Equipment has the meaning set forth in Section 2.1(a)(i). Excluded Collateral has the meaning set forth in Section 2.1(b).
Excluded Contracts means any contract to which any of the Grantors is a party on the date hereof or which is entered into by any Grantor after the date hereof which complies with Section 6.5 of the Credit Agreement (and the provisions of which are not agreed to by a Grantor for the purposes of excluding such contract from the Lien granted hereunder) to the extent (but only to the extent) that the granting of a security interest therein would be prohibited by (a) such contract under a provision (unless a Restricted Entity may unilaterally waive such prohibition) in such contract in existence on the date hereof or, as to contracts entered into after the date hereof, in existence in compliance with Section 6.5 of the Credit Agreement (and the provisions of which are not agreed to by a Grantor for the purposes of excluding such contract from the Lien granted hereunder), or (b) an applicable Legal Requirement to which such Grantor or such contract is subject; provided, however, to the extent that (i) either of the prohibitions discussed in clause (a) and clause (b) above is ineffective or subsequently rendered ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of the UCC or under any other Legal Requirement or is otherwise no longer in effect or enforceable, or (ii) the applicable Grantor has obtained the consent of the other parties to such Excluded Contract to the creation of a lien and security interest in such Excluded Contract, then such contract shall cease to be an Excluded Contract and shall automatically be subject to the lien and security interests granted hereby and to the terms and
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provisions of this Security Agreement as Collateral; provided further, that any proceeds received by any Grantor from the sale, transfer or other disposition of Excluded Contracts shall constitute Collateral unless any Property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
Excluded Foreign Stock means the Equity Interests issued by Foreign Subsidiaries other than (a) 65% of the Voting Securities issued by a First-Tier Foreign Subsidiary and (b) 100% of Equity Interests issued by a First-Tier Foreign Subsidiary that are not Voting Securities.
Excluded Governmental Approvals means any Governmental Approval to the extent (but only to the extent) that a Grantor is prohibited from granting a security interest in, pledge of, or charge, mortgage or lien upon any such Property by reason of applicable Legal Requirement to which such Grantor or such Property is subject; provided, however, to the extent that (i) such prohibition is ineffective or subsequently rendered ineffective under Sections 9-406, 9-407, 9- 408 or 9-409 of the UCC or under any other Legal Requirement or is otherwise no longer in effect or enforceable, or (ii) the applicable Grantor has obtained the consent of the applicable Governmental Authority to the creation of a lien and security interest in such Excluded Governmental Approval, then such Governmental Approval shall cease to be an Excluded Governmental Approval and shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Security Agreement as Collateral; provided further, that any proceeds received by any Grantor from the sale, transfer or other disposition of Excluded Governmental Approval shall constitute Collateral unless any Property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
Excluded JV Equity Interests means the Equity Interests owned by any Grantor in a Joint Venture to the extent (but only to the extent) (a) the organizational documents of such Joint Venture prohibit the granting of a Lien on such Equity Interests or (b) such Equity Interests of such Joint Venture are expressly required to be pledged as collateral to secure (i) obligations to the other holders of the Equity Interests in such Joint Venture (other than a holder that is a Subsidiary of the Borrower) or (ii) Debt of such Joint Venture that is non-recourse to any of the Credit Parties or to any of the Credit Parties Properties; provided, however, if any of the foregoing conditions ceases to be in effect for any reason, then the Equity Interest in such Joint Venture shall cease to be an Excluded JV Equity Interest and shall automatically be subject to the Lien and security interest granted hereby and to the terms and provisions of this Security Agreement as Collateral; provided further, that any proceeds received by any Grantor in respect of any (including from the sale, transfer or other disposition of) Excluded JV Equity Interest shall constitute Collateral unless any Property constituting such proceeds are themselves subject to the exclusions set forth above.
Excluded Perfection Collateral has the meaning set forth in the Credit Agreement. Excluded PMSI Collateral means any Property and proceeds thereof (including insurance proceeds) of a Grantor that is now or hereafter subject to a Lien securing (and, for the avoidance of doubt, acquired with the proceeds of) purchase money debt or a Capital Lease obligation to the extent (and only to the extent) that (a) the Debt associated with such Lien is permitted under Section 6.1(e), (k) or (m) of the Credit Agreement, and (b) the documents
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evidencing such purchase money debt or Capital Lease obligation prohibit or restrict the granting of a Lien in such Property; provided, however, to the extent that (i) either of the prohibitions discussed in clauses (a) and (b) above is ineffective or subsequently rendered ineffective under Sections 9-406, 9-407, 9-408 or 9-409 of the UCC or under any other Legal Requirement or is otherwise no longer in effect or (ii) the holder of such Lien consents to the granting of a Lien in favor of the Administrative Agent, then such Property and proceeds thereof shall cease to be Excluded PMSI Collateral and shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Security Agreement as Collateral; provided further, that any proceeds received by any Grantor from the sale, transfer or other disposition of Excluded PMSI Collateral shall constitute Collateral unless any Property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
Excluded Real Property means all fee owned and leased real property (including all leases related thereto) of any Credit Party.
Excluded Trademark Collateral means all United States intent to use trademark applications with respect to which the grant of a security interest therein would impair the validity or enforceability of said intent to use trademark application under federal law; provided, however, to the extent that such law is no longer in effect, then such trademark application shall cease to be Excluded Trademark Collateral and shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Security Agreement as Collateral; provided further, that any proceeds received by any Grantor from the sale, transfer or other disposition of Excluded Trademark Collateral shall constitute Collateral unless any Property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
First-Tier Foreign Subsidiary means any Foreign Subsidiary the Equity Interests of which are held directly by the Borrower or a Wholly-Owned Domestic Restricted Subsidiary.
Foreign Subsidiary means any Subsidiary of the Borrower that is not a United States Person within the meaning of Section 7701(a)(30) of the Code.
General Intangibles means all general intangibles and all payment intangibles, each as defined in the UCC, and shall include all interest rate or currency protection or hedging arrangements, all tax refunds, all licenses, permits, concessions and authorizations and all Intellectual Property Collateral (in each case, regardless of whether characterized as general intangibles under the UCC).
Governmental Approval has the meaning set forth in Section 2.1(a)(vi). Grantor has the meaning set forth in the preamble.
Indemnitee has the meaning set forth in Section 6.3(a).
Intellectual Property Collateral means, collectively, the Computer Hardware and Software Collateral, the Copyright Collateral, the Patent Collateral, the Trademark Collateral and the Trade Secrets Collateral.
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Inventory has the meaning set forth in Section 2.1(a)(ii).
Joint Venture means, with respect to any Person (the holder) at any time, any incorporated, formed or organized corporation, limited liability company, partnership, association or other entity, which is not a Subsidiary of the Borrower and less than a majority of whose outstanding Voting Securities are at such time owned by the holder or one or more Subsidiaries of the holder. Unless expressly provided otherwise, all references herein to any Joint Venture or Joint Ventures means a Joint Venture or Joint Ventures of a Grantor.
Lenders has the meaning set forth in the first recital.
Letter-of-Credit Rights has the meaning given to such term in the UCC.
Patent Collateral means (a) all inventions and discoveries, whether patentable or not, all letters patent and applications for letters patent throughout the world, including those patents and patent applications referred to in Schedule III-A hereto, (b) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clause (a), (c) all patent licenses, and other agreements providing any Grantor with the right to use any items of the type referred to in clauses (a) and (b) above, and (d) all proceeds of, and rights associated with, the foregoing (including licenses, royalties income, payments, claims, damages and proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, and for breach or enforcement of any patent license.
Pledged Interests means all Equity Interests or other ownership interests of any Pledged Interests Issuer, including those described in Schedule I-A hereto; all registrations, certificates, articles, by-laws, regulations, limited liability company agreements or constitutive agreements governing or representing any such interests; all options and other rights, contractual or otherwise, at any time existing with respect to such interests, as such interests are amended, modified, or supplemented from time to time, and together with any interests in any Pledged Interests Issuer taken in extension or renewal thereof or substitution therefor.
Pledged Interests Issuer means each Person identified in Schedule I-A hereto as the issuer of the Pledged Interests identified opposite the name of such Person or any other issuer of Pledged Interests.
Pledged Note Issuer means any issuer of Pledged Notes.
Pledged Notes means all promissory notes listed on Schedule IB hereto together with any intercompany notes and any other promissory notes issued to or held by any Grantor, excluding, in each case, any Excluded Collateral.
Pledged Property means all Pledged Notes, Pledged Interests, all assignments of any amounts due or to become due with respect to the Pledged Interests, all other instruments which are now being delivered by any Grantor to the Administrative Agent or may from time to time hereafter be delivered by any Grantor to the Administrative Agent for the purpose of pledging under this Security Agreement or any other Credit Document, and all proceeds of any of the foregoing.
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Receivables has the meaning set forth in Section 2.1(a)(iii). Related Contracts has the meaning set forth in Section 2.1(a)(iii).
Secured Obligations means the Secured Obligations as defined in the Credit Agreement.
Secured Parties has the meaning set forth in the Credit Agreement. Security Agreement has the meaning set forth in the preamble. Payment in Full has the meaning set forth in the Credit Agreement.
Trademark Collateral means (a) (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, and all goodwill of the business associated therewith, now existing or hereafter adopted or acquired, including those trademarks referred to in Schedule III-B hereto, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America, or any State thereof or any other country or political subdivision thereof or otherwise, and all common-law rights relating to the foregoing, and (ii) the right to obtain all reissues, extensions or renewals of the foregoing (collectively referred to as the Trademark), (b) all trademark licenses for the grant by or to any Grantor of any right to use any trademark, (c) all of the goodwill of the business connected with the use of, and symbolized by the items described in, clause (a), and to the extent applicable, clause (b), (d) the right to sue third parties for past, present and future infringements of any Trademark Collateral described in clause (a) and, to the extent applicable, clause (b), and (e) all Proceeds of, and rights associated with, the foregoing, including any claim by any Grantor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license and all rights corresponding thereto throughout the world.
Trade Secrets Collateral means all common law and statutory trade secrets and all other confidential, proprietary or useful information and all know-how obtained by or used in or contemplated at any time for use in the business of any Grantor, and any patent applications in preparation for filing (all of the foregoing being collectively called a Trade Secret), including all documents and things embodying, incorporating or referring in any way to such Trade Secret, all Trade Secret licenses, and including the right to sue for and to enjoin and to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license.
UCC means the Uniform Commercial Code, as in effect in the State of New York, as the same may be amended from time to time.
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Section 1.2 Credit Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, capitalized terms used in this Security Agreement, including its preamble and recitals, have the meanings provided in the Credit Agreement.
Section 1.3 UCC Definitions. Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the UCC are used in this Security Agreement, including its preamble and recitals, with such meanings.
Section 1.4 Miscellaneous. Article, Section, Schedule, Annex and Exhibit references are to Articles and Sections of and Schedules, Annexes and Exhibits to this Security Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements (including this Security Agreement) are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified and shall include all schedules, annexes and exhibits thereto unless otherwise specified. The words hereof, herein, and hereunder and words of similar import when used in this Security Agreement shall refer to this Security Agreement as a whole and not to any particular provision of this Security Agreement. The term including means including, without limitation,. Paragraph headings have been inserted in this Security Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Security Agreement and shall not be used in the interpretation of any provision of this Security Agreement.
ARTICLE II
SECURITY INTEREST
Section 2.1 Grant of Security Interest.
(a) Each Grantor hereby pledges, hypothecates, assigns, charges, mortgages, delivers, and transfers to the Administrative Agent, for the ratable benefit of each Secured Party, and hereby grants to the Administrative Agent, for the ratable benefit of each Secured Party, a continuing security interest in all of such Grantors right, title and interest in, to and under, all of the following, whether now owned or hereafter acquired by such Grantor, and wherever located and whether now owned or hereafter existing or arising (collectively, the Collateral) as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantors Secured Obligations:
(i) all equipment in all of its forms (including all drilling platforms and rigs and remotely operated vehicles, trenchers, and other equipment used by any Grantor, vehicles, motor vehicles, rolling stock, vessels and aircraft) of such Grantor, wherever located, and all surface or subsurface machinery, equipment, facilities, supplies, or other tangible personal property, including tubing, rods, pumps, pumping units and engines, pipe, pipelines, meters, apparatus, boilers, compressors, liquid extractors, connectors, valves, fittings, power plants, poles, lines, cables, wires, transformers, starters and controllers, machine shops, tools, machinery and parts, telegraph, telephone, and other communication systems, loading docks, loading racks, and shipping 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, and
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any and all additions, substitutions and replacements of any of the foregoing, wherever located together with all improvements thereon and all attachments, components, parts, equipment and accessories installed thereon or affixed thereto (any and all of the foregoing being the Equipment);
(ii) all inventory in all of its forms of such Grantor, wherever located, including (A) all oil, gas, or other hydrocarbons and all products and substances derived therefrom, all raw materials and work in process therefore, finished goods thereof, and materials used or consumed in the manufacture or production thereof, (B) all documents of title covering any inventory, including work in process, materials used or consumed in any Grantors business, now owned or hereafter acquired or manufactured by any Grantor and held for sale in the ordinary course of its business, (C) all goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including goods in which such Grantor has an interest or right as consignee), (D) all goods which are returned to or repossessed by such Grantor, and all accessions thereto, products thereof and documents therefore, and (E) any other item constituting inventory under the UCC (any and all such inventory, materials, goods, accessions, products and documents being the Inventory);
(iii) all accounts, money, payment intangibles, deposit accounts (including the Collateral Accounts and all amounts on deposit therein and all cash equivalent investments carried therein and all proceeds thereof), contracts, contract rights, all rights constituting a right to the payment of money, chattel paper, documents, documents of title, instruments, and General Intangibles of such Grantor, whether or not earned by performance or arising out of or in connection with the sale or lease of goods or the rendering of services, including all moneys due or to become due in repayment of any loans or advances, and all rights of such Grantor now or hereafter existing in and to all security agreements, guaranties, leases, agreements and other contracts securing or otherwise relating to any such accounts, money, payment intangibles, deposit accounts, contracts, contract rights, rights to the payment of money, chattel paper, documents, documents of title, instruments, and General Intangibles (any and all such accounts, money, payment intangibles, deposit accounts, contracts, contract rights, rights to the payment of money, chattel paper, documents, documents of title, instruments, and General Intangibles being the Receivables, and any and all such security agreements, guaranties, leases, agreements and other contracts being the Related Contracts);
(iv) all Intellectual Property Collateral of such Grantor;
(v) all books, correspondence, credit files, records, invoices, tapes, cards, computer runs, writings, data bases, information in all forms, paper and documents and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any of the foregoing in this Section 2.1(a);
(vi) all governmental approvals, permits, licenses, authorizations, consents, rulings, tariffs, rates, certifications, waivers, exemptions, filings, claims, orders, judgments and decrees and other Legal Requirements (each a Governmental Approval);
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(vii) all interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect such Grantor against fluctuations in interest rates or currency exchange rates and all commodity hedge, commodity swap, exchange, forward, future, floor, collar or cap agreements, fixed price agreements and all other agreements or arrangements designed to protect such Grantor against fluctuations in commodity prices (including any Swap Agreement);
(viii) to the extent not included in the foregoing, all bank accounts, investment property, fixtures, supporting obligations, and goods;
(ix) all Pledged Interests, Pledged Notes, and any other Pledged Property and all Distributions, interest, and other payments and rights with respect to such Pledged Property;
(x) (A) all policies of insurance now or hereafter held by or on behalf of such Grantor, including casualty, liability, key man life insurance, business interruption, foreign credit insurance, and any title insurance, (B) all proceeds of insurance, and (C) all rights, now or hereafter held by such Grantor to any warranties of any manufacturer or contractor of any other Person;
(xi) all Commercial Tort Claims as set forth on Schedule IV;
(xii) all accessions, substitutions, replacements, products, offspring, rents, issues, profits, returns, income and proceeds of and from any and all of the foregoing Collateral (including proceeds which constitute property of the types described in sub-clauses (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix) and (x) and proceeds deposited from time to time in any lock boxes of such Grantor, and, to the extent not otherwise included, all payments and proceeds under insurance (whether or not the Administrative Agent is the loss payee thereof), or any condemnation award, indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the Collateral);
(xiii) any and all Liens and security interests (together with the documents evidencing such security interests) granted to such Grantor by an obligor to secure such obligors obligations owing under any Instrument, Chattel Paper, or contract that is pledged hereunder or with respect to which a security interest in such Grantors rights in such Instrument, Chattel Paper, or contract is granted hereunder;
(xiv) any and all guaranties given by any Person for the benefit of such Grantor which guarantees the obligations of an obligor under any instrument, chattel paper, or contract, which are pledged hereunder;
(xv) all of such Grantors other property and rights of every kind and description and interests therein, including all other Account, Certificated Securities, Chattel Paper, Commodity Accounts, Commodity Contracts, Deposit Account, Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment Property, Money, Payment Intangibles, Proceeds, Securities, Securities Account, Security Entitlements, Supporting Obligations and Uncertificated Securities as each such term is defined in the UCC.
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(b) Notwithstanding anything to the contrary contained in Section 2(a) and other than to the extent set forth in this Section 2(b), the following property shall be excluded from the lien and security interest granted hereunder (and shall not be included as Collateral for purposes of this Agreement) (collectively, the Excluded Collateral):
(i) Letter-of-Credit Rights (other than to the extent constituting Supporting Obligations);
(ii) Excluded Governmental Approvals;
(iii) Excluded Contracts;
(iv) Excluded JV Equity Interests;
(v) Excluded PMSI Collateral;
(vi) Excluded Real Property;
(vii) Excluded Foreign Stock (with respect to the U.S. Secured Obligations only); and
(viii) Excluded Trademark Collateral;
provided, however, that (x) the exclusion from the Lien and security interest granted by any Grantor hereunder of any Excluded Collateral shall not limit, restrict or impair the grant by such Grantor of the Lien and security interest in any accounts or receivables arising under any such Excluded Collateral or any payments due or to become due thereunder unless the conditions in effect which qualify such Property as Excluded Collateral applies with respect to such accounts and receivables, (y) any proceeds received by any Grantor from the sale, transfer or other disposition of Excluded Collateral shall constitute Collateral unless the conditions in effect which qualify such Property as an Excluded Collateral applies with respect to such proceeds and (z) for the avoidance of doubt, no Excluded Foreign Stock shall secure the U.S. Secured Obligations and all of the Pledged Interests of a Foreign Subsidiary shall secure the Canadian Secured Obligations.
Section 2.2 Security for Obligations.
(a) This Security Agreement, and the Collateral in which the Administrative Agent for the benefit of the Secured Parties is granted a security interest hereunder by each Grantor, secures the prompt and complete payment in cash and performance of the Secured Obligations.
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(b) Notwithstanding anything contained herein to the contrary, it is the intention of each Grantor, the Administrative Agent and the other Secured Parties that the amount of the Secured Obligations secured by each Grantors interests in any of its Property shall be in, but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer and other similar law, rule or regulation of any Governmental Authority applicable to such Grantor. Accordingly, notwithstanding anything to the contrary contained in this Security Agreement or in any other agreement or instrument executed in connection with the payment of any of the Secured Obligations, the amount of the Secured Obligations secured by each Grantors interests in any of its Property pursuant to this Security Agreement shall be limited to an aggregate amount equal to the largest amount that would not render such Grantors obligations hereunder or the Liens and security interest granted to the Administrative Agent hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any other applicable Legal Requirement.
Section 2.3 Continuing Security Interest; Transfer of Loans; Reinstatement. This Security Agreement shall create continuing security interests in the Collateral and shall (a) except as otherwise provided in the Credit Agreement, remain in full force and effect until Payment in Full, (b) be binding upon each Grantor and its successors, transferees and assigns, and (c) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of the Administrative Agent and each other Secured Party and its respective permitted successors, transferees and assigns, subject to the limitations as set forth in the Credit Agreement. Without limiting the generality of the foregoing clause (c), any Lender may assign or otherwise transfer (in whole or in part) all or any part of its Commitment and Loans held by or owing to it as provided in Section 9.7 of the Credit Agreement, and any successor or assignee thereof shall thereupon become vested with all the rights and benefits in respect thereof granted to such Secured Party under any Credit Document (including this Security Agreement), or otherwise. If at any time all or any part of any payment theretofore applied by the Administrative Agent or any other Secured Party to any of the Secured Obligations is or must be rescinded or returned by the Administrative Agent or any such Secured Party for any reason whatsoever (including the insolvency, bankruptcy, reorganization or other similar proceeding of any Grantor or any other Person), such Secured Obligations shall, for purposes of this Security Agreement, to the extent that such payment is or must be rescinded or returned, be deemed to have continued to be in existence, notwithstanding any application by the Administrative Agent or such Secured Party or any termination agreement or release provided to any Grantor, and this Security Agreement shall continue to be effective or reinstated, as the case may be, as to such Secured Obligations, all as though such application by the Administrative Agent or such Secured Party had not been made.
Section 2.4 Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and will perform all of its duties and obligations under such contracts and agreements to the same extent as if this Security Agreement had not been executed, (b) the exercise by the Administrative Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under any such contracts or agreements included in the Collateral, and (c) neither the Administrative Agent nor any other Secured Party shall have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Security Agreement, nor shall the Administrative Agent nor any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.
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Section 2.5 Delivery of Pledged Property; Instruments and Tangible Chattel Paper. Other than as provided in the first sentence of Section 4.5 below, all certificates or instruments representing or evidencing (i) all Pledged Interests and Pledged Notes and (ii) other Collateral consisting of Instruments and Tangible Chattel Paper individually or collectively evidencing amounts payable in excess of $3,000,000 shall be delivered to and held by or on behalf of (or in the case of the Pledged Notes, endorsed to the order of) the Administrative Agent pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary endorsements or instruments of transfer or assignment, duly executed in blank. To the extent any of the Collateral constitutes an uncertificated security (as defined in Section 8- 102(a)(18) of the UCC) or a security entitlement (as defined in Section 8-102(a)(17) of the UCC), then at the Administrative Agents request and its determination that such Property is not an Excluded Perfection Collateral, the applicable Grantor shall take and cause the appropriate Person (including any issuer, entitlement holder or securities intermediary thereof) to take all actions necessary to grant control (as defined in 8-106 of the UCC) to the Agent (for the benefit of the Secured Parties) over such Collateral.
Section 2.6 Distributions on Pledged Interests. So long as no Event of Default shall have occurred and be continuing, in the event that any Distribution with respect to any Pledged Interest pledged hereunder is permitted to be paid (in accordance with Section 6.9 of the Credit Agreement), such Distribution or payment may be paid directly to the applicable Grantor. If any Distribution is made in contravention of Section 6.9 of the Credit Agreement or this Section 2.6, the applicable Grantor shall hold the same segregated and in trust for the Administrative Agent until paid to the Administrative Agent in accordance with Section 4.1(e).
Section 2.7 Security Interest Absolute, etc. This Security Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable grant of security interest, and shall remain in full force and effect until Payment in Full. All rights of the Secured Parties and the security interests granted to the Administrative Agent (for its benefit and the ratable benefit of each other Secured Party) hereunder, and all obligations of each Grantor hereunder, shall, in each case, be absolute, unconditional and irrevocable irrespective of (a) any lack of validity, legality or enforceability of any Credit Document, (b) the failure of any Secured Party (i) to assert any claim or demand or to enforce any right or remedy against any Grantor or any other Person under the provisions of any Credit Document or otherwise, or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Secured Obligations, (c) any change in the time, manner or place of payment of, or in any other term of, all or any part of the Secured Obligations, or any other extension, compromise or renewal of any Secured Obligations, (d) any reduction, limitation, impairment or termination of any Secured Obligations (other than Payment in Full) for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Secured Obligations or otherwise, (e) any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Credit Document, (f) any addition, exchange or release of any Collateral of the Secured Obligations, or any surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition to, or consent to or departure from, any other guaranty held by any Secured Party securing any of the Secured Obligations, or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Grantor or any other Credit Party, any surety or any guarantor.
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Section 2.8 Waiver of Subrogation. Until 91 days after Payment in Full, each Grantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against any Credit Party that arise from the existence, payment, performance or enforcement of such Grantors obligations under this Security Agreement or any other Credit Document, including any right of subrogation, reimbursement, exoneration or indemnification, any right to participate in any claim or remedy of any Secured Party against any Credit Party or any collateral which any Secured Party now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including the right to take or receive from any Credit Party, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Grantor in violation of the preceding sentence and Payment in Full shall not have occurred, then such amount shall be deemed to have been paid to such Grantor for the benefit of, and held in trust for, the Administrative Agent (on behalf of the Secured Parties), and shall forthwith be paid to the Administrative Agent to be credited and applied upon the Secured Obligations, whether matured or unmatured. Each Grantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth in this Section 2.8 is knowingly made in contemplation of such benefits.
Section 2.9 Election of Remedies. Except as otherwise provided in the Credit Agreement, if any Secured Party may, under applicable Legal Requirement, proceed to realize its benefits under this Security Agreement or the other Credit Documents giving any Secured Party a Lien upon any Collateral, either by judicial foreclosure or by non-judicial sale or enforcement, such Secured Party may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Security Agreement. If, in the exercise of any of its rights and remedies, any Secured Party shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Credit Party or any other Person, whether because of any applicable Legal Requirements pertaining to election of remedies or the like, each Grantor hereby consents to such action by such Secured Party and waives any claim based upon such action, even if such action by such Secured Party shall result in a full or partial loss of any rights of subrogation that such Grantor might otherwise have had but for such action by such Secured Party.
Section 2.10 Pledged Securities. The granting of the foregoing security interest does not make the Administrative Agent or any Secured Party a successor to Grantor as a partner or member in any Pledged Interests Issuer that is a partnership, limited partnership or limited liability company, as applicable, and neither the Administrative Agent, any Secured Party, nor any of their respective successors or assigns hereunder shall be deemed to have become a partner or member in any Issuer, as applicable, by accepting this Agreement or exercising any right granted herein unless and until such time, if any, when any such Person expressly becomes a partner or member in any Pledged Interests Issuer, as applicable, and complies with any applicable transfer provisions set forth in the charter or organizational documents relating to an applicable Pledged Security after a foreclosure thereon.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce the Secured Parties to enter into the Credit Agreement and extend credit to the Borrower thereunder and for the Issuing Lenders to issue Letters of Credit thereunder, and to induce the Secured Parties to enter into Swap Agreements and Banking Services, each Grantor represents and warrants unto each Secured Party as set forth in this Article.
Section 3.1 Ownership, No Liens, etc. Such Grantor is the legal and beneficial owner of, and has good title to (and has full right and authority to pledge, grant and assign) the Collateral free and clear of all Liens, except for any Lien that is a Permitted Lien. No effective UCC financing statement or other filing similar in effect covering all or any part of the Collateral is on file in any recording office, except those filed in favor of the Administrative Agent relating to this Security Agreement, Permitted Liens or as to which a duly authorized termination statement relating to such UCC financing statement or other instrument has been delivered to the Administrative Agent on the Closing Date. This Security Agreement creates a valid security interest in the Collateral, securing the payment of the Secured Obligations, and, except for (a) the proper filing of the applicable financing statements with the filing offices listed on Schedule II-A attached hereto, (b) the recordation of security agreements with the U.S. Patent and Trademark Office and the U.S. Copyright Office, and (c) taking possession of any Pledged Property with necessary endorsements, all filings and other actions necessary to perfect and protect such security interest in the Collateral (other than, as to perfection, Excluded Perfection Collateral) have been duly taken and, subject to Permitted Liens, such security interest shall be a first priority security interest.
Section 3.2 As to Equity Interests of the Subsidiaries, Investment Property.
(a) With respect to the Pledged Interests, all such Pledged Interests (i) other than with respect to Pledged Interests in limited liability companies and partnerships, are duly authorized and validly issued, fully paid and non-assessable, and (ii) unless otherwise noted on Schedule I, are represented by a certificate.
(b) With respect to the Pledged Interests, no such Pledged Interests (i) are dealt in or traded on securities exchanges or in securities markets, or (ii) are held in a Securities Account, except, with respect to this clause (b), Pledged Interests (A) for which the Administrative Agent is the registered owner or (B) with respect to which the Pledged Interests Issuer has agreed in an authenticated record with such Grantor and the Administrative Agent to comply with any instructions of the Administrative Agent without the consent of such Grantor.
(c) Such Grantor has delivered all Certificated Securities constituting Collateral held by such Grantor on the Closing Date to the Administrative Agent, together with duly executed undated blank stock powers, or other equivalent instruments of transfer reasonably acceptable to the Administrative Agent.
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(d) With respect to Uncertificated Securities constituting Collateral, such Grantor has caused the Pledged Interests Issuer or other issuer thereof either (i) to register the Administrative Agent as the registered owner of such security, or (ii) to agree in an authenticated record with such Grantor and the Administrative Agent that such Pledged Interests Issuer or other issuer will comply with instructions with respect to such security originated by the Administrative Agent without further consent of such Grantor.
(e) The percentage of the issued and outstanding Pledged Interests of each Pledged Interests Issuer pledged by such Grantor hereunder is as set forth on Schedule I-A and the percentage of the total membership, partnership and/or other Equity Interests in the Pledged Interests Issuer is indicated on Schedule I-A, in each case, as such Schedule I-A may be supplemented from time to time pursuant to the terms hereof. All of the Pledged Interests constitute one hundred percent (100%) of such Grantors interest in the applicable Pledged Interests Issuer, except in the case of the Pledged Interests that are issued by First-Tier Foreign Subsidiaries with respect to which such Grantor has pledged (i) up to sixty-five percent (65%) of the outstanding Voting Securities issued by such First-Tier Foreign Subsidiaries and (ii) one hundred percent (100%) of all Equity Interests issued by such First-Tier Foreign Subsidiaries that are not Voting Securities, in any case, as indicated on Schedule I-A.
(f) There are no outstanding rights, rights to subscribe, options, warrants or convertible securities outstanding or any other rights outstanding whereby any Person would be entitled to acquire shares, member interests or units of any Pledged Interests Issuer other than (i) as to Pledged Interests Issuers that are not Wholly-Owned Subsidiaries or (ii) such rights that constitute Collateral.
(g) In the case of each Pledged Note, all of such Pledged Notes are as set forth on Schedule I-B and have been duly authorized, executed, endorsed, issued and delivered, and are the legal, valid and binding obligation of the issuers thereof, and, as of the Closing Date, are not in default.
Section 3.3 Grantors Name, Location, etc.
(a) Other than as otherwise permitted pursuant to any Credit Document, (i) the jurisdiction in which such Grantor is located for purposes of Sections 9-301 and 9-307 of the UCC is set forth in Schedule II-A hereto, (ii) as of the Closing Date or such later date on which such Grantor joins this Security Agreement, the place of business of such Grantor or, if such Grantor has more than one place of business, the chief executive office of such Grantor and the office where such Grantor keeps its records concerning the Receivables, is set forth in Schedule II-B hereto, and (iii) such Grantors federal taxpayer identification number is set forth in Schedule II-C hereto.
(b) Within the past five years, such Grantor has not been known by any legal name different from the one set forth on the signature page hereto, nor has such Grantor been the subject of any merger or other corporate reorganization, except as set forth in Schedule II-D hereto.
(c) None of the Receivables in excess of $3,000,000 is evidenced by a promissory note or other instrument other than a promissory note or instrument that has been delivered to the Administrative Agent (with appropriate endorsements).
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(d) As of the Closing Date or such later date on which such Grantor joins this Security Agreement, the name set forth on the signature page attached hereto (or, if applicable, the signature page to the supplement document pursuant to which such Grantor joins this Security Agreement) is the true and correct legal name (as defined in the UCC) of such Grantor.
Section 3.4 Possession of Inventory; Control. Such Grantor has exclusive possession and control, subject to Permitted Liens, of the Equipment and Inventory, except as otherwise required, necessary or customary in the ordinary course of its business. Such Grantor has not consented to, and is otherwise unaware of, any Person (other than, if applicable, the Administrative Agent pursuant to Section 4.3(b) or Section 4.1(b)(i) hereof) having control (within the meaning of Section 9-104 or Section 8-106 of the UCC) over any Collateral, or any other interest in any of such Grantors rights in respect thereof other than, with respect to Deposit Accounts and Securities Accounts, as to Liens permitted under Section 6.2(b), (h), (i), (l) and (m) of the Credit Agreement.
Section 3.5 Pledged Property, Instruments and Tangible Chattel Paper. Such Grantor has, contemporaneously herewith, delivered to the Administrative Agent possession of all originals of all certificates or instruments representing or evidencing (i) any Pledged Interests and Pledged Notes, and (ii) other Collateral consisting of Instruments and Tangible Chattel Paper individually, or collectively, evidencing amounts payable in excess of $3,000,000, owned or held by such Grantor (duly endorsed, in blank, if requested by the Administrative Agent).
Section 3.6 Intellectual Property Collateral. Such Grantor represents that except for any Patent Collateral, Trademark Collateral, and Copyright Collateral specified in Item A, Item B and Item C, respectively, of Schedule III hereto, and any and all Trade Secrets Collateral, as of the date hereof, such Grantor does not own and has no interests in any other Intellectual Property Collateral material to the operations or business of such Grantor, other than the Computer Hardware and Software Collateral. Such Grantor further represents and warrants that, with respect to all Intellectual Property Collateral material to the conduct of such Grantors business (a) such Intellectual Property Collateral is valid, subsisting, unexpired and enforceable and has not been abandoned or adjudged invalid or unenforceable, in whole or in part, (b) other than with respect to Intellectual Property Collateral licensed to it, such Grantor is the sole and exclusive owner of the right, title and interest in and to such Intellectual Property Collateral, subject to Permitted Liens, and, to such Grantors knowledge, no claim has been made that the use of such Intellectual Property Collateral does or may, conflict with, infringe, misappropriate, dilute, misuse or otherwise violate any of the rights of any third party in any material respects, (c) such Grantor has made all necessary filings and recordations to protect its interest in such Intellectual Property Collateral, including recordations of any of its interests in the Patent Collateral and Trademark Collateral in the United States Patent and Trademark Office and, if requested by the Administrative Agent, in corresponding offices throughout the world, and its claims to the Copyright Collateral in the United States Copyright Office and, if requested by the Administrative Agent, in corresponding offices throughout the world, (d) such Grantor has taken all reasonable steps to safeguard its material Trade Secrets Collateral and to its knowledge none of such Trade Secrets Collateral of such Grantor has been used, divulged, disclosed or appropriated for the benefit of any other Person other than such Grantor, the Borrower or any Subsidiary thereof, (e) to such Grantors knowledge, no third party is infringing upon any such Intellectual Property Collateral owned or used by such Grantor in any material respect, or any of
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its respective licensees, (f) no settlement or consents, covenants not to sue, nonassertion assurances, or releases have been entered into by such Grantor or to which such Grantor is bound that adversely affects its rights to own or use any such Intellectual Property Collateral, and (g) the consummation of the transactions contemplated by the Credit Agreement and this Security Agreement will not result in the termination or material impairment of any material portion of such Intellectual Property Collateral.
Section 3.7 Commercial Tort Claims. As of the date hereof, no Grantor has rights in any commercial tort claim with potential value in excess of $3,000,000.
Section 3.8 Authorization, Approval, etc. Except as have been obtained or made and are in full force and effect, no Governmental Approval, authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required either (a) for the grant by such Grantor of the security interest granted hereby, (b) except with respect to Excluded Perfection Collateral, for the perfection or maintenance of the security interests hereunder including the first priority (subject to Permitted Liens) nature of such security interest (except with respect to the financing statements or, with respect to Intellectual Property Collateral, the recordation of any agreements with the U.S. Patent and Trademark Office or the U.S. Copyright Office) or the exercise by the Administrative Agent of its rights and remedies hereunder, or (c) for the exercise by the Administrative Agent of the voting or other rights provided for in this Security Agreement, except (i) with respect to any Pledged Interests, as may be required in connection with a disposition of such Pledged Interests by laws affecting the offering and sale of securities generally, the remedies in respect of the Collateral pursuant to this Security Agreement and (ii) any change of control or similar filings required by state licensing agencies.
Section 3.9 Best Interests. It is in the best interests of each Grantor to execute this Security Agreement in as much as such Grantor will, as a result of being the Borrower, or a Restricted Subsidiary of the Borrower, derive substantial direct and indirect benefits from (a) the extensions of credit (including Letters of Credit) made from time to time to the Borrower or any other Grantor by the Lenders and the Issuing Lenders pursuant to the Credit Agreement, (b) the Swap Agreements entered into with the Swap Counterparties, and (c) the Banking Services provided by the Banking Services Providers, and each Grantor agrees that the Secured Parties are relying on this representation in agreeing to make such extensions of credit pursuant to the Credit Agreement to the Borrower. Furthermore, such extensions of credit, Swap Agreements and Banking Services are (i) in furtherance of each Grantors corporate purposes, and (ii) necessary or convenient to the conduct, promotion or attainment of each Grantors business.
Section 3.10 Inventory and Real Property Locations.
(a) As of the date of this Agreement, Schedule IV (as such Schedule IV may be supplemented from time to time) to this Security Agreement sets forth the address of each parcel of real property that is owned or leased by any Grantor at which Inventory with a book value in excess of $1,000,000 (the Material Inventory Locations) is located. To the extent such real property is leased, each of such leases and subleases is valid and enforceable against the applicable Grantor in accordance with its terms and is in full force and effect, and no material default by such Grantor to any such lease or sublease exists. Each of the Grantors and each of its Restricted Subsidiaries has good and indefeasible title to, or valid leasehold interests in, all of its material real and personal property, free of all Liens other than those permitted by Section 6.2 of the Credit Agreement.
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(b) With respect to any of its Inventory scheduled or listed on the most recent Collateral Report, (i) all such Inventory is located at a Material Inventory Location, in transit, located at a customers location, being replaced or repaired, or located at locations which are not Material Inventory Locations, (ii) no such Inventory (other than Inventory in transit, Inventory located at a customers location and Inventory which is being replaced or repaired) is now, or shall at any time or times hereafter be stored at any other location except as permitted by Section 4.11, (iii) such Grantor has good, indefeasible and merchantable title to such Inventory and such Inventory is not subject to any Lien or security interest or document whatsoever except for Liens permitted under Section 6.2 of the Credit Agreement, (iv) except as specifically disclosed in the most recent Collateral Report, such Inventory is Eligible Inventory of good and merchantable quality, free from any material defects, (v) such Inventory is not subject to any licensing, patent, royalty, trademark, trade name or copyright agreements with any third parties which would require any consent of any third party upon sale or disposition of that Inventory or the payment of any monies to any third party upon such sale or other disposition, (vi) such Inventory has been produced in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder and (vii) the completion of manufacture, sale or other disposition of such Inventory by the Administrative Agent following an Event of Default shall not require the consent of any Person and shall not constitute a breach or default under any material contract or agreement to which such Grantor is a party or to which such property is subject.
Section 3.11 Accounts. All of the Deposit Accounts of each Grantor as of the Closing Date are identified as such on Exhibit A to this Agreement.
ARTICLE IV
COVENANTS
Each Grantor covenants and agrees that, until Payment in Full, it will perform, comply with and be bound by the obligations set forth below.
Section 4.1 As to Investment Property, etc.
(a) Equity Interests of Subsidiaries. No Grantor shall allow or permit any of its Subsidiaries (i) that is a corporation, business trust, joint stock company or similar Person, to issue Uncertificated Securities, unless such Person promptly (and, in any case, within five (5) Business Days (or such later date as the Administrative Agent may agree in its sole discretion) of such issuance) takes the actions set forth in Section 4.1(b)(ii) with respect to any such Uncertificated Securities, (ii) that is a partnership or limited liability company, to (A) issue Equity Interests that are to be dealt in or traded on securities exchanges or in securities markets, (B) expressly provide in its organizational documents that its Equity Interests are securities governed by Article 8 of the UCC, or (C) place such Subsidiarys Equity Interests in a Securities Account, unless such Person promptly (and, in any case, within five (5) Business Days (or such
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later date as the Administrative Agent may agree in its sole discretion) of such placement) takes the actions set forth in Section 4.1(b)(ii) with respect to any such Equity Interests, and (iii) to issue Equity Interests in addition to or in substitution for the Pledged Property or any other Equity Interests pledged hereunder, except for additional Equity Interests issued to such Grantor; provided that (x) such Equity Interests are pledged and delivered to the Administrative Agent promptly (and in any event within ten (10) Business Days of issuance), and (y) such Grantor delivers a supplement to Schedule I to the Administrative Agent identifying such new Equity Interests as Pledged Property, in each case pursuant to the terms of this Security Agreement. No Grantor shall permit any of its Subsidiaries to issue any warrants, options, contracts or other commitments or other securities that are convertible to any of the foregoing (except as to Equity Interests issued by Subsidiaries that are not Wholly-Owned) or that entitle any Person to purchase any of the foregoing, and except for this Security Agreement or any other Credit Document, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement creating any restriction or condition upon the transfer, voting or control of any Pledged Property.
(b) Investment Property (other than Certificated Securities).
(i) With respect to any Commodity Contracts or Security Entitlements constituting Investment Property owned or held by any Grantor, such Grantor will, (A) with respect to any Commodity Contracts or Security Entitlements existing on the Closing Date, within 60 days of the Closing Date and (B) with respect to Commodity Contracts or Security Entitlements acquired after the Closing Date, within 30 calendar days of such acquisition, cause the intermediary maintaining such Investment Property to execute a Control Agreement relating to such Investment Property pursuant to which such intermediary agrees to comply with the Administrative Agents instructions with respect to such Investment Property without further consent by such Grantor, or (2) transfer such Investment Property to intermediaries that have or will agree to execute such Control Agreements.
(ii) With respect to any Uncertificated Securities (other than Uncertificated Securities credited to a Securities Account) owned or held by any Grantor, such Grantor will (y) cause the Pledged Interests Issuer or other issuer of such securities to either (A) register the Administrative Agent as the registered owner thereof on the books and records of the issuer, or (B) execute a Control Agreement relating to such Investment Property pursuant to which the Pledged Interests Issuer or other issuer agrees to comply with the Administrative Agents instructions with respect to such Uncertificated Securities (provided that, it is understood that the Administrative Agent shall not deliver such instructions except following the occurrence and during the continuance of an Event of Default), and (z) take and cause the appropriate Person (including any issuer, entitlement holder or securities intermediary thereof) to take all other actions necessary to grant control (as defined in 8-106 of the UCC) to the Administrative Agent (for the ratable benefit of the Secured Parties) over such Collateral.
(c) Certificated Securities (Stock Powers). Each Grantor agrees that all Pledged Interests which are certificated (and all other certificated shares of Equity Interests constituting Collateral) delivered by such Grantor pursuant to this Security Agreement will be accompanied by duly endorsed undated blank stock powers, or other equivalent instruments of
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transfer reasonably acceptable to the Administrative Agent. Each Grantor will, from time to time upon the reasonable request of the Administrative Agent, promptly deliver to the Administrative Agent such stock powers, instruments and similar documents, reasonably satisfactory in form and substance to the Administrative Agent, with respect to the Collateral and will, from time to time upon the request of the Administrative Agent during the continuance of any Event of Default, promptly transfer any Pledged Interests or other shares of Equity Interests constituting Collateral into the name of any nominee designated by the Administrative Agent.
(d) Continuous Pledge. Each Grantor will (subject to the terms of the Credit Agreement and this Security Agreement) at all times keep pledged to the Administrative Agent pursuant hereto, on a first-priority, perfected basis all Pledged Property and all Distributions with respect thereto, and all Proceeds and rights from time to time received by or distributable to such Grantor in respect of any of the foregoing Collateral (other than, as to perfection, Excluded Perfection Collateral). Each Grantor agrees that it will promptly (and no later than ten (10) Business Days following receipt thereof unless consented to by the Administrative Agent) deliver to the Administrative Agent possession of all originals of Pledged Property that it acquires following the Closing Date and shall deliver to the Administrative Agent a supplement to Schedule I identifying any such new Pledged Property.
(e) Voting Rights; Dividends, etc. Each Grantor agrees:
(i) that promptly upon receipt of notice of the occurrence and continuance of an Event of Default from the Administrative Agent and without any request therefor by the Administrative Agent, so long as such Event of Default shall continue, to deliver (properly endorsed where required hereby or requested by the Administrative Agent) to the Administrative Agent all Distributions with respect to Investment Property, all interest principal and other cash payments on the Pledged Property and all Proceeds of the Pledged Property, in case thereafter received by such Grantor, all of which shall be held by the Administrative Agent as additional Collateral; and
(ii) if an Event of Default shall have occurred and be continuing and the Administrative Agent has notified such Grantor of the Administrative Agents intention to exercise its voting power under this Section 4.1(e)(ii),
(A) the Administrative Agent may exercise (to the exclusion of such Grantor) the voting power and all other incidental rights of ownership with respect to any Pledged Interests, Investment Property or other Equity Interests constituting Collateral. EACH GRANTOR HEREBY GRANTS THE ADMINISTRATIVE AGENT AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL SUCH EVENT OF DEFAULT SHALL HAVE BEEN CURED OR WAIVED) EXERCISABLE UNDER SUCH CIRCUMSTANCES, TO VOTE THE PLEDGED INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL; AND
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(B) promptly to deliver to the Administrative Agent such additional proxies and other documents as may be necessary to allow the Administrative Agent to exercise such voting power.
All Distributions, interest, principal, cash payments, Payment Intangibles and Proceeds that may at any time and from time to time be held by any Grantor but which such Grantor is then obligated to deliver to the Administrative Agent, shall, until delivery to the Administrative Agent, be held by such Grantor separate and apart from its other property in trust for the Administrative Agent. The Administrative Agent agrees that unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given the notice referred to in Section 4.1(e), each Grantor shall be entitled to receive and retain all Distributions and shall have the exclusive voting power, and is granted a proxy, with respect to any Equity Interests constituting Collateral. Administrative Agent shall, upon the written request of any Grantor, promptly deliver such proxies and other documents, if any, as shall be reasonably requested by such Grantor which are necessary to allow such Grantor to exercise that voting power with respect to any such Equity Interests constituting Collateral; provided, however, that no vote shall be cast, or consent, waiver, or ratification given, or action taken by such Grantor that would violate any provision of the Credit Agreement or any other Credit Document (including this Security Agreement).
Section 4.2 As to Deposit Accounts.
With respect to any Deposit Account, Securities Account and Commodity Account (other than any Excluded Account for so long as such account is an Excluded Account) owned or held by any Grantor, such Grantor shall deliver an Account Control Agreement or lockbox agreement to the Administrative Agent in the manner set forth in Section 2.5(b) of the Credit Agreement.
Section 4.3 As to Accounts.
(a) Each Grantor shall have the right to collect all Accounts so long as no Event of Default shall have occurred and be continuing.
(b) Upon (i) the occurrence and continuance of an Event of Default and (ii) the delivery of notice by the Administrative Agent to each Grantor, all Proceeds of Collateral received by any Grantor shall be delivered in kind to the Administrative Agent for deposit in a Deposit Account of such Grantor maintained with the Administrative Agent and subject to a Control Agreement (any such Deposit Accounts, together with any other Deposit Accounts pursuant to which any portion of the Collateral is deposited with the Administrative Agent, a Collateral Account, and collectively, the Collateral Accounts), and such Grantor shall not commingle any such Proceeds, and shall hold separate and apart from all other property, all such Proceeds in express trust for the benefit of the Administrative Agent until delivery thereof is made to the Administrative Agent.
(c) Following the delivery of notice pursuant to clause (b)(ii) during the continuance of an Event of Default, the Administrative Agent shall have the right to apply any amount in the Collateral Account to the payment of any Secured Obligations which are due and payable or in accordance with Section 7.6 of the Credit Agreement.
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(d) With respect to each of the Collateral Accounts, it is hereby confirmed and agreed that (i) deposits in such Collateral Account are subject to a security interest as contemplated hereby, (ii) such Collateral Account shall be under the control of the Administrative Agent after the occurrence and during the continuance of an Event of Default (unless otherwise agreed to by the Borrower and the Majority Lenders), and (iii) the Administrative Agent shall have the sole right of withdrawal over such Collateral Account; provided that such withdrawals shall only be made during the existence of an Event of Default.
(e) No Grantor shall adjust, settle, or compromise the amount or payment of any Receivable, nor release wholly or partly any account debtor or obligor thereof, nor allow any credit or discount thereon; provided that, a Grantor may make such adjustments, settlements or compromises and release wholly or partly any account debtor or obligor thereof and allow any credit or discounts thereon so long as (i) such action is taken in the ordinary course of business, and (ii) such action is, in such Grantors good faith business judgment, advisable.
Section 4.4 As to Grantors Use of Collateral.
(a) Subject to clause (b), each Grantor (i) may in the ordinary course of its business, at its own expense, sell, lease or furnish under the contracts of service any of the Inventory held by such Grantor for such purpose, and use and consume any raw materials, work in process or materials held by such Grantor for such purpose, (ii) following the occurrence and during the continuance of an Event of Default, shall, at its own expense, endeavor to collect, as and when due, all amounts due with respect to any of the Collateral, including the taking of such action with respect to such collection as the Administrative Agent may request or, in the absence of such request, as such Grantor may deem advisable, and (iii) may grant, in the ordinary course of business, to any party obligated on any of the Collateral, any rebate, refund or allowance to which such party may be lawfully entitled, and may accept, in connection therewith, the return of Goods, the sale or lease of which shall have given rise to such Collateral.
(b) At any time following the occurrence and during the continuance of an Event of Default, whether before or after the maturity of any of the Secured Obligations, the Administrative Agent may (i) revoke any or all of the rights of any Grantor set forth in clause (a), (ii) notify any parties obligated on any of the Collateral to make payment to the Administrative Agent of any amounts due or to become due thereunder, and (iii) enforce collection of any of the Collateral by suit or otherwise and surrender, release, or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby.
(c) Upon request of the Administrative Agent following the occurrence and during the continuance of an Event of Default, each Grantor will, at its own expense, notify any parties obligated on any of the Collateral to make payment to the Administrative Agent of any amounts due or to become due thereunder.
(d) At any time following the occurrence and during the continuation of an Event of Default, the Administrative Agent may endorse, in the name of the applicable Grantor, any item, howsoever received by the Administrative Agent, representing any payment on or other Proceeds of any of the Collateral.
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Section 4.5 As to Equipment and Inventory and Goods. Each Grantor agrees to take such action (or cause its Restricted Subsidiaries that are also Credit Parties to take such action) as is reasonably requested by the Administrative Agent to enable it to properly perfect and protect its Lien on Equipment and Inventory and Goods that such Grantor has transferred from a jurisdiction within the United States of America or its offshore waters to a jurisdiction outside of the United States of America or its offshore waters. Notwithstanding anything else in this Section 4.5, it is understood and agreed that no such actions shall be required with respect to Excluded Collateral or Excluded Perfection Collateral.
Section 4.6 As to Intellectual Property Collateral. Each Grantor covenants and agrees to comply with the following provisions as such provisions relate to any Intellectual Property Collateral material to the operations or business of such Grantor:
(a) such Grantor will not (i) do or fail to perform any act whereby any such Patent Collateral may lapse or become abandoned or dedicated to the public or unenforceable except upon the expiration of the life of the applicable patent, (ii) permit any of its licensees to (A) fail to continue to use any of such Trademark Collateral in order to maintain all of such Trademark Collateral in full force free from any claim of abandonment for non-use, (B) fail to maintain as in the past the quality of products and services offered under all such Trademark Collateral, (C) fail to employ all of such Trademark Collateral registered with any federal or state, or if requested by the Administrative Agent, foreign authority with an appropriate notice of such registration, (D) knowingly adopt or use any other Trademark which is confusingly similar or a colorable imitation of any such Trademark Collateral, (E) use any such Trademark Collateral registered with any federal, state or if requested by the Administrative Agent, foreign authority except for the uses for which registration or application for registration of all of the Trademark Collateral has been made, or (F) do or permit any act or knowingly omit to do any act whereby any such Trademark Collateral may lapse or become invalid or unenforceable, or (iii) do or permit any act or knowingly omit to do any act whereby any such Copyright Collateral or any such Trade Secrets Collateral may lapse or become invalid or unenforceable or placed in the public domain except upon expiration of the end of an unrenewable term of a registration thereof, unless, in the case of any of the foregoing requirements in clauses (i), (ii) and (iii), such Grantor shall reasonably and in good faith determine that any of such Intellectual Property Collateral is of negligible economic value to such Grantor or in the case of Trade Secret Collateral, the publication of such information is customary in the ordinary course of business of such Grantor;
(b) such Grantor shall promptly notify the Administrative Agent if it knows that any application or registration relating to any material item of such Intellectual Property Collateral may become abandoned or dedicated to the public or placed in the public domain or invalid or unenforceable (other than upon the expiration of the life of the applicable patent), or of any adverse determination or development (including 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 or if requested by the Administrative Agent, any foreign counterpart thereof or any court) regarding such Grantors ownership of any such Intellectual Property Collateral, its right to register the same or to keep and maintain and enforce the same;
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(c) in no event will such Grantor or any of its agents, employees, designees or licensees file an application for the registration of any such material Intellectual Property Collateral with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency in any other country or any political subdivision thereof, unless it promptly informs the Administrative Agent, and upon request of the Administrative Agent (subject to the terms of the Credit Agreement), such Grantor shall execute and deliver all agreements, instruments and documents as the Administrative Agent may reasonably request to evidence the Administrative Agents security interest in such Intellectual Property Collateral;
(d) such Grantor will take all necessary steps, including in any proceeding before the United States Patent and Trademark Office, the United States Copyright Office or (subject to the terms of the Credit Agreement), if requested by the Administrative Agent, any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue any application (and to obtain the relevant registration) filed with respect to, and to maintain any registration of, each such Intellectual Property Collateral, including the filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and the payment of fees and taxes (except to the extent that dedication, abandonment or invalidation is permitted under the foregoing clause (a) or (b) or to the extent such Grantor shall reasonably and in good faith determine is of immaterial economic value to such Grantor);
(e) following the obtaining of an interest in any such Intellectual Property Collateral by such Grantor, such Grantor shall deliver a supplement to Schedule III identifying such new Intellectual Property Collateral; and
(f) following the obtaining of an interest in any such Intellectual Property Collateral by such Grantor or, following the occurrence and during the continuance of an Event of Default, upon the request of the Administrative Agent, such Grantor shall deliver all agreements, instruments and documents the Administrative Agent may reasonably request to evidence the Administrative Agents security interest in such Intellectual Property Collateral and as may otherwise be required to acknowledge or register or perfect the Administrative Agents interest in any part of such item of Intellectual Property Collateral unless such Grantor shall determine in good faith (and if an Event of Default has occurred and is continuing, with the consent of the Administrative Agent) that any Intellectual Property Collateral is of negligible economic value to such Grantor.
Section 4.7 As to Electronic Chattel Paper and Transferable Records. If any Grantor at any time holds or acquires an interest in any electronic chattel paper or any transferable record, as that term is defined in Section 201 of the U.S. Federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the U.S. Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, with a value in excess of $3,000,000, such Grantor shall promptly notify the Administrative Agent thereof and, at the reasonable request of the Administrative Agent, shall take such action as the Administrative Agent may reasonably request to vest in the Administrative Agent control (for the ratable benefit of Secured Parties) under Section 9-105 of the UCC of such electronic chattel paper or control under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in such
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jurisdiction, of such transferable record. The Administrative Agent agrees with each Grantor that the Administrative Agent will arrange, pursuant to procedures reasonably satisfactory to the Administrative Agent and so long as such procedures will not result in the Administrative Agents loss of control, for such Grantor to make alterations to the electronic chattel paper or transferable record permitted under Section 9-105 of the UCC or, as the case may be, Section 201 of the U.S. Federal Electronic Signatures in Global and National Commerce Act or Section 16 of the U.S. Uniform Electronic Transactions Act for a party in control to allow without loss of control, unless an Event of Default has occurred and is continuing or would occur after taking into account any action by such Grantor with respect to such electronic chattel paper or transferable record.
Section 4.8 As to Certificated Equipment. The certificates of title with respect to Certificated Equipment shall be maintained at the applicable Grantors offices or at such other new location of the Grantors office as to which written notice has been given to the Administrative Agent in accordance with Section 4.11.
Section 4.9 Trade Secrets. With respect to any patent applications in preparation for filing that comprise Trade Secret Collateral, Grantor shall have the right to assert its attorney-client privilege in such applications and not to disclose such applications unless and until an Event of Default has occurred and is continuing. If an Event of Default has occurred and is continuing, then at the request of the Administrative Agent, the Grantors shall deliver to the Administrative Agent any patent applications in preparation for filing and all documents and things embodying, incorporating or referring to inventions that in any way relate to such patent application.
Section 4.10 As to Commercial Tort Claims. If any Grantor shall obtain an interest in any commercial tort claim with a potential value in excess of $3,000,000, such Grantor shall within 20 days of obtaining such interest sign and deliver documentation acceptable to the Administrative Agent granting a security interest under the terms and provisions of this Agreement in and to such commercial tort claim including a supplement to Schedule IV hereto.
Section 4.11 Locations. Each Grantor shall not (i) maintain any tangible Collateral owned by it with a book value in excess of $1,000,000 at any location other than those locations listed on Schedule IV to this Agreement (as such Schedule may be supplemented from time to time), (ii) otherwise change, or add to, such locations without providing written notice to the Administrative Agent no less than five (5) days prior to such change or addition of a location and such Grantor will concurrently therewith obtain a Collateral Access Agreement for each such location to the extent required by Section 4.12, or (iii) change its principal place of business or chief executive office from the location identified on Schedule IIB to this Agreement, other than as permitted by the Credit Agreement.
Section 4.12 Collateral Access Agreements. Each Grantor shall use commercially reasonable efforts to obtain a Collateral Access Agreement from the lessor of each Material Inventory Location, which agreement or letter shall provide access rights, contain a waiver or subordination of all Liens or claims that the landlord, mortgagee, bailee or consignee may assert against the Material Inventory at that location, and shall otherwise be reasonably satisfactory in form and substance to the Administrative Agent. With respect to such Material Inventory
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Locations as of the Closing Date and thereafter, if the Administrative Agent has not received a Collateral Access Agreement within sixty (60) days of the Closing Date (or, if such location is subsequently acquired or leased after the date that is sixty (60) days after the Closing Date, as of the date that such location is subsequently acquired or leased), the U.S. Borrowers Eligible Inventory at that location shall be subject to Reserves as may be established by the Administrative Agent in accordance with the Credit Agreement. Grantor shall use commercially reasonable efforts to obtain a Collateral Access Agreement for all locations to which Eligible Inventory with a book value in excess of $500,000 is being shipped to a processor or converter under arrangements established after the Closing Date and, to the extent a Collateral Access Agreement has not been obtained with respect to any location, the U.S. Borrowers Eligible Inventory at that location shall be subject to the establishment of Reserves as may be established by the Administrative Agent in accordance with the Credit Agreement. Such Grantor shall timely and fully pay and perform its obligations under all leases and other agreements with respect to each leased location or third party warehouse where any Inventory is or may be located.
Section 4.13 Further Assurances, etc. Each Grantor shall warrant and defend the right and title herein granted unto the Administrative Agent in and to the Collateral (and all right, title and interest represented by the Collateral) against the claims and demands of all Persons whomsoever. Each Grantor agrees that, from time to time at its own expense, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that the Administrative Agent may reasonably request, in order to perfect, preserve and protect any security interest granted or purported to be granted hereby or to enable the Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral (other than, as to perfection, Excluded Perfection Collateral) subject to the terms hereof. Each Grantor agrees that, upon the acquisition after the date hereof by such Grantor of any Collateral, with respect to which the security interest granted hereunder is not perfected automatically upon such acquisition, to take such actions with respect to such Collateral (other than, as to perfection, Excluded Perfection Collateral) or any part thereof as required by the Credit Documents. Without limiting the generality of the foregoing, each Grantor will:
(a) from time to time upon the request of the Administrative Agent, promptly deliver to the Administrative Agent such stock powers, instruments and similar documents, reasonably satisfactory in form and substance to the Administrative Agent, with respect to such Collateral as the Administrative Agent may reasonably request and will, from time to time upon the request of the Administrative Agent, after the occurrence and during the continuance of any Event of Default, (i) promptly transfer any securities constituting Collateral into the name of any nominee designated by the Administrative Agent and (ii) if any Collateral shall be evidenced by an Instrument, negotiable Document, promissory note or tangible Chattel Paper, deliver and pledge to the Administrative Agent hereunder such Instrument, negotiable Document, promissory note, Pledged Note or tangible Chattel Paper duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Administrative Agent;
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(b) file (and hereby authorize the Administrative Agent to file) such financing statements or continuation statements, or amendments thereto, and such other instruments or notices (including any assignment of claim form under or pursuant to the federal assignment of claims statute, 31 U.S.C. § 3726, any successor or amended version thereof or any regulation promulgated under or pursuant to any version thereof), as may be necessary or that the Administrative Agent may reasonably request in order to perfect and preserve the security interests and other rights granted or purported to be granted to the Administrative Agent hereby; and
(c) furnish to the Administrative Agent, from time to time at the Administrative Agents reasonable request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail.
The authorization contained in Section 4.10(b) above shall be irrevocable and continuing until Payment in Full. Each Grantor agrees that a carbon, photographic or other reproduction of this Security Agreement or any UCC financing statement covering the Collateral or any part thereof shall be sufficient as a UCC financing statement where permitted by law. Each Grantor hereby authorizes the Administrative Agent to file financing statements describing as the collateral covered thereby all of the debtors personal property or assets or words to that effect, notwithstanding that such wording may be broader in scope than the Collateral described in this Security Agreement.
ARTICLE V
THE ADMINISTRATIVE AGENT
Section 5.1 Administrative Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints the Administrative Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Administrative Agents discretion, following the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument which the Administrative Agent may deem necessary or advisable to accomplish the purposes of this Security Agreement, including (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (b) to receive, endorse, and collect any drafts or other Instruments, Documents and Chattel Paper, in connection with clause (a) above, (c) to file any claims or take any action or institute any proceedings which the Administrative Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Administrative Agent with respect to any of the Collateral, and (d) to perform the affirmative obligations of such Grantor hereunder. EACH GRANTOR HEREBY ACKNOWLEDGES, CONSENTS AND AGREES THAT THE POWER OF ATTORNEY GRANTED PURSUANT TO THIS SECTION 5.1 IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND SHALL BE EFFECTIVE UNTIL PAYMENT IN FULL.
Section 5.2 Administrative Agent May Perform. If any Grantor fails to perform any agreement contained herein, the Administrative Agent may, during the continuance of any Event of Default, itself perform, or cause performance of, such agreement, and the expenses of the Administrative Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 6.3 hereof and Section 9.1 of the Credit Agreement and the Administrative Agent may from time to time take any other action which the Administrative Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein.
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Section 5.3 Administrative Agent Has No Duty. The powers conferred on the Administrative Agent hereunder are solely to protect its interest (on behalf of the Secured Parties) in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Administrative Agent shall have no duty as to any Collateral or responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Investment Property and any other Pledged Property, whether or not the Administrative Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.
Section 5.4 Reasonable Care. The Administrative Agent is required to exercise reasonable care in the custody and preservation of any of the Collateral in its possession; provided, that the Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral (a) if such Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own personal property, or (b) if the Administrative Agent takes such action for that purpose as any Grantor reasonably requests in writing at times other than upon the occurrence and during the continuance of an Event of Default; provided, further, that failure of the Administrative Agent to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
Section 6.1 Certain Remedies. If any Event of Default shall have occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral) and also may (i) take possession of any Collateral not already in its possession without demand and without legal process, (ii) require any Grantor to, and each Grantor hereby agrees that it will, at its expense and upon request of the Administrative Agent forthwith, assemble all or part of the Collateral as directed by the Administrative Agent and make it available to the Administrative Agent at a place to be designated by the Administrative Agent that is reasonably convenient to both parties, (iii) subject to applicable Legal Requirement or agreements with landlords, bailees, or warehousemen, enter onto the property where any Collateral is located and take possession thereof without demand and without legal process, (iv) without notice except as specified below, lease, license, sell or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Administrative Agents offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days prior notice to the applicable Grantor of the time and place of any public sale or the time of any
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private sale is to be made shall constitute reasonable notification; provided, however, that with respect to Collateral that is (x) perishable or threatens to decline speedily in value, or (y) is of a type customarily sold on a recognized market (including Investment Property), no notice of sale or disposition need be given. For purposes of this Article VI, notice of any intended sale or disposition of any Collateral may be given by first-class mail, hand-delivery (through a delivery service or otherwise), facsimile or email, and shall be deemed to have been sent upon deposit in the U.S. Mails with adequate postage properly affixed, upon delivery to an express delivery service or upon electronic submission through telephonic or internet services, as applicable. 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 public or private sale from time to time 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 so adjourned.
(b) Each Grantor that is or may become a fee estate owner of property where any Collateral is located (regardless of ownership thereof by any other Grantor) agrees and acknowledges that (i) Administrative Agent may remove the Collateral or any part thereof from such property in accordance with statutory law appertaining thereto without objection, delay, hindrance or interference by such Grantor and in such case such Grantor will make no claim or demand whatsoever against the Collateral, (ii) it will (x) cooperate with Administrative Agent in its efforts to assemble and/or remove all of the Collateral located on such property; (y) permit Administrative Agent and its agents to enter upon such property and occupy the property at any or all times to conduct an auction or sale, and/or to inspect, audit, examine, safeguard, assemble, appraise, display, remove, maintain, prepare for sale or lease, repair, lease, transfer, auction and/or sell the Collateral; and (z) not hinder Administrative Agents actions in enforcing its security interest in the Collateral.
(c) Each Grantor agrees and acknowledges that a commercially reasonable disposition of Inventory, Equipment, Goods, Computer Hardware and Software Collateral, or Intellectual Property Collateral may be by lease or license of, in addition to the sale of, such Collateral. Each Grantor further agrees and acknowledges that the following shall be deemed a reasonable commercial disposition: (i) a disposition made in the usual manner on any recognized market, (ii) a disposition at the price current in any recognized market at the time of disposition, and (iii) a disposition in conformity with reasonable commercial practices among dealers in the type of property subject to the disposition.
(d) All cash Proceeds received by the Administrative Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral shall be applied by the Administrative Agent against, all or any part of the Obligations as set forth in Section 7.6 of the Credit Agreement. The Administrative Agent shall not be obligated to apply or pay over for application noncash proceeds of collection or enforcement unless (i) the failure to do so would be commercially unreasonable, and (ii) the affected party has provided the Administrative Agent with a written demand to apply or pay over such noncash proceeds on such basis.
(e) The Administrative Agent may do any or all of the following: (i) transfer all or any part of the Collateral into the name of the Administrative Agent or its nominee, with or without disclosing that such Collateral is subject to the Lien hereunder, (ii) notify the parties obligated on any of the Collateral to make payment to the Administrative Agent of any amount
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due or to become due thereunder, (iii) withdraw, or cause or direct the withdrawal, of all funds with respect to the Collateral Account, (iv) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto, (v) endorse any checks, drafts, or other writings in the applicable Grantors name to allow collection of the Collateral, (vi) take control of any Proceeds of the Collateral, or (vii) execute (in the name, place and stead of the applicable Grantor) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Collateral.
Section 6.2 Compliance with Restrictions. Each Grantor agrees that in any sale of any of the Collateral whenever an Event of Default shall have occurred and be continuing, the Administrative Agent is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable Legal Requirement (including compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any Governmental Authority or official, and each Grantor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Administrative Agent be liable nor accountable to such Grantor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction.
Section 6.3 Indemnity and Expenses.
(a) WITHOUT LIMITING THE GENERALITY OF THE PROVISIONS OF SECTION 9.1 OF THE CREDIT AGREEMENT, EACH GRANTOR HEREBY INDEMNIFIES AND HOLDS HARMLESS THE ADMINISTRATIVE AGENT, EACH SECURED PARTY AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS (ANY OF THE FOREGOING BEING, AN INDEMNITEE) FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES AND LIABILITIES ARISING OUT OF OR RESULTING FROM THIS SECURITY AGREEMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING ENFORCEMENT OF THIS SECURITY AGREEMENT), EXCEPT CLAIMS, LOSSES OR LIABILITIES THAT (I) ARE FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNITEES BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, (II) RESULT FROM A CLAIM BROUGHT BY A GRANTOR AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH INDEMNITEES OBLIGATIONS HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT, IF SUCH GRANTOR HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION OR (III) A DISPUTE AMONG OR BETWEEN INDEMNITEES (EXCEPT TO THE EXTENT THAT SUCH INDEMNIFIED LOSS WAS INCURRED BY OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT, ANY
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ARRANGER OR ISSUING LENDER IN ITS CAPACITY AS SUCH) AND NOT INVOLVING ANY ACT OR OMISSION OF THE GRANTORS; PROVIDED, HOWEVER, THAT, TO THE EXTENT THIS INDEMNITY WOULD OTHERWISE APPLY, IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH INDEMNITEE BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. If and to the extent that the foregoing undertaking may be unenforceable for any reason, each Grantor hereby agrees to make the maximum contribution to the payment and satisfaction of each of the foregoing which is permissible under applicable Legal Requirement.
(b) Other than as set forth in clause (c) below, each Grantor will upon demand pay to the Administrative Agent the amount of any and all out-of-pocket expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Administrative Agent may incur in connection herewith, including in connection with the administration of this Security Agreement and the custody, preservation, use or operation of, any of the Collateral in accordance with Section 9.1 of the Credit Agreement.
(c) Each Grantor will upon demand pay to the Administrative Agent the amount of any and all out-of-pocket expenses, including the fees and disbursements of its counsel and of any experts and agents, which the Administrative Agent may incur in connection (i) the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of the Administrative Agent or any of the Secured Parties hereunder, or (iii) the failure by any Grantor to perform or observe any of the provisions hereof.
Section 6.4 Warranties. The Administrative Agent may sell the Collateral without giving any warranties or representations as to the Collateral. The Administrative Agent may disclaim any warranties of title or the like. Each Grantor agrees that this procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1 Credit Document. This Security Agreement is a Credit Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article 9 thereof.
Section 7.2 Binding on Successors, Transferees and Assigns; Assignment. This Security Agreement shall remain in full force and effect until Payment in Full, shall be binding upon each Grantor and its successors, transferees and assigns and, subject to the limitations set forth in the Credit Agreement, shall inure to the benefit of and be enforceable by each Secured Party and its successors, transferees and assigns; provided that, no Grantor shall assign any of its obligations hereunder (unless otherwise permitted under the terms of the Credit Agreement or this Security Agreement).
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Section 7.3 Amendments, etc. No amendment to or waiver of any provision of this Security Agreement, nor consent to any departure by any Grantor from its obligations under this Security Agreement, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent (on behalf of the Lenders or the Majority Lenders, as the case may be, pursuant to Section 9.2 of the Credit Agreement) and such Grantor and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
Section 7.4 Notices. Except as otherwise provided in this Security Agreement, all notices and other communications provided for hereunder shall be in writing and hand delivered with written receipt, telecopied, sent by facsimile (with a hard copy sent as otherwise permitted pursuant to the Credit Agreement), sent by a nationally recognized overnight courier, or sent by certified mail, return receipt requested to the appropriate party at the address or facsimile number of such party specified in the Credit Agreement, on the signature pages of this Security Agreement or at such other address or facsimile number as may be designated by such party in a notice to the other party. Except as otherwise provided in this Security Agreement, all such notices and communications shall be effective when delivered.
Section 7.5 No Waiver; Remedies. In addition to, and not in limitation of Section 2.7, no failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.
Section 7.6 Headings. The various headings of this Security Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Security Agreement or any provisions thereof.
Section 7.7 Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
Section 7.8 Counterparts. This Security Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. Delivery of an executed counterpart of a signature page to this Security Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Security Agreement.
Section 7.9 Consent as Holder of Equity and as Pledged Interests Issuer. Each Grantor hereby (a) consents to the execution by each other Grantor of this Security Agreement and grant by each other Grantor of a security interest, encumbrance, pledge and hypothecation in all Pledged Interests and other Collateral of such other Grantor to the Administrative Agent pursuant hereto, and (b) without limiting the generality of the foregoing, consents to the transfer of any Pledged Interest to the Administrative Agent or its nominee pursuant to the terms of this Security Agreement following the occurrence and during the continuance of an Event of Default
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and to the substitution of the Administrative Agent or its nominee as a partner under the limited partnership agreement or as a member under the limited liability company agreement, in any case, as heretofore and hereafter amended. Furthermore, each Grantor as the holder of any Equity Interests in a Pledged Interests Issuer, hereby (i) waives all rights of first refusal, rights to purchase, and rights to consent to transfer (to any Secured Party or to any purchaser resulting from the exercise of a Secured Partys remedy provided hereunder or under applicable Legal Requirement) and (ii) if required by the organizational documents of such Pledged Interests Issuer, agrees to cause such Pledged Interests Issuer to register the Lien granted hereunder and encumbering such Equity Interests in the registry books of such Pledged Interests Issuer.
Section 7.10 Additional Grantors. Additional Wholly-Owned Domestic Restricted Subsidiaries of Borrower may from time to time enter into this Security Agreement as a Grantor. Upon execution and delivery after the date hereof by the Administrative Agent and such Wholly- Owned Domestic Restricted Subsidiary of an instrument in the form of Annex 1, such Wholly- Owned Domestic Restricted Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Security Agreement shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Security Agreement.
Section 7.11 Acknowledgment of Pledged Interests Issuers. Each Pledged Interests Issuer that is party hereto agrees that it will comply with instructions of the Administrative Agent with respect to the applicable Uncertificated Securities without further consent by the applicable Grantor.
Section 7.12 Conflicts with Credit Agreement. To the fullest extent possible, the terms and provisions of the Credit Agreement shall be read together with the terms and provisions of this Security Agreement so that the terms and provisions of this Security Agreement do not conflict with the terms and provisions of the Credit Agreement; provided, however, notwithstanding the foregoing, in the event that any of the terms or provisions of this Security Agreement conflict with any terms or provisions of the Credit Agreement, the terms or provisions of the Credit Agreement shall govern and control for all purposes; provided that the inclusion in this Security Agreement of terms and provisions, supplemental rights or remedies in favor of the Administrative Agent not addressed in the Credit Agreement shall not be deemed to be in conflict with the Credit Agreement and all such additional terms, provisions, supplemental rights or remedies contained herein shall be given full force and effect.
Section 7.13 Governing Law. This Security Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.
Section 7.14 Submission to Jurisdiction. EACH GRANTOR PARTY TO THIS SECURITY AGREEMENT 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 COUNTY 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
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PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE GRANTORS PARTY 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 LEGAL REQUIREMENT, IN SUCH FEDERAL COURT. EACH OF THE GRANTORS PARTY 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 APPLICABLE LEGAL REQUIREMENT. NOTHING IN THIS SECURITY AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS SECURITY AGREEMENT AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
Section 7.15 Waiver of Venue. EACH GRANTOR PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, 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 SECURITY AGREEMENT IN ANY COURT REFERRED TO IN SECTION 7.14. EACH OF THE PARTIES HERETO HEREBY AGREES THAT SECTIONS 5-1401 AND 4-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS SECURITY AGREEMENT AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
Section 7.16 Service of Process. Each Grantor party hereto irrevocably consents to service of process in the manner provided for notices in Section 9.9 of the Credit Agreement.
Nothing in this Security Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable Legal Requirement.
Section 7.17 Waiver of Jury. EACH GRANTOR PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH GRANTOR 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 SECURITY AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
35
THIS SECURITY AGREEMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND SUPERSEDE ALL PRIOR UNDERSTANDINGS AND AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATING TO THE TRANSACTIONS PROVIDED FOR HEREIN AND THEREIN. ADDITIONALLY, THIS SECURITY AGREEMENT AND THE CREDIT DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder of this page intentionally left blank. Signature pages to follow.]
36
IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be duly executed and delivered by its Responsible Officer as of the date first above written.
GRANTORS | ||
NINE ENERGY SERVICES, INC. BECKMAN PRODUCTION SERVICES, INC. (DELAWARE) | ||
BECKMAN PRODUCTION SERVICES, INC. (MICHIGAN) | ||
BIG LAKE SERVICE, LLC | ||
BIG LAKE SERVICES HOLDCO, LLC CDK INTERMEDIATE, LLC | ||
CDK PERFORATING, LLC | ||
CDK PERFORATING HOLDINGS, INC. CREST PUMPING TECHNOLOGIES, LLC DAK-TANA WIRELINE, LLC | ||
J & R WELL SERVICE, LLC | ||
NINE DOWNHOLE TECHNOLOGIES, LLC NINE ENERGY SERVICE, LLC | ||
NORTHERN PRODUCTION COMPANY, LLC NORTHERN STATES COMPLETIONS, INC. PEAK PRESSURE CONTROL, LLC | ||
R & S WELL SERVICE, INC. REDZONE COIL TUBING, LLC REDZONE HOLDCO, LLC | ||
SJL WELL SERVICE, LLC MAGNUM OIL TOOLS GP, LLC | ||
MAGNUM OIL TOOLS INTERNATIONAL, LTD | ||
MOTI HOLDCO, LLC | ||
By: |
| |
Name: | Ann G. Fox | |
Title: | President, Chief Executive Officer |
[Signature Page to Pledge and Security Agreement]
JPMORGAN CHASE BANK, N.A., as | ||
Administrative Agent | ||
By: |
| |
Name: | ||
Title: |
[Signature Page to Pledge and Security Agreement]
ANNEX 1 to Pledge and Security
Agreement
SUPPLEMENT TO U.S. PLEDGE AND SECURITY AGREEMENT
SUPPLEMENT NO. dated as of , 20 (this Supplement), to the Pledge and Security Agreement dated as of , 2018 (as amended, supplemented, restated, or otherwise modified from time to time, the Security Agreement), among NINE ENERGY SERVICE, INC., a Delaware corporation (the Borrower) and each domestic subsidiary of the Borrower party thereto from time to time (collectively with the Borrower, the Grantors and individually, a Grantor), and JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity, the Administrative Agent) for the ratable benefit of the Secured Parties (as defined in the Credit Agreement referred to herein).
A. Reference is made to the Credit Agreement dated as of , 2018 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), among the Borrower, Nine Energy Canada, Inc., the lenders from time to time party thereto (the Lenders), the Issuing Lenders (as defined in the Credit Agreement), and JPMorgan Chase Bank, N.A., as Administrative Agent.
B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and the Credit Agreement.
C. Section 7.10 of the Security Agreement provides that additional Wholly-Owned Domestic Restricted Subsidiaries of the Borrower may become Grantors under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Wholly-Owned Domestic Restricted Subsidiary of the Borrower (the New Grantor) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Grantor under the Security Agreement.
Accordingly, the Administrative Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 7.10 of the Security Agreement, the New Grantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and the New Grantor hereby agrees (a) to all the terms and provisions of the Security Agreement applicable to it as a Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of the U.S. Secured Obligations (as defined in the Credit Agreement), does hereby create and grant to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns as provided in the Security Agreement, a continuing security interest in and Lien on all of the New Grantors right, title and interest in and to the Collateral (as defined in the Security Agreement) of the New Grantor. Each reference to a Grantor in the Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby incorporated herein by reference.
[Annex I Supplement to Pledge and Security Agreement]
SECTION 2. The New Grantor represents and warrants to the Administrative Agent and the other Secured Parties 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 (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Grantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by facsimile or other electronic transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.
SECTION 4. The New Grantor hereby agrees that the schedules attached to the Security Agreement are hereby supplemented by the corresponding schedules attached to this Supplement. The New Grantor hereby represents and warrants that the information provided in the schedules attached hereto is true and correct as of the date hereof.
SECTION 5. The New Grantor hereby expressly acknowledges and agrees to the terms of Section 6.3. (Indemnity and Expenses) of the Security Agreement and expressly acknowledges the irrevocable proxy provided in Section 4.1(e) of the Security Agreement. In furtherance thereof, NEW GRANTOR HEREBY GRANTS THE ADMINISTRATIVE AGENT AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL PAYMENT IN FULL) EXERCISABLE UNDER THE CIRCUMSTANCES PROVIDED IN SECTION 4.1 OF THE SECURITY AGREEMENT, TO VOTE THE PLEDGED INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL.
SECTION 6. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.
SECTION 7. This Supplement shall be deemed a contract under, and shall be governed by, and construed and enforced in accordance with, the laws of the State of New York (including Section 5-1401 and Section 5-1402 of the General Obligations Law of the State of New York), applicable to contracts made and to be performed entirely within such state, including without regard to conflicts of laws principles, except to the extent that the validity or perfection of the security interests hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the State of New York.
SECTION 8. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, neither party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the Security Agreement shall not in any way be affected or impaired.
[Annex I Supplement to Pledge and Security Agreement]
The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9. All communications and notices hereunder shall be in writing and given as provided in the Security Agreement. All communications and notices hereunder to the New Grantor shall be given to it at the address set forth under its signature hereto.
SECTION 10. The New Grantor 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.
SECTION 11. Submission to Jurisdiction. NEW GRANTOR 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 COUNTY 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 SUPPLEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND NEW GRANTOR 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 LEGAL REQUIREMENT, IN SUCH FEDERAL COURT. NEW GRANTOR 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 SUPPLEMENT SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS SUPPLEMENT AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
SECTION 12. Waiver of Venue. NEW GRANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, 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 SUPPLEMENT IN ANY COURT REFERRED TO IN SECTION 11. NEW GRANTOR HEREBY AGREES THAT SECTIONS 5-1401 AND 4-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THIS SUPPLEMENT AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
SECTION 13. Service of Process. New Grantor irrevocably consents to service of process in the manner provided for notices in Section 9.9 of the Credit Agreement. Nothing in this Supplement will affect the right of any party hereto to serve process in any other manner permitted by applicable Legal Requirement.
[Annex I Supplement to Pledge and Security Agreement]
Section 7.18 Waiver of Jury. NEW GRANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUPPLEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). NEW GRANTOR (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 SUPPLEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
THIS SUPPLEMENT, THE SECURITY AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT REFERRED TO IN THIS SUPPLEMENT, 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 HERETO.
IN WITNESS WHEREOF, the New Grantor 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 Grantor] | ||
By: |
| |
Name: | ||
Title: | ||
Address: | ||
JPMORGAN CHASE BANK, N.A., as | ||
Administrative Agent | ||
By: |
| |
Name: | ||
Title: |
[Annex I Supplement to Pledge and Security Agreement]
JPMORGAN CHASE BANK, N.A., as | ||
Administrative Agent | ||
By: |
| |
Name: | ||
Title: |
[Signature Page to Pledge and Security Agreement]
SCHEDULES TO SUPPLEMENT NO. 1
[AS APPROPRIATE]
EXHIBIT A TO SUPPLEMENT
DEPOSIT ACCOUNTS
[ ]
LOCK BOXES
[ ]
EXHIBIT D-2
CANADIAN PLEDGE AND SECURITY AGREEMENT
This CANADIAN PLEDGE AND SECURITY AGREEMENT, dated as of October [25], 2018 (as amended, supplemented, amended and restated or otherwise modified from time to time, this Security Agreement), is by and among NINE ENERGY CANADA INC., an Alberta corporation (the Borrower), each subsidiary of the Borrower which is a Canadian Restricted Subsidiary (as defined below) party hereto from time to time (collectively with the Borrower, the Grantors and individually, a Grantor), and JPMorgan Chase Bank, N.A., Toronto Branch, as Administrative Agent (in such capacity, the Administrative Agent) for the ratable benefit of the Secured Parties (as defined in the Credit Agreement referred to herein).
W I T N E S S E T H:
WHEREAS, this Security Agreement is entered into in connection with that certain Credit Agreement dated as of the date hereof (as amended, supplemented, amended and restated or otherwise modified from time to time, the Credit Agreement), by and among Nine Energy Service, Inc. (the U.S. Borrower), the Borrower, the lenders party thereto from time to time (the Lenders), the Issuing Lenders (as defined in the Credit Agreement) and JPMorgan Chase Bank, N.A., as administrative agent; and
WHEREAS, pursuant to the terms of the Credit Agreement, and in consideration of the credit extended by the Lenders to the Borrower, the Grantors have executed and delivered the Guaranty (as defined in the Credit Agreement); and
WHEREAS, as a condition precedent to the initial extension of credit under the Credit Agreement, each Grantor is required to execute and deliver this Security Agreement; and
WHEREAS, it is in the best interests of each Grantor to execute this Security Agreement inasmuch as each Grantor will derive substantial direct and indirect benefits from (i) the transactions contemplated by the Credit Agreement and the other Credit Documents (as defined in the Credit Agreement), (ii) the Swap Agreements (as defined in the Credit Agreement) entered into by the Borrower or any other Canadian Credit Party (as defined in the Credit Agreement) with a Swap Counterparty (as defined in the Credit Agreement), and (iii) the Banking Services (as defined in the Credit Agreement) provided by any Banking Services Provider to the Borrower or any other Canadian Credit Party, and each Grantor is willing to execute, deliver and perform its obligations under this Security Agreement to secure the Canadian Secured Obligations (as defined in the Credit Agreement).
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor agrees, for the benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Terms. The following capitalized terms when used in this Security Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):
Accounts means, with respect to any Grantor, all accounts, as such term is defined in the PPSA, now owned or hereafter acquired by such Grantor and, in any event, includes all accounts due or accruing due and all agreements, books, accounts receivable, other receivables, book debts, claims and demand of every nature and kind and other forms of monetary obligations (other than forms of monetary obligations evidenced by Chattel Paper, Securities or Instruments) now owned or hereafter received or acquired by or belonging or owing to such Grantor, whether or not yet earned by performance on the part of such Grantor and all invoices, letters, documents and papers recording, evidencing or relating thereto.
Administrative Agent has the meaning set forth in the preamble.
Blocked Account Agreements means all agreements, in form and substance satisfactory to the Administrative Agent, among any Grantor, any banking institution holding such Grantors funds, and the Administrative Agent with respect to collection and control of all deposits and balances held in any Deposit Account maintained by such Grantor with such banking institutions.
Borrower has the meaning set forth in the preamble.
Certificated Equipment means any Equipment the ownership of which is evidenced by, or under any applicable Legal Requirement is required to be evidenced by, a certificate of title.
Chattel Paper (i) means all chattel paper as defined in the PPSA and (ii) includes all chattel paper in which a Grantor now or hereafter has an interest, and any part of such interest.
Collateral has the meaning set forth in Section 2.1(a).
Collateral Access Agreement means any landlord waiver or other agreement, in form and substance reasonably satisfactory to the Administrative Agent, between the Administrative Agent and any third party (including any bailee, consignee, customs broker, or other similar Person) in possession of any Collateral or any landlord of any real property where any Collateral is located, as such landlord waiver or other agreement may be amended, restated, supplemented or otherwise modified from time to time.
Collateral Account has the meaning set forth in Section 4.3(b).
Collateral Report means any certificate (including any Borrowing Base Certificate), report or other document delivered by any Grantor to the Administrative Agent or any Lender with respect to the Collateral pursuant to any Credit Document.
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Computer Hardware and Software Collateral means (a) all computer and other electronic data processing hardware, integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware, including all operating system software, utilities and application programs in whatsoever form owned by a Grantor or leased or licensed to Grantor, (b) software programs (including both source code, object code and all related applications and data files), designed for use on the computers and electronic data processing hardware described in clause (a) above owned by a Grantor or leased or licensed to a Grantor, (c) all firmware associated therewith, (d) all documentation (including flow charts, logic diagrams, manuals, guides, specifications, training materials, charts and pseudo codes) with respect to such hardware, software and firmware described in the preceding clauses (a) through (c), and (e) all rights with respect to all of the foregoing, including copyrights (including renewal rights) and trade secrets rights, contract rights of a Grantor with respect to all or any of the foregoing, licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications and any substitutions, replacements, improvements, error corrections, updates, additions or model conversions of any of the foregoing.
Control means, with respect to a specified form of Investment Property, control as defined in sections 23 through 26 of the STA as applicable to such form of Investment Property.
Control Agreement means an authenticated record in form and substance reasonably satisfactory to the Administrative Agent, that provides for the Administrative Agent (for the benefit of the Secured Parties) to have Control over certain Collateral.
Copyright Collateral means all copyrights of any Grantor, registered or unregistered and whether published or unpublished, now or hereafter in force throughout the world including all of such Grantors rights, titles and interests in and to all copyrights registered in the Canadian Intellectual Property Office or anywhere else in the world, including those copyright registrations or applications therefor set forth in Schedule III-C hereto, and registrations and recordings thereof and all applications for registration thereof, whether pending or in preparation, all copyright licenses, the right to sue for past, present and future infringements of any of the foregoing, all rights corresponding thereto, all extensions and renewals of any thereof and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and Proceeds of suit, which are owned or licensed by such Grantor.
Credit Agreement has the meaning set forth in the first recital.
Deposit Accounts means any demand, time, savings, passbook or like account maintained with a depository institution.
Design Collateral means all of any Grantors right, title and interest in and to the following: (a) all industrial designs and intangibles of like nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including all registrations, recordings and applications in the Canadian Industrial Design Office or in any similar office or agency in any other country or any political subdivision thereof, and (b) all reissues, extensions or renewals thereof.
3
Distributions means all cash, cash dividends, stock dividends, other distributions, liquidating dividends, shares of stock resulting from (or in connection with the exercise of) stock splits, reclassifications, warrants, options, non-cash dividends, and all other distributions or payments (whether similar or dissimilar to the foregoing) on or with respect to, or on account of, any Pledged Interest or other rights or interests constituting Collateral.
Documents of Title (i) means all documents of title as defined in the PPSA and (ii) includes, without limitation, all documents of title, whether negotiable or non-negotiable, including, without limitation, all warehouse receipts and bills of lading, in which the Grantor now or hereafter has an interest, and any part thereof.
Equipment means: all Goods owned by the Grantors which constitute machinery, equipment (as defined in the PPSA) and other and similar goods used in the business of the Grantors, including, without limitation, all manufacturing equipment, data processing equipment, computers, office equipment, furnishings, furniture, appliances, and serial number goods of the Grantors.
Excluded Collateral has the meaning set forth in Section 2.1(b).
Excluded Contracts means any contract to which any of the Grantors is a party on the date hereof or which is entered into by any Grantor after the date hereof which complies with Section 6.5 of the Credit Agreement (and the provisions of which are not agreed to by a Grantor for the purposes of excluding such contract from the Lien granted hereunder) to the extent (but only to the extent) that the granting of a security interest therein would be prohibited by (a) such contract under a provision (unless a Restricted Entity may unilaterally waive such prohibition) in such contract in existence on the date hereof or, as to contracts entered into after the date hereof, in existence in compliance with Section 6.5 of the Credit Agreement (and the provisions of which are not agreed to by a Grantor for the purposes of excluding such contract from the Lien granted hereunder), or (b) an applicable Legal Requirement to which such Grantor or such contract is subject; provided, however, to the extent that (i) either of the prohibitions discussed in clause (a) and clause (b) above is ineffective or subsequently rendered ineffective under any Legal Requirement or is otherwise no longer in effect or enforceable, or (ii) the applicable Grantor has obtained the consent of the other parties to such Excluded Contract to the creation of a lien and security interest in such Excluded Contract, then such contract shall cease to be an Excluded Contract and shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Security Agreement as Collateral; provided further, that any proceeds received by any Grantor from the sale, transfer or other disposition of Excluded Contracts shall constitute Collateral unless any Property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
Excluded Governmental Approvals means any Governmental Approval to the extent (but only to the extent) that a Grantor is prohibited from granting a security interest in, pledge of, or charge, mortgage or lien upon any such Property by reason of applicable Legal Requirement to which such Grantor or such Property is subject; provided, however, to the extent that (i) such
4
prohibition is ineffective or subsequently rendered ineffective under any Legal Requirement or is otherwise no longer in effect or enforceable, or (ii) the applicable Grantor has obtained the consent of the applicable Governmental Authority to the creation of a lien and security interest in such Excluded Governmental Approval, then such Governmental Approval shall cease to be an Excluded Governmental Approval and shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Security Agreement as Collateral; provided further, that any proceeds received by any Grantor from the sale, transfer or other disposition of Excluded Governmental Approval shall constitute Collateral unless any Property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
Excluded JV Equity Interests means the Equity Interests owned by any Grantor in a Joint Venture to the extent (but only to the extent) (a) the organizational documents of such Joint Venture prohibit the granting of a Lien on such Equity Interests or (b) such Equity Interests of such Joint Venture are expressly required to be pledged as collateral to secure (i) obligations to the other holders of the Equity Interests in such Joint Venture (other than a holder that is a Subsidiary of the Borrower) or (ii) Debt of such Joint Venture that is non-recourse to any of the Credit Parties or to any of the Credit Parties Properties; provided, however, if any of the foregoing conditions ceases to be in effect for any reason, then the Equity Interest in such Joint Venture shall cease to be an Excluded JV Equity Interest and shall automatically be subject to the Lien and security interest granted hereby and to the terms and provisions of this Security Agreement as Collateral; provided further, that any proceeds received by any Grantor in respect of any (including from the sale, transfer or other disposition of) Excluded JV Equity Interest shall constitute Collateral unless any Property constituting such proceeds are themselves subject to the exclusions set forth above.
Excluded Perfection Collateral has the meaning set forth in the Credit Agreement. Excluded PMSI Collateral means any Property and proceeds thereof (including
insurance proceeds) of a Grantor that is now or hereafter subject to a Lien securing (and, for the avoidance of doubt, acquired with the proceeds of) purchase money debt or a Capital Lease obligation to the extent (and only to the extent) that (a) the Debt associated with such Lien is permitted under Section 6.1(e), (k) or (m) of the Credit Agreement, and (b) the documents evidencing such purchase money debt or Capital Lease obligation prohibit or restrict the granting of a Lien in such Property; provided, however, to the extent that (i) either of the prohibitions discussed in clauses (a) and (b) above is ineffective or subsequently rendered ineffective under any Legal Requirement or is otherwise no longer in effect or (ii) the holder of such Lien consents to the granting of a Lien in favour of the Administrative Agent, then such Property and proceeds thereof shall cease to be Excluded PMSI Collateral and shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Security Agreement as Collateral; provided further, that any proceeds received by any Grantor from the sale, transfer or other disposition of Excluded PMSI Collateral shall constitute Collateral unless any Property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
Excluded Real Property means all fee owned and leased real property (including all leases related thereto) of any Credit Party.
5
Excluded Trademark Collateral means all Canadian proposed use trademark applications with respect to which the grant of a security interest therein would impair the validity or enforceability of said trademark application under federal law; provided, however, to the extent that such law is no longer in effect, then such trademark application shall cease to be Excluded Trademark Collateral and shall automatically be subject to the lien and security interests granted hereby and to the terms and provisions of this Security Agreement as Collateral; provided further, that any proceeds received by any Grantor from the sale, transfer or other disposition of Excluded Trademark Collateral shall constitute Collateral unless any Property constituting such proceeds are themselves subject to the exclusions set forth above or otherwise constitute Excluded Collateral.
Goods (i) means all goods as defined in the PPSA and (ii) includes, without limitation, all Inventory and Equipment.
Governmental Approval has the meaning set forth in Section 2.1(a)(vi). Grantor has the meaning set forth in the preamble.
Indemnitee has the meaning set forth in Section 6.3(a).
Instruments means all instruments as defined in the PPSA and (ii) shall include all letters of credit, advices of and all other instruments in which any Grantor now or hereafter has an interest, and any part thereof.
Intangibles (i) means all intangibles as defined in the PPSA and (ii) includes, without limitation, all interest rate or currency protection or hedging arrangements, all tax refunds, all rights in action, and all licenses, permits, concessions and authorizations, (in each case, regardless of whether characterized as intangibles under the PPSA).
Intellectual Property Collateral means, collectively, the Computer Hardware and Software Collateral, the Copyright Collateral, the Design Collateral, the Patent Collateral, the Trademark Collateral and the Trade Secrets Collateral.
Inventory means: (i) all inventory as defined in the PPSA and (ii) includes, without limitation, all goods held for sale or lease or to be furnished under contracts of service or so leased or furnished, all raw materials, spare and replacement parts, manufacturing supplies, subassemblies, work in process, finished goods, and materials used or consumed in the manufacture, packing, shipping, advertising, selling, leasing, furnishing or production of such inventory or otherwise used or consumed in any of the Grantors respective businesses; all goods in which the Grantor has an interest in mass or a joint or other interest or right of any kind; and all goods which are returned to or repossessed by any Grantor, and all accessions thereto and products thereof (in each case, regardless of whether characterized as inventory under the PPSA).
Joint Venture means, with respect to any Person (the holder) at any time, any incorporated, formed or organized corporation, limited liability company, partnership, association or other entity, which is not a Subsidiary of the Borrower and less than a majority of whose outstanding Voting Securities are at such time owned by the holder or one or more Subsidiaries of the holder. Unless expressly provided otherwise, all references herein to any Joint Venture or Joint Ventures means a Joint Venture or Joint Ventures of a Grantor.
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Lenders has the meaning set forth in the first recital. Money means money as defined in the PPSA.
Patent Collateral means (a) all inventions and discoveries, whether patentable or not, all letters patent and applications for letters patent throughout the world, including those patents and patent applications referred to in Schedule III-A hereto, (b) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clause (a), (c) all patent licenses, and other agreements providing any Grantor with the right to use any items of the type referred to in clauses (a) and (b) above, and (d) all proceeds of, and rights associated with, the foregoing (including licenses, royalties income, payments, claims, damages and proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, and for breach or enforcement of any patent license.
Payment in Full has the meaning set forth in the Credit Agreement.
Pledged Interests means all Equity Interests or other ownership interests of any Pledged Interests Issuer, including those described in Schedule I-A hereto; all registrations, certificates, articles, by-laws, regulations, limited liability company agreements or constitutive agreements governing or representing any such interests; all options and other rights, contractual or otherwise, at any time existing with respect to such interests, as such interests are amended, modified, or supplemented from time to time, and together with any interests in any Pledged Interests Issuer taken in extension or renewal thereof or substitution therefor.
Pledged Interests Issuer means each Person identified in Schedule I-A hereto as the issuer of the Pledged Interests identified opposite the name of such Person or any other issuer of Pledged Interests.
Pledged Note Issuer means any issuer of Pledged Notes.
Pledged Notes means all promissory notes listed on Schedule IB hereto together with any intercompany notes and any other promissory notes issued to or held by any Grantor, excluding, in each case, any Excluded Collateral.
Pledged Property means all Pledged Notes, Pledged Interests, all assignments of any amounts due or to become due with respect to the Pledged Interests, all other instruments which are now being delivered by any Grantor to the Administrative Agent or may from time to time hereafter be delivered by any Grantor to the Administrative Agent for the purpose of pledging under this Security Agreement or any other Credit Document, and all proceeds of any of the foregoing.
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PPSA means the Personal Property Security Act (Alberta), including the regulations thereto, provided that, if perfection or the effect of perfection or non-perfection or the priority of any Lien created hereunder on the Collateral is governed by the personal property security legislation or other applicable legislation with respect to personal property security as in effect in a jurisdiction other than Alberta, PPSA means the Personal Property Security Act or such other applicable legislation 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.
Proceeds (i) shall mean all proceeds as defined in the PPSA and (ii) shall include, without limitation, whatever is receivable or received when Collateral or proceeds are sold, leased, licensed, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.
Receivables has the meaning set forth in Section 2.1(a)(iii).
Related Contracts has the meaning set forth in Section 2.1(a)(iii).
Secured Obligations means the Canadian Secured Obligations as defined in the Credit Agreement.
Secured Parties has the meaning set forth in the Credit Agreement. Security Agreement has the meaning set forth in the preamble.
STA means the Securities Transfer Act (Alberta), including the regulations thereto, provided that, to the extent that perfection or the effect of perfection or non-perfection or the priority of any Lien created hereunder on Collateral that is Investment Property is governed by the laws in effect in any province or territory of Canada other than Alberta in which there is in force legislation substantially the same as the Securities Transfer Act (Alberta) (an Other STA Province), then STA shall mean such other legislation as in effect from time to time in such Other STA Province for purposes of the provisions hereof referring to or incorporating by reference provisions of the STA; and to the extent that such perfection or the effect of perfection or non-perfection or the priority of any Lien created hereunder on the Collateral is governed by the laws of a jurisdiction other than Alberta or an Other STA Province, then references herein to the STA shall be disregarded except for the terms Certificated Security and Uncertificated Security, which shall have the meanings herein as defined in the Securities Transfer Act (Alberta) regardless of whether the STA is in force in the applicable jurisdiction.
Trademark Collateral means (a) (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, and all goodwill of the business associated therewith, now existing or hereafter adopted or acquired, including those trademarks referred to in Schedule III-B hereto, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the Canadian Intellectual Property Office, or in any office or agency of the United States of America, or any State thereof or any other country or political subdivision thereof or otherwise, and all common-law rights relating to the foregoing, and (ii) the right to obtain all reissues, extensions or renewals of the foregoing (collectively referred to as the Trademark), (b) all trademark licenses for the grant by or to any Grantor of any right to use any trademark, (c) all of
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the goodwill of the business connected with the use of, and symbolized by the items described in, clause (a), and to the extent applicable, clause (b), (d) the right to sue third parties for past, present and future infringements of any Trademark Collateral described in clause (a) and, to the extent applicable, clause (b), and (e) all Proceeds of, and rights associated with, the foregoing, including any claim by any Grantor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license and all rights corresponding thereto throughout the world.
Trade Secrets Collateral means all common law and statutory trade secrets and all other confidential, proprietary or useful information and all know-how obtained by or used in or contemplated at any time for use in the business of any Grantor, and any patent applications in preparation for filing (all of the foregoing being collectively called a Trade Secret), including all documents and things embodying, incorporating or referring in any way to such Trade Secret, all Trade Secret licenses, and including the right to sue for and to enjoin and to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license.
ULC means an issuer that is an unlimited company, unlimited liability company or unlimited liability corporation.
ULC Laws means the Business Corporations Act (Alberta), similar legislation from other jurisdictions governing the formation and operation of ULCs within such jurisdictions and any future legislation governing the formation and operation of ULCs.
ULC Shares means shares or other equity interests in the capital stock of a ULC. U.S.$ means lawful money of the United States.
Section 1.2 Credit Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, capitalized terms used in this Security Agreement, including its preamble and recitals, have the meanings provided in the Credit Agreement.
Section 1.3 PPSA Definitions. Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the PPSA, including without limitation, Accessions, Chattel Paper, Documents of Title, Goods, Intangible, Instruments, Investment Property, Money, equipment, financing statement, financing change statement, aircraft, serial number goods and Proceeds are used in this Security Agreement, including its preamble and recitals, with such meanings. However, the term Goods when used herein does not include consumer goods as that term is defined in the PPSA.
Section 1.4 STA Definitions. Unless otherwise defined herein or the PPSA, or the context otherwise requires, terms for which meanings are provided in the STA, including without limitation, Certificated Security, Securities Account, Securities Intermediary, Security Entitlement, and Uncertificated Security are used in this Security Agreement, including its preamble and recitals, with such meanings.
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Section 1.5 Miscellaneous. Article, Section, Schedule, Annex and Exhibit references are to Articles and Sections of and Schedules, Annexes and Exhibits to this Security Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements (including this Security Agreement) are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified and shall include all schedules, annexes and exhibits thereto unless otherwise specified. The words hereof, herein, and hereunder and words of similar import when used in this Security Agreement shall refer to this Security Agreement as a whole and not to any particular provision of this Security Agreement. The term including means including, without limitation,. Paragraph headings have been inserted in this Security Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Security Agreement and shall not be used in the interpretation of any provision of this Security Agreement.
ARTICLE II
SECURITY INTEREST
Section 2.1 Grant of Security Interest.
(a) Each Grantor hereby pledges, hypothecates, assigns, charges, mortgages, delivers, and transfers to the Administrative Agent, for the ratable benefit of each Secured Party, and hereby grants to the Administrative Agent, for the ratable benefit of each Secured Party, a continuing security interest in all of such Grantors right, title and interest in, to and under, all of the following, whether now owned or hereafter acquired by such Grantor, and wherever located and whether now owned or hereafter existing or arising (collectively, the Collateral) as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of such Grantors Secured Obligations:
(i) all Equipment (including all drilling platforms and rigs and remotely operated vehicles, trenchers, and other equipment used by any Grantor, vehicles, motor vehicles, serial number goods, rolling stock, vessels, aircraft and airplanes) of such Grantor, wherever located, and all surface or subsurface machinery, equipment, facilities, supplies, or other tangible personal property, including tubing, rods, pumps, pumping units and engines, pipe, pipelines, meters, apparatus, boilers, compressors, liquid extractors, connectors, valves, fittings, power plants, poles, lines, cables, wires, transformers, starters and controllers, machine shops, tools, machinery and parts, telegraph, telephone, and other communication systems, loading docks, loading racks, and shipping 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, and any and all additions, substitutions and replacements of any of the foregoing, wherever located together with all improvements thereon and all attachments, components, parts, equipment and accessories installed thereon or affixed thereto;
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(ii) all Inventory of such Grantor, wherever located, including (A) all oil, gas, or other hydrocarbons and all products and substances derived therefrom, all raw materials and work in process therefore, finished goods thereof, and materials used or consumed in the manufacture or production thereof, (B) all Documents of Title covering any Inventory, including work in process, materials used or consumed in any Grantors business, now owned or hereafter acquired or manufactured by any Grantor and held for sale in the ordinary course of its business, (C) all goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including goods in which such Grantor has an interest or right as consignee), and (D) all goods which are returned to or repossessed by such Grantor, and all accessions thereto, products thereof and documents therefore;
(iii) all Accounts, Money, payment intangibles, Deposit Accounts (including the Collateral Accounts and all amounts on deposit therein and all cash equivalent investments carried therein and all proceeds thereof), contracts, contract rights, all rights constituting a right to the payment of money, Chattel Paper, documents, Documents of Title, Instruments, and Intangibles of such Grantor, whether or not earned by performance or arising out of or in connection with the sale or lease of goods or the rendering of services, including all moneys due or to become due in repayment of any loans or advances, and all rights of such Grantor now or hereafter existing in and to all security agreements, guaranties, leases, agreements and other contracts securing or otherwise relating to any such Accounts, Money, payment intangibles, Deposit Accounts, contracts, contract rights, rights to the payment of money, Chattel Paper, documents, Documents of Title, Instruments, and Intangibles (any and all such Accounts, Money, payment intangibles, Deposit Accounts, contracts, contract rights, rights to the payment of money, Chattel Paper, documents, Documents of Title, Instruments, and Intangibles being the Receivables, and any and all such security agreements, guaranties, leases, agreements and other contracts being the Related Contracts);
(iv) all Intellectual Property Collateral of such Grantor;
(v) all books, correspondence, credit files, records, invoices, tapes, cards, computer runs, writings, data bases, information in all forms, paper and documents and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any of the foregoing in this Section 2.1(a);
(vi) all governmental approvals, permits, licenses, authorizations, consents, rulings, tariffs, rates, certifications, waivers, exemptions, filings, claims, orders, judgments and decrees and other Legal Requirements (each a Governmental Approval);
(vii) all interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect such Grantor against fluctuations in interest rates or currency exchange rates and all commodity hedge, commodity swap, exchange, forward, future, floor, collar or cap agreements, fixed price agreements and all other agreements or arrangements designed to protect such Grantor against fluctuations in commodity prices (including any Swap Agreement);
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(viii) to the extent not included in the foregoing, all bank accounts, Investment Property, fixtures, supporting obligations, and Goods;
(ix) all Pledged Interests, Pledged Notes, and any other Pledged Property and all Distributions, interest, and other payments and rights with respect to such Pledged Property;
(x) (A) all policies of insurance now or hereafter held by or on behalf of such Grantor, including casualty, liability, key man life insurance, business interruption, foreign credit insurance, and any title insurance, (B) all proceeds of insurance, and (C) all rights, now or hereafter held by such Grantor to any warranties of any manufacturer or contractor of any other Person;
(xi) all accessions, substitutions, replacements, products, offspring, rents, issues, profits, returns, income and proceeds of and from any and all of the foregoing Collateral (including proceeds which constitute property of the types described in sub-clauses (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix) and (x) and proceeds deposited from time to time in any lock boxes of such Grantor, and, to the extent not otherwise included, all payments and proceeds under insurance (whether or not the Administrative Agent is the loss payee thereof), or any condemnation award, indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the Collateral);
(xii) any and all Liens and security interests (together with the documents evidencing such security interests) granted to such Grantor by an obligor to secure such obligors obligations owing under any Instrument, Chattel Paper, or contract that is pledged hereunder or with respect to which a security interest in such Grantors rights in such Instrument, Chattel Paper, or contract is granted hereunder;
(xiii) any and all guaranties given by any Person for the benefit of such Grantor which guarantees the obligations of an obligor under any instrument, chattel paper, or contract, which are pledged hereunder;
(xiv) all of such Grantors other property and rights of every kind and description and interests therein, including all other Chattel Paper, Documents of Title, Intangibles, Goods, Instruments, Investment Property and Money, as each such term is defined in the PPSA, and all Proceeds thereof.
(b) Notwithstanding anything to the contrary contained in Section 2.1(a) and other than to the extent set forth in this Section 2.1(b), the following property shall be excluded from the lien and security interest granted hereunder (and shall not be included as Collateral for purposes of this Security Agreement) (collectively, the Excluded Collateral):
(i) | Excluded Governmental Approvals; |
(ii) | Excluded Contracts; |
(iii) | Excluded JV Equity Interests; |
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(iv) | Excluded PMSI Collateral; |
(v) | Excluded Real Property; and |
(vi) | Excluded Trademark Collateral; |
provided, however, that (x) the exclusion from the Lien and security interest granted by any Grantor hereunder of any Excluded Collateral shall not limit, restrict or impair the grant by such Grantor of the Lien and security interest in any accounts or receivables arising under any such Excluded Collateral or any payments due or to become due thereunder unless the conditions in effect which qualify such Property as Excluded Collateral applies with respect to such accounts and receivables and (y) any proceeds received by any Grantor from the sale, transfer or other disposition of Excluded Collateral shall constitute Collateral unless the conditions in effect which qualify such Property as an Excluded Collateral applies with respect to such proceeds.
Section 2.2 Exception Respecting Trademarks. Notwithstanding Section 2.1, the Grantors grant of security in Trade-marks (as defined in the Trade-marks Act (Canada)) under this Security Agreement shall be limited to a grant by the Grantors of a security interest in all of the Grantors right, title and interest in such Trademarks.
Section 2.3 Security for Obligations. This Security Agreement, and the Collateral in which the Administrative Agent for the benefit of the Secured Parties is granted a security interest hereunder by each Grantor, secures the prompt and complete payment in cash and performance of the Secured Obligations.
Section 2.4 Attachment of Security Interests. Each Grantor and the Administrative Agent hereby acknowledge that (a) value has been given; (b) each Grantor has rights in the Collateral in which it has granted a security interest; (c) this Security Agreement constitutes a security agreement as that term is defined in the PPSA; and (d) the security interest attaches upon the execution of this Security Agreement (or in the case of any after-acquired property, at the time of acquisition thereof).
Section 2.5 Continuing Security Interest; Transfer of Loans; Reinstatement. This Security Agreement shall create continuing security interests in the Collateral and shall (a) except as otherwise provided in the Credit Agreement, remain in full force and effect until Payment in Full, (b) be binding upon each Grantor and its successors, transferees and assigns, and (c) inure, together with the rights and remedies of the Administrative Agent hereunder, to the benefit of the Administrative Agent and each other Secured Party and its respective permitted successors, transferees and assigns, subject to the limitations as set forth in the Credit Agreement. Without limiting the generality of the foregoing clause (c), any Lender may assign or otherwise transfer (in whole or in part) all or any part of its Commitment and Loans held by or owing to it as provided in Section 9.7 of the Credit Agreement, and any successor or assignee thereof shall thereupon become vested with all the rights and benefits in respect thereof granted to such Secured Party under any Credit Document (including this Security Agreement), or otherwise. If at any time all or any part of any payment theretofore applied by the Administrative Agent or any other Secured Party to any of the Secured Obligations is or must be rescinded or returned by the Administrative Agent or any such Secured Party for
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any reason whatsoever (including the insolvency, bankruptcy, reorganization or other similar proceeding of any Grantor or any other Person), such Secured Obligations shall, for purposes of this Security Agreement, to the extent that such payment is or must be rescinded or returned, be deemed to have continued to be in existence, notwithstanding any application by the Administrative Agent or such Secured Party or any termination agreement or release provided to any Grantor, and this Security Agreement shall continue to be effective or reinstated, as the case may be, as to such Secured Obligations, all as though such application by the Administrative Agent or such Secured Party had not been made.
Section 2.6 Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and will perform all of its duties and obligations under such contracts and agreements to the same extent as if this Security Agreement had not been executed, (b) the exercise by the Administrative Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under any such contracts or agreements included in the Collateral, and (c) neither the Administrative Agent nor any other Secured Party shall have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Security Agreement, nor shall the Administrative Agent nor any Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.
Section 2.7 Delivery of Pledged Property; Instruments and Chattel Paper. Other than as provided in the first sentence of Section 3.5 below, all certificates or instruments representing or evidencing (i) all Pledged Interests and Pledged Notes and (ii) other Collateral consisting of Instruments and Chattel Paper individually or collectively evidencing amounts payable in excess of U.S.$3,000,000 (or the Dollar Equivalent Amount in Canadian Dollars) shall be delivered to and held by or on behalf of (or in the case of the Pledged Notes, endorsed to the order of) the Administrative Agent pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary endorsements or instruments of transfer or assignment, duly executed in blank. To the extent any of the Collateral constitutes an Uncertificated Security or a Security Entitlement (as defined in the STA), then at the Administrative Agents request and its determination that such Property is not an Excluded Perfection Collateral, the applicable Grantor shall take and cause the appropriate Person (including any issuer, entitlement holder or securities intermediary thereof) to take all actions necessary to grant control (as defined in the STA) to the Agent (for the benefit of the Secured Parties) over such Collateral.
Section 2.8 Distributions on Pledged Interests. So long as no Event of Default shall have occurred and be continuing, in the event that any Distribution with respect to any Pledged Interest pledged hereunder is permitted to be paid (in accordance with Section 6.9 of the Credit Agreement), such Distribution or payment may be paid directly to the applicable Grantor. If any Distribution is made in contravention of Section 6.9 of the Credit Agreement or this Section 2.8, the applicable Grantor shall hold the same segregated and in trust for the Administrative Agent until paid to the Administrative Agent in accordance with Section 4.1(e).
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Section 2.9 Security Interest Absolute, etc. This Security Agreement shall in all respects be a continuing, absolute, unconditional and irrevocable grant of security interest, and shall remain in full force and effect until Payment in Full. All rights of the Secured Parties and the security interests granted to the Administrative Agent (for its benefit and the ratable benefit of each other Secured Party) hereunder, and all obligations of each Grantor hereunder, shall, in each case, be absolute, unconditional and irrevocable irrespective of (a) any lack of validity, legality or enforceability of any Credit Document, (b) the failure of any Secured Party (i) to assert any claim or demand or to enforce any right or remedy against any Grantor or any other Person under the provisions of any Credit Document or otherwise, or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Secured Obligations, (c) any change in the time, manner or place of payment of, or in any other term of, all or any part of the Secured Obligations, or any other extension, compromise or renewal of any Secured Obligations, (d) any reduction, limitation, impairment or termination of any Secured Obligations (other than Payment in Full) for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Secured Obligations or otherwise, (e) any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Credit Document, (f) any addition, exchange or release of any Collateral of the Secured Obligations, or any surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition to, or consent to or departure from, any other guaranty held by any Secured Party securing any of the Secured Obligations, or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, any Grantor or any other Credit Party, any surety or any guarantor.
Section 2.10 Waiver of Subrogation. Until 91 days after Payment in Full, each Grantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against any Credit Party that arise from the existence, payment, performance or enforcement of such Grantors obligations under this Security Agreement or any other Credit Document, including any right of subrogation, reimbursement, exoneration or indemnification, any right to participate in any claim or remedy of any Secured Party against any Credit Party or any collateral which any Secured Party now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including the right to take or receive from any Credit Party, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Grantor in violation of the preceding sentence and Payment in Full shall not have occurred, then such amount shall be deemed to have been paid to such Grantor for the benefit of, and held in trust for, the Administrative Agent (on behalf of the Secured Parties), and shall forthwith be paid to the Administrative Agent to be credited and applied upon the Secured Obligations, whether matured or unmatured. Each Grantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth in this Section 2.10 is knowingly made in contemplation of such benefits.
Section 2.11 Election of Remedies. Except as otherwise provided in the Credit Agreement, if any Secured Party may, under applicable Legal Requirement, proceed to realize its benefits under this Security Agreement or the other Credit Documents giving any Secured Party a Lien upon any Collateral, either by judicial foreclosure or by non-judicial sale or enforcement,
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such Secured Party may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of its rights and remedies under this Security Agreement. If, in the exercise of any of its rights and remedies, any Secured Party shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Credit Party or any other Person, whether because of any applicable Legal Requirements pertaining to election of remedies or the like, each Grantor hereby consents to such action by such Secured Party and waives any claim based upon such action, even if such action by such Secured Party shall result in a full or partial loss of any rights of subrogation that such Grantor might otherwise have had but for such action by such Secured Party.
Section 2.12 Pledged Securities. The granting of the foregoing security interest does not make the Administrative Agent or any Secured Party a successor to Grantor as a partner or member in any Pledged Interests Issuer that is a partnership, limited partnership or limited liability company, as applicable, and neither the Administrative Agent, any Secured Party, nor any of their respective successors or assigns hereunder shall be deemed to have become a partner or member in any Pledged Interest Issuer, as applicable, by accepting this Security Agreement or exercising any right granted herein unless and until such time, if any, when any such Person expressly becomes a partner or member in any Pledged Interests Issuer, as applicable, and complies with any applicable transfer provisions set forth in the charter or organizational documents relating to an applicable Pledged Security after a foreclosure thereon.
(b) Each Grantor acknowledges that certain of the Pledged Securities of a Grantor may now or in the future consist of ULC Shares, and that it is the intention of the Administrative Agent and each Grantor that neither the Administrative Agent nor any other Secured Party should under any circumstances prior to realization be held to be a member or a shareholder, as applicable, of a ULC for the purposes of any ULC Laws. Therefore, notwithstanding any provisions to the contrary contained in this Security Agreement, the Credit Agreement or any other Credit Document, each Grantor is and will remain the sole registered and beneficial owner of ULC Shares constituting Pledged Securities until such time as written notice is given by the Administrative Agent to the Grantor and such ULC Shares are effectively transferred into the name of the Administrative Agent, any other Secured Party, or any other Person, as directed by the Administrative Agent, on the books and records of the applicable ULC. Accordingly, each Grantor shall be entitled to receive and retain for its own account any dividend, property or other distribution, if any, in respect of such ULC Shares (except insofar as the applicable Grantor has granted a security interest or other lien in such dividend or other distribution and any distribution constituting Pledged Securities shall be delivered to the Administrative Agent to hold as security hereunder) and shall have the right to vote such ULC Shares and to control the direction, management and policies of the applicable ULC to the same extent as the Grantor would if such ULC Shares were not pledged to the Administrative Agent pursuant hereto. Nothing in this Security Agreement, the Credit Agreement or any other Credit Document is intended to, and nothing in this Security Agreement, the Credit Agreement or any other Credit Document shall, constitute the Administrative Agent, any other Secured Party, or any other Person other than the applicable Grantor, a member or shareholder (whether listed or unlisted, registered or beneficial) of a ULC for the purposes of any ULC Laws, until such time as notice is given by the Administrative Agent to the Grantor and all further steps are taken pursuant hereto or thereto so as to register the Administrative Agent, any other Secured Party, or such other Person, as specified in such notice, as the holder of the ULC Shares. To the extent
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any other provision hereof or any provision of the Credit Agreement or any other Credit Document would have the effect of constituting the Administrative Agent or any other Secured Party or any other Person other than the applicable Grantor as a member or a shareholder, as applicable, of any ULC prior to such time, such provision shall be severed herefrom and shall be ineffective with respect to ULC Shares which are Pledged Securities without otherwise invalidating or rendering unenforceable this Security Agreement or invalidating or rendering unenforceable such provision insofar as it relates to Pledged Securities which are not ULC Shares, if any. Notwithstanding anything contained herein, in the Credit Agreement or any other Credit Document to the contrary (except to the extent, if any, that the Administrative Agent, the Secured Parties or any of their successors or assigns hereafter expressly becomes a registered member or shareholder of a ULC), neither the Administrative Agent, the Secured Parties nor any of their respective successors or assigns shall be deemed to have assumed or otherwise become liable for any debts or obligations of any ULC. Except upon the exercise of rights of the Administrative Agent or other Persons to sell, transfer or otherwise dispose of ULC Shares in accordance with this Security Agreement, or exercise other remedies following the occurrence or during the continuance of an Event of Default, each Grantor shall not cause or permit, or enable the applicable issuer to cause or permit, the Administrative Agent or any other Secured Party or any other Person to: (a) be registered as a shareholder or member of the issuer; (b) have any notation entered in their favour in the share register of the issuer; (c) be held out as shareholders or members of the issuer; (d) receive, directly or indirectly, any dividends, property or other distributions from the issuer by reason of the Administrative Agent holding the security interests over the ULC Shares; or (e) act as a shareholder or member of the issuer, or exercise any rights of a shareholder or member including the right to attend a meeting of members or shareholders of the issuer or to vote its ULC Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce the Secured Parties to enter into the Credit Agreement and extend credit to the Borrower thereunder, and to induce the Secured Parties to enter into Swap Agreements and Banking Services, each Grantor represents and warrants unto each Secured Party as set forth in this Article.
Section 3.1 Ownership, No Liens, etc. Such Grantor is the legal and beneficial owner of, and has good title to (and has full right and authority to pledge, grant and assign) the Collateral free and clear of all Liens, except for any Lien that is a Permitted Lien. No effective PPSA financing statement, financing change statement or other filing similar in effect covering all or any part of the Collateral is on file in any recording office, except those filed in favour of the Administrative Agent relating to this Security Agreement, Permitted Liens or as to which a duly authorized termination statement relating to such PPSA financing statement, financing change statement or other instrument has been delivered to the Administrative Agent on the Closing Date. This Security Agreement creates a valid security interest in the Collateral, securing the payment of the Secured Obligations, and, except for (a) the proper filing of the applicable PPSA financing statements or financing change statements with the filing offices listed on Schedule II-A attached hereto, (b) the recordation of security agreements with the Canadian Intellectual Property Office, and any other intellectual property office in which Intellectual Property Collateral is registered, and (c) taking possession of any Pledged Property
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with necessary endorsements, all filings and other actions necessary to perfect and protect such security interest in the Collateral (other than, as to perfection, Excluded Perfection Collateral) have been duly taken and, subject to Permitted Liens, such security interest shall be a first priority security interest. Any reference in this Security Agreement or any other Credit Document to a Permitted Lien is not intended to subordinate or postpone, and shall not be interpreted as subordinating or postponing, or as any agreement to subordinate or postpone, any Lien created by any of the Credit Documents or the Permitted Lien.
Section 3.2 As to Equity Interests of the Subsidiaries, Investment Property.
(a) With respect to the Pledged Interests, all such Pledged Interests (i) other than with respect to Pledged Interests in limited liability companies and partnerships, are duly authorized and validly issued, fully paid and non-assessable, and (ii) unless otherwise noted on Schedule I, are represented by a certificate.
(b) With respect to the Pledged Interests, no such Pledged Interests (i) are dealt in or traded on securities exchanges or in securities markets, or (ii) are held in a Securities Account, except, with respect to this clause (b), Pledged Interests (A) for which the Administrative Agent is the registered owner or (B) with respect to which the Pledged Interests Issuer has agreed in a Control Agreement with such Grantor and the Administrative Agent to comply with any instructions of the Administrative Agent without the consent of such Grantor.
(c) Such Grantor has delivered all Certificated Securities constituting Collateral held by such Grantor on the Closing Date to the Administrative Agent, together with duly executed undated blank stock transfer forms, or other equivalent instruments of transfer reasonably acceptable to the Administrative Agent.
(d) With respect to Uncertificated Securities constituting Collateral, such Grantor has caused the Pledged Interests Issuer or other issuer thereof either (i) to register the Administrative Agent as the registered owner of such security, or (ii) to agree in a Control Agreement with such Grantor and the Administrative Agent that such Pledged Interests Issuer or other issuer will comply with instructions with respect to such security originated by the Administrative Agent without further consent of such Grantor.
(e) The percentage of the issued and outstanding Pledged Interests of each Pledged Interests Issuer pledged by such Grantor hereunder is as set forth on Schedule I-A and the percentage of the total membership, partnership and/or other Equity Interests in the Pledged Interests Issuer is indicated on Schedule I-A, in each case, as such Schedule I-A may be supplemented from time to time pursuant to the terms hereof. All of the Pledged Interests constitute one hundred percent (100%) of such Grantors interest in the applicable Pledged Interests Issuer.
(f) There are no outstanding rights, rights to subscribe, options, warrants or convertible securities outstanding or any other rights outstanding whereby any Person would be entitled to acquire shares, member interests or units of any Pledged Interests Issuer other than (i) as to Pledged Interests Issuers that are not Wholly-Owned Subsidiaries or (ii) such rights that constitute Collateral.
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(g) In the case of each Pledged Note, all of such Pledged Notes are as set forth on Schedule I-B and have been duly authorized, executed, endorsed, issued and delivered, and are the legal, valid and binding obligation of the issuers thereof, and, as of the Closing Date, are not in default.
Section 3.3 Grantors Name, Location, etc.
(a) Other than as otherwise permitted pursuant to any Credit Document, (i) each Grantors jurisdiction of incorporation, amalgamation, formation or organization, incorporation, amalgamation, formation or organizational identification number, if any, federal employer or other business identification number, if any, is set forth in Schedule II-A hereto, and (ii) as of the Closing Date or such later date on which such Grantor joins this Security Agreement, the place of business of such Grantor or, if such Grantor has more than one place of business, the chief executive office (and domicile for the purposes of the Quebec Civil Code) of such Grantor and the office where such Grantor keeps its records concerning the Receivables, is set forth in Schedule II-B hereto.
(b) Within the past five years, such Grantor has not been known by any legal name different from the one set forth on the signature page hereto, nor has such Grantor been the subject of any merger, amalgamation or other corporate reorganization, except as set forth in Schedule II-D hereto.
(c) None of the Receivables in excess of U.S.$3,000,000 (or the Dollar Equivalent Amount in Canadian Dollars) is evidenced by a promissory note or other instrument other than a promissory note or instrument that has been delivered to the Administrative Agent (with appropriate endorsements).
(d) As of the Closing Date or such later date on which such Grantor joins this Security Agreement, the name set forth on the signature page attached hereto (or, if applicable, the signature page to the supplement document pursuant to which such Grantor joins this Security Agreement) is the exact name of such Grantor as it appears in such Grantors organizational documents, as amended, as filed with the Grantors jurisdiction of incorporation, amalgamation, formation or organization.
Section 3.4 Possession of Inventory; Control. Such Grantor has exclusive possession and control, subject to Permitted Liens, of the Equipment and Inventory, except as otherwise required, necessary or customary in the ordinary course of its business. Such Grantor has not consented to, and is otherwise unaware of, any Person (other than, if applicable, the Administrative Agent pursuant to Section 6.1(a) or Section 6.1(f) hereof) having possession or control over any Collateral, or any other interest in any of such Grantors rights in respect thereof other than, with respect to Deposit Accounts and Securities Accounts, as to Liens permitted under Section 6.2(b), (h), (i), (l) and (m) of the Credit Agreement.
Section 3.5 Pledged Property, Instruments and Chattel Paper. Such Grantor has, contemporaneously herewith, delivered to the Administrative Agent possession of all originals of all certificates or instruments representing or evidencing (i) any Pledged Interests and Pledged Notes, and (ii) other Collateral consisting of Instruments and Chattel Paper individually, or collectively, evidencing amounts payable in excess of U.S.3,000,000 (or the Dollar Equivalent Amount in Canadian Dollars), owned or held by such Grantor (duly endorsed, in blank, if requested by the Administrative Agent).
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Section 3.6 Intellectual Property Collateral. Such Grantor represents that except for any Patent Collateral, Trademark Collateral, Copyright Collateral, and Design Collateral specified in Item A, Item B, Item C, and Item D respectively, of Schedule III hereto, and any and all Trade Secrets Collateral, as of the date hereof, such Grantor does not own and has no interests in any other Intellectual Property Collateral material to the operations or business of such Grantor, other than the Computer Hardware and Software Collateral. Such Grantor further represents and warrants that, with respect to all Intellectual Property Collateral material to the conduct of such Grantors business (a) such Intellectual Property Collateral is valid, subsisting, unexpired and enforceable and has not been abandoned or adjudged invalid or unenforceable, in whole or in part, (b) other than with respect to Intellectual Property Collateral licensed to it, such Grantor is the sole and exclusive owner of the right, title and interest in and to such Intellectual Property Collateral, subject to Permitted Liens, and, to such Grantors knowledge, no claim has been made that the use of such Intellectual Property Collateral does or may, conflict with, infringe, misappropriate, dilute, misuse or otherwise violate any of the rights of any third party in any material respects, (c) such Grantor has made all necessary filings and recordations to protect its interest in such Intellectual Property Collateral, including recordations of any of its interests in the Intellectual Property Collateral in the Canadian Intellectual Property Office and the Canadian Industrial Design Office, and, if requested by the Administrative Agent, in corresponding offices throughout the world, (d) such Grantor has taken all reasonable steps to safeguard its material Trade Secrets Collateral and to its knowledge none of such Trade Secrets Collateral of such Grantor has been used, divulged, disclosed or appropriated for the benefit of any other Person other than such Grantor, the Borrower or any Subsidiary thereof, (e) to such Grantors knowledge, no third party is infringing upon any such Intellectual Property Collateral owned or used by such Grantor in any material respect, or any of its respective licensees, (f) no settlement or consents, covenants not to sue, nonassertion assurances, or releases have been entered into by such Grantor or to which such Grantor is bound that adversely affects its rights to own or use any such Intellectual Property Collateral, and (g) the consummation of the transactions contemplated by the Credit Agreement and this Security Agreement will not result in the termination or material impairment of any material portion of such Intellectual Property Collateral.
Section 3.7 Authorization, Approval, etc. Except as have been obtained or made and are in full force and effect, no Governmental Approval, authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required either (a) for the grant by such Grantor of the security interest granted hereby, (b) except with respect to Excluded Perfection Collateral, for the perfection or maintenance of the security interests hereunder including the first priority (subject to Permitted Liens) nature of such security interest (except with respect to the financing statements or financing change statements, or, with respect to Intellectual Property Collateral, the recordation of any agreements with the Canadian Intellectual Property Office and the Canadian Industrial Design Office) or the exercise by the Administrative Agent of its rights and remedies hereunder, or (c) for the exercise by the Administrative Agent of the voting or other rights provided for in this Security Agreement, except (i) with respect to any Pledged Interests, as may be required in connection with a disposition of such Pledged Interests by laws affecting the offering and sale of securities generally, the remedies in respect of the Collateral pursuant to this Security Agreement and (ii) any change of control or similar filings required by state, provincial or territorial licensing agencies.
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Section 3.8 Best Interests. It is in the best interests of each Grantor to execute this Security Agreement in as much as such Grantor will, as a result of being the Borrower, or a Restricted Subsidiary of the Borrower, derive substantial direct and indirect benefits from (a) the extensions of credit made from time to time to the Borrower or any other Grantor by the Lenders pursuant to the Credit Agreement, (b) the Swap Agreements entered into with the Swap Counterparties, and (c) the Banking Services provided by the Banking Services Providers, and each Grantor agrees that the Secured Parties are relying on this representation in agreeing to make such extensions of credit pursuant to the Credit Agreement to the Borrower. Furthermore, such extensions of credit, Swap Agreements and Banking Services are (i) in furtherance of each Grantors corporate purposes, and (ii) necessary or convenient to the conduct, promotion or attainment of each Grantors business.
Section 3.9 Inventory and Real Property Locations.
(a) As of the date of this Security Agreement, Schedule IV to this Security Agreement (as such Schedule IV may be supplemented from time to time) sets forth the address of each parcel of real property that is owned or leased by any Grantor at which Inventory with a book value in excess of U.S.$1,000,000 (or the Dollar Equivalent Amount in Canadian Dollars) is located (the Material Inventory Locations). To the extent such real property is leased, each of such leases and subleases is valid and enforceable against the applicable Grantor in accordance with its terms and is in full force and effect, and no material default by such Grantor to any such lease or sublease exists. Each of the Grantors and each of its Restricted Subsidiaries has good and indefeasible title to, or valid leasehold interests in, all of its material real and personal property, free of all Liens other than those permitted by Section 6.2 of the Credit Agreement.
(b) With respect to any of its Inventory scheduled or listed on the most recent Collateral Report, (i) all such Inventory is located at a Material Inventory Location, in transit, located at a customers location, being replaced or repaired, or located at locations which are not Material Inventory Locations, (ii) no such Inventory (other than Inventory in transit, Inventory located at a customers location and Inventory which is being replaced or repaired) is now, or shall at any time or times hereafter be stored at any other location except as permitted by Section 4.9, (iii) such Grantor has good, indefeasible and merchantable title to such Inventory and such Inventory is not subject to any Lien or security interest or document whatsoever except for Liens permitted under Section 6.2 of the Credit Agreement, (iv) except as specifically disclosed in the most recent Collateral Report, such Inventory is Eligible Inventory of good and merchantable quality, free from any material defects, (v) such Inventory is not subject to any licensing, patent, royalty, trademark, trade name or copyright agreements with any third parties which would require any consent of any third party upon sale or disposition of that Inventory or the payment of any monies to any third party upon such sale or other disposition, (vi) all Legal Requirements and (vii) the completion of manufacture, sale or other disposition of such Inventory by the Administrative Agent following an Event of Default shall not require the consent of any Person and shall not constitute a breach or default under any material contract or agreement to which such Grantor is a party or to which such property is subject.
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Section 3.10 Accounts. All of the Deposit Accounts of each Grantor as of the Closing Date are identified as such on Exhibit A to this Security Agreement.
Section 3.11 Securities Intermediaries Jurisdiction. Each agreement between the Grantor and a Securities Intermediary that governs any Securities Account included in the Collateral or to which any Collateral that is Investment Property has been credited either (i) specifies that the Province of Alberta is the Securities Intermediarys jurisdiction for the purposes of the PPSA or (ii) is expressed to be governed by the laws of the Province of Alberta.
ARTICLE IV
COVENANTS
Each Grantor covenants and agrees that, until Payment in Full, it will perform, comply with and be bound by the obligations set forth below.
Section 4.1 As to Investment Property, etc.
(a) Equity Interests of Subsidiaries. No Grantor shall allow or permit any of its Subsidiaries (i) that is a corporation, business trust, joint stock company or similar Person, to issue Uncertificated Securities, unless such Person promptly (and, in any case, within five (5) Business Days (or such later date as the Administrative Agent may agree in its sole discretion) of such issuance) takes the actions set forth in Section 4.1(b)(ii) with respect to any such Uncertificated Securities, (ii) that is a partnership or limited liability company, to (x) issue Equity Interests (A) unless Section 12(1)(b) of the STA is complied with, or (B) that are to be dealt in or traded on securities exchanges or in securities markets, or (y) place such Subsidiarys Equity Interests in a Securities Account, unless such Person promptly (and, in any case, within five (5) Business Days (or such later date as the Administrative Agent may agree in its sole discretion) of such placement) takes the actions set forth in Section 4.1(b)(ii) with respect to any such Equity Interests, and (iii) to issue Equity Interests in addition to or in substitution for the Pledged Property or any other Equity Interests pledged hereunder, except for additional Equity Interests issued to such Grantor; provided that (x) such Equity Interests are pledged and delivered to the Administrative Agent promptly (and in any event within ten (10) Business Days of issuance), and (y) such Grantor delivers a supplement to Schedule I to the Administrative Agent identifying such new Equity Interests as Pledged Property, in each case pursuant to the terms of this Security Agreement. No Grantor shall permit any of its Subsidiaries to issue any warrants, options, contracts or other commitments or other securities that are convertible to any of the foregoing (except as to Equity Interests issued by Subsidiaries that are not Wholly-Owned) or that entitle any Person to purchase any of the foregoing, and except for this Security Agreement or any other Credit Document, shall not, and shall not permit any of its Subsidiaries to, enter into any agreement creating any restriction or condition upon the transfer, voting or control of any Pledged Property.
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(b) Investment Property (other than Certificated Securities).
(i) With respect to any Commodity Contracts or Security Entitlements constituting Investment Property owned or held by any Grantor, such Grantor will, (A) with respect to any Commodity Contracts or Security Entitlements existing on the Closing Date, within 60 days of the Closing Date and (B) with respect to Commodity Contracts or Security Entitlements acquired after the Closing Date, within 30 calendar days of such acquisition, cause the intermediary maintaining such Investment Property to execute a Control Agreement relating to such Investment Property pursuant to which such intermediary agrees to comply with the Administrative Agents instructions with respect to such Investment Property without further consent by such Grantor, or (2) transfer such Investment Property to intermediaries that have or will agree to execute such Control Agreements.
(ii) With respect to any Uncertificated Securities (other than Uncertificated Securities credited to a Securities Account) owned or held by any Grantor, such Grantor will (y) cause the Pledged Interests Issuer or other issuer of such securities to either (A) register the Administrative Agent as the registered owner thereof on the books and records of the issuer, or (B) execute a Control Agreement relating to such Investment Property pursuant to which the Pledged Interests Issuer or other issuer agrees to comply with the Administrative Agents instructions with respect to such Uncertificated Securities (provided that, it is understood that the Administrative Agent shall not deliver such instructions except following the occurrence and during the continuance of an Event of Default), and (z) take and cause the appropriate Person (including any issuer, entitlement holder or securities intermediary thereof) to take all other actions necessary to grant control (as defined in the STA) to the Administrative Agent (for the ratable benefit of the Secured Parties) over such Collateral.
(c) Certificated Securities (Stock Transfer Forms). Each Grantor agrees that all Pledged Interests which are certificated (and all other certificated shares of Equity Interests constituting Collateral) delivered by such Grantor pursuant to this Security Agreement will be accompanied by duly endorsed undated blank stock transfer forms, or other equivalent instruments of transfer reasonably acceptable to the Administrative Agent. Each Grantor will, from time to time upon the reasonable request of the Administrative Agent, promptly deliver to the Administrative Agent such stock transfer forms, instruments and similar documents, reasonably satisfactory in form and substance to the Administrative Agent, with respect to the Collateral and will, from time to time upon the request of the Administrative Agent during the continuance of any Event of Default, promptly transfer any Pledged Interests or other shares of Equity Interests constituting Collateral into the name of any nominee designated by the Administrative Agent.
(d) Continuous Pledge. Each Grantor will (subject to the terms of the Credit Agreement and this Security Agreement) at all times keep pledged to the Administrative Agent pursuant hereto, on a first-priority, perfected basis all Pledged Property and all Distributions with respect thereto, and all Proceeds and rights from time to time received by or distributable to such Grantor in respect of any of the foregoing Collateral (other than, as to perfection, Excluded Perfection Collateral). Each Grantor agrees that it will promptly (and no later than ten (10) Business Days following receipt thereof unless consented to by the Administrative Agent) deliver to the Administrative Agent possession of all originals of Pledged Property that it acquires following the Closing Date and shall deliver to the Administrative Agent a supplement to Schedule I identifying any such new Pledged Property.
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(e) Voting Rights; Dividends, etc. Each Grantor agrees:
(i) that promptly upon receipt of notice of the occurrence and continuance of an Event of Default from the Administrative Agent and without any request therefor by the Administrative Agent, so long as such Event of Default shall continue, to deliver (properly endorsed where required hereby or requested by the Administrative Agent) to the Administrative Agent all Distributions with respect to Investment Property, all interest principal and other cash payments on the Pledged Property and all Proceeds of the Pledged Property, in case thereafter received by such Grantor, all of which shall be held by the Administrative Agent as additional Collateral; and
(ii) if an Event of Default shall have occurred and be continuing and the Administrative Agent has notified such Grantor of the Administrative Agents intention to exercise its voting power under this Section 4.1(e)(ii),
(A) the Administrative Agent may exercise (to the exclusion of such Grantor) the voting power and all other incidental rights of ownership with respect to any Pledged Interests, Investment Property or other Equity Interests constituting Collateral. EACH GRANTOR HEREBY GRANTS THE ADMINISTRATIVE AGENT AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL SUCH EVENT OF DEFAULT SHALL HAVE BEEN CURED OR WAIVED) EXERCISABLE UNDER SUCH CIRCUMSTANCES, TO VOTE THE PLEDGED INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL; AND
(B) promptly to deliver to the Administrative Agent such additional proxies and other documents as may be necessary to allow the Administrative Agent to exercise such voting power.
All Distributions, interest, principal, cash payments, payment intangibles and Proceeds that may at any time and from time to time be held by any Grantor but which such Grantor is then obligated to deliver to the Administrative Agent, shall, until delivery to the Administrative Agent, be held by such Grantor separate and apart from its other property in trust for the Administrative Agent. The Administrative Agent agrees that unless an Event of Default shall have occurred and be continuing and the Administrative Agent shall have given the notice referred to in Section 4.1(e), each Grantor shall be entitled to receive and retain all Distributions and shall have the exclusive voting power, and is granted a proxy, with respect to any Equity Interests constituting Collateral. Administrative Agent shall, upon the written request of any Grantor, promptly deliver such proxies and other documents, if any, as shall be reasonably requested by such Grantor which are necessary to allow such Grantor to exercise that voting power with respect to any such Equity Interests constituting Collateral; provided, however, that no vote shall be cast, or consent, waiver, or ratification given, or action taken by such Grantor that would violate any provision of the Credit Agreement or any other Credit Document (including this Security Agreement).
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Section 4.2 As to Deposit Accounts and Securities Accounts. With respect to any Deposit Account and Securities Accounts (other than any Excluded Account for so long as such account is an Excluded Account) owned or held by any Grantor, such Grantor shall deliver a Control Agreement or lockbox agreement to the Administrative Agent in the manner set forth in Section 2.5(b) of the Credit Agreement.
Section 4.3 As to Accounts.
(a) Each Grantor shall have the right to collect all Accounts so long as no Event of Default shall have occurred and be continuing.
(b) Upon (i) the occurrence and continuance of an Event of Default and (ii) the delivery of notice by the Administrative Agent to each Grantor, all Proceeds of Collateral received by any Grantor shall be delivered in kind to the Administrative Agent for deposit in a Deposit Account of such Grantor maintained with the Administrative Agent and subject to a Control Agreement (any such Deposit Accounts, together with any other Deposit Accounts pursuant to which any portion of the Collateral is deposited with the Administrative Agent, a Collateral Account, and collectively, the Collateral Accounts), and such Grantor shall not commingle any such Proceeds, and shall hold separate and apart from all other property, all such Proceeds in express trust for the benefit of the Administrative Agent until delivery thereof is made to the Administrative Agent.
(c) Following the delivery of notice pursuant to clause (b)(ii) during the continuance of an Event of Default, the Administrative Agent shall have the right to apply any amount in the Collateral Account to the payment of any Secured Obligations which are due and payable or in accordance with Section 7.6 of the Credit Agreement.
(d) With respect to each of the Collateral Accounts, it is hereby confirmed and agreed that (i) deposits in such Collateral Account are subject to a security interest as contemplated hereby, (ii) such Collateral Account shall be under the control of the Administrative Agent after the occurrence and during the continuance of an Event of Default (unless otherwise agreed to by the Borrower and the Majority Lenders), and (iii) the Administrative Agent shall have the sole right of withdrawal over such Collateral Account; provided that such withdrawals shall only be made during the existence of an Event of Default.
(e) No Grantor shall adjust, settle, or compromise the amount or payment of any Receivable, nor release wholly or partly any account debtor or obligor thereof, nor allow any credit or discount thereon; provided that, a Grantor may make such adjustments, settlements or compromises and release wholly or partly any account debtor or obligor thereof and allow any credit or discounts thereon so long as (i) such action is taken in the ordinary course of business, and (ii) such action is, in such Grantors good faith business judgment, advisable.
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Section 4.4 As to Grantors Use of Collateral.
(a) Subject to clause (b), each Grantor (i) may in the ordinary course of its business, at its own expense, sell, lease or furnish under the contracts of service any of the Inventory held by such Grantor for such purpose, and use and consume any raw materials, work in process or materials held by such Grantor for such purpose, (ii) following the occurrence and during the continuance of an Event of Default, shall, at its own expense, endeavor to collect, as and when due, all amounts due with respect to any of the Collateral, including the taking of such action with respect to such collection as the Administrative Agent may request or, in the absence of such request, as such Grantor may deem advisable, and (iii) may grant, in the ordinary course of business, to any party obligated on any of the Collateral, any rebate, refund or allowance to which such party may be lawfully entitled, and may accept, in connection therewith, the return of Goods, the sale or lease of which shall have given rise to such Collateral.
(b) At any time following the occurrence and during the continuance of an Event of Default, whether before or after the maturity of any of the Secured Obligations, the Administrative Agent may (i) revoke any or all of the rights of any Grantor set forth in clause (a), (ii) notify any parties obligated on any of the Collateral to make payment to the Administrative Agent of any amounts due or to become due thereunder, and (iii) enforce collection of any of the Collateral by suit or otherwise and surrender, release, or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby.
(c) Upon request of the Administrative Agent following the occurrence and during the continuance of an Event of Default, each Grantor will, at its own expense, notify any parties obligated on any of the Collateral to make payment to the Administrative Agent of any amounts due or to become due thereunder.
(d) At any time following the occurrence and during the continuation of an Event of Default, the Administrative Agent may endorse, in the name of the applicable Grantor, any item, howsoever received by the Administrative Agent, representing any payment on or other Proceeds of any of the Collateral.
Section 4.5 As to Equipment and Inventory and Goods. Each Grantor agrees to take such action (or cause its Restricted Subsidiaries that are also Credit Parties to take such action) as is reasonably requested by the Administrative Agent to enable it to properly perfect and protect its Lien on Equipment and Inventory and Goods that such Grantor has transferred from a jurisdiction within Canada to any other jurisdiction within Canada or any jurisdiction outside of Canada. Notwithstanding anything else in this Section 4.5, it is understood and agreed that no such actions shall be required with respect to Excluded Collateral or Excluded Perfection Collateral.
Section 4.6 As to Intellectual Property Collateral. Each Grantor covenants and agrees to comply with the following provisions as such provisions relate to any Intellectual Property Collateral material to the operations or business of such Grantor:
(a) such Grantor will not (i) do or fail to perform any act whereby any such Patent Collateral may lapse or become abandoned or dedicated to the public or unenforceable except upon the expiration of the life of the applicable patent, (ii) permit any of its licensees to
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(A) fail to continue to use any of such Trademark Collateral in order to maintain all of such Trademark Collateral in full force free from any claim of abandonment for non-use, (B) fail to maintain as in the past the quality of products and services offered under all such Trademark Collateral, (C) fail to employ all of such Trademark Collateral registered with any federal or state, or if requested by the Administrative Agent, foreign authority with an appropriate notice of such registration, (D) knowingly adopt or use any other Trademark which is confusingly similar or a colorable imitation of any such Trademark Collateral, (E) use any such Trademark Collateral registered with any federal, state or if requested by the Administrative Agent, foreign authority except for the uses for which registration or application for registration of all of the Trademark Collateral has been made, or (F) do or permit any act or knowingly omit to do any act whereby any such Trademark Collateral may lapse or become invalid or unenforceable, or (iii) do or permit any act or knowingly omit to do any act whereby any such Copyright Collateral or any such Trade Secrets Collateral may lapse or become invalid or unenforceable or placed in the public domain except upon expiration of the end of an unrenewable term of a registration thereof, unless, in the case of any of the foregoing requirements in clauses (i), (ii) and (iii), such Grantor shall reasonably and in good faith determine that any of such Intellectual Property Collateral is of negligible economic value to such Grantor or in the case of Trade Secret Collateral, the publication of such information is customary in the ordinary course of business of such Grantor;
(b) such Grantor shall promptly notify the Administrative Agent if it knows that any application or registration relating to any material item of such Intellectual Property Collateral may become abandoned or dedicated to the public or placed in the public domain or invalid or unenforceable (other than upon the expiration of the life of the applicable patent), or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the Canadian Intellectual Property Office or the Canadian Industrial Design Office or if requested by the Administrative Agent, any foreign counterpart thereof or any court) regarding such Grantors ownership of any such Intellectual Property Collateral, its right to register the same or to keep and maintain and enforce the same;
(c) in no event will such Grantor or any of its agents, employees, designees or licensees file an application for the registration of any such material Intellectual Property Collateral with the Canadian Intellectual Property Office, the Canadian Industrial Design Office or any similar office or agency in any other country or any political subdivision thereof, unless it promptly informs the Administrative Agent, and upon request of the Administrative Agent (subject to the terms of the Credit Agreement), such Grantor shall execute and deliver all agreements, instruments and documents as the Administrative Agent may reasonably request to evidence the Administrative Agents security interest in such Intellectual Property Collateral;
(d) such Grantor will take all necessary steps, including in any proceeding before the Canadian Intellectual Property Office, the Canadian Industrial Design Office or (subject to the terms of the Credit Agreement), if requested by the Administrative Agent, any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue any application (and to obtain the relevant registration) filed with respect to, and to maintain any registration of, each such Intellectual Property Collateral, including the filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and the payment of fees and taxes (except to the extent that dedication, abandonment or invalidation is permitted under the foregoing clause (a) or (b) or to the extent such Grantor shall reasonably and in good faith determine is of immaterial economic value to such Grantor);
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(e) following the obtaining of an interest in any such Intellectual Property Collateral by such Grantor, such Grantor shall deliver a supplement to Schedule III identifying such new Intellectual Property Collateral; and
(f) following the obtaining of an interest in any such Intellectual Property Collateral by such Grantor or, following the occurrence and during the continuance of an Event of Default, upon the request of the Administrative Agent, such Grantor shall deliver all agreements, instruments and documents the Administrative Agent may reasonably request to evidence the Administrative Agents security interest in such Intellectual Property Collateral and as may otherwise be required to acknowledge or register or perfect the Administrative Agents interest in any part of such item of Intellectual Property Collateral unless such Grantor shall determine in good faith (and if an Event of Default has occurred and is continuing, with the consent of the Administrative Agent) that any Intellectual Property Collateral is of negligible economic value to such Grantor.
Section 4.7 As to Certificated Equipment. The certificates of title with respect to Certificated Equipment shall be maintained at the applicable Grantors offices or at such other new location of the Grantors office as to which written notice has been given to the Administrative Agent in accordance with Section 4.9.
Section 4.8 Trade Secrets. With respect to any patent applications in preparation for filing that comprise Trade Secret Collateral, Grantor shall have the right to assert its attorney- client privilege in such applications and not to disclose such applications unless and until an Event of Default has occurred and is continuing. If an Event of Default has occurred and is continuing, then at the request of the Administrative Agent, the Grantors shall deliver to the Administrative Agent any patent applications in preparation for filing and all documents and things embodying, incorporating or referring to inventions that in any way relate to such patent application.
Section 4.9 Locations. Each Grantor shall not (i) maintain any tangible Collateral owned by it with a book value in excess of U.S.$1,000,000 (or the Dollar Equivalent Amount in Canadian Dollars) at any location other than those locations listed on Schedule IV to this Security Agreement (as such Schedule may be supplemented from time to time), (ii) otherwise change, or add to, such locations without providing written notice to the Administrative Agent no less than five (5) days prior to such change or addition of a location and such Grantor will concurrently therewith obtain a Collateral Access Agreement for each such location to the extent required by Section 4.10, (iii) change its jurisdiction of incorporation, amalgamation, formation or organization from the jurisdiction identified on Schedule IIA to this Security Agreement, or (iv) change its principal place of business or chief executive office (or domicile) from the location identified on Schedule IIB to this Security Agreement, other than as permitted by the Credit Agreement.
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Section 4.10 Collateral Access Agreements. Each Grantor shall use commercially reasonable efforts to obtain a Collateral Access Agreement, from the lessor of each Material Inventory Location, which agreement or letter shall provide access rights, contain a waiver or subordination of all Liens or claims that the landlord, mortgagee, bailee or consignee may assert against the Material Inventory at that location, and shall otherwise be reasonably satisfactory in form and substance to the Administrative Agent. With respect to such Material Inventory Locations as of the Closing Date and thereafter, if the Administrative Agent has not received a Collateral Access Agreement within sixty (60) days of the Closing Date (or, if such location is subsequently acquired or leased after the date that is sixty (60) days after the Closing Date, as of the date that such location is subsequently acquired or leased), the Borrowers Eligible Inventory at that location shall be subject to Reserves as may be established by the Administrative Agent in accordance with the Credit Agreement. Each Grantor shall use commercially reasonable efforts to obtain a Collateral Access Agreement for all locations to which Eligible Inventory with a book value in excess of U.S.$500,000 (or the Dollar Equivalent Amount in Canadian Dollars) is being shipped to a processor or converter under arrangements established after the Closing Date, and, to the extent a Collateral Access Agreement has not been obtained with respect to any such location, the U.S. Borrowers Eligible Inventory at that location shall be subject to the establishment of Reserves as may be established by the Administrative Agent in accordance with the Credit Agreement. Such Grantor shall timely and fully pay and perform its obligations under all leases and other agreements with respect to each leased location or third party warehouse where any Inventory is or may be located.
Section 4.11 Further Assurances, etc. Each Grantor shall warrant and defend the right and title herein granted unto the Administrative Agent in and to the Collateral (and all right, title and interest represented by the Collateral) against the claims and demands of all Persons whomsoever. Each Grantor agrees that, from time to time at its own expense, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that the Administrative Agent may reasonably request, in order to perfect, preserve and protect any security interest granted or purported to be granted hereby or to enable the Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral (other than, as to perfection, Excluded Perfection Collateral) subject to the terms hereof. Each Grantor agrees that, upon the acquisition after the date hereof by such Grantor of any Collateral, with respect to which the security interest granted hereunder is not perfected automatically upon such acquisition, to take such actions with respect to such Collateral (other than, as to perfection, Excluded Perfection Collateral) or any part thereof as required by the Credit Documents. Without limiting the generality of the foregoing, each Grantor will:
(a) from time to time upon the request of the Administrative Agent, promptly deliver to the Administrative Agent such stock transfer forms, instruments and similar documents, reasonably satisfactory in form and substance to the Administrative Agent, with respect to such Collateral as the Administrative Agent may reasonably request and will, from time to time upon the request of the Administrative Agent, after the occurrence and during the continuance of any Event of Default, (i) promptly transfer any securities constituting Collateral into the name of any nominee designated by the Administrative Agent and (ii) if any Collateral shall be evidenced by an Instrument, negotiable Documents of Title, promissory note or Chattel Paper, deliver and pledge to the Administrative Agent hereunder such Instrument, negotiable Documents of Title, promissory note, Pledged Note or Chattel Paper duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Administrative Agent;
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(b) file (and hereby authorize the Administrative Agent to file) such financing or financing change statements, or amendments thereto, and such other instruments or notices, as may be necessary or that the Administrative Agent may reasonably request in order to perfect and preserve the security interests and other rights granted or purported to be granted to the Administrative Agent hereby; and
(c) furnish to the Administrative Agent, from time to time at the Administrative Agents reasonable request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Administrative Agent may reasonably request, all in reasonable detail.
The authorization contained in Section 4.11(b) above shall be irrevocable and continuing until Payment in Full. Each Grantor agrees that a carbon, photographic or other reproduction of this Security Agreement or any PPSA financing statement or financing change statement covering the Collateral or any part thereof shall be sufficient as a PPSA financing statement or financing change statement where permitted by law. Each Grantor hereby authorizes the Administrative Agent to file financing statements or financing change statements describing as the collateral covered thereby all of the debtors present and after-acquired personal property or words to that effect, notwithstanding that such wording may be broader in scope than the Collateral described in this Security Agreement.
ARTICLE V
THE ADMINISTRATIVE AGENT
Section 5.1 Administrative Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints the Administrative Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Administrative Agents discretion, following the occurrence and during the continuance of an Event of Default, to take any action and to execute any instrument which the Administrative Agent may deem necessary or advisable to accomplish the purposes of this Security Agreement, including (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (b) to receive, endorse, and collect any drafts or other Instruments, Documents of Title and Chattel Paper, in connection with clause (a) above, (c) to file any claims or take any action or institute any proceedings which the Administrative Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Administrative Agent with respect to any of the Collateral, and (d) to perform the affirmative obligations of such Grantor hereunder. EACH GRANTOR HEREBY ACKNOWLEDGES, CONSENTS AND AGREES THAT THE POWER OF ATTORNEY GRANTED PURSUANT TO THIS SECTION 5.1 IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND SHALL BE EFFECTIVE UNTIL PAYMENT IN FULL.
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Section 5.2 Administrative Agent May Perform. If any Grantor fails to perform any agreement contained herein, the Administrative Agent may, during the continuance of any Event of Default, itself perform, or cause performance of, such agreement, and the expenses of the Administrative Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 6.3 hereof and Section 9.1 of the Credit Agreement and the Administrative Agent may from time to time take any other action which the Administrative Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein.
Section 5.3 Administrative Agent Has No Duty. The powers conferred on the Administrative Agent hereunder are solely to protect its interest (on behalf of the Secured Parties) in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Administrative Agent shall have no duty as to any Collateral or responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Investment Property and any other Pledged Property, whether or not the Administrative Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.
Section 5.4 Reasonable Care. The Administrative Agent is required to exercise reasonable care in the custody and preservation of any of the Collateral in its possession; provided, that the Administrative Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral (a) if such Collateral is accorded treatment substantially equal to that which the Administrative Agent accords its own personal property, or (b) if the Administrative Agent takes such action for that purpose as any Grantor reasonably requests in writing at times other than upon the occurrence and during the continuance of an Event of Default; provided, further, that failure of the Administrative Agent to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
Section 6.1 Certain Remedies. If any Event of Default shall have occurred and be continuing:
(a) The Administrative Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the PPSA (whether or not the PPSA applies to the affected Collateral) and also may (i) take possession of any Collateral not already in its possession without demand and without legal process, (ii) require any Grantor to, and each Grantor hereby agrees that it will, at its expense and upon request of the Administrative Agent forthwith, assemble all or part of the Collateral as directed by the Administrative Agent and make it available to the Administrative Agent at a place to be designated by the Administrative Agent that is reasonably convenient to both parties, (iii) subject to applicable Legal Requirement or agreements with landlords, bailees, or warehousemen, enter onto the property where any Collateral is located and take possession thereof without demand and without legal process, (iv)
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without notice except as specified below, lease, license, sell or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Administrative Agents offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days prior notice to the applicable Grantor of the time and place of any public sale or the time of any private sale is to be made shall constitute reasonable notification; provided, however, that with respect to Collateral that is (x) perishable or threatens to decline speedily in value, or (y) is of a type customarily sold on a recognized market (including Investment Property), no notice of sale or disposition need be given. For purposes of this Article VI, notice of any intended sale or disposition of any Collateral may be given by first-class mail, hand-delivery (through a delivery service or otherwise), facsimile or email, and shall be deemed to have been sent upon deposit in the U.S. Mails or Canada Post with adequate postage properly affixed, upon delivery to an express delivery service or upon electronic submission through telephonic or internet services, as applicable. 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 public or private sale from time to time 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 so adjourned.
(b) Each Grantor that is or may become a fee estate owner of property where any Collateral is located (regardless of ownership thereof by any other Grantor) agrees and acknowledges that (i) Administrative Agent may remove the Collateral or any part thereof from such property in accordance with statutory law appertaining thereto without objection, delay, hindrance or interference by such Grantor and in such case such Grantor will make no claim or demand whatsoever against the Collateral, (ii) it will (x) cooperate with Administrative Agent in its efforts to assemble and/or remove all of the Collateral located on such property; (y) permit Administrative Agent and its agents to enter upon such property and occupy the property at any or all times to conduct an auction or sale, and/or to inspect, audit, examine, safeguard, assemble, appraise, display, remove, maintain, prepare for sale or lease, repair, lease, transfer, auction and/or sell the Collateral; and (z) not hinder Administrative Agents actions in enforcing its security interest in the Collateral.
(c) Each Grantor agrees and acknowledges that a commercially reasonable disposition of Inventory, Equipment, Goods, Computer Hardware and Software Collateral, or Intellectual Property Collateral may be by lease or license of, in addition to the sale of, such Collateral. Each Grantor further agrees and acknowledges that the following shall be deemed a reasonable commercial disposition: (i) a disposition made in the usual manner on any recognized market, (ii) a disposition at the price current in any recognized market at the time of disposition, and (iii) a disposition in conformity with reasonable commercial practices among dealers in the type of property subject to the disposition.
(d) All cash Proceeds received by the Administrative Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral shall be applied by the Administrative Agent against, all or any part of the Obligations as set forth in Section 7.6 of the Credit Agreement. The Administrative Agent shall not be obligated to apply or pay over for application noncash proceeds of collection or enforcement unless (i) the failure to do so would be commercially unreasonable, and (ii) the affected party has provided the Administrative Agent with a written demand to apply or pay over such noncash proceeds on such basis.
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(e) The Administrative Agent may do any or all of the following: (i) transfer all or any part of the Collateral into the name of the Administrative Agent or its nominee, with or without disclosing that such Collateral is subject to the Lien hereunder, (ii) notify the parties obligated on any of the Collateral to make payment to the Administrative Agent of any amount due or to become due thereunder, (iii) withdraw, or cause or direct the withdrawal, of all funds with respect to the Collateral Account, (iv) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto, (v) endorse any checks, drafts, or other writings in the applicable Grantors name to allow collection of the Collateral, (vi) take control of any Proceeds of the Collateral, or (vii) execute (in the name, place and stead of the applicable Grantor) endorsements, assignments, stock transfer forms and other instruments of conveyance or transfer with respect to all or any of the Collateral.
(f) If an Event of Default shall have occurred and be continuing, the Administrative Agent may appoint or reappoint by instrument in writing, any Person or Persons, whether an officer or officers or an employee or employees of any Grantor or not, to be an interim receiver, receiver or receivers (hereinafter called a Receiver, which term when used herein shall include a receiver and manager) of the Collateral of such Grantor (including any interest, income or profits therefrom) and may remove any Receiver so appointed and appoint another in his/her/its stead. Any such Receiver shall, to the extent permitted by applicable Legal Requirement, so far as concerns responsibility for his/her/its acts, be deemed the agent of such Grantor and not of the Administrative Agent, and the Administrative Agent shall not be in any way responsible for any misconduct, negligence or non-feasance on the part of any such Receiver or his/her/its servants, agents or employees. Subject to the provisions of the instrument appointing him/her/it, any such Receiver shall (i) have such powers as have been granted to the Administrative Agent under this Section 6.1, and (ii) shall be entitled to exercise such powers at any time that such powers would otherwise be exercisable by the Administrative Agent under this Section 6.1, which powers shall include the power to take possession of the Collateral, to preserve the Collateral or its value, to carry on or concur in carrying on all or any part of the business of the Grantor and to sell, lease, license or otherwise dispose of or concur in selling, leasing, licensing or otherwise disposing of the Collateral. To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others, including the Grantor, enter upon, use and occupy all premises owned or occupied by the Grantor wherein the Collateral may be situate, maintain the Collateral upon such premises, borrow money on a secured or unsecured basis and use the Collateral directly in carrying on the Grantors business or as security for loans or advances to enable the Receiver to carry on the Grantors business or otherwise, as such Receiver shall, in its reasonable discretion, determine. Except as may be otherwise directed by the Administrative Agent, all money received from time to time by such Receiver in carrying out his/her/its appointment shall be received in trust for and be paid over to the Administrative Agent, and any surplus shall be applied in accordance with Legal Requirement. Every such Receiver may, in the discretion of the Administrative Agent, be vested with all or any of the rights and powers of the Administrative Agent.
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Section 6.2 Compliance with Restrictions. Each Grantor agrees that in any sale of any of the Collateral whenever an Event of Default shall have occurred and be continuing, the Administrative Agent is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable Legal Requirement (including compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any Governmental Authority or official, and each Grantor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Administrative Agent be liable nor accountable to such Grantor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction.
Section 6.3 Indemnity and Expenses.
(a) WITHOUT LIMITING THE GENERALITY OF THE PROVISIONS OF SECTION 9.1 OF THE CREDIT AGREEMENT, EACH GRANTOR HEREBY INDEMNIFIES AND HOLDS HARMLESS THE ADMINISTRATIVE AGENT, EACH SECURED PARTY AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS (ANY OF THE FOREGOING BEING, AN INDEMNITEE) FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES AND LIABILITIES ARISING OUT OF OR RESULTING FROM THIS SECURITY AGREEMENT OR ANY OTHER CREDIT DOCUMENT (INCLUDING ENFORCEMENT OF THIS SECURITY AGREEMENT), EXCEPT CLAIMS, LOSSES OR LIABILITIES THAT (I) ARE FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNITEES BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, (II) RESULT FROM A CLAIM BROUGHT BY A GRANTOR AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH INDEMNITEES OBLIGATIONS HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT, IF SUCH GRANTOR HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOUR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION OR (III) A DISPUTE AMONG OR BETWEEN INDEMNITEES (EXCEPT TO THE EXTENT THAT SUCH INDEMNIFIED LOSS WAS INCURRED BY OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT, ANY ARRANGER OR ISSUING LENDER IN ITS CAPACITY AS SUCH) AND NOT INVOLVING ANY ACT OR OMISSION OF THE GRANTORS; PROVIDED, HOWEVER, THAT, TO THE EXTENT THIS INDEMNITY WOULD OTHERWISE APPLY, IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH INDEMNITEE BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL. If and to the extent that the foregoing undertaking may be unenforceable for any reason, each Grantor hereby agrees to make the maximum contribution to the payment and satisfaction of each of the foregoing which is permissible under applicable Legal Requirement.
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(b) Other than as set forth in clause (c) below, each Grantor will upon demand pay to the Administrative Agent the amount of any and all out-of-pocket expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Administrative Agent may incur in connection herewith, including in connection with the administration of this Security Agreement and the custody, preservation, use or operation of, any of the Collateral in accordance with Section 9.1 of the Credit Agreement.
(c) Each Grantor will upon demand pay to the Administrative Agent the amount of any and all out-of-pocket expenses, including the fees and disbursements of its counsel and of any experts and agents, which the Administrative Agent may incur in connection (i) the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of the Administrative Agent or any of the Secured Parties hereunder, or (iii) the failure by any Grantor to perform or observe any of the provisions hereof.
Section 6.4 Warranties. The Administrative Agent may sell the Collateral without giving any warranties or representations as to the Collateral. The Administrative Agent may disclaim any warranties of title or the like. Each Grantor agrees that this procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1 Credit Document. This Security Agreement is a Credit Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article 9 thereof.
Section 7.2 Binding on Successors, Transferees and Assigns; Assignment. This Security Agreement shall remain in full force and effect until Payment in Full, shall be binding upon each Grantor and its successors, transferees and assigns and, subject to the limitations set forth in the Credit Agreement, shall inure to the benefit of and be enforceable by each Secured Party and its successors, transferees and assigns; provided that, no Grantor shall assign any of its obligations hereunder (unless otherwise permitted under the terms of the Credit Agreement or this Security Agreement).
Section 7.3 Amendments, etc. No amendment to or waiver of any provision of this Security Agreement, nor consent to any departure by any Grantor from its obligations under this Security Agreement, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent (on behalf of the Lenders or the Majority Lenders, as the case may be, pursuant to Section 9.2 of the Credit Agreement) and such Grantor and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
Section 7.4 Notices. Except as otherwise provided in this Security Agreement, all notices and other communications provided for hereunder shall be in writing and hand delivered with written receipt, telecopied, sent by facsimile (with a hard copy sent as otherwise permitted pursuant to the Credit Agreement), sent by a nationally recognized overnight courier, or sent by
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certified mail, return receipt requested to the appropriate party at the address or facsimile number of such party specified in the Credit Agreement, on the signature pages of this Security Agreement or at such other address or facsimile number as may be designated by such party in a notice to the other party. Except as otherwise provided in this Security Agreement, all such notices and communications shall be effective when delivered.
Section 7.5 No Waiver; Remedies. In addition to, and not in limitation of Section 2.9, no failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.
Section 7.6 Headings. The various headings of this Security Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Security Agreement or any provisions thereof.
Section 7.7 Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
Section 7.8 Counterparts. This Security Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. Delivery of an executed counterpart of a signature page to this Security Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this Security Agreement.
Section 7.9 Consent as Holder of Equity and as Pledged Interests Issuer. Each Grantor hereby (a) consents to the execution by each other Grantor of this Security Agreement and grant by each other Grantor of a security interest, encumbrance, pledge and hypothecation in all Pledged Interests and other Collateral of such other Grantor to the Administrative Agent pursuant hereto, and (b) without limiting the generality of the foregoing, consents to the transfer of any Pledged Interest to the Administrative Agent or its nominee pursuant to the terms of this Security Agreement following the occurrence and during the continuance of an Event of Default and to the substitution of the Administrative Agent or its nominee as a partner under the limited partnership agreement or as a member under the limited liability company agreement, in any case, as heretofore and hereafter amended. Furthermore, each Grantor as the holder of any Equity Interests in a Pledged Interests Issuer, hereby (i) waives all rights of first refusal, rights to purchase, and rights to consent to transfer (to any Secured Party or to any purchaser resulting from the exercise of a Secured Partys remedy provided hereunder or under applicable Legal Requirement) and (ii) if required by the organizational documents of such Pledged Interests Issuer, agrees to cause such Pledged Interests Issuer to register the Lien granted hereunder and encumbering such Equity Interests in the registry books of such Pledged Interests Issuer.
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Section 7.10 Additional Grantors. Additional Wholly-Owned Restricted Subsidiaries of Borrower and organized under the federal laws of Canada or those of a province or territory of Canada (each, a Canadian Restricted Subsidiary) may from time to time enter into this Security Agreement as a Grantor. Upon execution and delivery after the date hereof by the Administrative Agent and such Canadian Restricted Subsidiary of an instrument in the form of Annex 1, such Canadian Restricted Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Security Agreement shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Security Agreement.
Section 7.11 Acknowledgment of Pledged Interests Issuers. Each Pledged Interests Issuer that is party hereto agrees that it will comply with instructions of the Administrative Agent with respect to the applicable Uncertificated Securities without further consent by the applicable Grantor.
Section 7.12 Joint and Several Liability. Notwithstanding any provision to the contrary contained herein, in any other of the Credit Documents or in any other documents relating to the Secured Obligations, if a secured creditor (as that term is defined under the Bankruptcy and Insolvency Act (Canada)) is determined by a court of competent jurisdiction not to include a Person to whom obligations are owed on a joint or joint and several basis, then each Grantors obligations (and the obligations of each other Grantor), to the extent such obligations are secured, shall be several obligations and not joint or joint and several obligations.
Section 7.13 Copy of Agreement. Each Grantor hereby acknowledges receipt of a copy of this security Agreement.
Section 7.14 Waiver. To the extent permitted by applicable law, each Grantor waives its right to receive a copy of any financing statement or financing change statement registered by the Administrative Agent, or of any verification statement with respect to any financing statement or financing change statement registered by the Administrative Agent.
Section 7.15 Conflicts with Credit Agreement. To the fullest extent possible, the terms and provisions of the Credit Agreement shall be read together with the terms and provisions of this Security Agreement so that the terms and provisions of this Security Agreement do not conflict with the terms and provisions of the Credit Agreement; provided, however, notwithstanding the foregoing, in the event that any of the terms or provisions of this Security Agreement conflict with any terms or provisions of the Credit Agreement, the terms or provisions of the Credit Agreement shall govern and control for all purposes; provided that the inclusion in this Security Agreement of terms and provisions, supplemental rights or remedies in favour of the Administrative Agent not addressed in the Credit Agreement shall not be deemed to be in conflict with the Credit Agreement and all such additional terms, provisions, supplemental rights or remedies contained herein shall be given full force and effect.
Section 7.16 Governing Law. This Security Agreement shall be deemed a contract under, and shall be governed by, and construed and enforced in accordance with, the laws of the Province of Alberta, and the federal laws of Canada applicable therein.
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Section 7.17 Submission to Jurisdiction. EACH GRANTOR PARTY TO THIS SECURITY AGREEMENT IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE PROVINCE OF ALBERTA, AND ANY APPELLATE COURT THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE GRANTORS PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURT. EACH OF THE GRANTORS PARTY 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 APPLICABLE LEGAL REQUIREMENT. NOTHING IN THIS SECURITY AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS SECURITY AGREEMENT AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
Section 7.18 Waiver of Venue. EACH GRANTOR PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, 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 SECURITY AGREEMENT IN ANY COURT REFERRED TO IN SECTION 7.14. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
Section 7.19 Service of Process. Each Grantor party hereto irrevocably consents to service of process in the manner provided for notices in Section 9.9 of the Credit Agreement. Nothing in this Security Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable Legal Requirement.
Section 7.20 Waiver of Jury. EACH GRANTOR PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH GRANTOR 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 SECURITY AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
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THIS SECURITY AGREEMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND SUPERSEDE ALL PRIOR UNDERSTANDINGS AND AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATING TO THE TRANSACTIONS PROVIDED FOR HEREIN AND THEREIN. ADDITIONALLY, THIS SECURITY AGREEMENT AND THE CREDIT DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be duly executed and delivered by its Responsible Officer as of the date first above written.
GRANTORS
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NINE ENERGY CANADA INC. MAGNUM OIL TOOLS CANADA INC.
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By: |
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Name: | Ann G. Fox | |
Title: | President, Chief Executive Officer |
[Signature Page to Canadian Pledge and Security Agreement]
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as Administrative Agent
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By: |
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Name: | ||
Title: |
[Signature Page to Canadian Pledge and Security Agreement]
ANNEX 1 to Canadian Pledge and
Security Agreement
SUPPLEMENT TO CANADIAN PLEDGE AND SECURITY AGREEMENT
SUPPLEMENT NO. dated as of , 20 (this Supplement), to the Pledge and Security Agreement dated as of , 2018 (as amended, supplemented, restated, or otherwise modified from time to time, the Security Agreement), among NINE ENERGY CANADA INC., an Alberta corporation (the Borrower), each domestic subsidiary of the Borrower party thereto from time to time (collectively with the Borrower, the Grantors and individually, a Grantor), and JPMorgan Chase Bank, N.A., Toronto Branch, as Administrative Agent (in such capacity, the Administrative Agent) for the ratable benefit of the Secured Parties (as defined in the Credit Agreement referred to herein).
A. Reference is made to the Credit Agreement dated as of , 2018 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement), among Nine Energy Service, Inc. (the U.S. Borrower), the Borrower, the lenders from time to time party thereto (the Lenders), the Issuing Lenders (as defined in the Credit Agreement), and JPMorgan Chase Bank, N.A., as administrative agent.
B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement and the Credit Agreement.
C. Section 7.10 of the Security Agreement provides that additional Canadian Restricted Subsidiaries of the Borrower may become Grantors under the Security Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Canadian Restricted Subsidiary of the Borrower (the New Grantor) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Grantor under the Security Agreement.
Accordingly, the Administrative Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 7.10 of the Security Agreement, the New Grantor by its signature below becomes a Grantor under the Security Agreement with the same force and effect as if originally named therein as a Grantor and the New Grantor hereby agrees (a) to all the terms and provisions of the Security Agreement applicable to it as a Grantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Grantor, as security for the payment and performance in full of the Canadian Secured Obligations (as defined in the Credit Agreement), does hereby create and grant to the Administrative Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and assigns as provided in the Security Agreement, a continuing security interest in and Lien on all of the New Grantors right, title and interest in and to the Collateral (as defined in the Security Agreement) of the New Grantor. Each reference to a Grantor in the Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby incorporated herein by reference.
SECTION 2. The New Grantor represents and warrants to the Administrative Agent and the other Secured Parties 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 (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)).
SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when the Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Grantor and the Administrative Agent. Delivery of an executed signature page to this Supplement by facsimile or other electronic transmission shall be as effective as delivery of a manually signed counterpart of this Supplement.
SECTION 4. The New Grantor hereby agrees that the schedules attached to the Security Agreement are hereby supplemented by the corresponding schedules attached to this Supplement. The New Grantor hereby represents and warrants that the information provided in the schedules attached hereto is true and correct as of the date hereof.
SECTION 5. The New Grantor hereby expressly acknowledges and agrees to the terms of Section 6.3 (Indemnity and Expenses) of the Security Agreement and expressly acknowledges the irrevocable proxy provided in Section 4.1(e) of the Security Agreement. In furtherance thereof, NEW GRANTOR HEREBY GRANTS THE ADMINISTRATIVE AGENT AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY SHALL CONTINUE IN EFFECT UNTIL PAYMENT IN FULL) EXERCISABLE UNDER THE CIRCUMSTANCES PROVIDED IN SECTION 4.1 OF THE SECURITY AGREEMENT, TO VOTE THE PLEDGED INTERESTS, INVESTMENT PROPERTY AND SUCH OTHER COLLATERAL.
SECTION 6. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.
SECTION 7. This Supplement shall be deemed a contract under, and shall be governed by, and construed and enforced in accordance with, the laws of the Province of Alberta and the federal laws of Canada applicable therein.
SECTION 8. In case any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, neither party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the Security Agreement shall not in any way be affected or impaired. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 9. All communications and notices hereunder shall be in writing and given as provided in the Security Agreement. All communications and notices hereunder to the New Grantor shall be given to it at the address set forth under its signature hereto.
SECTION 10. The New Grantor 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.
SECTION 11. Submission to Jurisdiction. NEW GRANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE PROVINCE OF ALBERTA, AND ANY APPELLATE COURT THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND NEW GRANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURT. NEW GRANTOR 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 SUPPLEMENT SHALL AFFECT ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS SUPPLEMENT AGAINST ANY OTHER PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
SECTION 12. Waiver of Venue. NEW GRANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, 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 SUPPLEMENT IN ANY COURT REFERRED TO IN SECTION 11. NEW GRANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
SECTION 13. Service of Process. New Grantor irrevocably consents to service of process in the manner provided for notices in Section 9.9 of the Credit Agreement. Nothing in this Supplement will affect the right of any party hereto to serve process in any other manner permitted by applicable Legal Requirement.
Section 7.21 Waiver of Jury. NEW GRANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENT, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUPPLEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). NEW GRANTOR (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 SUPPLEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
THIS SUPPLEMENT, THE SECURITY AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AS DEFINED IN THE CREDIT AGREEMENT REFERRED TO IN THIS SUPPLEMENT, 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 HERETO.
IN WITNESS WHEREOF, the New Grantor 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 Grantor] | ||
By: |
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Name: | ||
Title: | ||
Address: | ||
JPMORGAN CHASE BANK, N.A., TORONTO BRANCH as Administrative Agent | ||
By: |
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Name: | ||
Title: |
SCHEDULES TO SUPPLEMENT NO. 1
[AS APPROPRIATE]
EXHIBIT A TO SUPPLEMENT
ACCOUNTS
Name of Grantor |
Name of Institution |
Account Number |
Check here if Account |
Check here if Account |
Description of Deposit |
2
EXHIBIT E
[FORM OF]
COMPLIANCE CERTIFICATE
To: JPMorgan Chase Bank, N.A. and each of the Lenders party to the Credit Agreement (as defined below)
This Compliance Certificate (this Certificate) is furnished pursuant to that certain Credit Agreement dated as of October 25, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement) among Nine Energy Service, Inc., a Delaware corporation (the U.S. Borrower or the Company), Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada (the Canadian Borrower and, together with the U.S. Borrower, the Borrowers), the lenders party thereto (the Lenders), the Issuing Lenders and JPMorgan Chase Bank, N.A., as Administrative Agent (as each such term is defined in the Credit Agreement). Unless otherwise defined in this certificate, capitalized terms used herein that are defined in the Credit Agreement shall have the meanings assigned to them in the Credit Agreement.
I, the undersigned, in my capacity as [ ] of the Borrower Representative, do hereby certify, for and on behalf of the Borrowers in the foregoing capacity, and not in my personal capacity, as follows:
1. I am the duly elected 1 of the Borrower Representative.
2. I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Company and its Subsidiaries during the accounting period covered by the attached financial statements [for quarterly financial statements add: and such financial statements present fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes].
3. To my knowledge, no Default or Event of Default[, except as specified on Attachment A,2] has occurred and is continuing as of the date of this Certificate, and I have no knowledge of any condition or event which constitutes a Default existing at the end of the accounting period covered by the financial statements attached hereto.
4. [Schedule I hereto sets forth (a) the computations necessary to determine the Applicable Margin commencing on the Business Day this Certificate is delivered and (b) the Level from the definition of Applicable Margin determined by such computations.] 3
5. [Schedule II attached hereto sets forth in detail the calculations and computations of the Fixed Charge Coverage Ratio for the most recent period for which financial statements are available. [The Company is [not] in compliance with Section 6.18.]4
1 | Responsible Officer of the Company. |
2 | Add if disclosures are made under this paragraph and describe in reasonable detail on Attachment A the nature of the condition or event, the period during which it has existed and the action which the Company has taken, is taking or proposes to take with respect to such condition or event. |
3 | Only to be included when delivered in connection with quarterly or annual financial statements. |
4 | To be included during the continuance of a Financial Covenant Trigger Period. |
6. No Credit Party has changed its name, changed its jurisdiction of incorporation, formation or organization, changed its organizational identification number or reorganized in another jurisdiction without having given the Administrative Agent notice thereof in accordance with the Credit Agreement.
The foregoing certifications, together with the data and computations set forth in the Schedules hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this day of , .
, as Borrower Representative |
By: |
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Name: | ||||
Title: |
EXHIBIT F
[FORM OF]
NOTICE OF BORROWING
,
JPMorgan Chase Bank, N.A.
712 Main Street, 5th Floor
Houston, Texas 77002
Ladies and Gentlemen:
The undersigned, [Nine Energy Service, Inc., a Delaware corporation][Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada] (Borrower), refers to the Credit Agreement dated as of October 25, 2018 (as the same may be amended or modified from time to time, the Credit Agreement, the defined terms of which are used in this Notice of Borrowing as defined therein unless otherwise defined in this Notice of Borrowing) among the Borrower, [Nine Energy Service, Inc.,][Nine Energy Canada Inc.,] the lenders party thereto (the Lenders), the Issuing Lenders, and JPMorgan Chase Bank, N.A., as Administrative Agent (as each such term is defined therein). The Borrower hereby gives you irrevocable notice pursuant to Section 2.3(a) of the Credit Agreement that the Borrower hereby requests a Borrowing consisting of [Base Rate Loans][Non-Base Rate Loans], and in connection with that request sets forth below the information relating to such Borrowing (the Proposed Borrowing) as required by Section 2.3(b) of the Credit Agreement:
(a) The Business Day of the Proposed Borrowing is , .
(b) The Proposed Borrowing will be composed of [ABR][CBR][CPR][Eurodollar][CDOR] Loans.
(c) The aggregate amount of the Proposed Borrowing is $ .
(d) [The Interest Period for each Eurodollar Loan made as part of the Proposed Borrowing is month(s)].
The Borrower hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:
[(i) the representations and warranties contained in the Credit Agreement and each of the other Credit Documents are true and correct in all material respects (except that such materiality qualifier does not apply to any representations and warranties that already are qualified or modified by materiality in the text thereof), on and as of the date of the Proposed Borrowing, before and after giving effect to such Proposed Borrowing, as though made on the date of the Proposed Borrowing except for those representations and warranties that are expressly made as of an earlier date or period which are true and correct as of such earlier date or period (except that such materiality qualifier does not apply to any representations and warranties that already are qualified or modified by materiality in the text thereof); and
(ii) no Default has occurred and is continuing, or would result from such Proposed Borrowing]1.
[(i) the representations and warranties (i) made by the Credit Parties under Sections 4.1, 4.2, 4.3, 4.15, 4.19 and 4.20 of the Credit Agreement and (ii) made by the Magnum Targets and their affiliates in the Magnum Purchase Agreement as are material to the interests of the Lenders, but only to the extent that the breach of any such representations results in the Company or any of its affiliates having the right to terminate its obligations under the Magnum Purchase Agreement (after giving effect to any applicable notice and cure period) or otherwise decline to consummate the Magnum Acquisition, are true and correct in all material respects.]2
1 | NTD: For each Borrowing other than the initial Borrowing. |
2 | NTD: For the initial Borrowing. |
2
Very truly yours,
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[NINE ENERGY SERVICE, INC.][NINE ENERGY CANADA INC.]
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By: |
Name: |
Title: |
EXHIBIT G-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 Credit Agreement dated as of October 25, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement) among Nine Energy Service, Inc., a Delaware corporation (the U.S. Borrower), Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada (the Canadian Borrower and, together with the U.S. Borrower, the Borrowers), the Lenders party thereto, the Issuing Lenders and JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for the Lenders.
Pursuant to the provisions of Section 2.17 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 any Borrower within the meaning of Section 871(h)(3)(B) of the Code and (iv) it is not a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower Representative 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 Representative and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower Representative and the Administrative Agent with a properly completed and currently effective certificate prior to the first payment 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]
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By: |
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Name: | ||
Title: | ||
Date: , , 20[ ] |
EXHIBIT G-1
EXHIBIT G-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 Credit Agreement dated as of October 25, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement) among Nine Energy Service, Inc., a Delaware corporation (the U.S. Borrower), Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada (the Canadian Borrower and, together with the U.S. Borrower, the Borrowers), the Lenders party thereto, the Issuing Lenders and JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for the Lenders.
Pursuant to the provisions of Section 2.17 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 any Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreign corporation related to any 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 prior to the first payment 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]
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By: |
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Name: | ||
Title: | ||
Date: , , 20[ ] |
EXHIBIT G-2
EXHIBIT G-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 Credit Agreement dated as of October 25, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement) among Nine Energy Service, Inc., a Delaware corporation (the U.S. Borrower), Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada (the Canadian Borrower and, together with the U.S. Borrower, the Borrowers), the Lenders party thereto, the Issuing Lenders and JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for the Lenders.
Pursuant to the provisions of Section 2.17 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 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 any 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 any 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-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, from each of such partners/members 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 prior to the first payment 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]
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By: |
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Name: | ||
Title: | ||
Date: , , 20[ ] |
EXHIBIT G-3
EXHIBIT G-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 Credit Agreement dated as of October 25, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the Credit Agreement) among Nine Energy Service, Inc., a Delaware corporation (the U.S. Borrower), Nine Energy Canada Inc., a corporation organized under the laws of Alberta, Canada (the Canadian Borrower and, together with the U.S. Borrower, the Borrowers), the Lenders party thereto, the Issuing Lenders and JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent for the Lenders.
Pursuant to the provisions of Section 2.17 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 any 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 any Borrower as described in Section 881(c)(3)(C) of the Code.
The undersigned has furnished the Administrative Agent and the Borrower Representative 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-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, from each of such partners/members 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 Representative and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower Representative and the Administrative Agent with a properly completed and currently effective certificate prior to the first payment 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]
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By: |
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Name: | ||
Title: | ||
Date: , , 20[ ] |
EXHIBIT G-4