Exhibit 10.2

 

 

 

TERM LOAN AND SECURITY AGREEMENT

Dated as of December 15, 2016

KEY ENERGY SERVICES, INC.,

as Borrower

CORTLAND PRODUCTS CORP.,

as Agent

and

CERTAIN FINANCIAL INSTITUTIONS,

as Lenders

 

 

 

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TABLE OF CONTENTS

 

     Page  

SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION

     2   

1.1 Definitions

     2   

1.2 Accounting Terms

     39   

1.3 Uniform Commercial Code

     39   

1.4 Certain Matters of Construction

     39   

1.5 Pro Forma Calculations

     40   

SECTION 2. CREDIT FACILITY

     41   

2.1 Loans

     41   

2.2 Notes

     41   

2.3 [Reserved]

     42   

2.4 [Reserved]

     42   

2.5 Extension of Maturity Date

     42   

SECTION 3. INTEREST, FEES AND CHARGES

     44   

3.1 Interest

     44   

3.2 Fees

     45   

3.3 Computation of Interest, Fees, Yield Protection

     45   

3.4 Reimbursement Obligations

     46   

3.5 Illegality

     46   

3.6 Inability to Determine Rates

     47   

3.7 Increased Costs; Capital Adequacy

     47   

3.8 Mitigation

     48   

3.9 Funding Losses

     48   

3.10 Maximum Interest

     49   

SECTION 4. LOAN ADMINISTRATION

     49   

4.1 [Reserved]

     49   

4.2 Defaulting Lender

     49   

4.3 Number and Amount of LIBOR Loans; Determination of Rate

     49   

4.4 One Obligation

     50   

4.5 Effect of Termination

     50   

SECTION 5. PAYMENTS

     50   

5.1 General Payment Provisions

     50   

5.2 Repayment of Loans

     50   

5.3 Prepayments

     51   

5.4 Offers to Repurchase Loans

     52   

5.5 Payment of Applicable Premium

     54   

 

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5.6 Payment of Other Obligations

     55   

5.7 Marshaling; Payments Set Aside

     55   

5.8 Application and Allocation of Payments

     55   

5.9 Account Stated

     56   

5.10 Taxes

     56   

5.11 Lender Tax Information

     58   

SECTION 6. CONDITIONS PRECEDENT

     60   

6.1 Conditions Precedent to Effectiveness

     60   

SECTION 7. COLLATERAL

     62   

7.1 Grant of Security Interest

     62   

7.2 Lien on Deposit Accounts; Cash Collateral

     63   

7.3 Real Estate Collateral and Vehicles

     64   

7.4 Other Collateral

     66   

7.5 Limitations

     66   

7.6 Further Assurances

     67   

7.7 Certain Limited Exclusions

     67   

7.8 Intercreditor Agreement

     68   

SECTION 8. COLLATERAL ADMINISTRATION

     68   

8.1 TL Proceeds and Priority Collateral Account

     68   

8.2 Equipment

     69   

8.3 Deposit Accounts and Securities Accounts

     69   

8.4 General Provisions

     70   

8.5 Power of Attorney

     70   

SECTION 9. REPRESENTATIONS AND WARRANTIES

     71   

9.1 General Representations and Warranties

     71   

SECTION 10. COVENANTS AND CONTINUING AGREEMENTS

     80   

10.1 Affirmative Covenants

     80   

10.2 Negative Covenants

     88   

10.3 Financial Covenants

     99   

SECTION 11. GUARANTY

     100   

11.1 Guaranty

     100   

11.2 No Setoff or Deductions; Taxes; Payments

     100   

11.3 Rights of Secured Parties

     101   

11.4 Certain Waivers

     101   

11.5 Obligations Independent

     102   

11.6 Subrogation

     102   

 

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11.7 Termination; Reinstatement

     102   

11.8 Subordination

     102   

11.9 Stay of Acceleration

     103   

11.10 Expenses

     103   

11.11 Miscellaneous

     103   

11.12 Condition of Borrower

     103   

11.13 Additional Guarantors

     103   

SECTION 12. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

     104   

12.1 Events of Default

     104   

12.2 Remedies upon Default

     105   

12.3 License

     106   

12.4 Setoff

     106   

12.5 Remedies Cumulative; No Waiver

     106   

SECTION 13. AGENT

     107   

13.1 Appointment, Authority and Duties of Agent

     107   

13.2 Agreements Regarding Collateral and Borrower Materials

     108   

13.3 Reliance By Agent

     109   

13.4 Action Upon Default

     109   

13.5 Ratable Sharing

     109   

13.6 Indemnification; Waiver

     110   

13.7 Limitation on Responsibilities of Agent

     110   

13.8 Successor Agent and Co-Agents

     111   

13.9 Due Diligence and Non-Reliance

     111   

13.10 Remittance of Payments and Collections

     112   

13.11 Individual Capacities

     112   

13.12 Titles

     113   

13.13 No Third Party Beneficiaries

     113   

SECTION 14. BENEFIT OF AGREEMENT; ASSIGNMENTS

     113   

14.1 Successors and Assigns

     113   

14.2 Participations

     113   

14.3 Assignments

     114   

14.4 Replacement of Certain Lenders

     116   

SECTION 15. MISCELLANEOUS

     117   

15.1 Consents, Amendments and Waivers

     117   

15.2 Indemnity

     118   

15.3 Notices and Communications

     118   

15.4 Performance of Borrower’s Obligations

     119   

15.5 Credit Inquiries

     120   

15.6 Severability

     120   

15.7 Cumulative Effect; Conflict of Terms

     120   

 

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15.8 Counterparts; Execution

     120   

15.9 Entire Agreement

     120   

15.10 Relationship with Lenders

     120   

15.11 No Advisory or Fiduciary Responsibility

     121   

15.12 Confidentiality

     121   

15.13 GOVERNING LAW

     122   

15.14 Consent to Forum

     122   

15.15 Waivers by Borrower

     122   

15.16 PATRIOT Act Notice

     123   

15.17 NO ORAL AGREEMENT

     123   

LIST OF EXHIBITS AND SCHEDULES

 

Exhibit A-1    Form of Assignment Exhibit A-2    Form of Affiliated Lender
Assignment and Assumption Exhibit B    Form of Notice of Conversion/Continuation
Exhibit C    Form of Compliance Certificate Exhibit D    Form of Note Schedule
1.1(A)    Closing Date Unrestricted Subsidiaries Schedule 1.1(B)    Closing Date
Immaterial Domestic Subsidiaries Schedule 1.1(C)    Mortgaged Real Property as
of Closing Date Schedule 2.1    Initial Loans Schedule 7.4.1    Commercial Tort
Claims Schedule 8.3    Deposit Accounts Schedule 9.1.4    Existing Liabilities
Schedule 9.1.14    Restrictive Agreements Schedule 9.1.16    Names and Capital
Structure Schedule 9.1.17    Locations of Offices Schedule 9.1.18    Patents,
Trademarks, Copyrights and Licenses Schedule 9.1.20    Hedging Agreements
Schedule 9.1.21(a)    Filing Offices Schedule 10.1.18    Post-Closing
Undertakings Schedule 10.2.1(k)    Closing Date Borrowed Money Schedule 10.2.4
   Investments

 

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TERM LOAN AND SECURITY AGREEMENT

THIS TERM LOAN AND SECURITY AGREEMENT (this “Agreement”) is dated as of December
15, 2016, among KEY ENERGY SERVICES, INC., a Delaware corporation (the
“Borrower”), certain subsidiaries of the Borrower named as guarantors herein,
the financial institutions party to this Agreement from time to time as Lenders,
CORTLAND PRODUCTS CORP., a Delaware corporation, as agent for the Lenders and
CORTLAND CAPITAL MARKET SERVICES LLC, a Delaware limited liability company, as
agent for the Lenders solely with respect to Vehicles (collectively, “Agent”).

R E C I T A L S:

WHEREAS, the Borrower, the Guarantors, Agent and certain financial institutions
or entities party thereto as lenders were party to that certain Term Loan and
Security Agreement (as amended, restated, amended and restated, supplemented or
otherwise modified prior to the date hereof, the “Original Credit Agreement”),
dated as of June 1, 2015, pursuant to which the lenders party thereto extended
credit in the form of term loans to the Borrower in an aggregate principal
amount of $315,000,000;

WHEREAS, on October 24, 2016, the Borrower and certain of its Subsidiaries
commenced voluntary cases under Chapter 11 of Title 11 of the United States Code
(the “Bankruptcy Code”) in the United States Bankruptcy Court for the District
of Delaware (the “Bankruptcy Court”), which cases are being jointly administered
under Case No. 16-12306 (the “Chapter 11 Cases”);

WHEREAS, in connection with the Chapter 11 Cases, the Borrower, the Lenders and
certain other parties entered into the Plan Support Agreement on August 24,
2016, which provides for the implementation of a restructuring involving the
Borrower and certain of its Subsidiaries on the terms set forth in the
Fundamental Implementation Agreements (as defined in the Plan Support
Agreement), including the Joint Prepackaged Chapter 11 Plan of Reorganization of
Key Energy Services, Inc. and its Debtor Affiliates Pursuant to Chapter 11 of
the Bankruptcy Code filed with the Bankruptcy Court distributed on September 21,
2016 (including all annexes, exhibits, schedules and supplements thereto, in
each case, as may be amended, modified or supplemented from time to time only in
accordance with the terms thereof, the “Prepackaged Plan”);

WHEREAS, on December 6, 2016, the Bankruptcy Court entered the Confirmation
Order confirming the Prepackaged Plan; and

WHEREAS, substantially concurrently with the effective date of the Prepackaged
Plan and pursuant to the Prepackaged Plan, in exchange for the release and
discharge of the loans outstanding under the Original Credit Agreement and their
other prepetition claims, the Lenders are receiving, among other things, new
term loans issued under this Agreement by the Borrower in the initial aggregate
principal amount of $250,000,000.

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NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
agree as follows:

 

SECTION 1. DEFINITIONS; RULES OF CONSTRUCTION

1.1 Definitions. As used herein, the following terms have the meanings set forth
below:

ABL Agent: the “Agent” under the ABL Credit Agreement.

ABL Bank Products: the obligations of the Borrower and its Restricted
Subsidiaries with respect to Bank Products secured by the collateral under the
ABL Credit Agreement.

ABL Borrowers: the Borrower and Key Energy Services, LLC, a Texas limited
liability company.

ABL Credit Agreement: that certain Loan and Security Agreement, dated of even
date herewith, by and among the ABL Borrowers, the lenders party thereto, and
the ABL Agent.

ABL Loans: “Loans” under the ABL Credit Agreement.

ABL Obligations: “Obligations” under the ABL Credit Agreement as in effect on
the Closing Date.

acceleration: as defined in Section 12.2(a).

Acceptance Notice: as defined in Section 5.4.1(b).

Accepted Appraiser: each of Great American Appraisal & Valuation Services, LLC,
Tiger Valuation Services, LLC, Hilco Appraisal Services LLC, Gordon Brothers
Asset Advisors, LLC and each of their Affiliates.

Account: as defined in the UCC, including all rights to payment for goods sold
or leased, or for services rendered.

Account Debtor: a Person obligated under an Account, Chattel Paper or General
Intangible.

Acquisition: a transaction or series of transactions resulting in
(a) acquisition of a business, division or all or substantially all assets of a
Person; (b) record or beneficial ownership of more than 50% of the Equity
Interests of a Person; or (c) merger, consolidation or combination of a Borrower
or a Restricted Subsidiary with another Person.

Affiliate: 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. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have correlative meanings.

Affiliate Transaction: as defined in Section 10.2.10.

Affiliated Lender: as defined in Section 14.3.3(b).

 

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Agency Letter: that certain letter agreement, dated as of December 15, 2016,
executed and delivered by Borrower and Agent, as amended, modified or replaced
from time to time in accordance with the terms thereof.

Agent: as defined in the preamble hereto.

Agent Indemnitees: Agent and its officers, directors, employees, Affiliates,
agents and attorneys.

Agent Professionals: attorneys, accountants, appraisers, auditors, business
valuation experts, environmental engineers or consultants, turnaround
consultants, and other professionals and experts retained by Agent.

Agreement: as defined in the preamble hereto.

All-In-Yield: means, as to any Debt, the total yield thereof (exclusive of base
rate and LIBOR), including interest margins, upfront fees and original issue
discount and any underwriting, commitment, arrangement or other fees payable in
connection therewith, in each case, incurred or payable by the Borrower or the
Subsidiaries generally to all lenders of such Debt; provided that (a) original
issue discount and upfront fees shall be equated to interest margins assuming a
four-year life to maturity (or, if less, the stated life to maturity at the time
of its incurrence of the applicable Debt) and (b) if there is a LIBOR floor
greater than 100 basis points, any excess above 100 basis points will be
included in All-In-Yield.

Anti-Corruption Laws: all laws, rules and regulations of any jurisdiction
applicable to the Borrower or its Subsidiaries from time to time concerning or
relating to bribery or corruption.

Anti-Terrorism Law: any law relating to terrorism or money laundering, including
the PATRIOT Act.

Applicable Law: all laws, rules, regulations and binding governmental guidelines
applicable to the Person, conduct, transaction, agreement or matter in question,
including all applicable statutory law, common law and equitable principles, and
all provisions of constitutions, treaties, statutes, rules, regulations, orders
and decrees of Governmental Authorities.

Applicable Margin: (a) 10.25% per annum in the case of LIBOR Loans and (b) 9.25%
per annum in the case of Base Rate Loans.

Applicable Premium: as defined in Section 5.5.

Approved Fund: any Person (other than a natural Person) engaged in making,
purchasing, holding or otherwise investing in commercial loans in its ordinary
course of activities and that is administered or managed by a Lender, an entity
that administers or manages a Lender or an Affiliate of either.

Asset Coverage Ratio: as of any date of determination, the ratio, determined on
a consolidated basis for the Borrower and its Consolidated Subsidiaries, of
(a) PP&E Value with

 

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respect to Term Priority Collateral in which Agent has a perfected
first-priority Lien, subject to Permitted Liens (which shall be deemed to
include (i) the Post-Closing Collateral solely during the Post-Closing
Collateral Period and (ii) all assets transferred to the SPV pursuant to Section
7.3.3(b)) to (b) the outstanding principal amount of the Debt under the Loan
Documents.

Asset Disposition: a sale, lease, license, consignment, transfer or other
disposition, including any disposition in connection with a sale-leaseback
transaction or synthetic lease, to any Person other than an Obligor of any
Property of such Person (other than (i) inventory, damaged, obsolete or worn out
assets, scrap and Cash Equivalents, in each case disposed of in the Ordinary
Course of Business, (ii) dispositions between or among Unrestricted
Subsidiaries, (iii) assets referred to in Section 10.2.9(l), and (iv) any sale,
transfer or other disposition or series of related sales, transfers or other
dispositions having a value not in excess of $15,000,000 in the aggregate for
all such sales, transfers or other dispositions).

Asset Disposition Offer: as defined in Section 5.4.1(a).

Assignment: an assignment and acceptance agreement between a Lender and Eligible
Assignee, in the form of Exhibit A-1, or in the event such Eligible Assignee is
an Affiliated Lender, Exhibit A-2, or otherwise reasonably satisfactory to
Agent.

Availability: has the meaning assigned in the ABL Credit Agreement.

Backstop Agreement: the Backstop Commitment Agreement, dated as of September 21,
2016, among the Borrower, certain subsidiaries of the Borrower and the backstop
participants party thereto.

Bank Product: any of the following products, services or facilities extended to
the Borrower or an Affiliate of the Borrower by a Lender, an Affiliate of a
Lender or any Person who, at the time of establishing any of the following was a
Lender or an Affiliate of a Lender: (a) Cash Management Services; (b) products
under Hedging Agreements; and (c) other banking products or services.

Bankruptcy Code: as defined in the recitals hereto.

Bankruptcy Court: as defined in the recitals hereto.

Base Rate: for any day, a per annum rate equal to the greatest of (a) the Prime
Rate for such day; (b) the Federal Funds Rate for such day, plus 0.50%; or
(c) LIBOR for a 1 month interest period as of such day, plus 1.0%.

Base Rate Loan: any Loan that bears interest based on the Base Rate.

Board of Governors: the Board of Governors of the Federal Reserve System.

Borrowed Money: with respect to any Obligor, without duplication, its (a) Debt
that (i) arises from the lending of money by any Person to such Obligor or (ii)
is evidenced by notes, drafts, bonds, debentures, credit documents or similar
instruments; (b) Capital Leases; and (c) reimbursement obligations with respect
to drawn letters of credit.

 

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Borrower: as defined in the preamble hereto.

Borrower Materials: Compliance Certificates and other information, reports,
financial statements and other materials delivered by Borrower hereunder, as
well as other Reports and information provided by Agent to Lenders.

Borrowing: a group of Loans that are made or converted together on the same day
and have the same interest option and, if applicable, Interest Period.

Borrowing Base: has the meaning assigned to such term in the ABL Credit
Agreement.

Business Day: any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact
closed in, New York, and if such day relates to a LIBOR Loan, any such day on
which dealings in Dollar deposits are conducted in the London interbank market.

Capital Expenditures: all expenditures made by the Borrower or Restricted
Subsidiary for the acquisition of fixed assets, or any improvements,
replacements, substitutions or additions thereto with a useful life of more than
one year and which are accounted for as “capital expenditures” in accordance
with GAAP.

Capital Lease: any lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

Cash Collateral: cash, and any interest or other income earned thereon, that is
delivered to Agent to Cash Collateralize any Obligations.

Cash Collateral Account: a demand deposit, money market or other account
established by Agent at such commercial bank as Agent may select in its
reasonable discretion, which account shall be subject to a Lien in favor of
Agent.

Cash Collateralize: the delivery of cash to Agent, as security for the payment
of any inchoate, contingent or other Obligations, in an amount equal to Agent’s
good faith estimate of the amount due or to become due, including fees, expenses
and indemnification hereunder. “Cash Collateralization” has a correlative
meaning.

Cash Equivalents: (a) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency thereof,
in each case maturing within one (1) year from the date of creation thereof; (b)
deposits maturing within one (1) year from the date of creation thereof with,
including certificates of deposit issued by, any Lender or any office located in
the United States of any other bank or trust company which is organized under
the laws of the United States or any state thereof having capital, surplus and
undivided profits aggregating at least $100,000,000 (as of the date of such bank
or trust company’s most recent financial reports) and a short term deposit
rating of no lower than A2 or P2, as such rating is set forth from time to time,
by S&P or Moody’s, respectively or, in the case of any Foreign Subsidiary, a
bank organized in a jurisdiction in which the Foreign Subsidiary conducts
operations having assets in excess of $500,000,000; (c) repurchase obligations
of any Lender or of any commercial bank satisfying the requirements of clause
(b) hereof, having a term of not

 

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more than 30 days with respect to securities issued or fully guaranteed or
insured by the United States government; (d) commercial paper maturing within
one year from the date of creation thereof rated in the highest grade by S&P or
Moody’s; (e) securities with maturities of six months or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) hereof; (f) deposits
in money market funds investing exclusively in Investments described in clauses
(a) through (e) hereof and (g) instruments equivalent to those referred to in
clauses (a) through (f) above of comparable tenor to those referred to above,
(i) denominated in Canadian dollars, pounds sterling, euros, the national
currency of any participating member state of the European Union or, in the case
of any Foreign Subsidiary, such local currencies held by it from time to time in
the ordinary course of business, and (ii) used in the ordinary course of
business of the Borrower and its Subsidiaries for cash management purposes in
any jurisdiction outside the United States of America to the extent reasonably
required or advisable in connection with any business conducted by the Borrower
or any Subsidiary.

Cash Management Services: services relating to operating, cash management
collections, payroll, trust, or other depository or disbursement accounts,
including automated clearinghouse, e-payable, electronic funds transfer, wire
transfer, treasury services, controlled disbursement, overdraft, depository,
information reporting, lockbox and stop payment services.

CERCLA: the Comprehensive Environmental Response Compensation and Liability Act
(42 U.S.C. § 9601 et seq.).

CFC: as defined in the definition of “Foreign Subsidiary”.

Change in Law: the occurrence, after the date hereof, of (a) the adoption,
taking effect or phasing in of any law, rule, regulation or treaty; (b) any
change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof by any Governmental Authority; or (c) the
making, issuance or application of any request, guideline, requirement or
directive (whether or not having the force of law) by any Governmental
Authority; provided, however, that “Change in Law” shall include, regardless of
the date enacted, adopted or issued, all requests, rules, guidelines,
requirements or directives (i) under or relating to the Dodd-Frank Wall Street
Reform and Consumer Protection Act, or (ii) promulgated pursuant to Basel III by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any similar authority) or any other Governmental Authority.

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

(a) any sale, lease, transfer, conveyance or other disposition (in one
transaction or a series of related transactions) of all or substantially all of
the properties or assets of the Borrower and its Restricted Subsidiaries taken
as a whole to any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act (a “Group”) together with any Affiliates thereof
(whether or not otherwise in compliance with the provisions of this Agreement)
unless immediately following such sale, lease, transfer, conveyance or other
disposition in compliance with this Agreement such properties or assets are
owned, directly or indirectly, by (i) the Borrower or a Restricted Subsidiary of
the Borrower or (ii) a Person controlled by the Borrower or a Restricted
Subsidiary of the Borrower;

 

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(b) the approval by the holders of Equity Interests of the Borrower of any plan
or proposal for the liquidation or dissolution of the Borrower;

(c) the acquisition, in one or more transactions, of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of the Equity
Interests of the Borrower by any Person or Group (other than Permitted Holders)
that, as a result of such acquisition, either (i) beneficially owns (within the
meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, 50.1% or
more of the Borrower’s then outstanding Equity Interests or Voting Stock or
(ii) otherwise has the ability to elect, directly or indirectly, a majority of
the members of the board of directors of the Borrower, including, without
limitation, by the acquisition of revocable proxies for the election of
directors;

(d) a “change in control” or any comparable term under, and as defined in, the
ABL Credit Agreement (to the extent then in effect); or

(e) the Borrower ceases to own and control, beneficially and of record, directly
or indirectly, all Equity Interests in Key Energy Services, LLC;

provided, that, none of the transactions contemplated or expressly authorized by
the Prepackaged Plan shall constitute, or be deemed to constitute, a Change of
Control.

Change of Control Offer: as defined in Section 5.4.3(a).

Change of Control Payment Date: as defined in Section 5.4.3(b).

Chapter 11 Cases: as defined in the recitals hereto.

Claims: all claims, liabilities, obligations, losses, damages, penalties,
judgments, proceedings, interest, costs and expenses of any kind (including
remedial response costs, reasonable attorneys’ fees and Extraordinary Expenses)
at any time (including after Full Payment of the Obligations or replacement of
Agent or any Lender) incurred by any Indemnitee or asserted against any
Indemnitee by any Obligor or other Person, in any way relating to (a) any Loans,
Loan Documents, Borrower Materials, or the use thereof or transactions relating
thereto, (b) any action taken or omitted to be taken by any Indemnitee in
connection with any Loan Documents, (c) the existence or perfection of any
Liens, or realization upon any Collateral, (d) exercise of any rights or
remedies under any Loan Documents or Applicable Law, or (e) failure by any
Obligor to perform or observe any terms of any Loan Document, in each case
including all costs and expenses relating to any investigation, litigation,
arbitration or other proceeding (including an Insolvency Proceeding or appellate
proceedings), whether or not the applicable Indemnitee is a party thereto.

Closing Date: as defined in Section 6.1.

Closing Date Mortgaged Real Property: as defined in Section 7.3.3(a).

Code: the Internal Revenue Code of 1986, as amended.

 

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Collateral: all Property described in Section 7.1 (and not excluded by
Section 7.7), all Property described in any Security Documents as security for
any Obligations, and all other Property that now or hereafter secures (or is
intended to secure) any Obligations.

Compliance Certificate: a certificate, in substantially the form attached hereto
as Exhibit C or such other form reasonably satisfactory to Agent, by which
Borrower (a) certifies compliance with Section 10.3, (b) calculates the Asset
Coverage Ratio and Liquidity for the applicable date (regardless of whether
compliance with the Asset Coverage Ratio or Liquidity is tested for such date),
(c) to the extent applicable, attaches related consolidating financial
statements reflecting the adjustments necessary to eliminate (1) the accounts of
Unrestricted Subsidiaries (if any) from such consolidated financial statements
and (2) the financial and other operational results of Unrestricted Subsidiaries
(if any), (d) sets forth reasonably detailed calculations satisfactory to Agent
demonstrating that the aggregate value of the Excluded Property designated under
clause (i) of the definition thereof as of the last day of the period covered by
such Compliance Certificate does not exceed $5,000,000, and (e) lists any office
or place of business that was opened or was closed during the period covered by
the certificate.

Confirmation Order: has the meaning assigned to such term in the Prepackaged
Plan.

Connection Income Taxes: Other Connection Taxes that are imposed on or measured
by net income (however denominated), or are franchise or branch profits Taxes.

Consolidated Depreciation and Amortization Expense: with respect to the
Borrower, for any period, the total amount of depreciation and amortization
expense, including (i) amortization of deferred financing fees and debt issuance
costs, commissions, fees and expenses, (ii) amortization of unrecognized prior
service costs and actuarial gains and losses related to pensions and other
post-employment benefits and (iii) amortization of intangibles (including
goodwill and organizational costs) (excluding any such adjustment to the extent
that it represents an accrual of or reserve for cash expenditures in any future
period except to the extent such adjustment is subsequently reversed), in each
case of the Borrower and its Consolidated Subsidiaries for such period on a
consolidated basis and otherwise determined in accordance with GAAP.

Consolidated Interest Expense: for any period, the sum (determined without
duplication) of the aggregate gross interest expense of the Borrower and the
Consolidated Subsidiaries for such period, whether paid or accrued, including to
the extent included in interest expense under GAAP: (a) amortization of debt
issuance costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, commissions, discounts
and other fees (excluding expenses resulting from the discounting of any
outstanding Debt in connection with the application of fresh start accounting in
relation to the Prepackaged Plan or transactions related thereto) and charges
incurred in respect of letter of credit or bankers’ acceptance financings, and
net payments (if any) pursuant to Hedging Agreement; (b) any interest expense on
Debt of another Person that is guaranteed by the Borrower or any Consolidated
Subsidiary or secured by a Lien on assets of the Borrower or any Consolidated
Subsidiary (whether or not such guarantee or Lien is called upon); (c)
capitalized interest and (d) the portion of any payments or accruals under
Capital Leases allocable to interest expense, plus the portion of any payments
or accruals under synthetic leases allocable to interest expense whether or not
the same constitutes interest expense under GAAP.

 

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Consolidated Net Income: with respect to the Borrower for any period, the
aggregate of the net income (loss) of the Borrower and its Consolidated
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (without duplication):

(i) any after-tax effect of all extraordinary, nonrecurring or unusual gains or
losses or income or expenses (including related to the Transactions on the
Closing Date) or any restructuring changes or reserves, including, without
limitation, any expenses related to any reconstruction, recommissioning or
reconfiguration of fixed assets for alternate uses, retention, severance, system
establishment cost, contract termination costs, costs to consolidate facilities
and relocate employees, advisor fees and other out of pocket costs and non-cash
charges to assess and execute operational improvement plans and restructuring
programs, will be excluded;

(ii) any expenses, costs or charges incurred, or any amortization thereof for
such period, in connection with any equity issuance, Investment, acquisition,
disposition, recapitalization or incurrence or repayment of Debt, including a
refinancing thereof (in each case whether or not consummated) (including any
such costs and charges incurred in connection with the Transactions on the
Closing Date and the Chapter 11 Cases), and all gains and losses realized in
connection with any business disposition or any disposition of assets outside
the ordinary course of business or the disposition of securities or the early
extinguishment of Debt, together with any related provision for taxes on any
such gain, loss, income or expense will be excluded;

(iii) the net income (or loss) of any Person that is not a Consolidated
Subsidiary or that is accounted for by the equity method of accounting will be
excluded, provided that the income of the Borrower will be included to the
extent of the amount of dividends or similar distributions paid in cash (or
converted to cash) to the specified Person or a Consolidated Subsidiary of the
Person;

(iv) effects of non-cash adjustments (including the effects of such adjustments
pushed down to the Borrower and its Consolidated Subsidiaries) in the Borrower’s
consolidated financial statements (including to property, equipment, inventory
and other assets) pursuant to GAAP resulting from the application of purchase
accounting and/or fresh start accounting in relation to the Transactions on the
Closing Date, the Prepackaged Plan, the Chapter 11 Cases or any consummated
acquisition or the amortization or write-off of any amounts thereof (including
the impact on net income (or loss) arising from mark-to-market adjustments with
respect to earn-outs), net of taxes, will be excluded;

(v) the net income (or loss) of the Borrower and its Consolidated Subsidiaries
will be calculated without deducting the income attributed to, or adding the
losses attributed to, the minority equity interests of third parties in any
non-wholly-owned Consolidated Subsidiary except to the extent of the dividends
paid in cash (or convertible into cash) during such period on the shares of
Equity Interests of such Consolidated Subsidiary held by such third parties;

(vi) the cumulative effect of any change in accounting principles will be
excluded;

 

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(vii) (a) any non-cash expenses resulting from the grant or periodic
remeasurement of stock options, restricted stock grants or other equity
incentive programs (including any stock appreciation and similar rights) and
(b) any costs or expenses incurred pursuant to any management equity plan or
stock option plan or other management or employee benefit plan or agreement or
any stock subscription or shareholder agreement, to the extent, in the case of
clause (b), that such costs or expenses are funded with cash proceeds
contributed to the common equity capital of the Borrower or a Consolidated
Subsidiary of the Borrower, will be excluded;

(viii) the effect of any non-cash impairment charges or write-ups, write-downs
or write-offs of assets or liabilities resulting from the application of GAAP
and the amortization of intangibles arising from the application of GAAP,
including pursuant to ASC 805, Business Combinations, ASC 350, Intangibles-
Goodwill and Other, or ASC 360, Property, Plant and Equipment, as applicable,
will be excluded;

(ix) any net after-tax income or loss from disposed, abandoned or discontinued
operations or assets and any net after-tax gains or losses on disposed,
abandoned or discontinued, transferred or closed operations or assets will be
excluded;

(x) any increase in amortization or depreciation, or effect of any adjustments
to inventory, property, plant or equipment, software, goodwill and other
intangibles, debt line items, deferred revenue or rent expense, any one time
cash charges (such as purchased in process research and development or
capitalized manufacturing profit in inventory) or any other effects, in each
case, resulting from purchase accounting in connection with the Transactions on
the Closing Date or any other acquisition prior to or following the Closing Date
will be excluded;

(xi) unrealized gains and losses relating to foreign currency transactions,
including those relating to mark- to-market of Debt resulting from the
application of GAAP, including pursuant to ASC 830, Foreign Currency Matters
(including any net loss or gain resulting from hedge arrangements for currency
exchange risk) will be excluded;

(xii) any net gain or loss from Obligations or in connection with the early
extinguishment of obligations under Hedging Agreements (including of ASC 815,
Derivatives and Hedging) shall be excluded;

(xiii) subject to the Cost Savings Cap, the amount of any costs and charges
related to restructuring, business optimization, acquisition and integration
(including, without limitation, retention, severance, systems establishment
costs, excess pension charges, information technology costs, rebranding costs,
contract termination costs, including future lease commitments, costs related to
the start-up, closure or relocation or consolidation of facilities and costs to
relocate employees) shall be excluded;

(xiv) costs, charges and expenses related to the closure, disposition or
wind-down of any operations or assets located or conducted outside of the United
States, including severance and contract termination costs, shall be excluded as
long as the aggregate amount excluded pursuant this clause (xiv) does not exceed
$5,000,000 in the aggregate; and

(xv) accruals and reserves that are established or adjusted within 12 months
after the Closing Date that are so required to be established as a result of the
Transactions on the Closing Date in accordance with GAAP shall be excluded.

 

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Consolidated Subsidiaries: means each Restricted Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial statements
of which shall be consolidated with the financial statements of the Borrower in
accordance with GAAP.

Contingent Obligation: any obligation of a Person arising from a guaranty,
indemnity or other assurance of payment or performance of any Debt, lease,
dividend or other obligation (“primary obligations”) of another obligor
(“primary obligor”) in any manner, whether directly or indirectly, including any
obligation of such Person under any (a) guaranty, endorsement, co-making or sale
with recourse of an obligation of a primary obligor; (b) obligation to make
take-or-pay or similar payments regardless of nonperformance by any other party
to an agreement; and (c) arrangement (i) to purchase any primary obligation or
security therefor, (ii) to supply funds for the purchase or payment of any
primary obligation, (iii) to maintain or assure working capital, equity capital,
net worth or solvency of the primary obligor, (iv) to purchase Property or
services for the purpose of assuring the ability of the primary obligor to
perform a primary obligation, or (v) otherwise to assure or hold harmless the
holder of any primary obligation against loss in respect thereof. The amount of
any Contingent Obligation shall be deemed to be the stated or determinable
amount of the primary obligation (or, if less, the maximum amount for which such
Person may be liable under the instrument evidencing the Contingent Obligation)
or, if not stated or determinable, the maximum reasonably anticipated liability
with respect thereto.

Contract Consideration: as defined in the definition of “Excess Cash Flow”.

Cortland Corp.: Cortland Products Corp., a Delaware corporation, and its
successors and assigns.

Cortland LLC: Cortland Capital Market Services LLC, a Delaware limited liability
company, and its successors and assigns.

Cost Savings Cap: as defined in the definition of the term “Pro Forma Cost
Savings.”

Cure Period: as defined in Section 10.3.3.

Current Assets: at any time, the consolidated current assets (other than cash
and Cash Equivalents) of the Borrower and its Consolidated Subsidiaries.

Current Liabilities: at any time, the consolidated current liabilities of the
Borrower and its Consolidated Subsidiaries at such time, but excluding, without
duplication, (a) the current portion of any long-term Debt and (b) outstanding
ABL Loans.

CWA: the Clean Water Act (33 U.S.C. §§ 1251 et seq.).

Debt: for any Person, the sum of the following (without duplication): (a) all
obligations of such Person for Borrowed Money and obligations evidenced by
bonds, notes , debentures and other debt securities of such Person; (b) all
accounts payable and all accrued expenses, liabilities

 

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or other obligations of such Person to pay the deferred purchase price of
Property or services; (c) all obligations under synthetic leases; (d) all Debt
(as defined in the other clauses of this definition) of others secured by (or
for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) a Lien on any Property of such Person, whether or
not such Debt is assumed by such Person; (e) all Debt (as defined in the other
clauses of this definition) of others guaranteed by such Person or in which such
Person otherwise assures a creditor against loss of the Debt (howsoever such
assurance shall be made) to the extent of the lesser of the amount of such Debt
and the maximum stated amount of such guarantee or assurance against loss;
(f) all obligations or undertakings of such Person to maintain or cause to be
maintained the financial position or covenants of others or to purchase the Debt
or Property of others; (g) obligations to pay for goods or services even if such
goods or services are not actually received or utilized by such Person; (h) any
Debt of a partnership for which such Person is liable either by agreement or by
Applicable Law but only to the extent of such liability; and (i) Disqualified
Capital Stock; provided that Debt shall not include (i) prepaid or deferred
revenue arising in the ordinary course of business and not overdue for more than
60 days, (ii) purchase price holdbacks arising in the ordinary course of
business in respect of a portion of the purchase price of an asset to satisfy
unperformed obligations of the seller of such asset or (iii) earn-out
obligations until such obligations become a liability on the balance sheet of
such Person in accordance with GAAP.

Debt Fund Affiliate: an Affiliated Lender that is a bona fide debt fund or an
investment vehicle that is primarily engaged in making, purchasing, holding or
otherwise investing in loans, bonds and similar extensions of credit in the
ordinary course of business and with respect to which none of the Borrower or
the Affiliated Lenders or any Affiliate of the Borrower or the Affiliated
Lenders makes investment decisions or has the power, directly or indirectly, to
direct or cause the direction of such Affiliated Lender’s investment decisions.

Debtor Relief Laws: as defined in Section 11.1.

Debtors: as defined in the Prepackaged Plan.

Declined Amounts: as defined in Section 5.4.1(b).

Deemed Cash Equivalents: each of the following:

(a) the assumption of any liabilities (as shown on the Borrower’s or the
Restricted Subsidiary’s most recent balance sheet) of the Borrower or any
Restricted Subsidiary of the Borrower (other than liabilities that are by their
terms subordinated to Loans or any Guaranty) by the transferee of any such
assets pursuant to a customary novation agreement that releases the Borrower or
the Restricted Subsidiary from further liability;

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

(c) accounts receivable of a business retained by the Borrower or any of its
Restricted Subsidiaries 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 invoice creating such
accounts receivable.

 

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Default: any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an
Event of Default.

Default Rate: for any Obligation (including, to the extent permitted by law,
interest not paid when due), 2% plus the interest rate otherwise applicable
thereto.

Defaulting Lender: any Lender that has, or has a direct or indirect parent
company that has, become the subject of an Insolvency Proceeding (including
reorganization, liquidation, or appointment of a receiver, custodian,
administrator or similar Person by the Federal Deposit Insurance Corporation or
any other regulatory authority); provided, however, that a Lender shall not be a
Defaulting Lender solely by virtue of a Governmental Authority’s ownership of an
equity interest in such Lender or parent company unless the ownership provides
immunity for such Lender from jurisdiction of courts within the United States or
from enforcement of judgments or writs of attachment on its assets, or permits
such Lender or Governmental Authority to repudiate or otherwise to reject such
Lender’s agreements.

Deposit Account Control Agreement: control agreement satisfactory to Agent
executed by an institution maintaining a Deposit Account for an Obligor, to
perfect Agent’s Lien on such account.

Designated Jurisdiction: any country or territory that is itself the subject (or
becomes the subject) of Sanctions (currently, Crimea, Cuba, Iran, North Korea,
Sudan and Syria).

Disqualified Capital Stock: 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 other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the latest
Maturity Date in effect at the date of issuance of such Equity Interest.

Disqualified Institutions: (a) (i) persons identified by name in writing to
Agent by the Borrower on or prior to the date hereof and (ii) any strategic
competitor of the Borrower or any of its Subsidiaries, in each case of this
clause (a)(ii), identified by name in writing to Agent by the Borrower from time
to time and (b) any Affiliate of a person identified pursuant to clause (a) that
is either (x) identified in writing by the Borrower to Agent or (y) readily
identifiable by the Lenders or Agent by name (excluding in the case of clauses
(x) and (y), Affiliates that are bona fide debt funds or investment vehicles
that purchase commercial loans in the ordinary course of business and with
respect to which none of the persons identified in clauses (a) or (b) (other
than such debt fund affiliates or investment vehicles) makes investment
decisions or has the power, directly or indirectly, to direct or cause the
direction of such debt fund affiliate’s or investment vehicle’s investment
decisions); it being understood and agreed that the term “Disqualified
Institutions” shall not include the Lenders as of the Closing Date (or any of
their Affiliates) (it

 

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being understood and agreed that (x) Agent (a) shall not have any responsibility
or obligation to determine, monitor or inquire as to whether any person or any
potential assignee (or any Affiliate thereof) is a Disqualified Institution and
(b) shall not have any liability with respect to any assignment or participation
of any Loan made to a Disqualified Institution and (y) no action or inaction by
Agent shall be deemed to alter the persons constituting Disqualified
Institutions).

Distribution: any payment of a distribution, interest or dividend on any Equity
Interest (other than payment-in-kind); distribution, advance or repayment of
Debt to a holder of Equity Interests; or purchase, redemption, or other
acquisition or retirement for value of any Equity Interest.

Dollars: lawful money of the United States.

Domestic Subsidiary: any Subsidiary that is organized under the laws of the
United States of America or any state thereof or the District of Columbia.

EBITDA: with respect to the Borrower for any period, Consolidated Net Income of
the Borrower for such period; plus (without duplication):

(i) provision for taxes based on income, profits or capital (including state,
franchise, excise and similar taxes in the nature of income taxes) of the
Borrower and its Consolidated Subsidiaries for such period, franchise taxes and
foreign withholding taxes; plus

(ii) Consolidated Depreciation and Amortization Expense (as defined below) of
the Borrower and its Consolidated Subsidiaries for such period, to the extent
such expenses were deducted in computing such Consolidated Net Income; plus

(iii) the Consolidated Interest Expense of the Borrower and its Consolidated
Subsidiaries for such period, to the extent that such Consolidated Interest
Expense was deducted in computing such Consolidated Net Income; plus

(iv) any other consolidated non-cash charges of the Borrower and its
Consolidated Subsidiaries for such period, to the extent that such consolidated
non-cash charges were included in computing such Consolidated Net Income;
provided that if any such non-cash charge represents an accrual or reserve for
anticipated cash charges in any future period, the cash payment in respect
thereof in such future period shall be subtracted from EBITDA to such extent,
and excluding amortization of a prepaid cash item that was paid in a prior
period; plus

(v) any losses from foreign currency transactions (including losses related to
currency remeasurements of Debt) of the Borrower and its Consolidated
Subsidiaries for such period, to the extent that such losses were taken into
account in computing such Consolidated Net Income; plus

(vi) any (a) salary, benefit and other direct savings resulting from workforce
reductions or shutdown of operations by the Borrower implemented during or
reasonably expected to be implemented within the 12 months following such
period, (b) severance or relocation costs or expenses of the Borrower during
such period and (c) costs and expenses incurred after the Closing Date related
to employment of terminated employees incurred by the

 

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Borrower during such period; in each case to the extent that such costs and
expenses were deducted in computing such Consolidated Net Income and, in each
case, subject to the Cost Savings Cap; plus

(vii) losses in respect of post-retirement benefits of the Borrower, as a result
of the application of ASC 715, Compensation-Retirement Benefits, to the extent
that such losses were deducted in computing such Consolidated Net Income; plus

(viii) the amount of management, monitoring, consulting and advisory fees and
related indemnities, charges and expenses paid or accrued to or on behalf of any
of the Permitted Holders, in each case, to the extent permitted hereunder and,
in any event, the amount added back pursuant to this clause (viii) shall not
exceed $3,500,000 in any Fiscal Year; plus

(ix) any proceeds from business interruption insurance received by the Borrower
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 Consolidated Net Income; plus

(x) expenses incurred prior to the Closing Date in connection with the matters
that are subject to the FCPA Settlement not to exceed $6,000,000 in the
aggregate and the amount of the FCPA Settlement not to exceed $5,000,000 in the
aggregate, in each case, incurred or paid on or prior to March 31, 2017; plus

(xi) fees, costs, charges, commissions, operating losses, write-downs and
expenses (including (i) fees, costs and expenses related to legal, financial,
restructuring and other advisors, auditors and accountants, (ii) printer costs
and expenses, (iii) SEC and other filing fees and (iv) underwriting,
arrangement, syndication, issuance backstop and placement premiums, discounts,
fees, costs and expenses) paid, reimbursed or incurred during such period in
connection with the Chapter 11 Cases, the Transactions, obtaining confirmation,
effectiveness and implementation of the Prepackaged Plan, negotiation and
execution of the Loan Documents (and any Refinancing Debt with respect to the
foregoing), and, in each case, any transaction (including any financing,
acquisition or disposition, whether or not consummated) or litigation related
thereto or contemplated by any of the foregoing, in each case, regardless of
whether initially incurred by the Borrower or paid by the Borrower to reimburse
others for such fees, costs and expenses, in each case incurred prior to
December 31, 2017 as long as the total amount added back pursuant to this clause
(xii) does not exceed $50,000,000 in the aggregate; minus

(xii) the amount of any gain in respect of post-retirement benefits as a result
of the application of ASC 715, to the extent such gains were taken into account
in computing such Consolidated Net Income; minus

(xiii) any gains from foreign currency transactions (including gains related to
currency remeasurements of Debt) of the Borrower and its Consolidated
Subsidiaries for such period, to the extent that such gains were taken into
account in computing such Consolidated Net Income; minus

(xiv) non-cash gains increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business and other
than reversals of an accrual or reserve for a potential cash item that reduced
EBITDA in any prior period,

 

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

Notwithstanding any of the foregoing to the contrary, for purposes of
calculating all financial ratios and tests for any four-Fiscal Quarter period
that includes the Fiscal Quarter ending March 31, 2016, June 30, 2016 and
September 30, 2016, EBITDA shall be based on the sum of (a) the applicable
amounts specified below for such Fiscal Quarter, and (b) EBITDA for the portion
of such four-Fiscal Quarter period not including such Fiscal Quarter:

 

Fiscal Quarter Ending

   EBITDA  

March 31, 2016

   $ 2,823,000   

June 30, 2016

   $ (10,646,000 ) 

September 30, 2016

   $ (4,002,000 ) 

ECF Amount: as defined in Section 5.4.2(a).

ECF Offer: as defined in Section 5.4.2(a).

Eligible Assignee: a Person that is (a) a Lender (except for any Defaulting
Lender and its Affiliates), any Affiliate of a Lender, any Approved Fund or,
subject to the restrictions of Section 14.3.4(a), an Affiliated Lender (to the
extent such Lender, Affiliate of a Lender, Approved Fund or Affiliated Lender is
not subsequently designated as a Disqualified Institution); (b) so long as no
Event of Default has occurred and is continuing and subject to the restrictions
of Section 14.3.4(c), the Borrower or any of its Subsidiaries; (c) any other
assignee (other than a Disqualified Institution (to the extent the list of
Disqualified Institutions is made available to all Lenders) or natural Person)
subject to (i) so long as no Event of Default has occurred and is continuing,
approval by the Borrower (which shall be deemed given if no objection is made
within 10 Business Days after notice of the proposed assignment is given to the
Borrower) and (ii) approval by Agent, in each case, not to be unreasonably
withheld, delayed or conditioned; and (d) during an Event of Default, any Person
acceptable to Agent in its discretion.

Enforcement Action: any action to enforce any Obligations or Loan Documents or
to exercise any rights or remedies relating to any Collateral (whether by
judicial action, self-help, notification of Account Debtors, setoff or
recoupment, credit bid, action in an Obligor’s Insolvency Proceeding or
otherwise).

Environmental Laws: Applicable Laws (including permits and legally-binding
guidance promulgated by regulators) relating to public health as it relates to
Hazardous Material exposure, or the protection or pollution of the environment,
including CERCLA, RCRA and CWA.

 

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Environmental Permit: any permit, registration, license, notice, approval,
consent, variance, spill or response plan, or other authorization required under
or issued pursuant to applicable Environmental Laws.

Equity Interest: the interest of any (a) shareholder in a corporation; (b)
partner in a partnership (whether general, limited, limited liability or joint
venture); (c) member in a limited liability company; or (d) other Person having
any other form of equity security or ownership interest.

ERISA: the Employee Retirement Income Security Act of 1974.

ERISA Affiliate: any trade or business (whether or not incorporated) under
common control with an Obligor within the meaning of Section 414(b) or (c) of
the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).

ERISA Event: (a) a Reportable Event with respect to a Pension Plan;
(b) withdrawal of an Obligor or ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) complete or
partial withdrawal by an Obligor or ERISA Affiliate from a Multiemployer Plan;
(d) filing of a notice of intent to terminate, the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA, or the institution of
proceedings by the PBGC to terminate a Pension Plan; (e) determination that any
Pension Plan is considered an at-risk plan or a plan in critical or endangered
status under the Code or ERISA; (f) an event or condition that constitutes
grounds under Section 4042 of ERISA for termination of, or appointment of a
trustee to administer, any Pension Plan; (g) imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon any Obligor or ERISA Affiliate; or (h) failure by an
Obligor or ERISA Affiliate to meet all applicable requirements under the Pension
Funding Rules in respect of a Pension Plan, whether or not waived, or to make a
required contribution to a Multiemployer Plan.

Event of Default: as defined in Section 12.1.

Excepted Liens: (a) Liens for Taxes, assessments or other governmental charges
or levies which are not delinquent or which are being Properly Contested; (b)
Liens in connection with workers’ compensation, unemployment insurance or other
social security, old age pension or public liability obligations which are not
delinquent or which are being Properly Contested; (c) landlord’s liens, maritime
liens, liens granted under storage contracts, operators’, vendors’, carriers’,
warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’, materialmen’s,
construction or other like Liens, in each case arising in the Ordinary Course of
Business or incident to the operation and maintenance of Properties each of
which is in respect of obligations that are not delinquent or which are being
Properly Contested; (d) Liens arising solely by virtue of any statutory or
common law provision relating to banker’s liens, rights of set-off or similar
rights and remedies and burdening only deposit accounts or other funds
maintained with a creditor depository institution, provided that no such deposit
account is a dedicated cash collateral account or is subject to restrictions
against access by the depositor in excess of those set forth by regulations
promulgated by the Board of Governors and no such deposit account is

 

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intended by the Borrower or any Restricted Subsidiaries to provide collateral to
the depository institution; (e) easements, zoning restrictions, servitudes,
permits, conditions, covenants, exceptions or reservations in any Property of
the Borrower or any Restricted Subsidiary for the purpose of roads, pipelines,
transmission lines, transportation lines or distribution lines, or for the joint
or common use of real estate, rights of way, facilities and equipment, that do
not secure any monetary obligations and which in the aggregate do not materially
impair the use of such Property for the purposes of which such Property is held
by the Borrower or any Restricted Subsidiary or materially impair the value of
such Property subject thereto; (f) Liens on cash or securities 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, in
each case incurred in the Ordinary Course of Business and (g) judgment and
attachment Liens not giving rise to an Event of Default, provided that 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 no action to
enforce such Lien has been commenced; provided, further that Liens described in
clauses (a) through (d), (f) and (g) shall remain “Excepted Liens” only for so
long as no action to enforce such Lien has been commenced and no intention to
subordinate the first priority Lien granted in favor of Agent and the Lenders is
to be hereby implied or expressed by the permitted existence of such Excepted
Liens (other than such Excepted Liens that have priority by operation of law).

Excess Cash Flow: for any Fiscal Year, for the Borrower and the Consolidated
Subsidiaries, an amount equal to the excess (if any) of (a) the sum of
(i) EBITDA for such Fiscal Year and (ii) reductions to noncash working capital
of the Borrower and its Consolidated Subsidiaries for such fiscal year (i.e.,
the decrease, if any, in Current Assets minus Current Liabilities from the
beginning to the end of such fiscal year) over (b) the sum (for such Fiscal
Year) of (i) Fixed Charges actually paid in cash by the Borrower and its
Consolidated Subsidiaries, (ii) permanent repayments of Loans (other than
mandatory prepayment or offers to purchase under Section 5.3.2 or 5.4) and
regularly scheduled principal payments of other Debt, in each case, made in cash
by the Borrower and its Consolidated Subsidiaries during such Fiscal Year, but
only to the extent not financed with the proceeds of Borrowed Money, equity
issuances, casualty proceeds, condemnation proceeds or other proceeds that would
not be included in EBITDA, (iii) Capital Expenditures made in cash by the
Borrower and its Consolidated Subsidiaries during such Fiscal Year, except to
the extent financed with the proceeds of Borrowed Money, equity issuances,
casualty proceeds, condemnation proceeds or other proceeds that would not be
included in EBITDA, (iv) without duplication of amounts deducted from Excess
Cash Flow in prior periods, the aggregate consideration required to be paid in
cash by the Borrower or any of the Consolidated Subsidiaries pursuant to binding
contracts (the “Contract Consideration”) entered into prior to or during such
Fiscal Year relating to Permitted Acquisitions or similar Investments to be
consummated or made during the period of four consecutive Fiscal Quarters of the
Borrower following the end of such Fiscal Year, provided that to the extent the
aggregate amount of cash (excluding the proceeds of Borrowed Money, equity
issuances, casualty proceeds, condemnation proceeds or other proceeds that would
not be included in EBITDA) actually utilized to finance such Permitted
Acquisitions or similar Investments during such period of four consecutive
Fiscal Quarters is less than the Contract Consideration, the amount of such
shortfall shall be added to the calculation of Excess Cash Flow at the end of
such period of four consecutive Fiscal Quarters, (v) additions to working

 

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capital for such Fiscal Year (i.e., the increase, if any, in Current Assets
minus Current Liabilities from the beginning to the end of such Fiscal Year),
(vi) the aggregate amount of any premium, make-whole or penalty payments
actually paid in cash during such Fiscal Year that is required to be made in
connection with any prepayment of Debt, (vii) the amount of cash Taxes
(including penalties and interest) paid or tax reserves set aside or payable
without duplication in such Fiscal Year, (viii) any Asset Disposition proceeds
or casualty proceeds to the extent otherwise included in the definition of
Excess Cash Flow and to the extent the Borrower is in compliance with the
applicable mandatory prepayment requirements set forth in Section 5.4.1, (ix)
the fees, premiums, expenses and costs payable by the Borrower and its
Consolidated Subsidiaries in connection with their entrance into the Loan
Documents and the consummation of the Prepackaged Plan and other transaction
costs and expenses related to items (ii)-(iv) above and (x) losses, charges and
expenses related to internal software development that are expensed but could
have been capitalized under alternative accounting policies in accordance with
GAAP.

Excluded Accounts: as defined in Section 8.3.

Excluded Property: (i) any Real Estate and Vehicles owned by an Obligor that are
designated by such Obligor as Excluded Property (provided that no Obligor may
designate any individual Real Property owned as of the Closing Date with a fair
market value in excess of $175,000 or any individual Real Property acquired
after the Closing Date with a fair market value in excess of $500,000 as
Excluded Property) and (ii) any asset held by the SPV (but not the Equity
Interests issued by the SPV); provided that the aggregate value of all Real
Estate and Vehicles owned by Obligors that constitute Excluded Property under
clause (i) above may not exceed $5,000,000 (it being understood and agreed that
if the aggregate value of all such Real Estate and Vehicles exceeds $5,000,000,
Obligors shall subject one or more pieces of Real Estate to the Mortgages
pursuant to Section 7.3.1(a) or (b), as applicable and/or subject one or more
Vehicles to the Lien in favor of Agent pursuant to Section 7.3.2 such that the
aggregate value of all such Real Estate and Vehicles that are not subject to a
Mortgage is less than $5,000,000); provided further that in no event shall
(x) any Specified Vehicle or (y) any Vehicle owned by any Obligor as of the date
hereof constitute Excluded Property unless, in the case of clause (y), the
Borrower, after use of commercially reasonable efforts, is unable to perfect the
Lien thereon. For purposes of calculating the aggregate value of the Property
described above, (a) the value assigned to any Real Estate shall be the
individual net book value of such Real Estate and (b) the value assigned to any
Vehicle shall be the value assigned to such Vehicle in the most recent PP&E
Value Report.

Excluded Subsidiary: (a) an Immaterial Domestic Subsidiary, (b) a captive
insurance Subsidiary, (c) a Foreign Subsidiary or, subject to Section 10.1.17, a
Subsidiary of a Foreign Subsidiary and (d) an Unrestricted Subsidiary.

Excluded Taxes: 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) U.S. federal withholding Taxes imposed
on amounts payable to or for the

 

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account of a Lender with respect to an applicable interest in a Loan pursuant to
a law in effect on the date on which (i) such Lender acquires such interest in
the Loan (other than pursuant to an assignment request by the Borrower under
Section 14.4) or (ii) such Lender changes its Lending Office, except in each
case to the extent that, pursuant to Section 5.10, amounts with respect to such
Taxes were payable either to such Lender’s assignor immediately prior to such
assignment or to such Lender immediately prior to its change in Lending Office,
(c) Taxes attributable to such Recipient’s failure to comply with Section 5.11
and (d) any U.S. federal withholding Taxes imposed under FATCA.

Expected Asset Sale Proceeds: has the meaning assigned in the Prepackaged Plan.

Extended Maturity Date: as defined in Section 2.5.1.

Extension: as defined in Section 2.5.1.

Extension Amendments: as defined in Section 2.5.4.

Extension Loan: a Loan that is subject to an Extension Amendment.

Extension Offer: as defined in Section 2.5.1.

Extraordinary Expenses: all reasonable and documented costs, expenses or
advances that Agent may incur during an Event of Default, or during the pendency
of an Insolvency Proceeding of an Obligor, including those relating to (a) any
audit, inspection, repossession, storage, repair, appraisal, insurance,
manufacture, preparation or advertising for sale, sale, collection, or other
preservation of or realization upon any Collateral; (b) any action, arbitration
or other proceeding (whether instituted by or against Agent, any Lender, any
Obligor, any representative of creditors of an Obligor or any other Person) in
any way relating to any Collateral (including the validity, perfection, priority
or avoidability of Agent’s Liens with respect to any Collateral), Loan Documents
or Obligations, including any lender liability or other Claims; (c) the exercise
of any rights or remedies of Agent in, or the monitoring of, any Insolvency
Proceeding; (d) settlement or satisfaction of taxes, charges or Liens with
respect to any Collateral; (e) any Enforcement Action; and (f) negotiation and
documentation of any modification, waiver, workout, restructuring or forbearance
with respect to any Loan Documents or Obligations. Such costs, expenses and
advances include transfer fees, Other Taxes, storage fees, insurance costs,
permit fees, utility reservation and reasonable and documented standby fees,
legal fees, appraisal fees, brokers’ and auctioneers’ fees and commissions,
accountants’ fees, environmental study fees, wages and salaries paid to
employees of any Obligor or independent contractors in liquidating any
Collateral, and travel expenses.

FATCA: Sections 1471 through 1474 of the Code (including 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 agreements 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, rules or practices adopted pursuant to such
intergovernmental agreement.

 

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FCPA Settlement: the cease and desist order entered by the Securities and
Exchange Commission with respect to the Borrower on August 11, 2016 and
effective as of August 11, 2016.

Federal Funds Rate: the weighted average of interest rates on overnight federal
funds transactions with members of the Federal Reserve System on the applicable
Business Day (or on the preceding Business Day, if the applicable day is not a
Business Day), as published by the Federal Reserve Bank of New York on the next
Business Day, as determined by Agent in its sole discretion.

Final Order: has the meaning assigned to such term in the Prepackaged Plan.

Fiscal Quarter: each period of three months, commencing on the first day of a
Fiscal Year.

Fiscal Year: the fiscal year of Borrower and Restricted Subsidiaries for
accounting and tax purposes, ending on December 31 of each year.

Fixed Charge Coverage Ratio: the ratio, determined on a consolidated basis for
the Borrower and its Consolidated Subsidiaries for the most recently completed
trailing 12-month or four Fiscal Quarter period, as applicable, of (a) EBITDA
minus (i) Capital Expenditures (excluding (A) those financed or funded with
Borrowed Money (other than ABL Loans), (B) the portion thereof funded with the
Net Cash Proceeds from Asset Dispositions which Borrower is permitted to use to
reinvest in the business pursuant to the definition of “Net Cash Proceeds” and
(C) the portion thereof funded with the proceeds of casualty insurance or
condemnation awards in respect of any Collateral which Borrower is permitted to
use to reinvest in the business pursuant to the definition of “Net Cash
Proceeds” and (ii) cash taxes paid (net of cash tax refunds received during such
period), to (b) Fixed Charges.

Fixed Charges: the sum, without duplication, of: (a) the Consolidated Interest
Expense for such period, and (b) all dividend payments, whether or not in cash,
on any series of preferred stock of the Borrower and the Consolidated
Subsidiaries, other than dividend payments on Equity Interests payable solely in
Equity Interests of the Borrower (other than Disqualified Capital Stock).

Flood Laws: (a) the National Flood Insurance Act of 1994 (which comprehensively
revised the National Flood Insurance Act of 1968 and the Flood Disaster
Protection Act of 1973) as now or hereafter in effect or any successor statute
thereto, (b) the Flood Insurance Reform Act of 2004 as now or hereafter in
effect or any successor statute thereto, (c) the Biggert-Waters Flood Insurance
Reform Act of 2012 as now or hereafter in effect or any successor statute
thereto, and (d) all other Applicable Laws relating to policies and procedures
that address requirements placed on federally regulated lenders relating to
flood matters, in each case, as now or hereafter in effect or any successor
statute thereto.

FLSA: the Fair Labor Standards Act of 1938.

Foreign Lender: any Lender that is not a U.S. Person.

 

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Foreign Plan: any employee benefit plan or arrangement (a) maintained or
contributed to by any Obligor or Subsidiary that is not subject to the laws of
the United States; or (b) mandated by a government other than the United States
for employees of any Obligor or Subsidiary.

Foreign Subsidiary: a Subsidiary that is a “controlled foreign corporation”
under Section 957 of the Code (a “CFC”).

Full Payment: with respect to any Obligations or Guaranteed Obligations, as
applicable, (a) the full cash payment thereof (other than inchoate or contingent
or reimbursable obligations for which no claim has been asserted), including any
interest, fees and other charges accruing during an Insolvency Proceeding
(whether or not allowed in the proceeding); and (b) if such Obligations or
Guaranteed Obligations are inchoate or contingent in nature (other than inchoate
or contingent or reimbursable obligations for which no claim has been asserted),
Cash Collateralization thereof (or delivery of a standby letter of credit
acceptable to Agent in its discretion, in the amount of required Cash
Collateral).

GAAP: generally accepted accounting principles in effect in the United States
from time to time.

Governmental Approvals: all authorizations, consents, approvals, licenses and
exemptions of, registrations and filings with, and required reports to, all
Governmental Authorities.

Governmental Authority: the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supranational bodies, such as the European Union or the European Central Bank).

Group: as defined in the definition of “Change of Control”.

Guaranteed Obligations: as defined in Section 11.1.

Guarantors: (a) Key Energy Services, LLC, a Texas limited liability company and
(b) each other domestic Subsidiary, or, subject to the consent of the Agent in
its reasonable discretion, any other Person that guarantees payment or
performance of the Obligations; provided that, no Excluded Subsidiary or the SPV
shall be a Guarantor.

Guaranty: the guaranty of each Guarantor set forth in Section 11.1.

Hazardous Material: any substance regulated or as to which liability might arise
under any applicable Environmental Law including: (a) any chemical, compound,
material, product, byproduct, substance or waste defined as or included in the
definition or meaning of “hazardous substance,” “hazardous material,” “hazardous
waste,” “solid waste,” “toxic waste,” “extremely hazardous substance,” “toxic
substance,” “contaminant,” “pollutant,” or words of similar meaning or import
found in any applicable Environmental Law; (b) hydrocarbons, petroleum products,
petroleum substances, natural gas, oil, oil and gas waste, crude oil, and any

 

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components, fractions, or derivatives thereof; and (c) radioactive materials,
explosives, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon, infectious or medical wastes, to the extent any of the
foregoing are present in quantities or concentrations prohibited under
applicable Environmental Laws.

Hedging Agreement: means any agreement with respect to any swap, forward, future
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, in each case, not entered into for
speculative purposes.

Hedging Termination Value: in respect of any one or more Hedging Agreements,
after taking into account the effect of any legally enforceable netting
agreement relating to such Hedging Agreements, (a) for any date on or after the
date such Hedging Agreements have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Hedging Agreements, as determined by the
counterparties to such Hedging Agreements.

Immaterial Domestic Subsidiary: any Domestic Subsidiary of the Borrower (other
than a Subsidiary that is a Guarantor on the Closing Date) designated by the
Borrower in writing as an Immaterial Domestic Subsidiary which has assets with a
net book value of $1,000,000 or less and annual revenues of $1,000,000 or less;
provided that all Domestic Subsidiaries so designated as Immaterial Domestic
Subsidiary may not have at any time, in the aggregate, assets with a net book
value exceeding $5,000,000 or annual revenues exceeding $5,000,000; and in the
event such thresholds are exceeded at any time, and the Borrower does not
promptly deliver to Agent a written notice asserting that such Domestic
Subsidiary shall no longer be deemed an Immaterial Domestic Subsidiary, then the
most recently designated Immaterial Domestic Subsidiary shall no longer be
deemed an Immaterial Domestic Subsidiary. All of the Immaterial Domestic
Subsidiaries as of the Closing Date are listed on Schedule 1.1(B) and designated
thereon as Immaterial Domestic Subsidiaries.

Indemnified Taxes: (a) Taxes, other than Excluded Taxes, imposed on or with
respect to any payment on account of an Obligation; and (b) to the extent not
otherwise described in clause (a), Other Taxes.

Indemnitees: Agent Indemnitees and Lender Indemnitees.

Information: as defined in Section 15.12.

Initial Loans: the term loans issued by the Borrower to the Lenders pursuant to
Section 2.1.

Insolvency Proceeding: any case or proceeding commenced by or against a Person
under any state, federal or foreign law for, or any agreement of such Person to,
(a) the entry of an order for relief under the Bankruptcy Code, or any other
insolvency, debtor relief or debt adjustment law; (b) the appointment of a
receiver, trustee, liquidator, administrator, conservator or other custodian for
such Person or any part of its Property; or (c) an assignment or trust mortgage
for the benefit of creditors.

 

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Intellectual Property: all intellectual and similar Property of a Person,
including inventions, designs, patents, copyrights, trademarks, service marks,
trade names, trade secrets, confidential or proprietary information, customer
lists, know-how, software and databases; all embodiments or fixations thereof
and all related documentation, applications, registrations and franchises; all
licenses or other rights to use any of the foregoing; and all books and records
relating to the foregoing.

Intellectual Property Claim: any claim or assertion (whether in writing, by suit
or otherwise) that the Borrower’s or Restricted Subsidiary’s ownership, use,
marketing, sale or distribution of any Inventory, Equipment, Intellectual
Property or other Property violates another Person’s Intellectual Property.

Intercreditor Agreement: the intercreditor agreement of even date herewith,
between the ABL Agent and Agent.

Intercompany Note: as defined in Section 10.2.1(e).

Interest Period: as defined in Section 3.1.3.

Interim PP&E Value Report: as defined in Section 10.1.2(m)(i).

Inventory: as defined in the UCC, including all goods intended for sale, lease,
display or demonstration; all work in process; and all raw materials, and other
materials and supplies of any kind that are or could be used in connection with
the manufacture, printing, packing, shipping, advertising, sale, lease or
furnishing of such goods, or otherwise used or consumed in the Borrower’s
business (but excluding Equipment).

Investment: with respect to any Person, all direct or indirect investments by
such Person in other Persons (including Affiliates) in the forms of loans
(including guarantees or other obligations), advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Debt, Equity Interests or other securities, together with all
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP. If the Borrower or any Restricted Subsidiary of the
Borrower sells or otherwise disposes of less than all of the Equity Interests of
any direct or indirect Restricted Subsidiary of the Borrower such that, after
giving effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary of the Borrower, the Borrower will be deemed to have made
an Investment on the date of any such sale or disposition equal to the fair
market value of the Borrower’s Investments in such Subsidiary that were not
disposed of or sold.

IP Assignment: a collateral assignment or security agreement pursuant to which
an Obligor grants a Lien on its Intellectual Property to Agent, as security for
its Obligations.

IRS: the United States Internal Revenue Service.

 

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Lender Indemnitees: Lenders and their officers, directors, employees,
Affiliates, agents and attorneys.

Lenders: lenders party to this Agreement and any Person who hereafter becomes a
“Lender” pursuant to an Assignment, other than any Person that shall have ceased
to be a party hereto pursuant to an Assignment.

Lending Office: the office (including any domestic or foreign Affiliate or
branch) designated as such by a Lender by notice to Agent and the Borrower.

Leverage Ratio: the ratio, determined on a consolidated basis for the Borrower
and its Consolidated Subsidiaries for the most recently completed four-Fiscal
Quarter period for which financial statements have been delivered pursuant to
Section 10.1.2, of (a) Total Debt as of such date (net of unrestricted cash and
unrestricted Cash Equivalents (it being understood that, the existence of a Lien
in favor of the Agent (and, at the Borrower’s option, any additional Lien in
favor of the ABL Agent or holders of Permitted Junior Priority Secured Debt (or
their representative)) will not result in such cash or Cash Equivalents becoming
restricted) held by Borrower and Guarantors in their Deposit Accounts or
Securities Accounts located in the United States) to (b) EBITDA.

LIBOR: the per annum rate of interest (rounded up to the nearest 1/100th of
1.00%) determined by Agent at or about 11:00 a.m. (London time) two Business
Days prior to an interest period, for a term equivalent to such period, equal to
(a) the London Interbank Offered Rate, or comparable or successor rate approved
by Agent, as published on the applicable Bloomberg screen page (or other
commercially available source designated by Agent from time to time) or (b) if
LIBOR is not available for any reason, the average interest rate (as quoted to
Agent by three major banks in the London interbank LIBOR market selected by
Agent) at which dollar deposits in the approximate amount of the LIBOR Loan
would be offered to Agent; provided, that (i) any comparable or successor rate
shall be applied by Agent, if administratively feasible, in a manner consistent
with market practice and (ii) if LIBOR shall be less than 1.00%, such rate shall
be deemed to be 1.00% for purposes of this Agreement.

LIBOR Loan: each set of Loans bearing interest based on LIBOR and having a
common length and commencement of Interest Period.

License: any license or agreement under which an Obligor is authorized to use
Intellectual Property in connection with any manufacture, marketing,
distribution or disposition of Collateral, any use of Property or any other
conduct of its business.

Licensor: any Person from whom an Obligor obtains the right to use any
Intellectual Property.

Lien: a Person’s interest in Property securing an obligation owed to, or a claim
by, such Person, including any lien, security interest, pledge, hypothecation,
assignment, trust, reservation, encroachment, easement, right-of-way, covenant,
condition, restriction, lease, or other title exception or encumbrance.

 

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Lien Waiver: an agreement, in form and substance reasonably satisfactory to
Agent, by which (a) for any material Collateral located on leased premises, the
lessor waives or subordinates any Lien it may have on the Collateral, and agrees
to permit Agent to enter upon the premises and remove the Collateral or to use
the premises to store or dispose of the Collateral; (b) for any Collateral held
by a warehouseman, processor, shipper, customs broker or freight forwarder, such
Person waives or subordinates any Lien it may have on the Collateral, agrees to
hold any Documents in its possession relating to the Collateral as agent for
Agent, and agrees to deliver the Collateral to Agent upon request; (c) for any
Collateral held by a repairman, mechanic or bailee, such Person acknowledges
Agent’s Lien, waives or subordinates any Lien it may have on the Collateral, and
agrees to deliver the Collateral to Agent upon request; and (d) for any
Collateral subject to a Licensor’s Intellectual Property rights, the Licensor
grants to Agent the right, vis-à -vis such Licensor, to enforce Agent’s Liens
with respect to the Collateral, including the right to dispose of it with the
benefit of the Intellectual Property, whether or not a default exists under any
applicable License.

Liquidity: as of any time, the sum of (a) Availability as of such time, plus
(b) all unrestricted cash and unrestricted Cash Equivalents (it being understood
that, for the avoidance of doubt, the existence of a Lien in favor of the Agent
(and, at the Borrower’s option, any additional Lien in favor of the ABL Agent or
holders of Permitted Junior Priority Secured Debt (or their representative))
will not result in such cash or Cash Equivalents becoming restricted) held by
Borrower and Guarantors in their Deposit Accounts or Securities Accounts located
in the United States as of such time.

Loans: the loans made by the Lenders to the Borrower pursuant to this Agreement,
including for the avoidance of doubt, the Initial Loans and the Extension Loans.

Loan Documents: this Agreement, Other Agreements and Security Documents.

Make-Whole Amount: with respect to any Loan repaid or prepaid under Sections
5.3.1, 5.3.2 or 5.4.3, if applicable, accelerated pursuant to Section 12.2 or
assigned under Section 14.4(a), whether voluntarily or mandatorily, on any
prepayment, repayment, acceleration or assignment date, the greater of:

(a) 1.0% of the principal amount of the Loan repaid, prepaid, accelerated or
assigned; and

(b) the excess of:

(i) the present value at such repayment, prepayment or assignment date of
(i) (A) the principal amount of such Loans, plus (B) the Applicable Premium on
such Loan on the first anniversary of the Closing Date set forth in
Section 5.5(b), plus (ii) each required interest payment on such Loan from the
date of such repayment, prepayment or assignment (assuming that the rate for
LIBOR Loans prevailing at the time of the notice of repayment, prepayment or
assignment applies throughout such period) through the first anniversary of the
Closing Date (excluding accrued but unpaid interest to the date of such
repayment, prepayment or assignment), such present value to be computed using a
discount rate equal to the Treasury Rate plus 50 basis points discounted to the
repayment, prepayment or assignment date on a semi-annual basis (assuming a 360
day year consisting of twelve 30 day months), over

(ii) the principal amount of such Loans.

 

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Market Disruption Event: as defined in Section 3.6.

Material Adverse Effect: a material adverse effect on (a) the business,
Properties, condition (financial or otherwise) or results of operations of the
Borrower and its Subsidiaries, taken as a whole; (b) the rights and remedies of
Agent or any Lender under the Loan Documents, or of the ability of Obligors to
perform their respective obligations under the Loan Documents, in each case,
taken as a whole; or (c) the validity or enforceability against any Obligor of
any Loan Document to which it is a party; provided, that, the Chapter 11 Cases
and the events leading up to and following the commencement of the Chapter 11
Cases and any actions taken pursuant to the Prepackaged Plan shall not
constitute a Material Adverse Effect.

Material Contract: any agreement or arrangement to which the Borrower or
Restricted Subsidiary is party (other than the Loan Documents) (a) that is
deemed to be a material contract under the Securities Act of 1933; (b) for which
breach, termination, nonperformance or failure to renew could reasonably be
expected to have a Material Adverse Effect; or (c) that relates to Material
Debt.

Material Debt: Debt (other than the Loans), or obligations in respect of one or
more Hedging Agreements, of any one or more of the Borrower and its Restricted
Subsidiaries in an aggregate principal amount exceeding $30,000,000. For
purposes of determining Material Debt, the “principal amount” of the obligations
of the Borrower or any Restricted Subsidiary in respect of any Hedging Agreement
at any time shall be the Hedging Termination Value.

Material Real Property: any owned Real Estate with a net book value greater than
$250,000 located in any Mortgage State.

Maturity Date: (a) with respect to Initial Loans that have not been extended
pursuant to Section 2.5, the fifth anniversary of the Closing Date and (b) with
respect to Extension Loans, the applicable Extended Maturity Date.

Maximum Rate: as defined in Section 3.10.

Minimum Extension Condition: as defined in Section 2.5.3.

Minimum Liquidity: an amount equal to:

(a) $100,000,000 of aggregate liquidity, consisting of (i) at least $80,000,000,
combined, of (1) domestic Unrestricted Cash (as defined in the Prepackaged Plan)
in bank accounts of the Debtors (at least $70,000,000 of which shall be
deposited in the TL Proceeds and Priority Collateral Account) and (2) Expected
Asset Sale Proceeds, if any, and (ii) Availability (as defined in the Original
Credit Agreement as of October 24, 2016) under the ABL Credit Agreement; or

(b) $110,000,000 of aggregate liquidity, consisting of (i) at least $75,000,000,
combined, of (1) domestic Unrestricted Cash (as defined in the Prepackaged Plan)
in bank accounts of the Debtors (at least $65,000,000 of which shall be
deposited in the TL Proceeds and Priority Collateral Account) and (2) Expected
Asset Sale Proceeds, if any, and (ii) Availability (as defined in the Original
Credit Agreement as of October 24, 2016) under the ABL Credit Agreement;

 

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provided, however, that no Unrestricted Cash (as defined in the Prepackaged
Plan) shall be counted for purposes of satisfying Minimum Liquidity to the
extent it (a) is held in a foreign bank account, or (b) serves to backstop
letters of credit under the ABL Credit Agreement.

Moody’s: Moody’s Investors Service, Inc., and its successors.

Mortgage: a mortgage or deed of trust in which an Obligor grants a Lien on its
Real Estate to Agent, as security for its Obligations.

Mortgage State: each of the following states: California, Louisiana, New Mexico,
North Dakota, Oklahoma and Texas.

Mortgaged Property: any Real Estate owned by any Obligor that is subject to a
Mortgage.

Multiemployer Plan: any employee benefit plan of the type described in Section
4001(a)(3) of ERISA, to which an Obligor or ERISA Affiliate makes or is
obligated to make contributions, or during the preceding five plan years, has
made or been obligated to make contributions.

Net Cash Proceeds: (a) with respect to an Asset Disposition, proceeds
(including, when received, any deferred or escrowed payments) received by the
Borrower or any Restricted Subsidiary in cash from such disposition (including
cash proceeds subsequently received (as and when received) in respect of noncash
consideration initially received), net of (i) reasonable and customary costs and
expenses actually incurred in connection therewith, including legal fees and
sales commissions; (ii) amounts applied to repayment of Debt secured by a
Permitted Lien senior to Agent’s Liens on Collateral sold; (iii) transfer or
similar taxes; and (iv) reserves for indemnities, until such reserves are no
longer needed; provided, however, that, with respect to up to $20,000,000 of Net
Cash Proceeds in any fiscal year and up to $40,000,000 of Net Cash Proceeds in
the aggregate, if (x) the Borrower shall deliver a certificate of a Senior
Officer to Agent promptly following receipt thereof setting forth the Borrower’s
intent to reinvest such proceeds in the business of the Borrower and the
Restricted Subsidiaries or to permanently reduce any Obligations under the Loan
Documents, in each case, within 365 days of receipt of such proceeds and (y) no
Default or Event of Default shall have occurred and shall be continuing at the
time of such certificate, such proceeds shall not constitute Net Cash Proceeds
except to the extent not so used at the end of such 365-day period, at which
time such proceeds shall be deemed to be Net Cash Proceeds and (b) with respect
to the incurrence or issuance of any Debt by the Borrower or any of its
Restricted Subsidiaries, the sum of the cash received in connection with such
transaction, net of the underwriting discounts and commissions, and other
reasonable and customary out-of-pocket expenses, incurred by the Borrower or
such Subsidiary in connection therewith.

 

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Non-Recourse Debt: Debt (a) as to which neither the Borrower nor any of its
Restricted Subsidiaries, (i) provides any guarantee or credit support of any
kind (including any undertaking, guarantee, indemnity, agreement or instrument
that would constitute Debt) or (ii) is directly or indirectly liable (as a
guarantor or otherwise); (b) the incurrence of which will not result in any
recourse against any of the assets of the Borrower or its Restricted
Subsidiaries; and (c) no default with respect to which would permit (upon
notice, lapse of time or both) any holder of any other Debt (“Other Debt”) of
the Borrower or any of its Restricted Subsidiaries to declare pursuant to the
express terms governing such Debt a default on such Other Debt or cause the
payment thereof to be accelerated or payable prior to its stated maturity.

Note: a promissory note of the Borrower payable to any Lender or its registered
assigns, in substantially the form of Exhibit D hereto, evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from all Loans made by
such Lender.

Notice of Conversion/Continuation: a request by the Borrower of a conversion or
continuation of any Loans as LIBOR Loans substantially in the form of Exhibit B
or such other form as shall be reasonably satisfactory to Agent.

Obligations: all (a) principal of and premium (including any Applicable
Premium), if any, on the Loans, (b) interest, expenses, fees, indemnification
obligations, Extraordinary Expenses and other amounts payable by Obligors under
Loan Documents, and (c) other Debts, obligations and liabilities of any kind
owing by Obligors pursuant to the Loan Documents, whether now existing or
hereafter arising, whether evidenced by a note or other writing, whether allowed
in any Insolvency Proceeding, whether arising from an extension of credit,
issuance of a letter of credit, acceptance, loan, guaranty, indemnification or
otherwise, and whether direct or indirect, absolute or contingent, due or to
become due, primary or secondary, or joint or several.

Obligor: the Borrower, Guarantor or other Person that is liable for payment of
any Obligations or that has granted a Lien on its assets in favor of Agent to
secure any Obligations.

OFAC: Office of Foreign Assets Control of the U.S. Treasury Department.

OFAC Lists: collectively, the List of Specially Designated Nationals and Blocked
persons maintained by OFAC, as amended from time to time, or any similar lists
issued by OFAC.

Ordinary Course of Business: the ordinary course of business of the Borrower or
any Restricted Subsidiary, undertaken in good faith and consistent with
Applicable Law and past practices.

Organic Documents: with respect to any Person, its charter, certificate or
articles of incorporation, bylaws, articles of organization, limited liability
company agreement, operating agreement, members agreement, shareholders
agreement, partnership agreement, certificate of partnership, certificate of
formation, voting trust agreement, or similar agreement or instrument governing
the formation or operation of such Person.

Original Credit Agreement: as defined in the recitals hereto.

 

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OSHA: the Occupational Safety and Hazard Act of 1970.

Other Agreement: the Agency Letter, the Intercreditor Agreement, each fee letter
or any promissory note now or hereafter delivered by an Obligor or other Person
to Agent or a Lender in connection with any transactions relating hereto.

Other Connection Taxes: Taxes imposed on a Recipient as a result of a present or
former connection between the Recipient and the jurisdiction imposing such Tax
(other than connections arising from the Recipient having executed, delivered,
become a party to, performed obligations or received payments under, received or
perfected a Lien or engaged in any other transaction pursuant to, enforced, or
sold or assigned an interest in, any Loan or Loan Document).

Other Taxes: all present or future stamp, court, documentary, intangible,
recording, filing or similar Taxes that arise from any payment made under, from
the execution, delivery, performance, enforcement or registration of, from the
receipt or perfection of a Lien under, or otherwise with respect to, any Loan
Document, except Other Connection Taxes imposed with respect to an assignment
(other than an assignment made pursuant to Section 14.4(c)).

Participant: as defined in Section 14.2.1.

PATRIOT Act: the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L.
No. 107-56, 115 Stat. 272 (2001).

Payment Item: each check, draft or other item of payment payable to the
Borrower, including those constituting proceeds of any Collateral.

PBGC: the Pension Benefit Guaranty Corporation.

Pension Funding Rules: Code and ERISA rules regarding minimum required
contributions (including installment payments) to Pension Plans set forth in,
for plan years ending prior to the Pension Protection Act of 2006 effective
date, Section 412 of the Code and Section 302 of ERISA, both as in effect prior
to such act, and thereafter, Sections 412, 430 and 436 of the Code and Sections
302, and 303 of ERISA.

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

Permitted Acquisition: an Acquisition by the Borrower or any of its Restricted
Subsidiaries, provided that (a) the Person to be (or the property of which is to
be) so purchased or otherwise acquired shall be engaged in substantially the
same lines of business as one or more of the businesses of the Borrower and its
Restricted Subsidiaries or in a business or businesses reasonably related
thereto; (b) immediately before giving effect to such Acquisition, no Event of
Default shall have occurred and be continuing; (c) at the time of such
Acquisition and

 

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immediately thereafter, (i) no Default shall have occurred and be continuing,
and (ii) the Borrower could incur $1.00 of additional Debt under the Fixed
Charge Coverage Ratio test set forth in Section 10.2.1; (d) if such acquired
Person has outstanding Debt at the time of such Acquisition, such Debt is
permitted pursuant to Section 10.2.1; (e) any such newly-created or acquired
Subsidiary shall comply with the requirements of Section 10.1.13 and (f) with
respect to any Acquisition for which the consideration with respect to such
Acquisition equals or exceeds $25,000,000, the Borrower shall have delivered to
Agent and each Lender, at least five Business Days prior to the date on which
such Acquisition is to be consummated, a certificate of a Senior Officer, in
form and substance reasonably satisfactory to Agent, certifying that all of the
requirements set forth in this definition have been satisfied or will be
satisfied on or prior to the consummation of such Acquisition.

Permitted Contingent Obligations: Contingent Obligations (a) arising from
endorsements of Payment Items for collection or deposit in the Ordinary Course
of Business; (b) arising from Hedging Agreements permitted hereunder;
(c) existing on the Closing Date, and any extension or renewal thereof that does
not increase the amount of such Contingent Obligation when extended or renewed;
(d) incurred in the Ordinary Course of Business with respect to surety, appeal
or performance bonds, or other similar obligations; (e) arising from customary
indemnification obligations in favor of purchasers in connection with
dispositions of Equipment and other assets permitted hereunder; (f) arising
under the Loan Documents; (g) arising with respect to customary provisions of
any contract, customer agreement, purchase order, document or other agreement
incurred in the Ordinary Course of Business; (h) arising by operation of law; or
(i) in an aggregate amount of $10,000,000 or less at any time.

Permitted Holders: (a) Platinum and any affiliate (other than a portfolio
company) controlled directly or indirectly by Platinum and (b) any Person that
forms a Group with any of the Persons listed in clause (a) or Group consisting
of any of the Persons listed in clause (a); provided that the Persons listed in
clause (a) beneficially own in the aggregate, directly or indirectly, a majority
of the Voting Stock in the Borrower held by all Persons in such Group (without
giving effect to the application of any attribution rules).

Permitted Junior Debt Conditions: of an applicable Debt are that such Debt
(i) is not scheduled to mature prior to the date that is 91 days after the
latest maturity of the Loans and the ABL Loans, (ii) does not mature or have
scheduled amortization payments of principal or payments of principal and is not
subject to mandatory redemption, repurchase, prepayment or sinking fund
obligation (except customary asset sale or change of control provisions that
provide for the prior repayment in full of the Loans and all other Obligations),
in each case prior to the latest maturity of the Loans and the ABL Loans at the
time such Debt is incurred, (iii) is not at any time guaranteed by any
Subsidiaries other than Subsidiaries that are Guarantors and the terms of such
guarantee shall be no more favorable to the secured parties in respect of such
Debt than the terms of the Guaranty, and (iv) has covenants, default and remedy
provisions and other terms and conditions (other than interest, fees, premiums
and funding discounts) that are, taken as a whole, substantially identical to,
or less favorable to the investors providing such Debt than, those set forth in
this Agreement.

Permitted Junior Priority Secured Debt: secured (or, at the election of
Borrower, unsecured) Debt incurred by Obligors in the form of one or more series
of junior lien secured (or

 

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unsecured) notes or junior lien secured (or unsecured) loans; provided that
(i) such Debt is secured by the Collateral (if at all) on a junior priority
basis to the Liens in favor of Agent and the Liens in favor of the ABL Agent
under security documents substantially similar to the Security Documents and is
not secured by any property or assets of the Borrower or any Subsidiary other
than the Collateral, (ii) the holders of such Debt (or their representative) and
Agent and the ABL Agent shall be party to an intercreditor agreement in form and
substance reasonably satisfactory to the Required Lenders, (iii) such Debt has
financial covenants that are, taken as a whole, substantially identical to, or
less favorable to the investors of such Debt than, those set forth in this
Agreement and the ABL Credit Agreement, (iv) interest payable thereon may only
be made “in-kind” by increasing the outstanding principal amount thereof,
(v) such Debt is subordinated in right of payment to the payment in full of the
Obligations on customary terms reasonably satisfactory to Agent and (vi) such
Debt meets the Permitted Junior Debt Conditions.

Permitted Liens: as defined in Section 10.2.2.

Permitted Purchase Money Debt: Purchase Money Debt of the Borrower and
Restricted Subsidiaries that is unsecured or secured only by a Purchase Money
Lien, as long as the aggregate amount does not exceed $25,000,000 at any time.

Permitted Unsecured Debt: unsecured Debt incurred by Obligors in the form of one
or more series of senior unsecured notes or loans; provided that such Debt
(i) meets the Permitted Junior Debt Conditions, (ii) has no financial
maintenance covenants, and (iii) does not contain any provisions that
cross-default to any Default hereunder (but, for the avoidance of doubt, may
cross-accelerate).

Person: any individual, corporation, limited liability company, partnership,
joint venture, association, trust, unincorporated organization, Governmental
Authority or other entity.

Plan: an employee benefit plan (as defined in Section 3(3) of ERISA) maintained
for employees of an Obligor or ERISA Affiliate, or to which an Obligor or ERISA
Affiliate is required to contribute on behalf of its employees.

Plan Support Agreement: the Plan Support Agreement (including the term sheets
and any other attachments thereto), entered into on August 24, 2016 among the
Borrower and the supporting holders party thereto, as may be amended, modified
or supplemented from time to time in accordance with the terms thereof.

Platform: as defined in Section 15.3.3.

Platinum: Platinum Equity Advisors, LLC, a Delaware limited liability company,
and its managed funds and/or accounts.

Post-Closing Collateral: as defined in Section 7.3.3.

Post-Closing Collateral Period: as defined in Section 7.3.3.

 

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PP&E Value: the sum of (a) the total net recovery value (determined on the basis
of an orderly liquidation value) after expenses of the Term Priority Collateral
as set forth in the most recent PP&E Value Report delivered pursuant to Section
10.1.2(m) and (b) cash and Cash Equivalents deposited in the TL Proceeds and
Priority Collateral Account; provided that, if the Borrower or any Consolidated
Subsidiary shall have acquired or disposed of any Term Priority Collateral after
the date of such PP&E Value Report but before the time such PP&E Value is being
calculated, then PP&E Value shall be calculated, with calculation in form and
substance reasonably satisfactory to Agent, after giving pro forma effect to
such acquisition or disposition by (i) with respect to any such acquisition,
increasing the PP&E Value reflected in the applicable PP&E Value Report by the
purchase price paid by the Borrower or such Consolidated Subsidiary for such
Term Priority Collateral and (ii) with respect to any such disposition,
deducting from the PP&E Value reflected in the applicable PP&E Value Report the
value attributable to any Term Priority Collateral subject to such disposition.

PP&E Value Report: any report delivered pursuant to Section 10.1.2(m).

Prepackaged Plan: as defined in the recitals hereto.

Pro Forma Cost Savings: without duplication of any amounts referenced in the
definition of “Pro Forma Basis,” an amount equal to the amount of cost savings,
operating expense reductions, operating improvements (including the entry into
any material contract or arrangement) and acquisition synergies, in each case,
projected in good faith to be realized (calculated on a pro forma basis as
though such items had been realized on the first day of such period) as a result
of actions taken on or prior to, or to be taken by the Borrower (or any
successor thereto) or any Consolidated Subsidiary within 12 months of, the date
of such pro forma calculation, net of the amount of actual benefits realized or
expected to be realized during such period that are otherwise included in the
calculation of EBITDA from such action; provided that (a) such cost savings,
operating expense reductions, operating improvements and synergies are factually
supportable and reasonably identifiable (as determined in good faith by a
responsible financial or accounting officer, in his or her capacity as such and
not in his or her personal capacity, of the Borrower (or any successor thereto)
and set forth in a certificate of such financial or accounting officer) and are
reasonably anticipated to be realized within 12 months after the date of such
pro forma calculation and (b) no cost savings, operating expense reductions,
operating improvements and synergies shall be added pursuant to this definition
to the extent duplicative of any expenses or charges otherwise added to
Consolidated Net Income or EBITDA, whether through a pro forma adjustment or
otherwise, for such period; provided, further, that (i) the aggregate amount
added in respect of the foregoing proviso (or otherwise added to Consolidated
Net Income pursuant to clause (xiii) of the definition thereof or added to
EBITDA pursuant to clause (vi) of the definition thereof) shall not exceed with
respect to any four quarter period 10% of EBITDA for such period (calculated
prior to giving effect to any such adjustments) (such limitation, the “Cost
Savings Cap”) and (ii) the aggregate amount added in respect of the foregoing
proviso (or otherwise added to Consolidated Net Income pursuant to clause
(xiii) of the definition thereof or added to EBITDA pursuant to clause (vi) of
the definition thereof) shall no longer be permitted to be added back to the
extent the cost savings, operating expense reductions, operating improvements
and synergies have not been achieved within 12 months of the action or event
giving rise to such cost savings, operating expense reductions, operating
improvements and synergies.

 

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Prime Rate: the rate of interest which is identified as the “Prime Rate” and
normally published in the Money Rates section of The Wall Street Journal (or, if
such rate ceases to be so published, as quoted from such other generally
available and recognizable source as Agent may select); each change in the Prime
Rate shall be effective from and including the date such change is announced as
being effective.

Pro Rata: with respect to any Lender, a percentage (rounded to the ninth decimal
place) determined by dividing the amount of such Lender’s Loans by the aggregate
outstanding Loans or, if all Loans have been paid in full, by dividing such
Lender’s and its Affiliates’ remaining Obligations by the aggregate remaining
Obligations.

Properly Contested: with respect to any obligation of an Obligor, (a) the
obligation is subject to a bona fide dispute regarding amount or the Obligor’s
liability to pay; (b) the obligation is being properly contested in good faith
by appropriate proceedings promptly instituted and diligently pursued;
(c) appropriate reserves have been established in accordance with GAAP (to the
extent required); (d) non-payment could not have a Material Adverse Effect;
(e) no Lien is imposed on assets of the Obligor, unless bonded and stayed to the
satisfaction of Agent; and (f) if the obligation results from entry of a
judgment or other order, such judgment or order is stayed pending appeal or
other judicial review.

Property: any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.

Purchase Money Debt: (a) Debt (other than the Obligations), including Capital
Leases, for payment of any of the purchase price of fixed assets; (b) Debt
(other than the Obligations), including Capital Leases, incurred within 20 days
before or after acquisition of any fixed assets, for the purpose of financing
any of the purchase price thereof; and (c) any renewals, extensions or
refinancings (but not increases) thereof.

Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only
the fixed assets acquired with such Debt and constituting a Capital Lease or a
purchase money security interest under the UCC.

RCRA: the Resource Conservation and Recovery Act (42 U.S.C. §§ 6991-6991i).

Real Estate: all right, title and interest (whether as owner, lessor or lessee)
in any real Property or any buildings, structures, parking areas or other
improvements thereon.

Recipient: Agent, any Lender or any other recipient of a payment to be made by
an Obligor under a Loan Document or on account of an Obligation.

Reference Period: as defined in Section 1.5.

Refinancing Conditions: the following conditions for Refinancing Debt: (a) it is
in an aggregate principal amount that does not exceed the principal amount of
the Debt being extended, renewed or refinanced (other than an increase in an
aggregate principal amount resulting solely from any capitalized or payment
in-kind interest or an increase in the principal amount not in excess of the ABL
Cap Amount (as defined in the Intercreditor Agreement)); (b) it

 

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has a final maturity no sooner than, a weighted average life no less than, and,
unless otherwise approved by Agent, an interest rate no greater than, the Debt
being extended, renewed or refinanced; (c) if subordinated, it is subordinated
to the Obligations at least to the same extent as the Debt being extended,
renewed or refinanced or otherwise on terms and conditions acceptable to Agent;
(d) with respect to Refinancing Debt with a principal amount in excess of
$20,000,000, the representations, covenants and defaults applicable to it are no
less favorable (taken as a whole in any material respect) to the Borrower, than
those applicable to the Debt being extended, renewed or refinanced, unless
otherwise approved by Agent; (e) no additional Lien is granted to secure it
(other than additional Permitted Liens on Property not constituting Collateral);
(f) no additional Person is obligated on such Debt; and (g) upon giving effect
to it, no Default exists.

Refinancing Debt: Borrowed Money that is the result of an extension, renewal or
refinancing of Debt permitted under Section 10.2.1(h), (i), (j), (k) or (m).

Related Real Estate Documents: with respect to any Real Estate subject to a
Mortgage, the following: (a) a mortgagee title policy (or binder therefor)
covering Agent’s interest under the Mortgage; (b) assignments of leases,
estoppel letters, attornment agreements, consents, waivers and releases with
respect to other Persons having an interest in the Real Estate; (c) surveys of
the Real Estate; (d) appraisals of the Real Estate; and (e) environmental site
assessments, and other reports, certificates, studies or data with respect to
any environmental risks regarding the Real Estate.

Release: any depositing, spilling, leaking, pumping, pouring, placing, emitting,
discarding, abandoning, emptying, discharging, migrating, injecting, escaping,
leaching, dumping, or disposing in quantities or concentrations prohibited under
Environmental Laws. “Released” has a correlative meaning.

Remedial Work: as defined in Section 10.1.12(a).

Report: as defined in Section 13.2.3.

Reportable Event: any event set forth in Section 4043(c) of ERISA, other than an
event for which the 30 day notice period has been waived.

Reporting Trigger Period: the period commencing on the day that a Default occurs
and continuing until the day that no Default shall exist and be continuing.

Required Lenders: Lenders holding more than 50% of the aggregate outstanding
Loans or, if all Loans have been paid in full, the aggregate remaining
Obligations; provided, however, that Loans and other Obligations held by a
Defaulting Lender and its Affiliates shall be disregarded in making such
calculation.

Resolution End Date: as defined in Section 10.1.2(m)(i).

Restricted Subsidiary: any Subsidiary that is not an Unrestricted Subsidiary or
a direct or indirect Subsidiary of an Unrestricted Subsidiary.

 

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Restrictive Agreement: an agreement (other than a Loan Document) that conditions
or restricts the right of the Borrower, any Restricted Subsidiary or other
Obligor to incur or repay Borrowed Money, to grant, convey, create or impose
Liens on any assets, to declare or make Distributions, to modify, extend or
renew any agreement evidencing Borrowed Money, or to repay any intercompany Debt
or requires the consent of other Persons in connection with any of the
foregoing.

Royalties: all royalties, fees, expense reimbursement and other amounts payable
by the Borrower under a License.

S&P: Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill
Companies, Inc., and any successor thereto.

Sanctions: all sanctions adopted, administered or enforced by the United Nations
Security Council, the European Union, the United Kingdom, OFAC (including any
persons subject to country-specific or activity-specific sanctions administered
by OFAC and any persons named on any OFAC List), the U.S. Department of Commerce
Bureau of Industry and Security, or the U.S. Department of State.

SEC: the Securities and Exchange Commission or any successor thereto.

Secured Parties: Agent and Lenders.

Security Documents: the Guaranties, Mortgages, IP Assignments, Deposit Account
Control Agreements, and all other documents, instruments and agreements now or
hereafter securing (or given with the intent to secure) any Obligations.

Senior Officer: the chairman of the board, president, chief executive officer,
chief financial officer, any senior vice president, vice president, controller
or treasurer of Borrower or, if the context requires, an Obligor.

Solvent: as to any Person, such Person (a) owns Property whose fair salable
value is greater than the amount required to pay all of its debts (including
contingent, subordinated, unmatured and unliquidated liabilities); (b) owns
Property whose present fair salable value (as defined below) is greater than the
probable total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Person as they become absolute and matured;
(c) is able to pay all of its debts as they mature; (d) has capital that is not
unreasonably small for its business and is sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage; (e) is not “insolvent” within the meaning of Section 101(32) of the
Bankruptcy Code; and (f) has not incurred (by way of assumption or otherwise)
any obligations or liabilities (contingent or otherwise) under any Loan
Documents, or made any conveyance in connection therewith, with actual intent to
hinder, delay or defraud either present or future creditors of such Person or
any of its Affiliates. “Fair salable value” means the amount that could be
obtained for assets within a reasonable time, either through collection or
through sale under ordinary selling conditions by a capable and diligent seller
to an interested buyer who is willing (but under no compulsion) to purchase. For
the purposes of this definition, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability (irrespective of whether
such contingent liabilities meet the criteria for accrual under Statement of
Financial Accounting Standard No. 5).

 

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Specified Vehicle: any well service rig, contract drilling rig, heavy duty
vehicle or coiled tubing unit.

SPV: Key Property Holding Company LLC, a Delaware limited liability company,
which is wholly-owned directly by the Borrower or any Guarantor.

Subsidiary: any entity more than 50% of whose voting securities or Equity
Interests is owned by the Borrower (including indirect ownership through other
entities in which the Borrower directly or indirectly owns more than 50% of the
voting securities or Equity Interests).

Taxes: all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

Term Priority Collateral: as defined in the Intercreditor Agreement.

TL Proceeds and Priority Collateral Account: account #xxxx xx74 at Merrill
Lynch, Pierce, Fenner & Smith Incorporated and account #xxxx07 at Bank of
America, N.A. and, subject to compliance with the requirements set forth in
Section 8.1, any other account designated by the Borrower to Agent from time to
time as the TL Proceeds and Priority Collateral Account.

Total Debt: as of any date of determination, the aggregate principal amount of
Debt of the Borrower and the Consolidated Subsidiaries outstanding on such date,
in an amount that would be reflected on a balance sheet prepared in accordance
with GAAP consisting of Debt for Borrowed Money and obligations evidenced by
bonds, notes , debentures and other debt securities of such Person, capital
leases and purchase money indebtedness (other than intercompany Debt between the
Borrower and any Restricted Subsidiary or between Restricted Subsidiaries).

Transactions: means, with respect to the Obligors, the execution, delivery and
performance by the Obligors of this Agreement and each other Loan Document and
the deemed borrowing of Loans by the Borrower, the guarantee of the Obligations
and the grant of Liens by the Obligors on Collateral pursuant to the Loan
Documents.

Transferee: any actual or potential Eligible Assignee, Participant or other
Person acquiring an interest in any Obligations.

Treasury Rate: means, with respect to a repayment, prepayment or assignment
date, the weekly average yield on actively traded United States Treasury
securities adjusted to a constant maturity of one year (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519) that
has become publicly available at least two business days prior to such
repayment, prepayment or assignment date (or, if such Statistical Release is no
longer published, any publicly available source of similar market data)).

 

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UCC: the Uniform Commercial Code as in effect in the State of New York or, when
the laws of any other jurisdiction govern the perfection or enforcement of any
Lien, the Uniform Commercial Code of such jurisdiction.

Unrestricted Subsidiary: (a) any Subsidiary of the Borrower (including any newly
acquired or newly formed Subsidiary of the Borrower) that is designated by the
board of directors of the Borrower as an Unrestricted Subsidiary pursuant to a
resolution of the board of directors of the Borrower as certified in a
certificate delivered to Agent by a Senior Officer of the Borrower; (b) each
Subsidiary of an Unrestricted Subsidiary, whenever it shall become such a
Subsidiary; and (c) those Subsidiaries listed on Schedule 1.1(A) so long as each
such Subsidiary satisfies the conditions set forth in clause (A) below.

The board of directors of the Borrower may designate any Subsidiary of the
Borrower to become an Unrestricted Subsidiary if:

(A) such Subsidiary:

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

(2) is not party to any agreement, contract, arrangement or understanding with
the Borrower or any Restricted Subsidiary of the Borrower unless the terms of
any such agreement, contract, arrangement or understanding are no less favorable
to the Borrower or such Restricted Subsidiary than those that might be obtained,
in light of all the circumstances, at the time from Persons who are not
Affiliates of the Borrower;

(3) is a Person with respect to which neither the Borrower nor any of its
Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe
for additional Equity Interests or (y) to maintain or preserve such Person’s
financial condition or to cause such Persons to achieve any specified levels of
operating results;

(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Debt of the Borrower or any of its Restricted Subsidiaries;

(5) does not own any Equity Interest of, or own or hold any Lien on any property
of, the Borrower or any Restricted Subsidiary of the Borrower; and

(6) would constitute an Investment which the Borrower could make in compliance
with Section 10.2.4.

Notwithstanding the preceding, (a) if, at any time, any Unrestricted Subsidiary
would fail to meet the preceding requirements in clause (A) as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of this Agreement and any Debt of such Subsidiary shall be deemed to be
incurred as of such date and (b) no Subsidiary may be designated as an
Unrestricted Subsidiary hereunder unless such Subsidiary is or contemporaneously
herewith becomes designated as an “Unrestricted Subsidiary” under and within the
meaning of the ABL Credit Agreement (to the extent then in effect).

 

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Updated Interim PP&E Value Report: as defined in Section 10.1.2(m)(ii).

Upstream Payment: Distribution by a Restricted Subsidiary made ratably with
respect to its Equity Interests or made with respect to Debt held by a holder of
Equity Interests (other than Equity Interests of the Borrower).

U.S. Person: “United States Person” as defined in Section 7701(a)(30) of the
Code.

U.S. Tax Compliance Certificate: as defined in Section 5.11.2(b)(iii).

Vehicles: all cars, trucks, trailers, construction and earth moving equipment
and other vehicles covered by a certificate of title law of any state and all
tires and other appurtenances to any of the foregoing.

Voting Stock: of any Person as of any date means the Equity Interests of such
Person that is at the time entitled to vote in the election of the board of
directors of such Person.

1.2 Accounting Terms. Under the Loan Documents and the Borrower Materials
(except as otherwise specified therein), all accounting terms not otherwise
defined herein shall have the meanings assigned to them in conformity with GAAP.
Financial statements required to be delivered by the Borrower to Lenders
pursuant to Section 10.1.2 shall be prepared in accordance with GAAP as in
effect at the time of such preparation. If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Loan Document, and Borrower or the Required Lenders shall so request, Agent and
Borrower shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP (subject to
the reasonable approval of Required Lenders), provided that, until so amended,
such ratio or requirement shall continue to be computed in conformity with those
accounting principles and policies as in effect immediately prior to such
change. Notwithstanding anything in this Section 1.2 or in the definition of
“Capital Lease” to the contrary, in the event of an accounting change requiring
all leases to be capitalized, only those leases (assuming for purposes hereof
that such leases were in existence on the Closing Date) that would constitute
Capital Leases in conformity with GAAP on the Closing Date shall be considered
Capital Leases, and all calculations and deliverables under this Agreement or
any other Loan Document shall be made or delivered, as applicable, in accordance
therewith (provided that together with all financial statements delivered to
Agent in accordance with the terms of this Agreement after the date of any such
accounting change, the Borrower shall deliver a schedule showing the adjustments
necessary to reconcile such financial statements with GAAP as in effect
immediately prior to such accounting change).

1.3 Uniform Commercial Code. As used herein, the following terms are defined in
accordance with the UCC in effect in the State of New York from time to time:
“Chattel Paper,” “Commercial Tort Claim,” “Deposit Account,” “Document,”
“Equipment,” “General Intangibles,” “Goods,” “Instrument,” “Investment
Property,” “Letter-of-Credit Right,” “Securities Account” and “Supporting
Obligation.”

1.4 Certain Matters of Construction. The terms “herein,” “hereof,” “hereunder”
and other words of similar import refer to this Agreement as a whole and not to
any particular section, paragraph or subdivision. Any pronoun used shall be
deemed to cover all genders. In the

 

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computation of periods of time from a specified date to a later specified date,
“from” means “from and including,” and “to” and “until” each mean “to but
excluding.” The terms “including” and “include” shall mean “including, without
limitation” and, for purposes of each Loan Document and the Borrower Materials,
the parties agree that the rule of ejusdem generis shall not be applicable to
limit any provision. Section titles appear as a matter of convenience only and
shall not affect the interpretation of any Loan Document and the Borrower
Materials. All references to (a) laws include all related regulations,
interpretations, supplements, amendments and successor provisions; (b) any
document, instrument or agreement include any amendments, waivers and other
modifications, extensions or renewals (to the extent permitted by the Loan
Documents); (c) any section mean, unless the context otherwise requires, a
section of this Agreement; (d) any exhibits or schedules mean, unless the
context otherwise requires, exhibits and schedules attached hereto, which are
hereby incorporated by reference; (e) any Person include such Person’s
successors and assigns; (f) time of day mean time of day in New York, New York,
unless otherwise specified; (g) a number of days, such number shall refer to
calendar days unless Business Days are specified; (h) any action being taken or
given on or by a particular calendar day and such calendar day is not a Business
Day, unless otherwise specified herein, shall be deemed to refer instead to the
next Business Day or (i) except as expressly provided, discretion of Agent or
any Lender mean the sole and absolute discretion of such Person acting
reasonably. All calculations of value, Loans, Obligations and other amounts
herein shall be denominated in Dollars, unless expressly provided otherwise, and
all determinations (including calculations of financial covenants) made from
time to time under the Loan Documents and the Borrower Materials shall be made
in light of the circumstances existing at such time. No provision of any Loan
Documents shall be construed against any party by reason of such party having,
or being deemed to have, drafted the provision. Reference to the Borrower’s
“knowledge” or similar concept means actual knowledge of a Senior Officer, or
knowledge that a Senior Officer would have obtained if he or she had engaged in
good faith and diligent performance of his or her duties, including reasonably
specific inquiries of employees or agents and a good faith attempt to ascertain
the matter.

1.5 Pro Forma Calculations. With respect to the calculation of any test,
financial ratio, basket or covenant under this Agreement, including the Asset
Coverage Ratio and the Fixed Charge Coverage Ratio, of the Borrower and the
Restricted Subsidiaries, as of any date, pro forma effect shall be given to the
Transactions, any acquisition, merger, consolidation, Investment, any issuance,
incurrence, assumption or permanent repayment or redemption of Debt (including
Debt issued, incurred or assumed or repaid or redeemed as a result of, or to
finance, any relevant transaction and for which any such test, financial ratio,
basket or covenant is being calculated) (but excluding (i) normal fluctuations
in revolving Debt incurred for working capital purposes and (ii) the
identifiable proceeds of any Debt being incurred substantially simultaneously
therewith or as part of the same transaction or series of related transactions
for purposes of netting cash to calculate the applicable ratio), any issuance or
redemption of preferred stock, all sales, transfers and other dispositions or
discontinuance of any Subsidiary, line of business, division, segment or
operating unit or any designation of a Restricted Subsidiary to an Unrestricted
Subsidiary or of an Unrestricted Subsidiary to a Restricted Subsidiary, in each
case that have occurred during the four consecutive fiscal quarter period of the
Borrower and the Restricted Subsidiaries being used to calculate such test,
financial ratio, basket or covenant (the “Reference Period”), or subsequent to
the end of the Reference Period but prior to such date or prior to or
simultaneously with the event for which a determination under this definition is
made

 

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(including any such event occurring at a Person who became a Restricted
Subsidiary or was merged or consolidated with or into a Restricted Subsidiary
after the commencement of the Reference Period), as if each such event occurred
on the first day of the Reference Period; provided that for purposes of
determining actual compliance with the financial covenants in Section 10.2, the
events that occurred subsequent to the Reference Period shall not be given pro
forma effect.

For purposes of making any computation referred to above:

 

  (1) if any Debt bears a floating rate of interest and is being given pro forma
effect, the interest on such Debt shall be calculated as if the rate in effect
on the date for which a determination under this definition is made had been the
applicable rate for the entire period (taking into account any Hedging
Agreements applicable to such Debt if such Hedging Agreements have a remaining
term in excess of 12 months);

 

  (2) interest on a Capital Lease shall be deemed to accrue at an interest rate
reasonably determined by a responsible financial or accounting officer, in his
or her capacity as such and not in his or her personal capacity, of the Borrower
to be the rate of interest implicit in such Capital Lease in accordance with
GAAP;

 

  (3) interest on Debt that may optionally be determined at an interest rate
based upon a factor of a prime or similar rate, an eurocurrency interbank
offered rate, or other rate, shall be deemed to have been based upon the rate
actually chosen, or, if none, then based upon such optional rate chosen as the
Borrower may designate; and

 

  (4) interest on any Debt under a revolving credit facility computed on a pro
forma basis shall be computed based upon the average daily balance of such Debt
during the applicable period.

Any pro forma calculation may include, without limitation, adjustments
calculated in accordance with Regulation S-X under the Securities Act; provided
that any such adjustments that consist of reductions in costs and other
operating improvements or synergies (whether added pursuant to this definition,
the definition “Pro Forma Cost Savings” or otherwise added to Consolidated Net
Income or EBITDA) shall be calculated in accordance with, and satisfy the
requirements specified in, the definition of “Pro Forma Cost Savings.”

 

SECTION 2. CREDIT FACILITY

2.1 Loans. Subject to the terms and conditions hereof, on the Closing Date, each
Lender shall be deemed to have made a term loan to the Borrower in an aggregate
principal amount equal to the amount set forth opposite such Lender’s name on
Schedule 2.1. Amounts borrowed under this Section 2.1 and repaid or prepaid may
not be reborrowed. Loans may be Base Rate Loans or LIBOR Loans as further
provided herein. Such Loans are being issued on account of and in full
satisfaction of any claims arising out of the loans outstanding under the
Original Credit Agreement and the Lenders’ other prepetition claims and pursuant
to the Prepackaged Plan. As of the Closing Date, the Initial Loans will be LIBOR
Loans with an interest period of one month.

2.2 Notes. Loans and interest accruing thereon shall be evidenced by the records
of Agent and the applicable Lender. At the request of a Lender, Borrower shall
deliver a Note to such Lender, evidencing its Loan(s).

 

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2.3 [Reserved].

2.4 [Reserved].

2.5 Extension of Maturity Date.

2.5.1 The Borrower may from time to time, pursuant to the provisions of this
Section 2.5, without the consent of Agent or the Required Lenders, agree with
one or more Lenders to extend the Maturity Date then applicable to such Lender’s
Loan or any portion thereof, and, provided written notice thereof is given to
Agent, otherwise modify the economic terms of any such Loans or any portion
thereof (including, without limitation, by modifying the interest rate or fees
payable and/or the amortization schedule in respect of such Loans or any portion
thereof) (each such modification an “Extension”) pursuant to one or more written
offers (each an “Extension Offer”) made from time to time by the Borrower to all
Lenders whose Loans have the same Maturity Date that is proposed to be extended
under this Section 2.5, in each case on a pro rata basis (based on the relative
principal amounts of the outstanding Loans of each such Lender holding such
Loans) and on the same terms to each such Lender, which Extension Offer may be
conditioned as determined by the Borrower and set forth in such offer. In
connection with each Extension, the Borrower will provide notification to Agent
(for distribution to the applicable Lenders), no later than 30 days (or such
shorter period as Agent may agree) prior to the maturity of the applicable Loans
to be extended of the requested new maturity date for the proposed Extension
Loans (each an “Extended Maturity Date”) and the due date for Lender responses.
The Borrower and Agent shall agree to such procedures, if any, as may be
reasonably established by, or acceptable to, Agent to accomplish the purposes of
this Section 2.5. In connection with any Extension, each applicable Lender
wishing to participate in such Extension shall, prior to such due date, provide
Agent with a written notice thereof. Any Lender that does not respond to an
Extension Offer by the applicable due date shall be deemed to have rejected such
Extension.

2.5.2 Each Extension shall be subject to the following:

(a) no Event of Default shall have occurred and be continuing at the time of
such Extension or would result from the consummation of the applicable
Extension;

(b) except as to interest rates, fees, scheduled amortization, optional
prepayment terms, premium, required prepayment dates, final maturity date (which
shall, subject to clause (c) below, be determined by the Borrower and set forth
in the relevant Extension Offer) and covenants and other provisions applicable
to periods after the Maturity Date of any non-Extension Loans, the Extension
Loans of any Lender extended pursuant to any Extension shall have terms that are
no more favorable to the Lenders thereof in any material respect, taken as a
whole, than the applicable Loans prior to the related Extension Offer;

(c) the final maturity date of the Extension Loans shall be later than the final
Maturity Date of the Loans that are not being so extended, and the weighted
average life to maturity of the Extension Loans shall be no shorter than the
weighted average life to maturity of the applicable Loans subject to an
Extension Offer that are not so extended;

 

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(d) if the aggregate principal amount of Loans in respect of which Lenders shall
have accepted an Extension Offer exceeds the maximum aggregate principal amount
of Loans offered to be extended by the Borrower pursuant to the relevant
Extension Offer, then such Loans shall be extended ratably up to such maximum
amount based on the relative principal amounts thereof (not to exceed any
Lender’s actual holdings of record) with respect to which such Lenders accepted
such Extension Offer;

(e) all documentation in respect of such Extension shall be consistent with the
foregoing, and all written communications by the Borrower generally directed to
the applicable Lenders under the applicable class of Extension Loans in
connection therewith shall be in form and substance consistent with the
foregoing;

(f) any applicable Minimum Extension Condition shall be satisfied;

(g) no more than four Maturity Dates and four tranches of pricing with respect
to the Loans may be effectuated hereunder; and

(h) no Extension shall become effective unless, on the proposed effective date
of such Extension, the representations and warranties contained herein are true
and correct in all material respects on and as of the applicable date of such
Extension to the same extent as though made on and as of that date, except to
the extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date.

2.5.3 The consummation and effectiveness of any Extension will be subject to a
condition set forth in the relevant Extension Offer (a “Minimum Extension
Condition”) that a minimum amount (to be determined in the Borrower’s discretion
and specified in the relevant Extension Offer, but in no event less than
$25,000,000, unless another lesser amount is agreed to by Agent) of Loans be
tendered.

2.5.4 The Lenders hereby irrevocably authorize Agent to enter into amendments
(collectively, “Extension Amendments”) to this Agreement and the other Loan
Documents as may be necessary in order to establish new tranches of Loans
created pursuant to an Extension (including without limitation amending the
definition of “Applicable Margin” to effectuate the payment of different rates
and fees to be made to those Lenders who have agreed to extend the maturity date
of their Loans), in each case on terms consistent with this Section 2.5, and any
such Extension Amendments entered into with the Borrower by Agent hereunder
shall be binding on the Lenders. The term of any Extension Amendment shall be
binding upon only the Lenders agreeing to participate in the Extension Offer and
then, only with respect to the Extension Loans of such Lenders. For the
avoidance of doubt, no Extension Amendment shall modify in any respect any Loans
of a Lender without the written consent of such Lender. All Extension Loans and
all obligations in respect thereof shall be Obligations under this Agreement and
the other Loan Documents that are secured by the Collateral on a pari passu
basis with all other applicable Obligations under this Agreement and the other
Loan Documents.

 

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SECTION 3. INTEREST, FEES AND CHARGES

3.1 Interest.

3.1.1 Rates and Payment of Interest.

(a) The Obligations shall bear interest (i) if a Base Rate Loan, at the Base
Rate in effect from time to time, plus the Applicable Margin; (ii) if a LIBOR
Loan, at LIBOR for the applicable Interest Period, plus the Applicable Margin;
and (iii) if any other Obligation not paid when due (including, to the extent
permitted by law, interest not paid when due), at the Base Rate in effect from
time to time, plus the Applicable Margin for Base Rate Loans.

(b) Upon notice from Agent, acting at the direction of the Required Lenders,
during an Insolvency Proceeding with respect to the Borrower, or during any
other Event of Default if Required Lenders in their discretion so elect,
Obligations shall bear interest at the Default Rate (whether before or after any
judgment). The Borrower acknowledges that the cost and expense to Agent and
Lenders due to an Event of Default are difficult to ascertain and that the
Default Rate is fair and reasonable compensation for this.

(c) Interest shall accrue from the date a Loan is advanced or Obligation is not
paid when due, until paid in full by the Borrower. Interest accrued on the Loans
shall be due and payable in arrears, (i) on the last day of each quarter (or, if
such day is not a Business Day, the immediately preceding Business Day) with
respect to a Base Rate Loan, and on the last day of the applicable Interest
Period (or, if such day is not a Business Day, the immediately preceding
Business Day) with respect to a LIBOR Loan (except in the case of a LIBOR Loan
with an Interest Period of more than three months’ duration, each day prior to
the last day of such Interest Period that occurs at intervals of three months’
duration after the first day of such Interest Period (or, if such day is not a
Business Day, the immediately preceding Business Day)); (ii) on any date of
prepayment, with respect to the principal amount of Loans being prepaid; and
(iii) on the Maturity Date. Interest accrued on any other Obligations shall be
due and payable as provided in the Loan Documents and, if no payment date is
specified, shall be due and payable on demand. Notwithstanding the foregoing,
interest accrued at the Default Rate shall be due and payable on demand.

(d) Up to 100 basis points of the per annum interest due on the Loans may, at
the option of the Borrower, be paid-in-kind with interest paid-in-kind being
added to the unpaid principal amount of the Loans on the applicable interest
payment date for such Loan; provided that, in the event the Borrower elects to
pay a portion of interest in-kind, the Borrower shall have delivered a written
notice to Agent at least five Business Days prior to the applicable interest
payment date stating the amount of interest on such interest payment date that
will be paid-in-kind; provided, however, that in the case of any prepayment or
repayment of the principal amount of any Loans, including on the Maturity Date
(or that has become payable pursuant to Section 12.2), all accrued and unpaid
interest on the principal amount prepaid or repaid shall be payable in cash. On
each applicable interest payment date Agent shall update the Loan register to
reflect the payment of interest in-kind.

 

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3.1.2 Application of LIBOR to Outstanding Loans.

(a) The Borrower may on any Business Day, subject to delivery of a Notice of
Conversion/Continuation, elect to convert any portion of the Base Rate Loans to,
or to continue any LIBOR Loan at the end of its Interest Period as, a LIBOR
Loan. During any Default or Event of Default, Agent may (and shall at the
direction of Required Lenders) declare that no Loan may be made, converted or
continued as a LIBOR Loan.

(b) Whenever the Borrower desires to convert or continue Loans as LIBOR Loans,
the Borrower shall give Agent a written Notice of Conversion/Continuation (which
may be submitted by e-mail), no later than 11:00 a.m. at least three Business
Days before the requested conversion or continuation date. Promptly after
receiving any such notice, Agent shall notify each Lender thereof. Each Notice
of Conversion/Continuation shall be irrevocable, and shall specify the amount of
Loans to be converted or continued, the conversion or continuation date (which
shall be a Business Day), and the duration of the Interest Period (which shall
be deemed to be 1 month if not specified). If, upon the expiration of any
Interest Period for any LIBOR Loan, the Borrower shall have failed to deliver a
Notice of Conversion/Continuation, it shall be deemed to have elected to convert
such Loan into a Base Rate Loan. Agent does not warrant or accept responsibility
for, nor shall it have any liability with respect to, administration, submission
or any other matter related to any rate described in the definition of LIBOR.

3.1.3 Interest Periods. In connection with the making, conversion or
continuation of any LIBOR Loans, the Borrower shall select an interest period
(“Interest Period”) to apply, which interest period shall be one month, two
months, three months, or six months (or, with the consent of all Lenders, such
longer period not to exceed 12 months); provided, however, that:

(a) the Interest Period shall begin on the date the Loan is made or continued
as, or converted into, a LIBOR Loan, and shall expire on the numerically
corresponding day in the calendar month at its end;

(b) if any Interest Period begins on a day for which there is no corresponding
day in the calendar month at its end or if such corresponding day falls after
the last Business Day of such month, then the Interest Period shall expire on
the last Business Day of such month; and if any Interest Period would otherwise
expire on a day that is not a Business Day, the period shall expire on the next
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the immediately preceding Business Day;
and

(c) no Interest Period shall extend beyond the Maturity Date.

3.2 Fees. The Borrower shall pay all fees set forth in the Agency Letter.

3.3 Computation of Interest, Fees, Yield Protection. All computations of
interest for Base Rate Loans (including Base Rate Loans determined by reference
to LIBOR) shall be made on the basis of a year of 365 or 366 days, as the case
may be, and actual days elapsed. All other computations of interest, as well as
fees and other charges calculated on a per annum basis, shall be computed for
the actual days elapsed, based on a year of 360 days (which results in more fees
or interest, as applicable, being paid than if computed on the basis of a
365-day year). Each determination by Agent of any interest, fees or interest
rate hereunder shall be final, conclusive

 

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and binding for all purposes, absent manifest error. All fees shall be fully
earned when due and shall not be subject to rebate, refund or proration. All
fees payable under Section 3.2 are compensation for services and are not, and
shall not be deemed to be, interest or any other charge for the use, forbearance
or detention of money. A certificate as to amounts payable by the Borrower under
Section 3.4, 3.6, 3.7, 3.9 or 5.10, submitted to the Borrower by Agent or the
affected Lender shall be final, conclusive and binding for all purposes, absent
manifest error, and the Borrower shall pay such amounts to the appropriate party
within 10 days following receipt of the certificate.

3.4 Reimbursement Obligations. The Borrower shall pay all Extraordinary Expenses
promptly upon request. The Borrower shall also reimburse Agent for all
reasonable and documented out-of-pocket legal, accounting, appraisal,
consulting, and other fees, costs and expenses incurred by it in connection with
(a) negotiation and preparation of any Loan Documents, including any amendment
or other modification thereof; (b) administration of and actions relating to any
Collateral, Loan Documents and transactions contemplated thereby, including any
actions taken to perfect or maintain priority of Agent’s Liens on any
Collateral, to maintain any insurance required hereunder or to verify
Collateral; and (c) subject to the limits of Section 10.1.1(b), each inspection,
audit or appraisal with respect to any Obligor or Collateral, whether prepared
by Agent’s personnel or a third party; provided that legal fees shall be limited
to one firm of counsel and an additional local law firm in each applicable
jurisdiction and, in the case of an actual or potential conflict of interest as
determined by the affected party, one additional firm of counsel to such
affected party and one additional firm of local counsel to such affected party
in each applicable jurisdiction. All reasonable and documented legal, accounting
and consulting fees shall be charged to the Borrower by Agent’s professionals at
their full hourly rates, regardless of any alternative fee arrangements that
Agent, any Lender or any of their Affiliates may have with such professionals
that otherwise might apply to this or any other transaction. The Borrower
acknowledges that counsel may provide Agent with a benefit (such as a discount,
credit or accommodation for other matters) based on counsel’s overall
relationship with Agent, including fees paid hereunder. All amounts payable by
the Borrower under this Section 3.4 shall be due on demand.

3.5 Illegality. If any Lender determines that any Applicable Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender to make, maintain or fund LIBOR Loans, or to determine or charge
interest rates based upon LIBOR, or any Governmental Authority has imposed
material restrictions on the authority of such Lender to purchase or sell, or to
take deposits of, Dollars in the London interbank market, then, on notice
thereof by such Lender to Agent, any obligation of such Lender to make or
continue LIBOR Loans or to convert Base Rate Loans to LIBOR Loans shall be
suspended until such Lender notifies Agent that the circumstances giving rise to
such determination no longer exist. Upon delivery of such notice, the Borrower
shall prepay or, if applicable, convert all LIBOR Loans of such Lender to Base
Rate Loans, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such LIBOR Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such LIBOR
Loans. Upon any such prepayment or conversion, the Borrower shall also pay
accrued interest on the amount so prepaid or converted.

 

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3.6 Inability to Determine Rates. Agent will promptly notify the Borrower and
Lenders if, in connection with any Loan or request for a Loan, (a) Agent
determines that (i) Dollar deposits are not being offered to banks in the London
interbank Eurodollar market for the applicable Loan amount or Interest Period,
or (ii) adequate and reasonable means do not exist for determining LIBOR for the
Interest Period; or (b) Agent or Required Lenders determine for any reason that
LIBOR for the Interest Period does not adequately and fairly reflect the cost to
Lenders of funding the Loan (each of clause (a) and (b), a “Market Disruption
Event”). Thereafter, Lenders’ obligations to make or maintain affected LIBOR
Loans and utilization of the LIBOR component (if affected) in determining Base
Rate shall be suspended and no further Loans may be converted into or continued
as such LIBOR Loans until Agent (upon instruction by Required Lenders) withdraws
the notice. Upon receipt of such notice, the Borrower may revoke any pending
request for a LIBOR Loan or, failing that, will be deemed to have requested a
Base Rate Loan. During any period in which a Market Disruption Event is in
effect, the Borrower may request that the Agent or the Required Lenders, as
applicable, confirm that the circumstances giving rise to the Market Disruption
Event continue to be in effect; provided that (A) the Borrower shall not be
permitted to submit any such request more than once in any 30-day period and
(B) nothing contained in this Section 3.6 or the failure to provide confirmation
of the continued effectiveness of such Market Disruption Event shall in any way
affect the Agent’s or Required Lenders’ right to provide any additional notices
of a Market Disruption Event as provided in this Section 3.6. If the Agent or
Required Lenders, as applicable, have not confirmed within 10 Business Days
after request of such confirmation from the Borrower that a Market Disruption
Event continues to be in effect, then such Market Disruption Event shall be
deemed to be no longer existing.

3.7 Increased Costs; Capital Adequacy.

3.7.1 Increased Costs Generally. If any Change in Law shall:

(a) impose, modify or deem applicable any reserve, liquidity, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement reflected in calculating LIBOR);

(b) subject any Recipient to Taxes (other than (i) Indemnified Taxes, (ii) Taxes
described in clauses (b) through (d) of the definition of Excluded Taxes, and
(iii) Connection Income Taxes) with respect to any Loan or other obligations, or
its deposits, reserves, other liabilities or capital attributable thereto; or

(c) impose on any Lender or interbank market any other condition, cost or
expense (other than Taxes) affecting any Loan or Loan Document;

and the result thereof shall be to increase the cost to a Lender of making or
maintaining any Loan or converting to or continuing any interest option for a
Loan, or to increase the cost to a Lender, or to reduce the amount of any sum
received or receivable by a Lender hereunder (whether of principal, interest or
any other amount) then, upon request of such Lender, the Borrower will pay to it
such additional amount(s) as will compensate it for the additional costs
incurred or reduction suffered.

 

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3.7.2 Capital Requirements. If a Lender determines that a Change in Law
affecting such Lender or its holding company, if any, regarding capital or
liquidity requirements has or would have the effect of reducing the rate of
return on such Lender’s or holding company’s capital as a consequence of this
Agreement, or such Lender’s Loans or participations in Loans, to a level below
that which such Lender or holding company could have achieved but for such
Change in Law (taking into consideration its policies with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender such
additional amounts as will compensate it or its holding company for the
reduction suffered; provided, that such Lender is generally seeking, or intends
generally to seek, compensation from similarly situated borrowers under similar
credit facilities (to the extent such Lender has the right under such similar
credit facilities to do so) with respect to such Change in Law regarding capital
or liquidity requirements.

3.7.3 LIBOR Loan Reserves. If any Lender is required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits, the Borrower shall pay additional interest to such Lender on each
LIBOR Loan equal to the costs of such reserves allocated to the Loan by the
Lender (as determined by it in good faith, which determination shall be
conclusive). The additional interest shall be due and payable on each interest
payment date for the Loan; provided, however, that if the Lender notifies the
Borrower (with a copy to Agent) of the additional interest less than 10 days
prior to the interest payment date, then such interest shall be payable 10 days
after the Borrower’s receipt of the notice.

3.7.4 Compensation. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section 3.7.4 shall not constitute a waiver of its
right to demand such compensation, but the Borrower shall not be required to
compensate a Lender for any increased costs incurred or reductions suffered more
than six months (plus any period of retroactivity of the Change in Law giving
rise to the demand) prior to the date that such Lender notifies the Borrower of
the applicable Change in Law and of such Lender’s intention to claim
compensation therefor.

3.8 Mitigation. If any Lender gives a notice under Section 3.5 or requests
compensation under Section 3.7, or if the Borrower is required to pay any
Indemnified Taxes or additional amounts with respect to a Lender under
Section 5.10, then at the request of the Borrower, such Lender shall use
reasonable efforts to designate a different Lending Office 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
(a) would eliminate the need for such notice or reduce amounts payable or to be
withheld in the future, as applicable; and (b) would not subject the Lender to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
it or unlawful. The Borrower shall pay all reasonable and documented costs and
expenses incurred by any Lender in connection with any such designation or
assignment.

3.9 Funding Losses. If for any reason (a) any conversion or continuation of a
LIBOR Loan does not occur on the date specified therefor in a Notice of
Conversion/Continuation (whether or not withdrawn), (b) any repayment or
conversion of a LIBOR Loan occurs on a day other than the end of its Interest
Period, (c) the Borrower fails to repay a LIBOR Loan when required hereunder, or
(d) a Lender (other than a Defaulting Lender) is required to assign a LIBOR Loan
prior to the end of its Interest Period pursuant to Section 14.4, then the
Borrower

 

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shall pay to Agent its customary administrative charge and to each Lender all
losses, expenses and fees arising from redeployment of funds or termination of
match funding. For purposes of calculating amounts payable under this
Section 3.9, a Lender shall be deemed to have funded a LIBOR Loan by a matching
deposit or other borrowing in the London interbank market for a comparable
amount and period, whether or not the Loan was in fact so funded.

3.10 Maximum Interest. Notwithstanding anything to the contrary contained in any
Loan Document, the interest paid or agreed to be paid under the Loan Documents
shall not exceed the maximum rate of non-usurious interest permitted by
Applicable Law (“Maximum Rate”). If Agent or any Lender shall receive interest
in an amount that exceeds the Maximum Rate, the excess interest shall be applied
to the principal of the Obligations or, if it exceeds such unpaid principal,
refunded to the Borrower. In determining whether the interest contracted for,
charged or received by Agent or a Lender exceeds the Maximum Rate, such Person
may, to the extent permitted by Applicable Law, (a) characterize any payment
that is not principal as an expense, fee or premium rather than interest;
(b) exclude voluntary prepayments and the effects thereof; and (c) amortize,
prorate, allocate and spread in equal or unequal parts the total amount of
interest throughout the contemplated term of the Obligations hereunder.

 

SECTION 4. LOAN ADMINISTRATION

4.1 [Reserved].

4.2 Defaulting Lender. Notwithstanding anything herein to the contrary:

4.2.1 Reallocation of Pro Rata Share; Amendments. For purposes of determining
Lenders’ obligations or rights to fund, participate in or receive collections
with respect to Loans, Agent may in its discretion reallocate Pro Rata shares by
excluding a Defaulting Lender’s Loans from the calculation of shares. A
Defaulting Lender shall have no right to vote on any amendment, waiver or other
modification of a Loan Document, except as provided in Section 15.1.1(b).

4.2.2 Fees. A Lender shall not be entitled to receive any fees accruing
hereunder while it is a Defaulting Lender.

4.2.3 Status; Cure. Agent may determine in its discretion that a Lender
constitutes a Defaulting Lender and the effective date of such status shall be
conclusive and binding on all parties, absent manifest error. The Borrower and
Agent may agree in writing that a Lender has ceased to be a Defaulting Lender,
whereupon Pro Rata shares shall be reallocated without exclusion of the
reinstated Lender’s Loans. Unless expressly agreed by the Borrower and Agent, no
reinstatement of a Defaulting Lender shall constitute a waiver or release of
claims against such Lender. The failure of any Lender to fund a Loan or
otherwise to perform obligations hereunder shall not relieve any other Lender of
its obligations under any Loan Document. No Lender shall be responsible for
default by another Lender.

4.3 Number and Amount of LIBOR Loans; Determination of Rate. Each Borrowing of
LIBOR Loans when made shall be in a minimum amount of $1,000,000, plus an
increment of $500,000 in excess thereof. No more than six (6) Borrowings of
LIBOR Loans may be outstanding at any time, and all LIBOR Loans having the same
length and beginning date of their Interest Periods shall be aggregated together
and considered one Borrowing for this purpose.

 

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Upon determining LIBOR for any Interest Period requested by the Borrower, Agent
shall promptly notify the Borrower in writing (which may be by e-mail).

4.4 One Obligation. The Loans and other Obligations constitute one general
obligation of the Borrower and are secured by Agent’s Lien on all Collateral.

4.5 Effect of Termination. On the Maturity Date, the Obligations shall be
immediately due and payable. Until Full Payment of the Obligations, all
undertakings of the Borrower contained in the Loan Documents shall continue, and
Agent shall retain its Liens in the Collateral and all of its rights and
remedies under the Loan Documents. Sections 3.4, 3.6, 3.7, 3.9, 5.6, 5.10, 13,
15.2, this Section 4.5, and each indemnity or waiver given by an Obligor or
Lender in any Loan Document, shall survive Full Payment of the Obligations.

 

SECTION 5. PAYMENTS

5.1 General Payment Provisions. All payments of Obligations shall be made in
Dollars, without offset, counterclaim or defense of any kind, free and clear of
(and without deduction for) any Taxes, and in immediately available funds, not
later than 3:00 p.m. on the due date. Any payment after such time may in Agent’s
discretion be deemed made on the next Business Day. Any payment of a LIBOR Loan
prior to the end of its Interest Period shall be accompanied by all amounts due
under Section 3.9. The Borrower agrees that after an Event of Default has
occurred and is continuing, Agent shall have the continuing, exclusive right to
apply and reapply payments and proceeds of Collateral against the Obligations,
in such manner as Agent deems advisable, but whenever possible, any prepayment
of Loans shall be applied first to Base Rate Loans and then to LIBOR Loans.

5.2 Repayment of Loans.

5.2.1 Initial Loans. The Borrower shall repay to Agent, for the account of the
Lenders, a principal amount of the Initial Loans outstanding on the following
dates (or, if such day is not a Business Day, the immediately preceding Business
Day) equal to the respective amounts set forth opposite such dates (which
amounts shall be reduced as a result of the application of prepayments in
accordance with the order of application set forth in Section 5.3), together in
each case with accrued and unpaid interest on the principal amount to be paid to
but excluding the date of such payment:

 

Repayment Date

   Amount  

March 31, 2017

   $ 625,000   

June 30, 2017

   $ 625,000   

September 30, 2017

   $ 625,000   

December 31, 2017

   $ 625,000   

March 31, 2018

   $ 625,000   

June 30, 2018

   $ 625,000   

September 30, 2018

   $ 625,000   

December 31, 2018

   $ 625,000   

March 31, 2019

   $ 625,000   

June 30, 2019

   $ 625,000   

September 30, 2019

   $ 625,000   

December 31, 2019

   $ 625,000   

March 31, 2020

   $ 625,000   

June 30, 2020

   $ 625,000   

September 30, 2020

   $ 625,000   

December 31, 2020

   $ 625,000   

March 31, 2021

   $ 625,000   

June 30, 2021

   $ 625,000   

September 30, 2021

   $ 625,000   

December 31, 2021

   $ 625,000   

 

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provided, however, that the final principal repayment installment of the Loans
shall be repaid on the Maturity Date and in any event shall be in an amount
equal to the aggregate principal amount of all Loans outstanding on such date.

5.2.2 No Premium. All repayments pursuant to this Section 5.2 shall be subject
to Section 3.9, but shall otherwise be without premium or penalty.

5.3 Prepayments.

5.3.1 Optional. The Borrower may, upon written notice to Agent, at any time or
from time to time voluntarily prepay Loans in whole or in part; provided that
(A) such notice must be in a form reasonably acceptable to Agent and be received
by Agent not later than 11:00 a.m. (1) three Business Days prior to any date of
prepayment of LIBOR Loans and (2) one Business Day prior to any date of
prepayment of Base Rate Loans; (B) any prepayment of LIBOR Loans shall be in a
principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof; and (C) any prepayment of Base Rate Loans shall be in a principal
amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each
case, the entire principal amount thereof then outstanding. Each such notice
shall specify the date and amount of such prepayment, whether the Loans to be
prepaid are Base Rate Loans or LIBOR Loans and if LIBOR Loans are to be prepaid,
the Interest Period(s) of such Loans. Agent will promptly notify each Lender of
its receipt of each such notice, and of the amount of such Lender’s ratable
portion of such prepayment (based on such Lender’s Pro Rata share). If such
notice is given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein. Any prepayment of Loans under this Section 5.3.1 shall be
accompanied by any Applicable Premium and all accrued interest on the amount
prepaid, together with any additional amounts required pursuant to Section 3.9.
Each prepayment of Loans pursuant to this Section 5.3.1 shall be applied to the
principal repayment installments thereof as directed by the Borrower, and
subject to Section 4.2, each such prepayment shall be paid to the Lenders in
accordance with their respective Pro Rata shares.

 

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5.3.2 Mandatory.

(a) Upon the incurrence or issuance by the Borrower or any of its Restricted
Subsidiaries of any Debt (other than Debt expressly permitted to be incurred or
issued pursuant to Section 10.2.1), the Borrower shall prepay an aggregate
principal amount of Loans equal to 100% of all Net Cash Proceeds received from
such incurrence of Debt immediately upon receipt thereof by the Borrower or such
Restricted Subsidiary.

(b) The Borrower shall deliver to Agent, no later than 12:00 p.m. on the date of
each prepayment required under this Section 5.3.2, a certificate signed by a
Senior Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment. Each such certificate shall
specify the Loans being prepaid and the principal amount of each Loan (or
portion thereof) to be prepaid. Prepayments shall be accompanied by accrued
interest. All prepayments of Loans under this Section 5.3.2 shall be accompanied
by any Applicable Premium and all accrued interest on the amount prepaid,
together with any additional amounts required pursuant to Section 3.9. Each
prepayment of Loans pursuant to this Section 5.3.2 shall be applied to the
principal repayment installments thereof as directed by the Borrower, and
subject to Section 4.2, each such prepayment shall be paid to the Lenders in
accordance with their respective Pro Rata shares.

5.4 Offers to Repurchase Loans.

5.4.1 Asset Dispositions.

(a) Not later than the third Business Day following the receipt (or deemed
receipt as specified in the definition of Net Cash Proceeds) of Net Cash
Proceeds in respect of any Asset Disposition (including any proceeds from any
casualty or condemnation) in excess of $30,000,000 in the aggregate for all such
Asset Dispositions, the Borrower shall deliver to Agent who, in turn, shall
furnish such offer to all of the Lenders at least ten Business Days prior to the
date of prepayment specified in such offer (the “Asset Disposition Prepayment
Date”), an offer to prepay the maximum aggregate principal amount of the Loans
that may be prepaid out of the Net Cash Proceeds received with respect thereto,
at an offer price in cash in an amount equal to 100% of the principal amount of
such Loans, plus accrued and unpaid interest (if any) as of the date of such
purchase (each such offer, an “Asset Disposition Offer”).

(b) Each Lender may accept all or a portion of its Pro Rata share of any Asset
Disposition Offer (any amounts not accepted, together with any other amounts not
accepted from prepayments offered under Sections 5.4.2 and 5.4.3, the “Declined
Amounts”) by providing written notice (an “Acceptance Notice”) to Agent and the
Borrower no later than 5:00 p.m. five Business Days prior to the Asset
Disposition Prepayment Date. Each Acceptance Notice delivered by a Lender shall
specify the principal amount of the Loans to be purchased from such Lender;
provided that (i) such amount shall not exceed such Lender’s Pro Rata share of
the Asset Disposition Offer and (ii) if such Lender fails to specify any such
amount, it shall be deemed to have requested its full Pro Rata share of such
Asset Disposition Offer. If a Lender fails to deliver an Acceptance Notice to
Agent within the time frame specified above, such failure will be deemed a full
rejection of such Asset Disposition Offer. Any Declined Amounts shall no longer
be subject to this Section 5.4 and may be used by the Borrower in any way not
prohibited by this Agreement. If the aggregate principal amount of Loans
requested to be repaid exceeds the aggregate amount to be repaid by the Borrower
pursuant to this Section 5.4.1(b), Agent shall apply the amounts to be repaid by
the Borrower to the Loans requested to be repaid on a pro rata basis based on
the principal amount of such Loans.

 

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5.4.2 Excess Cash Flow.

(a) Commencing with the fiscal year ending December 31, 2017, no later than ten
Business Days after the date on which the financial statements with respect to
such period are delivered or are required to be delivered pursuant to Section
10.1.2(a), each fiscal year for which there is Excess Cash Flow, the Borrower
shall deliver to Agent who, in turn, shall furnish such offer to all of the
Lenders at least ten Business Days prior to the date of prepayment specified in
such offer (the “ECF Prepayment Date”), an offer to prepay Loans in the
aggregate principal amount equal to 50% of such Excess Cash Flow (such amount,
the “ECF Amount”), at an offer price in cash in an amount equal to 100% of the
aggregate principal amount of such Loans, plus accrued and unpaid interest (if
any) as of the date of such purchase (each such offer, an “ECF Offer”).

(b) Each Lender may accept all or a portion of its Pro Rata share of any ECF
Offer by providing an Acceptance Notice to Agent and the Borrower no later than
5:00 p.m. five Business Days prior to the ECF Prepayment Date. Each Acceptance
Notice delivered by a Lender shall specify the principal amount of the Loans to
be purchased from such Lender; provided that (i) such amount shall not exceed
such Lender’s Pro Rata share of the ECF Amount and (ii) if such Lender fails to
specify any such amount, it shall be deemed to have requested its full Pro Rata
share of such ECF Amount. If a Lender fails to deliver an Acceptance Notice to
Agent within the time frame specified above, such failure will be deemed a full
rejection of such ECF Offer. Any Declined Amounts shall no longer be subject to
this Section 5.4 and may be used by the Borrower in any way not prohibited by
this Agreement. If the aggregate principal amount of Loans requested to be
repaid exceeds the aggregate amount to be repaid by the Borrower pursuant to
this Section 5.4.2(b), Agent shall apply the amounts to be repaid by the
Borrower to the Loans requested to be repaid on a pro rata basis based on the
principal amount of such Loans.

5.4.3 Change of Control.

(a) Within 30 days following any Change of Control, the Borrower shall deliver
to Agent who, in turn, shall furnish such offer to all of the Lenders, an offer
(each such offer, a “Change of Control Offer”) at least ten Business Days prior
to the date of prepayment specified in such offer (the “Change of Control
Prepayment Date”) to prepay all Loans then outstanding at an offer price in cash
in an amount equal to:

(i) if after giving pro forma effect to such Change of Control and all related
repayments of Debt the Asset Coverage Ratio would be at least 1.35 to 1.0, 101%
of the aggregate principal amount of the Loans, plus accrued and unpaid interest
(if any) as of the date of such repurchase; and

(ii) if after giving pro forma effect to such Change of Control and all related
repayments of Debt the Asset Coverage Ratio would be less than 1.35 to 1.0, the
greater of (A) 101% of the aggregate principal amount of the Loans repurchased
and (B) 100% of the aggregate principal amount of the Loans repurchased plus the
Applicable Premium in effect on the date of such repurchase,

 

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in each case, together with all accrued and unpaid interest (if any) as of the
date of such purchase.

(b) Each Lender may accept all or a portion of its Pro Rata share of any Change
of Control Offer by providing an Acceptance Notice to Agent and the Borrower no
later than 5:00 p.m. five Business Days prior to the Change of Control
Prepayment Date. Each Acceptance Notice delivered by a Lender shall specify the
principal amount of the Loans to be purchased from such Lender; provided that if
such Lender fails to specify any such amount, it shall be deemed to have
requested that the Borrower purchase the full amount of its Loans. If a Lender
fails to deliver an Acceptance Notice to Agent within the time frame specified
above, such failure will be deemed a full rejection of such Change of Control
Offer. Any Declined Amounts shall no longer be subject to this Section 5.4 and
may be used by the Borrower in any way not prohibited by this Agreement.

(c) If the aggregate principal amount of Loans requested to be repaid exceeds
the aggregate amount to be repaid by the Borrower pursuant to Section 5.4.3(b),
Agent shall apply the amounts to be repaid by the Borrower to the Loans
requested to be repaid on a pro rata basis based on the principal amount of such
Loans.

(d) Provided that the Borrower complies in all respects with subsections (a) and
(b) of this Section 5.4.3, all Loans subject to the Change of Control Offer
shall cease to accrue interest on the Change of Control Payment Date.

5.4.4 No Premium. For the avoidance of doubt and notwithstanding anything herein
to the contrary, the Applicable Premium shall not be payable in connection with
any repayment of Loans pursuant to this Section 5.4 (other than as required
pursuant to Section 5.4.3(a)(ii)).

5.5 Payment of Applicable Premium. With respect to each repayment or prepayment
of Loans under Sections 5.3.1, 5.3.2 and 5.4.3, if applicable, any acceleration
of the Loans and other Obligations pursuant to Section 12.2 or assignment of the
Loans of any Lender under Section 14.4(a), whether voluntary or mandatory, the
Borrower shall be required to pay with respect to the amount of the Loans
repaid, prepaid or assigned, in each case, concurrently with such repayment,
prepayment or assignment the following amount (the “Applicable Premium”):

(a) if made prior to the first anniversary of the Closing Date, the Make-Whole
Amount;

(b) if made on or after the first anniversary of the Closing Date and before the
second anniversary of the Closing Date, a cash amount equal to the product of
the principal amount of the Loans prepaid times 6.00%;

(c) if made on or after the second anniversary of the Closing Date and before
the third anniversary of the Closing Date, a cash amount equal to the product of
the principal amount of the Loans prepaid times 3.00%; and

(d) if made on or after the third anniversary of the Closing Date, $0.

 

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IT IS UNDERSTOOD AND AGREED THAT IF THE LOANS ARE ACCELERATED OR OTHERWISE
BECOME DUE PRIOR TO THEIR MATURITY DATE, INCLUDING WITHOUT LIMITATION AS A
RESULT OF ANY EVENT OF DEFAULT DESCRIBED UNDER SECTION 12.1(h), THE APPLICABLE
PREMIUM WILL ALSO AUTOMATICALLY BE DUE AND PAYABLE AS THOUGH THE LOANS WERE
BEING PREPAID OR ASSIGNED (OR AMENDED OR OTHERWISE MODIFIED PURSUANT TO SUCH
AMENDMENT) AND SHALL CONSTITUTE PART OF THE OBLIGATIONS WITH RESPECT TO THE
LOANS.

5.6 Payment of Other Obligations. Obligations other than Loans, including
Extraordinary Expenses, shall be paid by the Borrower as provided in the Loan
Documents or, if no payment date is specified, on demand.

5.7 Marshaling; Payments Set Aside. None of Agent or Lenders shall be under any
obligation to marshal any assets in favor of any Obligor or against any
Obligations. If any payment by or on behalf of the Borrower is made to Agent or
any Lender, or if Agent or any Lender exercises a right of setoff, and any of
such payment or setoff is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by Agent or a Lender in its discretion) to be repaid to a trustee,
receiver or any other Person, then the Obligation originally intended to be
satisfied, and all Liens, rights and remedies relating thereto, shall be revived
and continued in full force and effect as if such payment or setoff had not
occurred.

5.8 Application and Allocation of Payments.

5.8.1 Application. Payments made by the Borrower hereunder shall be applied:

(a) first, as specifically required hereby;

(b) second, to Obligations then due and owing;

(c) third, to other Obligations specified by the Borrower; and

(d) fourth, as determined by Agent in its discretion.

5.8.2 Post-Default Allocation. Notwithstanding anything in any Loan Document to
the contrary, during an Event of Default, monies to be applied to the
Obligations, whether arising from payments by Obligors, realization on
Collateral, setoff or otherwise, shall be allocated as follows (subject to the
terms of the Intercreditor Agreement):

(a) first, to all fees, indemnification, costs and expenses, including
Extraordinary Expenses, owing to Agent;

(b) second, to all amounts owing to Agent on Loans and participations that a
Defaulting Lender has failed to settle or fund;

 

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(c) third, to all Obligations constituting fees, indemnification, costs or
expenses owing to the Lenders;

(d) fourth, to all Obligations constituting interest;

(e) fifth, to all Loans; and

(f) last, to all remaining Obligations.

Amounts shall be applied to payment of each category of Obligations only after
Full Payment of amounts payable from time to time under all preceding
categories. If amounts are insufficient to satisfy a category, they shall be
paid ratably among outstanding Obligations in the category. The allocations set
forth in this Section 5.8 are solely to determine the rights and priorities
among Secured Parties, and may be changed by agreement of the affected Secured
Parties, without the consent of any Obligor. This Section 5.8 is not for the
benefit of or enforceable by any Obligor, and the Borrower irrevocably waives
the right to direct the application of any payments or Collateral proceeds
subject to this Section 5.8.

5.8.3 Erroneous Application. Agent shall not be liable for any application of
amounts made by it in good faith and, if any such application is subsequently
determined to have been made in error, the sole recourse of any Lender or other
Person to which such amount should have been made shall be to recover the amount
from the Person that actually received it (and, if such amount was received by a
Secured Party, the Secured Party agrees to return it).

5.9 Account Stated. Agent shall maintain, in accordance with its customary
practices, loan account(s) evidencing the Debt of the Borrower hereunder. Any
failure of Agent to record anything in a loan account, or any error in doing so,
shall not limit or otherwise affect the obligation of the Borrower to pay any
amount owing hereunder. Entries made in a loan account shall constitute
presumptive evidence of the information contained therein. If any information
contained in a loan account is provided to or inspected by any Person, the
information shall be conclusive and binding on such Person for all purposes
absent manifest error, except to the extent such Person notifies Agent in
writing within 30 days after receipt or inspection that specific information is
subject to dispute.

5.10 Taxes.

5.10.1 Payments Free of Taxes; Obligation to Withhold; Tax Payment.

(a) All payments of Obligations by or on behalf of Obligors shall be made
without deduction or withholding for any Taxes, except as required by Applicable
Law. If Applicable Law (as determined by Agent in its discretion) requires the
deduction or withholding of any Tax from any such payment by Agent or an
Obligor, then Agent or such Obligor shall be entitled to make such deduction or
withholding.

(b) If Agent or any Obligor is required by any Applicable Law to withhold or
deduct Taxes from any payment, then (i) Agent or such Obligor, to the extent
required by Applicable Law, shall apply such withholding or deduction and timely
pay the full amount to be withheld or deducted to the relevant Governmental
Authority, and (ii) to the extent the

 

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withholding or deduction is made on account of Indemnified Taxes, the sum
payable by the applicable Obligor shall be increased as necessary so that the
Recipient receives an amount equal to the sum it would have received had no such
withholding or deduction been made.

5.10.2 Payment of Other Taxes. Without limiting the foregoing, the Borrower
shall timely pay to the relevant Governmental Authority in accordance with
Applicable Law, or at Agent’s option, timely reimburse Agent for payment of, any
Other Taxes.

5.10.3 Tax Indemnification.

(a) The Borrower shall indemnify and hold harmless, on a joint and several
basis, each Recipient against any Indemnified Taxes (including those Indemnified
Taxes imposed or asserted on or attributable to amounts payable under this
Section 5.10) payable or paid by a Recipient or required to be withheld or
deducted from a payment to a Recipient, and any penalties, interest and
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. The Borrower shall make payment within 10 days
after demand for any amount or liability payable under this Section 5.10. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender (with a copy to Agent), or by Agent on its own behalf or on
behalf of any Recipient, shall be conclusive absent manifest error.

(b) Each Lender shall indemnify and hold harmless, on a several basis, (i) Agent
against any Indemnified Taxes attributable to such Lender (but only to the
extent Borrower has not already paid or reimbursed Agent therefor and without
limiting Borrower’s obligation to do so), (ii) Agent and Obligors, as
applicable, against any Taxes attributable to such Lender’s failure to maintain
a Participant register as required hereunder, and (iii) Agent and Obligors, as
applicable, against any Excluded Taxes attributable to such Lender that are
payable or paid by Agent or an Obligor in connection with any Obligations, 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. Each Lender shall make payment within 10 days after
demand for any amount or liability payable under this Section 5.10. A
certificate as to the amount of such payment or liability delivered to any
Lender by Agent shall be conclusive absent manifest error.

5.10.4 Evidence of Payments. If Agent or an Obligor pays any Taxes pursuant to
this Section 5.10, then upon request, Agent shall deliver to the Borrower or the
Borrower shall deliver to Agent, respectively, a copy of a receipt issued by the
appropriate Governmental Authority evidencing the payment, a copy of any return
required by Applicable Law to report the payment, or other evidence of payment
reasonably satisfactory to Agent or the Borrower, as applicable.

5.10.5 Treatment of Certain Refunds. Unless required by Applicable Law, at no
time shall Agent have any obligation to file for or otherwise pursue on behalf
of a Lender, nor have any obligation to pay to any Lender, any refund of Taxes
withheld or deducted from funds paid for the account of a Lender. If a Recipient
determines in its discretion, exercised in good faith, that it has received a
refund of any Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this

 

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Section 5.10, it shall pay the Borrower an amount equal to such refund (but only
to the extent of indemnity payments made, or additional amounts paid, by the
Borrower with respect to the Taxes giving rise to such refund), net of all
out-of-pocket expenses (including Taxes) incurred by such Recipient, and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund), provided that the Borrower agrees, upon request by
the Recipient, to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Recipient if the Recipient is required to repay such refund to
the Governmental Authority. Notwithstanding anything herein to the contrary, no
Recipient shall be required to pay any amount to the Borrower if such payment
would place the Recipient in a less favorable net after-Tax position than it
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 with respect to such Tax had
never been paid. In no event shall Agent or any Recipient be required to make
its tax returns (or any other information relating to its Taxes that it deems
confidential) available to any Obligor or other Person.

5.10.6 Survival. Each party’s obligations under Sections 5.10 and 5.11 shall
survive the resignation or replacement of Agent or any assignment of rights by
or replacement of a Lender and the repayment, satisfaction, discharge or Full
Payment of any Obligations.

5.11 Lender Tax Information.

5.11.1 Status of Lenders. Any Lender that is entitled to an exemption from or
reduction of withholding Tax with respect to payments of Obligations shall
deliver to the Borrower and Agent properly completed and executed documentation
reasonably requested by the Borrower or Agent as will permit such payments to be
made without or at a reduced rate of withholding. In addition, any Lender, if
reasonably requested by the Borrower or Agent, shall deliver such other
documentation prescribed by Applicable Law or reasonably requested by the
Borrower or Agent to enable them to determine whether such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding the
foregoing, such documentation (other than documentation described in Sections
5.11.2(a), (b) and (d)) shall not be required if a Lender reasonably believes
delivery of the documentation would subject it to any material unreimbursed cost
or expense or would materially prejudice its legal or commercial position.

5.11.2 Documentation. Without limiting the foregoing, if the Borrower is a U.S.
Person,

(a) Any Lender that is a U.S. Person shall deliver to the Borrower and Agent on
or prior to the date on which such Lender becomes a Lender hereunder (and from
time to time thereafter upon reasonable request of the Borrower or Agent),
executed originals of IRS Form W-9, certifying that such Lender is exempt from
U.S. federal backup withholding Tax;

(b) Any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender hereunder (and from time to time thereafter upon reasonable
request of the Borrower or Agent), whichever of the following is applicable:

(i) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party, (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN or
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 other payments under the Loan Documents, IRS Form W-8BEN
or 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;

 

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(ii) executed originals of IRS Form W-8ECI;

(iii) 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 in form
satisfactory to Agent to the effect that such Foreign Lender is not a “bank”
within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent
shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the
Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of
the Code (“U.S. Tax Compliance Certificate”), and (y) executed originals of IRS
Form W-8BEN or W-8BEN-E, as applicable; or

(iv) to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or
W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate in form satisfactory
to Agent, 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 on behalf of each such direct and indirect
partner;

(c) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower and Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender hereunder (and from time to time thereafter upon the reasonable
request of the Borrower or Agent), executed originals of any other form
prescribed by Applicable Law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Tax, duly completed, together with such
supplementary documentation as may be prescribed by Applicable Law to permit the
Borrower or Agent to determine the withholding or deduction required to be made;
and

(d) if payment of an Obligation to a Recipient would be subject to U.S. federal
withholding Tax imposed by FATCA if such Recipient were to fail to comply with
the applicable reporting requirements of FATCA (including those contained in
Section 1471(b) or 1472(b) of the Code), such Recipient shall deliver to the
Borrower and Agent at the time(s) prescribed by law and otherwise as reasonably
requested by the Borrower or Agent such documentation prescribed by Applicable
Law (including Section 1471(b)(3)(C)(i) of the Code)

 

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and such additional documentation reasonably requested by the Borrower or Agent
as may be necessary for them to comply with their obligations under FATCA and to
determine that such Recipient has complied with its 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 hereof.

5.11.3 Agent Documentation. On or before the date Cortland Corp. and Cortland
LLC becomes Agent hereunder, it shall (and any successor or replacement Agent
shall, on or before the date on which it becomes Agent hereunder), deliver to
the Borrower two duly executed originals 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 the Borrower can
make payments to Agent without deduction or withholding of any Taxes imposed by
the United States, including Taxes imposed under FATCA.

5.11.4 Redelivery of Documentation. If any form or certification previously
delivered by a Lender or Agent pursuant to this Section 5.11 expires or becomes
obsolete or inaccurate in any respect, such Lender or Agent, as applicable,
shall promptly update the form or certification or notify the Borrower and Agent
in writing of its inability to do so.

 

SECTION 6. CONDITIONS PRECEDENT

6.1 Conditions Precedent to Effectiveness. This Agreement will not become
effective until the date (“Closing Date”) that each of the following conditions
has been satisfied (or waived in accordance with this Agreement):

(a) each Loan Document shall have been duly executed and delivered to Agent by
each of the signatories thereto, and each Obligor shall be in compliance with
all terms thereof, in each case subject to the post-closing collateral
requirements set forth in Section 7.3.3;

(b) Agent shall have received acknowledgments of all filings or recordations
necessary to perfect its Liens in the Collateral or arrangements reasonably
satisfactory to Agent for such filings and recordations shall have been made
(and all filing and recording fees and taxes in connection therewith shall have
been duly paid or arrangements reasonably satisfactory to Agent for the payment
of such fees and taxes shall have been made), as well as UCC and Lien searches
and other evidence reasonably satisfactory to Agent that such Liens are the only
Liens upon such Collateral, except Permitted Liens, in each case subject to the
post-closing collateral requirements set forth in Section 7.3.3;

(c) Agent shall have received a true, correct and complete copy of the ABL
Credit Agreement and the aggregate amount of the commitments in respect of ABL
Loans as of the Closing Date shall not be less than $50,000,000;

(d) Agent shall have received certificates, in form and substance reasonably
satisfactory to it, from a knowledgeable Senior Officer of the Borrower
certifying that, after giving effect to the initial Loans and transactions
hereunder, (i) the Borrower and the Obligors, taken as a whole, are Solvent;
(ii) no Default exists; (iii) the representations and warranties set forth in
Section 9 are true and correct in all material respects, except to the extent
that such representations and warranties expressly relate solely to an earlier
date (in which case such

 

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representations and warranties shall have been true and correct in all material
respects on and as of such earlier date); and (iv) the Borrower has complied
with all agreements and conditions to be satisfied by it under the Loan
Documents;

(e) Agent shall have received a certificate of a duly authorized officer of each
Obligor, certifying (i) that attached copies of such Obligor’s Organic Documents
are true and complete, and in full force and effect, without amendment except as
shown; (ii) that an attached copy of resolutions authorizing execution and
delivery of the Loan Documents is true and complete, and that such resolutions
are in full force and effect, were duly adopted, have not been amended, modified
or revoked, and constitute all resolutions adopted with respect to this credit
facility; (iii) that an attached copy of the Confirmation Order authorizing
execution and delivery of this Agreement and the Definitive Restructuring
Documents (as defined in the Plan Support Agreement), is in full force and
effect, and not subject to a stay; and (iv) to the title, name and signature of
each Person authorized to sign the Loan Documents. Agent may conclusively rely
on this certificate until it is otherwise notified by the applicable Obligor in
writing;

(f) Agent shall have received a customary written opinion of Sullivan & Cromwell
LLP and Vinson & Elkins LLP, counsel to the Borrower, in form and substance
reasonably satisfactory to Agent;

(g) Agent shall have received good standing certificates (to the extent
available in such Obligor’s jurisdiction of organization) for each Obligor,
issued by the Secretary of State or other appropriate official of such Obligor’s
jurisdiction of organization;

(h) Agent shall have received copies of policies or certificates of insurance
for the insurance policies carried by the Borrower;

(i) a Material Adverse Effect (as defined in the Backstop Agreement in effect as
of September 21, 2016) shall not have occurred after the date the Plan Support
Agreement is executed;

(j) the Borrower shall have paid all reasonable and documented fees and expenses
to be paid to Agent and Lenders on the Closing Date including the fees payable
pursuant to the Agency Letter (provided that invoices for expenses shall have
been delivered to the Borrower at least two (2) Business Days prior to the
Closing Date);

(k) (i) all conditions precedent to the confirmation and effectiveness of the
Prepackaged Plan, as set forth in the Prepackaged Plan, shall have been
satisfied or waived in accordance with the terms thereof, (ii) the Bankruptcy
Court shall have entered the Confirmation Order, and such Confirmation Order
shall be a Final Order (it being understood and agreed that the Agent and
Lenders have waived the requirement that such Confirmation Order be a Final
Order), (iii) the effective date under the Prepackaged Plan shall have occurred
(and all conditions precedent thereto as set forth therein shall have been
satisfied or waived in accordance with the terms thereof), (iv) substantial
consummation under the Prepackaged Plan shall have occurred, and (v) no motion,
action or proceeding by any creditor or other party-in-interest to the Chapter
11 Cases which could materially adversely affect the Prepackaged Plan, the
consummation of the Prepackaged Plan, the business or operations of the Borrower
or the transactions contemplated by this Agreement or the Prepackaged Plan shall
be pending;

 

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(l) Agent shall have received a certificate of a duly authorized Senior Officer
of the Borrower, demonstrating that, after giving effect to all payments
required to be made or funded by the Debtors under the Prepackaged Plan on or
before the effective date of the Prepackaged Plan (including on account of
accrued and unpaid professional fees and expenses but excluding any fees or
expenses paid or to be paid under the Corporate Advisory Services Agreement (as
defined in the Prepackaged Plan)), the Reorganized Debtors (as defined in the
Prepackaged Plan) will have on the effective date of the Prepackaged Plan, on a
pro forma basis after giving effect to the funding of the Primary Rights
Offering (including by the Backstop Participants pursuant to the Backstop
Commitment) and any funding of the Incremental Liquidity Rights Offering (as
such terms are defined in the Prepackaged Plan), the Minimum Liquidity;

(m) Agent shall have received evidence that the Original Credit Agreement has
been, or concurrently with the Initial Loans on the Closing Date is being,
terminated and all Liens securing obligations under the Original Credit
Agreement have been, or concurrently with the Initial Loans on the Closing Date
are being, released; and

(n) Agent shall have received, at least three Business Days prior to the Closing
Date, all documentation and other information required by Governmental
Authorities under applicable “know your customer” and anti-money laundering
rules and regulations, including the PATRIOT Act (including, but not limited to,
the Borrower’s W-9), that has been reasonably requested in writing at least 10
Business Days prior to the Closing Date by the Lenders.

For purposes of determining whether the conditions specified in this Section 6.1
have been satisfied, by releasing its signature page hereto, Agent and each
Lender shall be deemed to have consented to, approved or accepted or waived, or
to be satisfied with, each document or other matter required hereunder to be
consented to or approved by or acceptable or satisfactory to Agent or such
Lender, as the case may be.

 

SECTION 7. COLLATERAL

7.1 Grant of Security Interest. To secure the prompt payment and performance of
its Obligations, each Obligor hereby grants to Agent, for the benefit of Secured
Parties, a continuing security interest in and Lien upon all Property of such
Obligor, including all of the following Property, whether now owned or hereafter
acquired, and wherever located:

(a) all Accounts;

(b) all Chattel Paper, including electronic chattel paper;

(c) all Commercial Tort Claims, including those shown on Schedule 7.4.1;

(d) all Deposit Accounts;

 

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(e) all Documents;

(f) all General Intangibles, including Intellectual Property;

(g) all Goods, including Inventory, Equipment and fixtures;

(h) all Instruments;

(i) all Investment Property;

(j) all Letter-of-Credit Rights;

(k) all Supporting Obligations;

(l) all Vehicles;

(m) all monies, whether or not in the possession or under the control of Agent,
a Lender, or a bailee or Affiliate of Agent or a Lender, including any Cash
Collateral;

(n) all accessions to, substitutions for, and all replacements, products, and
cash and non-cash proceeds of the foregoing, including proceeds of and unearned
premiums with respect to insurance policies, and claims against any Person for
loss, damage or destruction of any Collateral;

(o) all books and records (including customer lists, files, correspondence,
tapes, computer programs, print-outs and computer records) pertaining to the
foregoing; and

(p) all products and proceeds of the foregoing, in any form, including insurance
proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.

Notwithstanding anything herein to the contrary, in no event shall the security
interest attach to, or the term “Collateral” be deemed to include, any of the
Property set forth in Section 7.7.

7.2 Lien on Deposit Accounts; Cash Collateral.

7.2.1 Deposit Accounts and Securities Accounts. To further secure the prompt
payment and performance of its Obligations, each Obligor hereby grants to Agent
a continuing security interest in and Lien upon all amounts credited to any
Deposit Account or Securities Account of such Obligor, including sums in any
blocked, lockbox, sweep or collection account; provided that, subject to the
Intercreditor Agreement, any security interest in any Deposit Account or
Securities Account other than the TL Proceeds and Priority Collateral Account
shall have second priority to the security interests of the ABL Agent (and
subject to Permitted Liens (x) in favor of the account bank and (y) that have
priority by operation of law). Each Obligor hereby authorizes and directs each
bank, other depository or securities intermediary to deliver to Agent, upon
request of Agent, all balances in any Deposit Account or Securities Account
maintained for such Obligor, without inquiry into the authority or right of
Agent to make such request. Agent hereby agrees that it will not issue any such
request unless an Event of Default has occurred and is continuing.

 

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7.2.2 Cash Collateral. Cash Collateral may be invested, at Agent’s discretion
(and with the consent of the Borrower, as long as no Event of Default exists),
but Agent shall have no duty to do so, regardless of any agreement or course of
dealing with any Obligor, and shall have no responsibility for any investment or
loss. As security for its Obligations, each Obligor hereby grants to Agent a
security interest in and Lien upon all Cash Collateral held from time to time
and all proceeds thereof, whether held in a Cash Collateral Account or
otherwise. After an Event of Default has occurred and is continuing, Agent may
apply Cash Collateral to the payment of such Obligations as they become due, in
such order as Agent may elect. Subject to the terms of the Intercreditor
Agreement, each Cash Collateral Account and all Cash Collateral shall be under
the sole dominion and control of Agent, and no Obligor or other Person shall
have any right to any Cash Collateral, until Full Payment of the Obligations.

7.3 Real Estate Collateral and Vehicles.

7.3.1 Lien on Real Estate. (a) If, after the Closing Date, any Obligor acquires
(x) any Restricted Subsidiary that owns Material Real Property or (y) any
Material Real Property, other than, in each case, Real Estate constituting
Excluded Property, or if any Real Estate ceases to be Excluded Property, the
Obligors shall, within 90 days (as may be extended by Agent in its sole
discretion), with respect to such Material Real Property, (i) execute, deliver
and record a Mortgage sufficient to create a perfected Lien in favor of Agent,
(ii) deliver a customary opinion of local counsel in the state in which such
Material Real Property is located as to such Mortgage, (iii) to the extent
required by applicable law, acknowledge receipt of any life-of-loan flood hazard
determination procured by Agent or any Lender; (iv) deliver to Agent such
existing documents, instruments or agreements as Agent may reasonably request
with respect to any environmental risks regarding such Real Estate; (v) upon
request, deliver to Agent any existing survey of such Material Real Property;
and (vi) (A) upon the reasonable request of Agent, deliver to Agent a title
report for all Real Estate referred to in clause (i) of this Section 7.3.1(a)
with a net book value between $250,000 and $500,000, and (B) deliver a mortgagee
title policy (or “marked” title commitment therefor) for all Real Estate
referred to in this Section 7.3.1(a) with a net book value in excess of
$500,000, in form and substance reasonably acceptable to Agent, having a value
not in excess of the fair market value of such Real Estate covering Agent’s
interest under the Mortgage, by an insurer reasonably acceptable to Agent (which
must be fully paid on such effective date); provided, that the Borrower shall
not be obligated to deliver any mortgage title policies to the extent doing so
would require the Borrower to obtain new surveys, zoning letters, appraisals, or
environmental assessments of such Real Estate, and (b) within 90 days or such
longer period as Agent may agree (such extensions not to be unreasonably
withheld, delayed or conditioned), the Obligors shall use commercially
reasonable efforts to (i) transfer all leased Real Estate and all owned Real
Estate, in each case acquired after the Closing Date and not constituting
Excluded Property, if not required to be secured by a Mortgage pursuant to
clause (a) above, to the SPV and, upon request of Agent, provide evidence of
same; provided that such commercially reasonable efforts shall not require the
Obligors to (A) pay consent or similar fees to counterparties to leases or other
contracts in order to effect such transfers or (B) transfer any lease to the
extent that a grant of a perfected security interest in the equity interests in
the SPV would violate or invalidate such lease or create a right of termination
in favor of any other party thereto, and (ii) grant to Agent a perfected
security interest in the equity interests in the SPV (to the extent not then in
place).

 

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7.3.2 Vehicles. If any Obligor acquires a Vehicle that does not constitute
Excluded Property or a Vehicle that is a Specified Vehicle (or if any Vehicle
ceases to be Excluded Property), Obligors shall, within 90 days (as may be
extended by Agent in its sole discretion), execute and deliver such documents
and take such actions (including notation on the certificate of title) as Agent
may reasonably request to create a perfected Lien in favor of Agent on such
Vehicle.

7.3.3 Post-Closing Collateral. The Borrower shall, and shall cause each other
Obligor to, as promptly as reasonably practicable, but in no event later than
the number of days after the Closing Date applicable to each clause set forth
below as any such period may be extended by Agent (such extensions not to be
unreasonably withheld, delayed or conditioned), provide the items or perform the
actions listed below (the assets subject to the below requirements,
collectively, the “Post-Closing Collateral” and the time periods relating
thereto, the “Post-Closing Collateral Period”):

(a) within 90 days following the Closing Date, the Obligors shall, with respect
to the owned Real Estate set forth on Schedule 1.1(C)(the “Closing Date
Mortgaged Real Property”), (i) execute, deliver and record to Agent a Mortgage
sufficient to create a perfected Lien in favor of Agent, (ii) deliver to Agent a
customary opinion of local counsel in the state in which such Closing Date
Mortgaged Real Property is located as to such Mortgage, (iii) to the extent
required by applicable law, acknowledge receipt of any life-of-loan flood hazard
determination procured by Agent or any Lender; (iv) deliver to Agent any
existing documents, instruments or agreements as Agent may reasonably request
with respect to any environmental risks regarding such Real Estate; (v) upon
request, deliver to Agent any existing survey of such Closing Date Mortgaged
Real Property; and (vi) (A) upon the reasonable request of Agent, deliver to
Agent a title report for all Closing Date Mortgaged Real Property with an
estimated emergence net book value between $175,000 and $400,000 as set forth on
Schedule 1.1(C), and (B) deliver to Agent a mortgagee title policy (or “marked”
title commitment therefor) for all Closing Date Mortgaged Real Property with an
estimated emergence net book value in excess of $400,000 as set forth on
Schedule 1.1(C), in form and substance reasonably acceptable to Agent, having a
value not in excess of the fair market value of such Real Estate covering
Agent’s interest under the Mortgage, by an insurer reasonably acceptable to
Agent (which must be fully paid on such effective date); provided, that the
Borrower shall not be obligated to deliver any mortgage title policies to the
extent doing so would require the Borrower to obtain new surveys, zoning
letters, appraisals, or environmental assessments of such Real Estate.

(b) within 90 days following the Closing Date the Obligors shall use
commercially reasonable efforts to (i) transfer all leased Real Estate (other
than the Borrower’s principal office) and all owned Real Estate not secured by a
Mortgage (and in any event shall transfer owned Real Estate accounting for at
least 90% of the aggregate net book value of all applicable Real Estate) to the
SPV; provided that such commercially reasonable efforts shall not require the
Obligors to pay consent or similar fees to counterparties to leases or other
contracts in order to effect such transfers, and (ii) grant to Agent a perfected
security interest in the equity interests in the SPV;

 

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(c) the Obligors shall use commercially reasonable efforts to create a perfected
Lien in favor of Agent on each Vehicle that does not constitute Excluded
Property that is not currently subject to a perfected security interest in favor
of Agent within 360 days following the Closing Date;

(d) other than as provided in Sections 7.3.3(a) through (c), the Obligors shall
not be required to provide any leasehold mortgages or any Related Real Estate
Documents with respect to any Mortgaged Property;

(e) Within 30 days of the Closing Date, the Borrower shall deliver a liability
insurance certificate along with endorsements to the liability insurance
policies of the Obligors or other evidence in form and substance reasonably
acceptable to the Agent to the effect that the Agent and the Lenders are
additional insureds under the liability insurance policies of the Obligors; and

(f) within 30 days of the Closing Date (or such longer period as Agent may agree
in its reasonable discretion), the Obligors shall deliver a Securities Account
Control Agreement with respect to Account no. xxxxxx01 maintained at Wells Fargo
Securities, LLC signed by Wells Fargo Securities, LLC, in the form previously
agreed to or such other form reasonably satisfactory to Agent.

7.4 Other Collateral.

7.4.1 Commercial Tort Claims. Except as shown on Schedule 7.4.1, as of the
Closing Date, no Obligor has a Commercial Tort Claim (other than a Commercial
Tort Claim for less than $5,000,000). Obligors shall promptly notify Agent in
writing if any Obligor has a Commercial Tort Claim (other than a Commercial Tort
Claim for less than $5,000,000), shall promptly amend Schedule 7.4.1 to include
such claim, and shall take such actions as Agent deems appropriate to subject
such claim to a duly perfected, first priority (or subject to the Intercreditor
Agreement, second priority) Lien in favor of Agent.

7.4.2 Certain After-Acquired Collateral. Obligors shall promptly notify Agent in
writing if, after the Closing Date, the Borrower obtains any interest in any
Collateral consisting of (a) Deposit Accounts (other than an Excluded Account),
(b) Intellectual Property that is material to such Obligor’s business or
(c) Chattel Paper, Documents, Instruments or Investment Property, in each case
with an individual value of or face amount in excess of $1,000,000 and, upon
Agent’s request, shall promptly take such actions as Agent deems appropriate to
effect Agent’s duly perfected, first priority (or subject to the Intercreditor
Agreement, second priority) Lien upon such Collateral, including obtaining any
appropriate possession, control agreement or Lien Waiver. If any Collateral is
in the possession of a third party, at Agent’s request, Obligors shall use
commercially reasonable efforts to obtain an acknowledgment that such third
party holds the Collateral for the benefit of Agent.

7.5 Limitations. The Lien on Collateral granted hereunder is given as security
only and shall not subject Agent or any Lender to, or in any way modify, any
obligation or liability of Obligors relating to any Collateral.

 

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7.6 Further Assurances. All Liens granted to Agent under the Loan Documents are
for the benefit of Secured Parties. Promptly upon request, Obligors shall
deliver such instruments and agreements, and shall take such actions, as Agent
deems appropriate under Applicable Law to evidence or perfect its Lien on any
Collateral. Each Obligor authorizes Agent to file any financing statement that
describes the Collateral as “all assets” or “all personal property” of such
Obligor, or words to similar effect, and ratifies any action taken by Agent
before the Closing Date to effect or perfect its Lien on any Collateral.

7.7 Certain Limited Exclusions.

(a) Notwithstanding Section 7.1, the Collateral shall not include, and no
Obligor shall be deemed to have granted a security interest in, any of such
Obligor’s right, title or interest in:

(i) any Excluded Property;

(ii) Letter-of-Credit Rights (other than to the extent such rights can be
perfected by filing a UCC financing statement);

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

(iv) pledges and security interests prohibited or restricted by Applicable Law
(including any requirement to obtain the consent of any Governmental Authority,
unless such consent has been obtained (it being understood that there shall be
no obligation to obtain such consent)) (after giving effect to the applicable
anti-assignment provisions of the UCC, the assignment of which is expressly
deemed effective under the UCC or other applicable law notwithstanding such
prohibition);

(v) (1) Property subject to a purchase money security agreement or capital lease
agreement evidencing or governing purchase money and capital lease obligations
that are permitted to be incurred pursuant to the Loan Documents to the extent
the granting of a security interest therein is validly prohibited thereby or
otherwise requires consent (but only so long as such prohibition or consent
requirement was not created in contemplation or anticipation of the Collateral
requirements under the Loan Documents) and/or (2) any lease, license, permit or
agreement or any property subject to such agreement, in each case in existence
on the Closing Date or upon acquisition of the relevant Obligor party thereto,
to the extent that a grant of a security interest therein would violate or
invalidate such lease, license, permit or agreement or create a right of
termination in favor of any other party thereto or otherwise require consent
thereunder (after giving effect to the applicable anti-assignment provisions of
the UCC or other Applicable Law, the assignment of which is expressly deemed
effective under the UCC or other applicable law notwithstanding such
prohibition), but only so long as such restriction or consent requirement was
not created in contemplation or anticipation of the Collateral requirements
under the Loan Documents;

 

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

(vii) Equity Interests in captive insurance Subsidiaries;

(viii) interests in joint ventures and non-wholly owned Subsidiaries which
cannot be pledged without the consent of third parties (but only so long as such
consent requirement was not created in contemplation or anticipation of the
Collateral requirements under the Loan Documents);

(ix) payroll, employee benefits, withholding tax and other fiduciary deposit
accounts;

(x) voting Equity Interests in excess of 66% in any CFC that is directly owned
by one or more Domestic Subsidiaries;

(xi) any assets (including any Equity Interests) owned by a Foreign Subsidiary;
and

(xii) other Property to the extent Agent determines that the cost of obtaining
or perfecting a lien or security interest therein is excessive in relation to
the benefit afforded to the Lenders thereby.

(b) Obligors shall not be required to (i) take any action under the law of any
non-U.S. jurisdiction to create or perfect a security interest in such assets,
including any intellectual property registered in any non-U.S. jurisdiction (and
no security agreements or pledge agreements governed under the laws of any
non-U.S. jurisdiction shall be required) or (ii) deliver any leasehold mortgages
and shall only be required to use commercially reasonable efforts to deliver
landlord waivers, estoppels or collateral access letters to the extent
reasonably requested by Agent.

7.8 Intercreditor Agreement. Notwithstanding anything herein to the contrary,
the liens and security interests granted to Agent pursuant to this Agreement and
the exercise of any right or remedy by Agent hereunder are subject to the
provisions of the Intercreditor Agreement. In the event of any conflict between
the terms of the Intercreditor Agreement and this Agreement, the terms of the
Intercreditor Agreement shall govern and control.

 

SECTION 8. COLLATERAL ADMINISTRATION

8.1 TL Proceeds and Priority Collateral Account. The TL Proceeds and Priority
Collateral Account and funds on deposit therein shall at all times be subject to
a Deposit Account Control Agreement and a perfected, first-priority Lien
(subject to Permitted Liens (x) in favor of the account bank and (y) that have
priority by operation of law) in favor of Agent. Funds on deposit in the TL
Proceeds and Priority Collateral Account on the Closing Date, together with
identifiable proceeds of Asset Dispositions of Term Priority Collateral, and
identifiable proceeds

 

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of insurance resulting from casualty of the Term Priority Collateral and of
awards arising from condemnation of the Term Priority Collateral to the extent
deposited in the TL Proceeds and Priority Collateral Account, (i) may not be
commingled with any other funds and (ii) shall at all times remain segregated
funds, separate and apart from any other funds of the Borrower and its
Subsidiaries. Funds kept in the TL Proceeds and Priority Collateral Account may
only be transferred to other deposit accounts of the parties to this Agreement
if and to the extent such funds are to be disbursed to third parties in
transactions not prohibited by the terms hereof and such transfer occurs
substantially concurrently with or reasonably in advance of such disbursement.

8.2 Equipment.

8.2.1 Records and Schedules of Equipment. Each Obligor shall keep accurate and
complete records in all material respects of its Equipment, including kind,
quality, quantity, cost, acquisitions and dispositions thereof, and shall submit
to Agent, on such periodic basis as Agent may reasonably request, a current
schedule thereof, in form reasonably satisfactory to Agent. Promptly upon
request, Obligors shall deliver to Agent evidence of their ownership or
interests in any Equipment.

8.2.2 Condition of Equipment. With respect to the Obligors’ obligations in
connection with the operation of their business, the Equipment is in good
operating condition and repair, and all necessary replacements and repairs have
been made so that the value and operating efficiency of such Equipment is
preserved at all times, reasonable wear and tear excepted. Each Obligor shall
ensure that such Equipment is mechanically and structurally sound, and capable
of performing the functions for which it was designed, in accordance with
manufacturer specifications. No Borrower shall permit any Equipment having a
value in excess of $2,500,000 to become affixed to real Property unless any
landlord or mortgagee delivers a Lien Waiver.

8.3 Deposit Accounts and Securities Accounts. Schedule 8.3 sets forth all
Deposit Accounts and Securities Accounts maintained by the Borrower and other
Obligors as of the Closing Date. Subject to the terms of the Intercreditor
Agreement, each of the Borrower and other Obligors shall take all commercially
reasonable actions necessary to establish Agent’s control of each such Deposit
Account or Securities Account (other than (a) an account exclusively used for
payroll, employee benefits, withholding tax and other fiduciary deposit accounts
and, to the extent an account is established to hold cash pledged in connection
with a Lien permitted pursuant to Section 10.2.2(l), such account, (b) escrow,
defeasance and discharge accounts which are required to be established pursuant
to the terms of related documents in connection with consummation of
transactions otherwise permitted by the terms of this Agreement, and
(c) accounts containing not more than $2,500,000 for all such accounts at any
time (each an “Excluded Account” and collectively for all such accounts in
clauses (a) and (b) above, the “Excluded Accounts”)). The Borrower and each
other Obligor shall be the sole account holders of each Deposit Account and
Securities Account and shall not allow any other Person (other than Agent and,
subject to the Intercreditor Agreement, the ABL Agent) to have control over a
Deposit Account, Securities Account or any Property deposited therein. The
Borrower and each other Obligor shall promptly notify Agent of any opening or
closing of a Deposit Account or Securities Account (other than an Excluded
Account) and, with the consent of Agent, will amend Schedule 8.3 to reflect
same.

 

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8.4 General Provisions.

8.4.1 Location of Collateral. All tangible items of Collateral, other than
Inventory in transit, shall at all times be kept by the Borrower at locations
owned or leased by an Obligor, at customer locations or at manufacturer
locations or other locations for the purposes of repair or servicing of such
Collateral, except that the Borrower may make sales or other dispositions of
Collateral in accordance with Section 10.2.9.

8.4.2 Insurance of Collateral; Condemnation Proceeds. Each Obligor shall
maintain insurance with respect to the Collateral in accordance with
Section 10.1.8. From time to time upon request, the Borrower shall provide Agent
with reasonably detailed information as to the insurance so carried. Unless
Agent shall agree otherwise, each policy shall include satisfactory endorsements
(i) showing Agent as loss payee in respect of the property insurance policies
relating to the Collateral and additional insured in respect of the liability
insurance policies, as applicable; (ii) requiring (x) 10 days’ prior written
notice to Agent in the event of cancellation of the policy due to non-payment of
premiums and (y) 30 days’ prior written notice to Agent in the event of
cancellation of the policy for any other reason; and (iii) specifying that the
interest of Agent shall not be impaired or invalidated by any act or neglect of
any Obligor or the owner of the Property, nor by the occupation of the premises
for purposes more hazardous than are permitted by the policy; provided that, so
long as no Event of Default has occurred and is then continuing, Agent will
provide any proceeds of such property insurance to the Borrower for application
in accordance with Section 5.4. If the Borrower fails to provide and pay for any
insurance, Agent may, at its option, but shall not be required to, procure the
insurance and charge the Borrower therefor. While no Event of Default exists,
the Borrower may settle, adjust or compromise any insurance claim, as long as
the proceeds are, subject to the terms of the Intercreditor Agreement, delivered
to Agent. If an Event of Default exists, subject to the terms of the
Intercreditor Agreement, only Agent shall be authorized to settle, adjust and
compromise such claims.

8.4.3 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping any Collateral, all
Taxes payable with respect to any Collateral (including any sale thereof), and
all other payments required to be made by Agent to any Person to realize upon
any Collateral, shall be borne and paid by Obligors. Agent shall not be liable
or responsible in any way for the safekeeping of any Collateral, for any loss or
damage thereto (except for reasonable care in its custody while Collateral is in
Agent’s actual possession), for any diminution in the value thereof, or for any
act or default of any warehouseman, carrier, forwarding agency or other Person
whatsoever, but the same shall be at Borrower’s sole risk.

8.4.4 Defense of Title. Each Obligor shall defend its title to Collateral and
Agent’s Liens therein against all Persons, claims and demands, except Permitted
Liens.

8.5 Power of Attorney. Each Obligor hereby irrevocably constitutes and appoints
Agent (and all Persons designated by Agent) as such Obligor’s true and lawful
attorney (and agent-in-

 

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fact) for the purposes provided in this Section 8.5. Agent, or Agent’s designee,
may, without notice and in either its or an Obligor’s name, but at the cost and
expense of Obligors and subject to the terms of the Intercreditor Agreement:

(a) endorse an Obligor’s name on any Payment Item or other proceeds of
Collateral (including proceeds of insurance) that come into Agent’s possession
or control; and

(b) during an Event of Default to the extent any of the following relates to the
Term Priority Collateral, (i) notify any Account Debtors of the assignment of
their Accounts, demand and enforce payment of Accounts by legal proceedings or
otherwise, and generally exercise any rights and remedies with respect to
Accounts; (ii) settle, adjust, modify, compromise, discharge or release any
Accounts or other Collateral, or any legal proceedings brought to collect
Accounts or Collateral; (iii) sell or assign any Accounts and other Collateral
upon such terms, for such amounts and at such times as Agent deems advisable;
(iv) collect, liquidate and receive balances in Deposit Accounts or investment
accounts, and take control, in any manner, of proceeds of Collateral;
(v) prepare, file and sign an Obligor’s name to a proof of claim or other
document in a bankruptcy of an Account Debtor, or to any notice, assignment or
satisfaction of Lien or similar document; (vi) receive, open and dispose of mail
addressed to an Obligor, and notify postal authorities to deliver any such mail
to an address designated by Agent; (vii) endorse any Chattel Paper, Document,
Instrument, bill of lading, or other document or agreement relating to any
Accounts, Inventory or other Collateral; (viii) use an Obligor’s stationery and
sign its name to verifications of Accounts and notices to Account Debtors;
(ix) use information contained in any data processing, electronic or information
systems relating to Collateral; (x) make and adjust claims under insurance
policies; (xi) take any action as may be necessary or appropriate to obtain
payment under any letter of credit, banker’s acceptance or other instrument for
which an Obligor is a beneficiary; and (xii) take all other actions as Agent
deems appropriate to fulfill any Obligor’s obligations under the Loan Documents.

 

SECTION 9. REPRESENTATIONS AND WARRANTIES

9.1 General Representations and Warranties. To induce Agent and Lenders to enter
into this Agreement and to make available the Loans, the Borrower represents and
warrants that:

9.1.1 Organization; Powers. Each of the Borrower and its Restricted Subsidiaries
is a legal entity duly organized, validly existing and in good standing (to the
extent applicable) under the laws of the jurisdiction of its organization, has
all requisite power and authority, and has all material governmental licenses,
authorizations, consents and approvals necessary, to own its assets and to carry
on its business as now conducted, and is qualified to do business in, and is in
good standing in, every jurisdiction where such qualification is required,
except where failure to have such power, authority, licenses, authorizations,
consents, approvals and qualifications could not reasonably be expected to have
a Material Adverse Effect.

9.1.2 Authority; Enforceability. After giving effect to the Confirmation Order
and the Prepackaged Plan, the Transactions are within each Obligor’s corporate,
limited liability company or partnership powers, as applicable, and have been
duly authorized by all necessary corporate, limited liability company or
partnership, as applicable, and, if required, equity holder action (including,
without limitation, any action required to be taken by any class

 

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of directors or other governing body of the Borrower or any other Person,
whether interested or disinterested, in order to ensure the due authorization of
the Transactions). Each Loan Document to which an Obligor is a party has been
duly executed and delivered by such Obligor and constitutes a legal, valid and
binding obligation of such Obligor, as applicable, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.

9.1.3 Approvals; No Conflicts. After giving effect to the Confirmation Order and
the Prepackaged Plan, the Transactions (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority or any other third Person (including shareholders or
other equity holders or any class of directors or other governing body, whether
interested or disinterested, of the Borrower or any other Person), nor is any
such consent, approval, registration, filing or other action necessary for the
validity or enforceability of any Loan Document or the consummation of the
transactions contemplated thereby, except such as have been obtained or made and
are in full force and effect other than (i) the recording and filing of the
Security Documents as required by this Agreement, and (ii) those third party
approvals or consents which, if not made or obtained, would not cause a Default
hereunder, or could not reasonably be expected to have a Material Adverse
Effect, (b) will not violate any Applicable Law or any Organic Documents of the
Borrower or any Restricted Subsidiary, or any order of any Governmental
Authority, (c) will not violate or result in a default under any Material
Contract, or give rise to a right thereunder to require any payment to be made
by the Borrower or any Restricted Subsidiary and (d) will not result in the
creation or imposition of any Lien on any Property of the Borrower or any
Restricted Subsidiary (other than the Liens created by the Loan Documents).

9.1.4 Financial Condition; No Material Adverse Effect.

(a) The Borrower has heretofore furnished to Agent and the Lenders the
consolidated balance sheet and statements of operations, stockholders’ equity
and cash flows of the Borrower and its Consolidated Subsidiaries as of and for
the Fiscal Year ended December 31, 2015, reported on by Grant Thornton LLP,
independent public accountants. Such financial statements are prepared in
accordance with GAAP and present fairly, in all material respects, the financial
position and results of operations and cash flows of the Borrower and its
Consolidated Subsidiaries as of such date and for such period in accordance with
GAAP.

(b) Since the Closing Date, there has been no event, development or circumstance
that has had or would reasonably be expected to have a Material Adverse Effect.

(c) Neither the Borrower nor any Restricted Subsidiary has, on the date hereof
after giving effect to the Transactions, any Material Debt (including
Disqualified Capital Stock), off-balance sheet liabilities or partnerships,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except for the outstanding
ABL Loans or as referred to or reflected or provided for in the financial
statements delivered to Agent and Lenders as set forth in Schedule 9.1.4.

 

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9.1.5 Litigation. After giving effect to the Confirmation Order and the
Prepackaged Plan, there are no actions, suits, investigations or proceedings by
or before any arbitrator or Governmental Authority pending against or, to the
knowledge of the Borrower, threatened in writing against or affecting the
Borrower or any Restricted Subsidiary or any of their respective Properties
(i) that could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (ii) that involve any Loan Document or
the Transactions.

9.1.6 Environmental Matters. Except for such matters that, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect:

(a) the Borrower and the Subsidiaries and each of their respective Properties
and operations thereon are, and have been for the preceding five years, in
compliance with applicable Environmental Laws;

(b) the Borrower and the Subsidiaries have obtained Environmental Permits
required for their respective operations and each of their Properties, with such
Environmental Permits being currently in full force and effect, and neither the
Borrower nor any Subsidiary has received any written notice or otherwise has
actual knowledge that any such existing Environmental Permit will be revoked or
that any application for any new Environmental Permit or renewal of any existing
Environmental Permit will be protested or denied;

(c) there are no claims, demands, suits, orders, inquiries, investigations,
written requests for information or proceedings concerning any violation of, or
any liability (including as a potentially responsible party) under, any
applicable Environmental Law that is pending or, to the Borrower’s knowledge,
threatened against the Borrower or any of its Subsidiaries or any of their
respective Properties or as a result of any operations at such Properties;

(d) none of the Properties of the Borrower or any Subsidiary of Borrower contain
or, during the period of ownership or operation of the respective Borrower or
Subsidiary of Borrower, have contained, or to the Borrower’s knowledge, have at
any time contained any: (i) underground storage tanks; (ii) asbestos-containing
materials; (iii) landfills or dumps; (iv) hazardous waste management units as
defined pursuant to RCRA or any comparable state law; or (v) sites on or
nominated for the National Priority List promulgated pursuant to CERCLA or any
state remedial priority list promulgated or published pursuant to any comparable
state law;

(e) there has been no Release or, to the Borrower’s knowledge, threatened
Release, of Hazardous Materials at, on, under or from the Borrower’s or any
Subsidiary’s Properties requiring any investigations, remediations, abatements,
removals, or monitorings of Hazardous Materials or other remedial actions
required under applicable Environmental Laws at such Properties and none of such
Properties are adversely affected by any Release or threatened Release of a
Hazardous Material originating or emanating from any other real property in
quantities or concentrations that would require remediation;

(f) none of the Borrower or any Subsidiary has received any written notice
asserting an alleged liability or obligation under any applicable Environmental
Laws with respect

 

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to the investigation, remediation, abatement, removal, or monitoring of any
Hazardous Materials at, under, or Released or threatened to be Released from any
real properties offsite the Borrower’s or any Subsidiary’s Properties and there
are no conditions or circumstances that could reasonably be expected to result
in the receipt of such written notice; and

(g) there has been no exposure of any Person or Property to any Hazardous
Materials as a result of or in connection with the operations and businesses of
any of the Borrower’s or the Subsidiaries’ Properties that could reasonably be
expected to form the basis for a claim for damages or compensation and there are
no conditions or circumstances that could reasonably be expected to result in
the receipt of notice regarding such exposure.

9.1.7 Surety Obligations. Neither the Borrower nor any Restricted Subsidiary is
obligated as surety or indemnitor under any bond or other contract that assures
payment or performance of any obligation of any Person, except as permitted
hereunder.

9.1.8 Compliance with the Laws and Agreements; No Defaults.

(a) After giving effect to the Confirmation Order, the Borrower and each
Restricted Subsidiary is in compliance, and its Properties and business
operations are in compliance, with all Applicable Law (including ERISA,
Environmental Laws, FLSA, OSHA, Anti-Terrorism Laws, and laws regarding
collection and payment of Taxes), and all agreements and other instruments
binding upon it or its Property, and possesses all licenses, permits,
franchises, exemptions, approvals and other governmental authorizations
necessary for the ownership of its Property and the conduct of its business,
except where the failure to do so (other than failure to comply with
Anti-Terrorism Laws), individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. Except for the FCPA Settlement,
there have been no citations, notices or orders of material noncompliance issued
to the Borrower or Subsidiary under any Applicable Law. No Inventory has been
produced in violation of the FLSA.

(b) None of the Borrower or any Restricted Subsidiary is in default, nor has any
event or circumstance occurred which, but for the expiration of any applicable
grace period or the giving of notice, or both, would constitute a default or
would require the Borrower or a Restricted Subsidiary to redeem or make any
offer to redeem under any material indenture, note, credit agreement or
instrument pursuant to which any Material Debt is outstanding or by which the
Borrower or any Restricted Subsidiary or any of their Properties is bound.

(c) No Default has occurred and is continuing.

9.1.9 Investment Company Act, etc. No Obligor is (i) an “investment company” or
a company “controlled” by an “investment company,” within the meaning of, or
subject to regulation under, the Investment Company Act of 1940, as amended or
(b) subject to regulation under the Federal Power Act, the Interstate Commerce
Act, any public utilities code or any other Applicable Law regarding its
authority to incur Debt.

9.1.10 Taxes. The Borrower and each Restricted Subsidiary has timely filed or
caused to be filed all tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it, except
(a) to the extent being Properly

 

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Contested or (b) to the extent that failure to do so could not reasonable be
expected to result in a Material Adverse Effect. The charges, accruals and
reserves on the books of the Borrower and its Restricted Subsidiaries in respect
of Taxes and other governmental charges are, in the reasonable opinion of the
Borrower, adequate. No Lien relating to Taxes described in the first sentence of
this Section 9.1.10 has been filed and, to the knowledge of the Borrower, no
claim is being asserted with respect to any such Tax or other such governmental
charge.

9.1.11 ERISA. Except for such matters that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect:

(a) the Borrower, the Subsidiaries and each ERISA Affiliate have complied with
ERISA and, where applicable, the Code regarding each Plan;

(b) each Plan is, and has been, established and maintained in compliance with
its terms, ERISA and, where applicable, the Code;

(c) no act, omission or transaction has occurred which could result in
imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant to
subsections (c), (i), (l) or (m) of section 502 of ERISA or a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary
duty liability damages under section 409 of ERISA;

(d) full payment when due has been made of all amounts which the Borrower, the
Subsidiaries or any ERISA Affiliate is required under the terms of each Plan or
applicable law to have paid as contributions to such Plan as of the date hereof;

(e) neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors,
maintains, or contributes to an 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 the Borrower, a Subsidiary or any ERISA Affiliate in its sole
discretion at any time without any material liability; and

(f) neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors,
maintains or contributes to, or has at any time in the six-year period preceding
the date hereof sponsored, maintained or contributed to, any employee pension
benefit plan, as defined in section 3(2) of ERISA, that is subject to Title IV
of ERISA, section 302 of ERISA or section 412 of the Code.

9.1.12 Governmental Approvals. The Borrower and each Restricted Subsidiary has,
is in compliance with, and is in good standing with respect to, all Governmental
Approvals necessary to conduct its business and to own, lease and operate its
Properties, except as could not reasonably be expected to result in a Material
Adverse Effect. All necessary import, export or other licenses, permits or
certificates for the import or handling of any goods or other Collateral have
been procured and are in effect, and the Borrower and Restricted Subsidiaries
have complied with all foreign and domestic laws with respect to the shipment
and importation of any goods or Collateral, except where noncompliance could not
reasonably be expected to have a Material Adverse Effect.

 

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9.1.13 Insurance. The Borrower has, and has caused all of its Subsidiaries
(after giving effect to any self-insurance) to maintain, with financially sound
and reputable insurance companies, insurance in such amounts and against such
risks as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations (including hazard
insurance). Agent has been named as additional insured in respect of such
liability insurance policies, and Agent has been named as loss payee with
respect to property loss insurance for all items of Collateral.

9.1.14 Burdensome Contracts. As of the Closing Date, neither the Borrower nor
any Restricted Subsidiary is party or subject to any Restrictive Agreement,
except as shown on Schedule 9.1.14. No such Restrictive Agreement prohibits the
execution, delivery or performance of any Loan Document by an Obligor.

9.1.15 Restriction on Liens. Neither the Borrower nor any of the Restricted
Subsidiaries is a party to any material agreement or arrangement (other than
(a) Purchase Money Debt permitted by Section 10.2.1(c), but then only on the
Property subject of such Purchase Money Debt, and (b) restrictions under
instruments creating Permitted Liens, but then only on the Property subject of
such Lien), or subject to any order, judgment, writ or decree, which either
restricts or purports to restrict its ability to grant Liens to Agent on or in
respect of their Properties to secure the Obligations and the Loan Documents.

9.1.16 Capital Structure. Schedule 9.1.16 shows, for the Borrower and each of
its Subsidiaries, its jurisdiction of organization, authorized and issued Equity
Interests, holders of its Equity Interests (other than the holders of the Equity
Interests in the Borrower) and agreements binding on such holders with respect
to such Equity Interests, in each case, as of the Closing Date. Except as
disclosed on Schedule 9.1.16, in the five years preceding the Closing Date,
neither the Borrower nor any Restricted Subsidiary has acquired any substantial
assets from any other Person nor been the surviving entity in a merger or
combination. The Borrower has good title to its Equity Interests in its
Restricted Subsidiaries, subject only to Agent’s and the ABL Agent’s Lien and
any Liens securing holders of Permitted Junior Priority Secured Debt (or their
representative), and all such Equity Interests are duly issued, fully paid and
non-assessable (to the extent applicable). As of the Closing Date, except as
disclosed on Schedule 9.1.16 or as expressly contemplated in the Prepackaged
Plan, there are no outstanding purchase options, warrants, subscription rights,
agreements to issue or sell, convertible interests, phantom rights or powers of
attorney relating to Equity Interests of any Restricted Subsidiary.

9.1.17 Location of Business and Offices. Schedule 9.1.17 shows, as of the
Closing Date, the name of each Obligor as listed in the public records of its
jurisdiction of organization, such Obligor’s organizational identification
number in its jurisdiction of organization, and the address for such Obligor’s
principal place of business and chief executive office.

9.1.18 Properties; Titles, Intellectual Property; Licenses; Etc.

(a) The Borrower and each Restricted Subsidiary has good and valid title to,
valid leasehold interests in, or valid easements, rights of way or other
property interests in all of its material real and personal Property free and
clear of all Liens except Permitted Liens. All

 

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Liens of Agent in the Collateral are or will be duly perfected, first priority
Liens (or, subject to the Intercreditor Agreement, second priority), subject
only to Permitted Liens that are expressly allowed to have priority over Agent’s
Liens. From and after the transfers to the SPV described in Section 7.3.1 and
7.3.3, the SPV will have good and valid title to, valid leasehold interests in,
or valid easements, rights of way or other property interests in all of its
material real and personal Property free and clear of all Liens except Permitted
Liens.

(b) All material leases, easements, rights of way and other agreements necessary
for the conduct of the business of the Borrower and the Restricted Subsidiaries
are valid and subsisting, in full force and effect, and to the Borrower’s
knowledge there exists no default or event or circumstance which with the giving
of notice or the passage of time or both would give rise to a default under any
such lease or leases, which could reasonably be expected to result in a Material
Adverse Effect.

(c) The Borrower and each Restricted Subsidiary owns, or is licensed to use, all
Intellectual Property material to its business, and to the Borrower’s knowledge,
the use thereof by the Borrower and such Restricted Subsidiary, as applicable,
does not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. There is no pending or, to the
Borrower’s knowledge, threatened Intellectual Property Claim with respect to the
Borrower, any Restricted Subsidiary or any of their Property (including any
Intellectual Property) that could reasonably be expected to result in a Material
Adverse Effect. All Intellectual Property owned, used or licensed by, or
otherwise subject to any interests of, the Borrower or Restricted Subsidiary as
of the Closing Date is shown on Schedule 9.1.18.

9.1.19 Maintenance of Properties. Except for such acts or failures to act as
could not be reasonably expected to have a Material Adverse Effect, the
Properties owned, leased or used by the Borrower and its Restricted Subsidiaries
that are necessary to the conduct of their businesses, in the aggregate, are in
good operating condition and repair, subject to ordinary wear and tear.

9.1.20 Hedging Agreements. Schedule 9.1.20, as of the date hereof, and after the
date hereof, each report required to be delivered by the Borrower pursuant to
Section 10.1.2(f), sets forth, a true and complete list of all Hedging
Agreements of the Borrower and each Restricted Subsidiary, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark to market value thereof, all credit support
agreements relating thereto (including any margin required or supplied) and the
counterparty to each such agreement.

9.1.21 Security Documents.

(a) The provisions of this Agreement are effective to create, in favor of Agent
for the benefit of the Secured Parties, a legal, valid and enforceable Lien on,
and security interest in, all of the Collateral described herein, and (i) when
financing statements and other filings in appropriate form are filed in the
offices set forth on Schedule 9.1.21(a) and (ii) upon the taking of possession
or control by Agent (or by the ABL Agent subject to the terms of the
Intercreditor Agreement) of the Collateral with respect to which a security
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possession or control (which possession or control shall be given to Agent (or
the ABL Agent subject to the terms of the Intercreditor Agreement) to the extent
possession or control by Agent is required by this Agreement), the Liens created
by this Agreement shall constitute fully perfected first priority (or, subject
to the Intercreditor Agreement, second priority) Liens on, and security
interests in, all right, title and interest of the Obligors in the Collateral
covered thereby (other than such Collateral in which a security interest cannot
be perfected under the Uniform Commercial Code as in effect at the relevant time
in the relevant jurisdiction), in each case free of all Liens other than
Permitted Liens, and prior and superior to all other Liens other than such Liens
and, subject to the terms of the Intercreditor Agreement, the Liens in favor of
the ABL Agent.

(b) If and when executed and delivered, each Mortgage will be effective to
create, in favor of Agent (or such other trustee as may be required or desired
under local law) for the benefit of the Secured Parties, legal, valid and
enforceable Liens on, and security interests in, all of the Mortgaged Property
and the proceeds thereof, subject only to Permitted Liens, and when any Mortgage
is executed and delivered after the date hereof in accordance with the
provisions of Section 7.3.1 and filed in the appropriate offices, the Mortgages
shall constitute fully perfected Liens on, and security interests in, all right,
title and interest of the Obligors in the Real Estate subject to such Mortgage
and the proceeds thereof, in each case prior and superior in right to any other
person, other than Liens permitted by such Mortgage and, subject to the terms of
the Intercreditor Agreement, the Liens in favor of the ABL Agent.

(c) Each Security Document delivered pursuant to Section 7.4, Section 7.6 or
Section 10.1.13, upon execution and delivery thereof, is effective to create in
favor of Agent, for the benefit of the Secured Parties, legal, valid and
enforceable Liens on, and security interests in, all of the Collateral
thereunder, and when all appropriate filings or recordings are made in the
appropriate offices as may be required under Applicable Law or possession or
control is conferred to Agent, such Security Document will constitute fully
perfected first priority (or, subject to the Intercreditor Agreement, second
priority) Liens on, and security interests in, all right, title and interest of
the Obligors in such Collateral, in each case with no other Liens except for
Permitted Liens.

9.1.22 Solvency. (i) As of the Closing Date, after giving effect to the
consummation of the Transactions and (ii) after giving effect to any extension
of credit hereunder, the Borrower and its Consolidated Subsidiaries, on a
consolidated basis, are Solvent. No Obligor is planning to take any action
described in Section 12.1(h).

9.1.23 Common Enterprise. The Borrower and its Restricted Subsidiaries and their
business operations are closely integrated with one another into a single,
interdependent and collective, common enterprise so that any benefit received by
any one of them from the financial accommodations provided under this Agreement
will be to the direct benefit of the others. The Borrower and its Restricted
Subsidiaries intend to render services to or for the benefit of each other, to
purchase or sell and supply goods to or from or for the benefit of each other,
to make loans, advances and provide other financial accommodations to or for the
benefit of each other and to provide administrative, marketing, payroll and
management services to or for the benefit of each other (in each case, except as
may be prohibited by this Agreement).

 

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9.1.24 Broker’s Fees. Except as disclosed in the Prepackaged Plan, no broker’s
or finder’s fee, commission or similar compensation will be payable by the
Borrower or any Restricted Subsidiary with respect to the Transactions.

9.1.25 Employee Matters. As of the Closing Date, (a) neither the Borrower nor
any Restricted Subsidiary, nor any of their respective employees, is subject to
any collective bargaining agreement, (b) no petition for certification or union
election is pending or, to the knowledge of the Borrower or any Restricted
Subsidiary, contemplated with respect to the employees thereof and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of the Borrower or any Restricted Subsidiary, and
(c) there are no strikes, slowdowns, work stoppages or controversies pending or,
to the knowledge of the Borrower, threatened between the Borrower or any
Restricted Subsidiary and its respective employees.

9.1.26 Anti-Corruption Laws and Sanctions. The Borrower has implemented and
maintained in effect policies and procedures designed to ensure compliance by
the Borrower, its Subsidiaries and their respective directors, officers,
employees and agents with Anti-Corruption Laws and applicable Sanctions, and the
Borrower, its Subsidiaries and their respective officers and to the knowledge of
the Borrower, their employees, directors and agents are in compliance with
Anti-Corruption Laws and applicable Sanctions in all material respects.

9.1.27 Status under Sanctions. None of the Borrower or any of its Subsidiaries
or, to the knowledge of the Borrower or any such Subsidiary, any director,
officer, employee or agent thereof is, or is owned or controlled by one or more
Persons that are, currently the subject or target of any Sanction or is located,
organized or resident in a Designated Jurisdiction.

9.1.28 Complete Disclosure. The consolidated balance sheet and statements of
operations, stockholders’ equity and cash flows of the Borrower and its
Consolidated Subsidiaries hereafter delivered to Agent and Lenders will be
prepared in accordance with GAAP and present fairly, in all material respects,
the financial position and results of operations and cash flows of the Borrower
and its Consolidated Subsidiaries as of the date and for the period set forth
therein in accordance with GAAP. All projections delivered from time to time to
Agent and Lenders will have been prepared in good faith, based on assumptions
believed by management of the Borrower to be reasonable at the time made, it
being recognized by Agent and the Lenders that such projections as they relate
to future events are not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount.

 

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SECTION 10. COVENANTS AND CONTINUING AGREEMENTS

10.1 Affirmative Covenants. Until Full Payment of all Obligations, the Borrower
(on behalf of itself and its Restricted Subsidiaries) and each Guarantor by its
execution of this Agreement, covenants and agrees with Agent and the Lenders
that:

10.1.1 Inspections; Appraisals.

(a) The Borrower shall, and shall cause each Restricted Subsidiary to, permit
Agent from time to time, subject to reasonable notice and normal business hours,
to visit and inspect the Properties of the Borrower or any Restricted
Subsidiary, inspect, audit and make extracts from the Borrower’s or Restricted
Subsidiary’s books and records, and discuss with its officers, employees,
agents, advisors and independent accountants the Borrower’s or Restricted
Subsidiary’s business, financial condition, assets, prospects and results of
operations. Lenders may participate in any such visit or inspection, at their
own expense. Neither Agent nor any Lender shall have any duty to the Borrower to
make any inspection, nor to share any results of any inspection, appraisal or
report with the Borrower or any of its Subsidiaries. The Borrower acknowledges
that all inspections, appraisals and reports are prepared by Agent and Lenders
for their purposes, and the Borrower shall not be entitled to rely upon them.

(b) The Borrower shall, and shall cause each Restricted Subsidiary to, permit
Agent to examine any Obligor’s books and records or any other financial or
Collateral matters as Agent deems appropriate, which examinations shall be
limited to one time during each 12-month period; provided, however, that the
foregoing limit shall not apply if an examination or appraisal is initiated
during a Default. The Borrower shall, and shall cause each Restricted Subsidiary
to, reimburse Agent for all reasonable and documented charges, costs and
expenses of Agent in connection with foregoing examinations and appraisals, and
the Borrower agrees to pay Agent’s then standard charges for examination
activities, including reasonable and documented charges for Agent’s internal
examination and appraisal groups, as well as the reasonable and documented
charges of any third party used for such purposes.

10.1.2 Financial Statements; Other Information. The Borrower will furnish to
Agent (the documents required to be delivered pursuant to clauses (a), (b) and
(i) below shall be deemed to have been delivered on the date on which such
documents are posted on the Securities and Exchange Commission’s website at
www.sec.gov):

(a) Annual Financial Statements. As soon as available, but in any event not
later than the earlier of (i) the date by which the Borrower is required to file
its annual report on Form 10-K with the Securities and Exchange Commission in
accordance with then Applicable Law and (ii) 90 days after the end of each
Fiscal Year of the Borrower, its audited consolidated balance sheet and related
statements of operations, stockholders’ equity and cash flows as of the end of
and for such year, setting forth in each case in comparative form the figures
for the previous Fiscal Year, all reported on by Grant Thornton LLP or other
independent public accountants of recognized national standing (without a “going
concern” or like qualification or exception and without any qualification or
exception as to the scope of such audit (other than as a result of an upcoming
maturity date under this Agreement or the ABL Credit Agreement occurring within
one year from the time such opinion is delivered or any potential inability to
satisfy the financial covenants set forth in Section 10.3 on a future date or in
a future period)) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied.

(b) Quarterly Financial Statements. As soon as available, but in any event in
accordance with then Applicable Law and not later than 60 days after the end of
each of the first three Fiscal Quarters of each Fiscal Year of the Borrower, its
consolidated balance sheet and

 

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related statements of operations and cash flows as of the then elapsed portion
of the Fiscal Year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous Fiscal Year, all certified by a Senior
Officer of the Borrower as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied or as prepared in accordance with the requirements of the
SEC, subject to normal year-end audit adjustments and the absence of footnotes.

(c) Monthly Financial Statements. During the Reporting Trigger Period, as soon
as available, but in any event not later than 30 days after the end of each
month of each Fiscal Year of the Borrower, its consolidated balance sheet and
related statements of operations and cash flows as of the then elapsed portion
of the Fiscal Year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous Fiscal Year, all certified by a Senior
Officer of the Borrower as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied or as prepared in accordance with the requirements of the
SEC, subject to normal year-end audit adjustments and the absence of footnotes.

(d) Annual Financial Projections. Concurrently with any delivery of financial
statements under Section 10.1.2(a), projections of the Borrower’s consolidated
balance sheets, related statements of operations, cash flow and Availability
under the ABL Credit Agreement for the next Fiscal Year, quarter by quarter.

(e) Certificate of Senior Officer – Compliance. Concurrently with any delivery
of financial statements under Section 10.1.2(a), Section 10.1.2(b) and, if
applicable, Section 10.1.2(c), a Compliance Certificate.

(f) Certificate of Senior Officer – Hedging Agreements. Concurrently with any
delivery of financial statements under Section 10.1.2(a), Section 10.1.2(b) and,
if applicable, Section 10.1.2(c), a certificate of a Senior Officer of the
Borrower, in form and substance reasonably satisfactory to Agent, setting forth
as of the last Business Day of such month, Fiscal Quarter or Fiscal Year, as
applicable, a true and complete list of all Hedging Agreements of the Borrower
and each Restricted Subsidiary, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the net
mark-to-market value therefor, any new credit support agreements relating
thereto, any margin required or supplied under any credit support document, and
the counterparty to each such agreement.

(g) Certificate of Insurer or Broker – Insurance Coverage. Use commercially
reasonable efforts to provide, concurrently with any delivery of financial
statements under Section 10.1.2(a), a certificate of insurance coverage from
each insurer or insurance broker with respect to the insurance required by
Section 10.1.8.

(h) Other Accounting Reports. Promptly upon receipt thereof, a copy of each
other material report or letter (except standard and customary correspondence)
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Borrower or any Restricted Subsidiaries by independent accountants in connection
with any annual, interim or special audit made by them of the books of the
Borrower or any such Restricted Subsidiary, and a copy of any response by the
Borrower or any such Restricted Subsidiary, or the board of directors or other
governing body, as applicable, of the Borrower or any such Restricted
Subsidiary, to such material letter or report.

(i) SEC and Other Filings; Reports to Shareholders. Promptly after the same
become publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by the Borrower or any Restricted
Subsidiary with the SEC, or with any national or foreign securities exchange
(except standard and customary correspondence), or distributed by the Borrower
to its shareholders generally, as the case may be.

(j) Notices Under Material Contracts. Promptly after the furnishing thereof,
copies of any material report or material notice furnished to or by any Person
pursuant to the terms of any Material Contract.

(k) Information Regarding Obligors. Prompt written notice (and in any event not
more than three Business Days after the occurrence thereof) of any change (i) in
any Obligor’s corporate name or in any trade name used to identify such Person
in the conduct of its business or in the ownership of its Properties, (ii) in
the location of any Obligor’s chief executive office or principal place of
business, (iii) in any Obligor’s identity or corporate structure, (iv) in any
Obligor’s jurisdiction of organization or such Person’s organizational
identification number in such jurisdiction of organization, and (v) in any
Obligor’s federal taxpayer identification number.

(l) Notices of Certain Changes. Promptly, but in any event within 10 Business
Days after the execution thereof, copies of any amendment, modification or
supplement to the certificate or articles of incorporation, by-laws, any
preferred stock designation or any other Organic Document of the Borrower or any
Restricted Subsidiary.

(m) PP&E Value Reports.

(i) Concurrently with any delivery of financial statements under Section
10.1.2(a) or financial statements for any quarter ending June 30 under Section
10.1.2(b), a PP&E Value Report evaluating the Term Priority Collateral and
setting forth the PP&E Value (before any adjustments contemplated by the proviso
set forth in the definition thereof) with respect thereto as of a date to be no
earlier than 45 days prior to the last day of the period covered by such
financial statements, together with a certification from the Borrower that such
PP&E Value Report is true and accurate and has been prepared in accordance with
the procedures used in the immediately preceding PP&E Value Report; provided
that (A) the PP&E Value Report to be delivered in connection with annual
financials shall reflect appropriate field examinations with respect to the Term
Priority Collateral and (B) otherwise, the PP&E Value Report may consist of a
desktop appraisal, in each case, prepared by an Accepted Appraiser. After
receipt of each PP&E Value Report delivered pursuant to the immediately
preceding sentence, Agent will have ten (10) Business Days to review such PP&E
Value Report. Agent will deliver notice to the Borrower on or prior to the tenth
(10th) Business Day after receipt of

 

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the PP&E Value Report specifying in reasonable detail any disputed items with
respect to such PP&E Value Report and the basis therefor. If Agent fails to
deliver such notice during such ten (10) Business Day period, Agent will have
waived its right to dispute such PP&E Value Report. If Agent notifies the
Borrower of any dispute to such PP&E Value Report during such ten (10) Business
Day period, the parties will, within ten (10) days following the date of such
notice, attempt to resolve their differences and any written resolution by them
as to any disputed item will be final and binding for all purposes under this
Agreement. If at the conclusion of such ten (10) day period (the “Resolution End
Date”) the parties have not reached an agreement on any dispute with respect to
such PP&E Value Report, then Agent may request an additional PP&E Value Report
prepared at the expense of the Borrower from another Accepted Appraiser selected
and engaged by Agent based on new field examinations with respect to the Term
Priority Collateral (an “Interim PP&E Value Report”). If an Interim PP&E Value
Report is delivered to Agent on or prior to the 50th Business Day following the
applicable Resolution End Date, the results thereof will be final and binding
for all purposes of this Agreement. If such Interim PP&E Value Report is not
delivered within such period, then the initial PP&E Value Report as modified by
any written resolutions of the parties shall apply.

(ii) In addition to the foregoing, at any time upon the request of the Required
Lenders (not to be exercised more than once in any Fiscal Year), Agent may
request an Interim PP&E Value Report. After receipt of each Interim PP&E Value
Report, the Borrower will have ten (10) Business Days to review such Interim
PP&E Value Report. The Borrower will deliver notice to Agent on or prior to the
tenth (10th) Business Day after receipt of the Interim PP&E Value Report
specifying in reasonable detail any disputed items with respect to such Interim
PP&E Value Report and the basis therefor. If the Borrower fails to deliver such
notice during such ten (10) Business Day period, the Borrower will have waived
its right to dispute such Interim PP&E Value Report. If the Borrower notifies
Agent of any dispute to such Interim PP&E Value Report during such ten
(10) Business Day period, the parties will, within ten (10) days following the
date of such notice, attempt to resolve their differences and any written
resolution by them as to any disputed item will be final and binding for all
purposes under this Agreement. If by the Resolution End Date the parties have
not reached an agreement on any dispute with respect to such Interim PP&E Value
Report, then the Borrower may request an updated Interim PP&E Value Report
prepared at the expense of the Borrower from another Accepted Appraiser selected
and engaged by the Borrower (the “Updated Interim PP&E Value Report”). If any
Updated Interim PP&E Value Report is delivered to Agent on or prior to the 50th
Business Day following the applicable Resolution End Date, the results thereof
will be final and binding for all purposes of this Agreement. If such Updated
Interim PP&E Value Report is not delivered within such period, then the initial
Interim PP&E Value Report as modified by any written resolutions of the parties
shall apply.

(n) Other Requested Information. Promptly following any request therefor, such
other information regarding the operations, business affairs, Collateral and
financial condition of the Borrower or any Restricted Subsidiary or any other
Obligor (including, without limitation, any Plan and any reports or other
information required to be filed with respect thereto under the Code or under
ERISA), or compliance with the terms of this Agreement or any other Loan
Document, as Agent may reasonably request.

 

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10.1.3 Notices of Material Events. The Borrower will furnish to Agent prompt
and, in any event, within 10 Business Days after acquiring knowledge thereof,
written notice of the following:

(a) the occurrence of any Default of which the Borrower has knowledge;

(b) the filing or commencement of, or the threat in writing of, any action,
suit, proceeding, investigation or arbitration by or before any arbitrator or
Governmental Authority against or affecting the Borrower or any Affiliate
thereof not previously disclosed in writing to Agent or any material adverse
development in any action, suit, proceeding, investigation or arbitration
(whether or not previously disclosed to Agent) that, in either case, could
reasonably be expected to result in a Material Adverse Effect;

(c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$10,000,000; and

(d) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.

Each notice delivered under this Section 10.1.3 shall be accompanied by a
statement of a Senior Officer of the Borrower setting forth the details of the
event or development requiring such notice and any action taken or proposed to
be taken with respect thereto.

10.1.4 Existence; Conduct of Business. The Borrower will, and will cause each
Restricted Subsidiary to, do or cause to be done all things reasonably necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, consents, privileges and franchises material to the
conduct of its business and maintain, including, if necessary, its qualification
to do business in each other jurisdiction in which its Properties are located or
the ownership of its Properties requires such qualification, except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 10.2.8.

10.1.5 Payment of Tax Obligations. The Borrower will, and will cause each
Restricted Subsidiary to, pay its Tax liabilities before the same shall become
delinquent or in default, except where such Tax liabilities are being Properly
Contested.

10.1.6 Performance of Obligations under Loan Documents. The Borrower will repay
the Loans according to the reading, tenor and effect thereof, and the Borrower
will, and will cause each Restricted Subsidiary to, do and perform every act and
discharge all of the obligations to be performed and discharged by them under
the Loan Documents, including, without limitation, this Agreement, at the time
or times and in the manner specified.

 

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10.1.7 Operation and Maintenance of Properties. Except, in each case, where the
failure to comply could not reasonably be expected to have a Material Adverse
Effect, the Borrower, at its own expense, will, and will cause each Restricted
Subsidiary to:

(a) operate its Properties or cause such Properties to be operated in a careful
and efficient manner in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance with
all Applicable Law, including, without limitation, applicable Environmental
Laws; and

(b) preserve, maintain and keep in good repair, condition and working order
(ordinary wear and tear excepted) all Property material to the conduct of its
business, including, without limitation, all equipment, machinery and
facilities.

10.1.8 Insurance.

(a) The Borrower will, and will cause each Restricted Subsidiary to, maintain
(after giving effect to any self-insurance), with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations (including hazard
insurance). The loss payable clauses or provisions in any insurance policy or
policies insuring any of the Collateral for the Loans shall be endorsed in favor
of and made payable to Agent as its interests may appear and such policies shall
name Agent as an “additional insured” and “loss payee”, as applicable, and
provide that the insurer will give at least 30 days’ prior notice of any
cancellation to Agent (or at least 10 days’ prior notice in the case of
cancellation of such insurance due to non-payment of premiums).

(b) If any building that forms a part of Mortgaged Property is located in an
area designated a “flood hazard area” in any Flood Insurance Rate Map published
by the Federal Emergency Management Agency (or any successor agency), obtain
flood insurance in such reasonable total amount as Agent may from time to time
reasonably require, and otherwise to ensure compliance with Applicable Law
(including any applicable Flood Laws).

(c) Notwithstanding anything to the contrary in this Agreement, Agent may,
acting in its reasonable discretion, waive any requirements of clause (a) of
Section 10.1.8 without the consent of any Lenders.

10.1.9 Books and Records. The Borrower will, and will cause each Restricted
Subsidiary to, keep proper books of record and account in which full, true and
correct entries in all material respects are made of all dealings and
transactions in relation to its business and activities.

10.1.10 Compliance with Laws. The Borrower will, and will cause each Subsidiary
to, comply with all Applicable Laws, including FLSA, OSHA, Environmental Laws,
Anti-Corruption Laws, and laws regarding collection and payment of Taxes, and
maintain all Governmental Approvals necessary to the ownership of its Properties
or conduct of its business, except where the failure to do so, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect. The Borrower will maintain in effect and enforce policies and
procedures designed to ensure compliance by the Borrower, its Subsidiaries and
their respective directors, officers, employees and agents with Anti-Corruption
Laws and applicable Sanctions.

 

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10.1.11 Compliance with Material Contracts. The Borrower will, and will cause
each Restricted Subsidiary to, comply with all Material Contracts, except to the
extent that such noncompliance could not reasonably be expected to have a
Material Adverse Effect.

10.1.12 Environmental Matters.

(a) Except for matters that individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, the Borrower shall at
its sole expense: (i) comply, and shall cause its Properties and operations and
each Restricted Subsidiary and each Restricted Subsidiary’s Properties and
operations to comply, with applicable Environmental Laws; (ii) not cause a
Release or threatened Release, and shall cause each Restricted Subsidiary not to
cause a Release or threatened Release, of any Hazardous Material on, under,
about or from any of the Borrower’s or its Restricted Subsidiaries’ Properties
except in compliance with, and in a manner not reasonably likely to give rise to
liability under, applicable Environmental Laws; (iii) timely obtain or file, and
shall cause each Restricted Subsidiary to timely obtain or file, Environmental
Permits, if any, required under applicable Environmental Laws to be obtained or
filed in connection with the operation or use of the Borrower’s or its
Restricted Subsidiaries’ Properties; (iv) promptly commence and diligently
prosecute to completion, and shall cause each Restricted Subsidiary to promptly
commence and diligently prosecute to completion, any assessment, evaluation,
investigation, monitoring, containment, cleanup, removal, repair, restoration,
remediation or other remedial obligations (collectively, the “Remedial Work”) if
such Remedial Work is required under applicable Environmental Laws because of or
in connection with the actual or suspected past, present or future Release or
threatened Release of any Hazardous Material on, under, about or from any of the
Borrower’s or its Restricted Subsidiaries’ Properties; and (v) conduct, and
cause each of its Restricted Subsidiaries to conduct, its operations and
businesses in a manner that will not expose any Property or Person to Hazardous
Materials that could reasonably be expected to form the basis for a claim for
damages or compensation.

(b) The Borrower will promptly, but in no event later than 10 Business Days
after the receipt of notice by any member of the executive management team of
the occurrence of a triggering event, notify Agent and the Lenders in writing of
any threatened action, investigation or inquiry by any Governmental Authority or
any threatened demand or lawsuit by any Person against the Borrower or any
Restricted Subsidiary or their Properties of which the Borrower has knowledge in
connection with any Environmental Laws if the Borrower could reasonably
anticipate that such action will result in liability (whether individually or in
the aggregate) in excess of $10,000,000, not fully covered by insurance, subject
to normal deductibles.

10.1.13 Future Subsidiaries; Subsidiary No Longer Immaterial Domestic
Subsidiaries. The Borrower will promptly notify Agent upon any Person becoming a
Subsidiary (and upon any Subsidiary that is an Immaterial Domestic Subsidiary
ceasing to be an Immaterial Domestic Subsidiary) and, if such Person is not an
Excluded Subsidiary, cause it (and cause any Subsidiary that is an Immaterial
Domestic Subsidiary that ceased to be an Immaterial Domestic Subsidiary) to
guaranty the Obligations in a manner reasonably satisfactory to Agent, and to

 

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execute and deliver such documents, instruments and agreements and to take such
other actions as Agent shall reasonably require to evidence and perfect a Lien
in favor of Agent on the Collateral of such Person, including delivery of such
legal opinions, in form and substance reasonably satisfactory to Agent, as it
shall deem appropriate.

10.1.14 ERISA Compliance.

(a) The Borrower will promptly furnish and will cause the Subsidiaries and any
ERISA Affiliate to promptly furnish to Agent immediately upon becoming aware of
the occurrence of any “prohibited transaction,” as described in section 406 of
ERISA or in section 4975 of the Code, in connection with any Plan or any trust
created thereunder, a written notice signed by Senior Officer of the Borrower,
the Subsidiary or such ERISA Affiliate, as the case may be, specifying the
nature thereof, what action the Borrower, such Subsidiary or such ERISA
Affiliate is taking or proposes to take with respect thereto, and, when known,
any action taken or proposed by the Internal Revenue Service or the Department
of Labor with respect thereto.

(b) Except for such matters that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, the Borrower will
ensure that neither it nor any of its Subsidiaries, at any time:

(i) engages in, or permits any ERISA Affiliate to engage in, any transaction in
connection with which the Borrower, a Subsidiary or any ERISA Affiliate could be
subjected to either a civil penalty assessed pursuant to subsections (c), (i),
(l) or (m) of section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D
of the Code.

(ii) fails to make, or permits any ERISA Affiliate 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 Borrower, a Subsidiary or any ERISA
Affiliate is required to pay as contributions thereto.

(iii) contributes to or assumes an obligation to contribute to, or permits any
ERISA Affiliate to contribute to or assume an obligation to contribute to
(i) 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 material liability, or (ii) any
employee pension benefit plan, as defined in section 3(2) of ERISA, that is
subject to Title IV of ERISA, section 302 of ERISA or section 412 of the Code.

10.1.15 Compliance with Terms of Leaseholds. The Borrower will, and will cause
all of its Restricted Subsidiaries to, make all payments and otherwise perform
all obligations in respect of all material leases of real Property to which the
Borrower or any of its Restricted Subsidiaries is or is to be a party, keep such
leases in full force and effect and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or cancelled,
notify Agent of any default by any party with respect to such leases of which
the Borrower has knowledge and cooperate with Agent in all respects to cure any
such default, and cause each of its Restricted Subsidiaries to do so, except, in
any case, where the failure to do so, either individually or in the aggregate,
could not be reasonably likely to have a Material Adverse Effect.

 

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10.1.16 Borrowing Base Report. The Borrower will deliver within five Business
Days after delivering a Borrowing Base Report to the ABL Agent pursuant to the
ABL Credit Agreement a copy of such Borrowing Base Report to Agent.

10.1.17 Post-closing Undertakings. Borrower will, and will cause each other
Obligor to, comply with the requirements set forth on Schedule 10.1.17 within
the time periods set forth therein (as any such period may be extended by Agent
in its sole discretion).

10.1.18 Borrower Calls. Unless the Borrower holds a quarterly public earnings
call with a “Q&A” component, the Borrower shall following delivery of the
financial statements required pursuant to Section 10.1.2, participate in one
conference call per quarter with Agent and the Lenders, collectively, in each
case at such times as may be agreed to by the Borrower and Agent or the Required
Lenders.

10.2 Negative Covenants. Until Full Payment of all Obligations, the Borrower (on
behalf of itself and its Restricted Subsidiaries) and each Guarantor by its
execution of this Agreement, covenants and agrees with Agent and the Lenders
that:

10.2.1 Debt. It will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, guarantee or suffer to exist any Debt,
except:

(a) the Obligations arising under the Loan Documents or any guaranty of or
suretyship arrangement for the Obligations arising under the Loan Documents;

(b) accounts payable and accrued expenses, liabilities or other obligations to
pay the deferred purchase price of Property or services, from time to time
incurred in the Ordinary Course of Business to the extent, in each case, not
past due for more than 90 days after the date on which such accounts payable,
accrued expenses, liabilities or other obligations were created or incurred
unless being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP;

(c) Permitted Purchase Money Debt;

(d) Debt arising from performance or appeal bonds or surety obligations required
by Applicable Law in connection with the operation of the Properties of the
Borrower or any Restricted Subsidiary and in the Ordinary Course of Business;

(e) to the extent permitted by Section 10.2.4(d) and with respect to Foreign
Subsidiaries, Section 10.2.4(m), (i) intercompany Debt between the Borrower and
any Restricted Subsidiary or between Restricted Subsidiaries; provided, that all
such Debt shall be (A) evidenced by a master intercompany note, in form and
substance reasonably satisfactory to Agent (the “Intercompany Note”), and, if
owed to an Obligor, shall be subject to a first priority (or, subject to the
Intercreditor Agreement, second priority) perfected Lien in favor of Agent
pursuant to the Loan Documents, and (B) unsecured and subordinated in right of
payment to the payment in full of the Obligations pursuant to the terms of the
Intercompany Note and (ii)

 

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intercompany Debt owing by the Borrower or any Restricted Subsidiary to any
Excluded Subsidiary, provided that such Debt is evidenced by the Intercompany
Note to which such Excluded Subsidiary is a party and is unsecured and
subordinated in right of payment to the payment in full of the Obligations
pursuant to the terms of the Intercompany Note;

(f) Debt issued to insurance companies, or their affiliates, to finance
insurance premiums payable to such insurance companies in connection with
insurance policies purchased by a Obligor in the Ordinary Course of Business;

(g) Debt (i) with respect to the ABL Obligations so long as (A) the ABL Credit
Agreement is not amended to increase the advance rate on accounts receivable
beyond 85%, (B) the holders of such Debt (or the ABL Agent on their behalf)
shall be party to the Intercreditor Agreement and (C) the aggregate principal
amount of the ABL Obligations does not exceed $100,000,000 at any time
outstanding plus an additional $50,000,000 of incremental ABL Obligations
provided, with respect to such additional $50,000,000 of incremental ABL
Obligations (I) the All-In-Yield for such additional ABL Obligations shall be no
greater than 6.00% and (II) such additional ABL Obligations are subject to a
borrowing base (x) based solely on “Eligible Accounts” (substantially as defined
in the ABL Credit Agreement as of the date hereof or as otherwise agreed by the
Borrower and the Required Lenders) and cash collateral and (y) with an advance
rate on such Eligible Accounts (substantially as defined in the ABL Credit
Agreement as of the date hereof or as otherwise agreed by the Borrower and the
Required Lenders) no greater than 85% and (ii) incurred in connection with any
financing from any lender in respect of the ABL Obligations under Section 364 of
the Bankruptcy Code to the extent permitted pursuant to the Intercreditor
Agreement;

(h) Debt with respect to Permitted Junior Priority Secured Debt (and any
refinancings or replacements thereof) in aggregate principal amount not to
exceed $200,000,000 at any time outstanding for all such Debt;

(i) Debt with respect to Permitted Junior Priority Secured Debt to the extent
the proceeds of such Debt are used to refinance, in whole or in part, any
unsecured Debt as long as (i) each of the Refinancing Conditions (other than
with respect to clause (e) of the definition of “Refinancing Conditions”) are
satisfied and (ii) after giving effect to the incurrence of such Debt, the ratio
of (A) the PP&E Value to (B) the aggregate principal amount of all Debt
outstanding under the Loan Documents as of such date and all Permitted Junior
Priority Secured Debt incurred prior to the date of determination in reliance on
Section 10.2.1(h) and this Section 10.2.1(i) is at least 1.35 to 1.00 and Agent
receives a certificate of a Senior Officer, in form and substance reasonably
satisfactory to Agent, certifying that all of the requirements set forth in this
clause (ii) have been satisfied or will be satisfied on or prior to the
incurrence of such Debt;

(j) Debt with respect to Borrowed Money owing by Foreign Subsidiaries in an
aggregate principal amount not to exceed $10,000,000 as long as (i) no Obligor
(A) provides any guarantee or credit support of any kind (including any
undertaking, guarantee, indemnity, agreement or instrument that would constitute
Debt) or (B) is directly or indirectly liable (as a guarantor or otherwise) for
such Debt; (ii) the incurrence of which will not result in any recourse against
any of the assets of any Obligor and (iii) no default with respect to which
would permit (upon notice, lapse of time or both) any holder of any other Debt
of any Obligor to declare pursuant to the express terms governing such Debt a
default on such other Debt or cause the payment thereof to be accelerated or
payable prior to its stated maturity;

 

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(k) Borrowed Money (other than the Obligations, ABL Obligations and Permitted
Purchase Money Debt) set forth on Schedule 10.2.1(k), but only to the extent
outstanding on the Closing Date;

(l) Debt with respect to ABL Bank Products incurred in the Ordinary Course of
Business;

(m) Debt of a Person that merged or consolidated with the Borrower or a
Restricted Subsidiary or that is in existence when a Person becomes a Restricted
Subsidiary or that is secured by an asset (other than Accounts) when acquired by
the Borrower or a Restricted Subsidiary, as long as such Debt was not incurred
in contemplation of such merger or consolidation or such Person becoming a
Subsidiary or such acquisition; provided that, after giving pro forma effect to
such incurrence of Debt and such merger or consolidation or acquisition of such
Restricted Subsidiary or asset pursuant to this clause (m), (i) the Fixed Charge
Coverage Ratio for the four most recently completed Fiscal Quarters for which
financial statements are available is at least 2.00 to 1.00 and (ii) the Asset
Coverage Ratio (which shall be calculated excluding the value of the assets
acquired that are subject to liens, other than liens in favor of Agent, to the
extent of the amount of the obligation secured by such liens) exceeds the Asset
Coverage Ratio calculated immediately prior to such incurrence of Debt and
acquisition of such Restricted Subsidiary or asset pursuant to this clause (m);

(n) Permitted Contingent Obligations;

(o) Refinancing Debt as long as each of the Refinancing Conditions are
satisfied;

(p) Permitted Unsecured Debt that is not included in any of the preceding
clauses of this Section so long as, giving pro forma effect to any incurrence of
Debt pursuant to this clause (p), the Fixed Charge Coverage Ratio for the four
most recently completed Fiscal Quarters for which financial statements are
available is at least 2.00 to 1.00;

(q) Debt with respect to Hedging Agreements entered into in compliance with
Section 10.2.14; and

(r) Debt incurred pursuant to Section 10.3.3(c) which shall be subordinated in
right of payment to the Obligations upon subordination terms as are reasonably
satisfactory to the Required Lenders.

10.2.2 Liens. The Borrower will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or permit to exist any Lien on any of its
Properties (now owned or hereafter acquired), except the following
(collectively, “Permitted Liens”):

(a) Liens securing the payment of any Obligations pursuant to the Loan
Documents;

 

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(b) Excepted Liens;

(c) Purchase Money Liens securing Permitted Purchase Money Debt;

(d) non-exclusive licenses of Intellectual Property in the Ordinary Course of
Business;

(e) Liens on property existing at the time such property is acquired by the
Borrower or a Restricted Subsidiary; provided that (i) such Liens were not
created in contemplation of such acquisition, (ii) such Liens do not extend to
any assets other than those being acquired by the Borrower or a Restricted
Subsidiary and (iii) the applicable Debt secured by such Lien is permitted under
Section 10.2.1(m);

(f) any interest or title of a lessor under any lease entered into by the
Borrower or any Restricted Subsidiary in the Ordinary Course of Business and
covering only the assets so leased;

(g) Liens on the assets of any Foreign Subsidiary which secure Debt permitted
pursuant to Section 10.2.1(j);

(h) Liens on unearned premiums in respect of insurance policies securing
insurance premium financing permitted under Section 10.2.1(f);

(i) subject to the terms of the Intercreditor Agreement, Liens securing Debt
permitted by Section 10.2.1(g);

(j) subject to the terms of the applicable intercreditor agreement, Liens
securing Permitted Junior Priority Secured Debt to the extent permitted by
Section 10.2.1(h) or Section 10.2.1(i);

(k) subject to the terms of the Intercreditor Agreement, Liens securing Debt
permitted by Section 10.2.1(l);

(l) Liens not otherwise permitted by this Section 10.2.2 so long as securing
obligations other than Borrowed Money and neither (i) the aggregate outstanding
principal amount of the obligations secured thereby nor (ii) the aggregate book
value (determined, in the case of each such Lien, as of the date such Lien is
incurred) of the assets subject thereto exceeds (as to the Borrower and all
Restricted Subsidiaries) $15,000,000 at any one time, provided that no such Lien
shall extend to or cover any Collateral (other than cash); and

(m) Liens with respect to Hedging Agreements entered into in compliance with
Section 10.2.14.

10.2.3 Distributions; Upstream Payments. The Borrower will not, and will not
permit any of its Restricted Subsidiaries to, declare or make, or agree to pay
or make, directly or indirectly, any Distributions except (1) Upstream Payments
and (2):

(a) the Borrower may declare and pay dividends with respect to its Equity
Interests payable solely in additional shares of its Equity Interests (other
than Disqualified Capital Stock);

 

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(b) the Borrower and each Restricted Subsidiary may purchase, redeem or
otherwise acquire its common Equity Interests with the proceeds received from
the substantially concurrent issue of new common Equity Interests;

(c) if no Event of Default then exists or would result from the making of such
Distribution, the Borrower may repurchase or redeem its Equity Interests owned
by employees, officers or directors of the Borrower or its Subsidiaries or make
payments to employees, officers or directors of the Borrower or its Subsidiaries
upon termination of employment or service in connection with the exercise of
stock options, stock appreciation rights or similar equity incentives or equity
based incentives pursuant to management incentive plans or in connection with
the death or disability of such employees, officers or directors in an aggregate
amount not to exceed $2,500,000 in any Fiscal Year (with unused amounts in any
Fiscal Year being carried over to succeeding calendar years, but not to exceed
$5,000,000 of repurchases or redemptions in any Fiscal Year);

(d) the Borrower may repurchase its Equity Interests in connection with the
administration of its equity-based compensation plans from time to time in
effect, in connection with the repurchase of Equity Interests from employees,
directors and other such recipients to satisfy federal, state or local tax
withholding obligations of such employees, directors and other recipients with
respect to income deemed earned as the result of options, stock grants or other
awards made under such plans; and

(e) other Distributions (other than repurchases or redemptions of Equity
Interests or cash distributions to holders of Equity Interests) in an aggregate
amount not to exceed $15,000,000.

10.2.4 Investments, Loans and Advances. The Borrower will not, and will not
permit any Restricted Subsidiary to, make or permit to remain outstanding any
Investments in or to any Person, except:

(a) Investments in Restricted Subsidiaries or disclosed on Schedule 10.2.4, in
each case to the extent existing on the Closing Date;

(b) Accounts arising in the Ordinary Course of Business;

(c) Cash Equivalents;

(d) Investments (i) made by the Borrower in or to any Guarantors, (ii) made by
any Restricted Subsidiary in or to the Borrower or any Guarantor, or (iii) made
by any Excluded Subsidiary in or to another Subsidiary or the Borrower;

(e) Investments in stock, obligations or securities received in settlement of
debts arising from Investments permitted under Section 10.2.4(b) owing to the
Borrower or any Restricted Subsidiary as a result of a bankruptcy or other
insolvency proceeding of the obligor in

 

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respect of such debts or upon the enforcement of any Lien in favor of the
Borrower or any of its Restricted Subsidiaries; provided that the Borrower shall
give Agent prompt written notice in the event that the aggregate amount of all
Investments held at any one time under this Section 10.2.4(e) exceeds
$10,000,000;

(f) Investments received in consideration for any Asset Disposition permitted
under Section 10.2.9; provided that the Obligors shall take appropriate steps to
grant a first priority (or, subject to the Intercreditor Agreement, second
priority) perfected Lien in such Investments in favor of Agent for the benefit
of the Secured Parties;

(g) advances to officers, directors and employees of the Borrower and its
Restricted Subsidiaries in an aggregate amount not to exceed $10,000,000 at any
time outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;

(h) any purchases of Equity Interests permitted under Section 10.2.3;

(i) Investments by Foreign Subsidiaries in the Ordinary Course of Business;

(j) Permitted Acquisitions;

(k) Investments (including Debt and other obligations) received in connection
with the bankruptcy or reorganization of suppliers or in settlement of
delinquent obligations of, and other disputes with, suppliers in the Ordinary
Course of Business;

(l) Investments in the SPV pursuant to Sections 7.3.1 and 7.3.3; and

(m) other Investments (including controlling interests in Persons in the same or
a similar line of business as the Borrower) not to exceed $25,000,000 in the
aggregate at any time, provided that (i) after giving effect to such Investment,
no Default would exist and (ii) no more than $5,000,000 in the aggregate under
this Section 10.2.4(m) may be used for Investments in Foreign Subsidiaries.

10.2.5 Fundamental Changes. The Borrower will not, and will not permit any
Restricted Subsidiary to, engage (directly or indirectly) in any business other
than those businesses in which the Borrower and its Restricted Subsidiaries are
engaged on the Closing Date (or which are reasonably related thereto or are
reasonable extensions thereof but not any trading business or similar
activities) or allow any material change to be made in the character of its
business.

10.2.6 Proceeds of Loans. The Borrower shall not, directly or indirectly, use
any Loan proceeds, nor use, lend, contribute or otherwise make available any
Loan proceeds to any Subsidiary, joint venture partner or other Person, (i) to
fund any activities of or business with any Person, or in any Designated
Jurisdiction, that, at the time of such funding, is the subject of any Sanction;
(ii) in any manner that would result in a violation of any Sanctions by any
Person (including any Secured Party or other Person participating in the Loans);
or (iii) for any purpose that would breach any Anti-Corruption Law.

 

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10.2.7 Sale or Discount of Receivables. Except for Accounts obtained by the
Borrower or any Restricted Subsidiary out of the Ordinary Course of Business or
the settlement of joint interest billing accounts in the Ordinary Course of
Business or discounts granted to settle collection of Accounts or the sale of
defaulted Accounts arising in the Ordinary Course of Business in connection with
the compromise or collection thereof and not in connection with any financing
transaction, the Borrower will not, and will not permit any Restricted
Subsidiary to, discount or sell (with or without recourse) any of its notes
receivable or Accounts.

10.2.8 Mergers, Etc. The Borrower may not consolidate, combine or merge with or
into another Person, in one or more related transactions, unless:

(a) the Borrower is the resulting or surviving Person or the resulting or
surviving Person (if other than the Borrower) is a corporation, limited
liability company or limited partnership organized and existing under the laws
of the United States or any state thereof or the District of Columbia and such
resulting or surviving Person assumes, pursuant to documentation in form and
substance reasonably satisfactory to Agent, all of the obligations and covenants
of the Borrower under this Agreement and the other Loan Documents;

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

(c) except in the case of a consolidation or merger of the Borrower with or into
a Guarantor, either (i) immediately after giving pro forma effect to such
transaction as if such transaction had occurred at the beginning of the
applicable four-quarter period, the Borrower or the resulting or surviving
Person (if other than the Borrower) would have a Fixed Charge Coverage Ratio
that is not less than the Fixed Charge Coverage Ratio of the Borrower
immediately prior to such transaction or (ii) immediately after giving pro forma
effect to such transaction as if such transaction had occurred at the beginning
of the applicable four-quarter period, the Borrower or the resulting or
surviving Person (if other than the Borrower) would be able to incur at least
$1.00 of additional Debt under the Fixed Charge Coverage Ratio test set forth in
Section 10.2.1; and

(d) the Borrower or such successor shall have delivered to Agent an officer’s
certificate and an opinion of counsel each stating that such consolidation,
merger or combination, comply with the provisions of this Agreement and that all
conditions precedent in this Agreement relating to such transaction have been
satisfied;

(e) Upon any consolidation, combination or merger in accordance with this
Section 10.2.8, the successor formed by such combination or consolidation or
into which the Borrower is merged shall succeed to, and may exercise every right
and power of, the Borrower under this Agreement and the other Loan Documents
with the same effect as if such successor had been named as the Borrower herein
and shall be substituted for the Borrower (so that from and after the date of
such consolidation, combination or merger, the provisions of this Agreement and
the other Loan Documents referring to the “Borrower” shall refer instead to the
successor and not to the predecessor); and thereafter, if the Borrower is
dissolved following a disposition of all or substantially all of the properties
or assets of the Borrower and its Restricted Subsidiaries taken as a whole in
accordance with this Agreement, it shall be discharged and released from all
obligations and covenants under this Agreement and the other Loan Documents.

 

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10.2.9 Sales of Properties. The Borrower will not, and will not permit any
Restricted Subsidiary to sell, transfer, lease or otherwise dispose of Property
except for:

(a) the sale of Inventory in the Ordinary Course of Business;

(b) the sale or transfer of Equipment or other goods that is obsolete, worn out
or no longer necessary for, or used or useful in, the business of the Borrower
or such Restricted Subsidiary or is replaced by Equipment or other goods;

(c) any sale, transfer, lease or other disposition of Property the consideration
for which is at least fair market value thereof and with respect to which (i) at
least 75% of the consideration received in such sale, transfer, lease or other
disposition is in the form of cash, Cash Equivalents or Deemed Cash Equivalents
and (ii) the fair market value of all forms of consideration other than cash or
Cash Equivalents or Deemed Cash Equivalents received for such sales, transfers,
leases and other dispositions does not exceed $15,000,000 in the aggregate;
provided that, with respect to any disposition pursuant to this Section
10.2.9(c) that constitutes an Asset Disposition, the Borrower shall comply with
the requirements of Section 5.4.1 with respect to any Net Cash Proceeds thereof;

(d) the sale, transfer, lease or other disposition of Property by a Subsidiary
or a Guarantor to the Borrower or another Guarantor or by a non-Guarantor to
another non-Guarantor;

(e) the sale of the Borrower’s treasury stock and the sale or issuance of any
Subsidiary’s Equity Interests to the Borrower or any Guarantor;

(f) an exchange or “swap” of assets of the Borrower or any Restricted Subsidiary
for the assets of a Person other than the Borrower or any Restricted Subsidiary
in the Ordinary Course of Business, provided that (i) the assets received will
be used or useful in its business, (ii) the Borrower or such Restricted
Subsidiary, as applicable, shall have received reasonably equivalent value for
such assets, such value to be demonstrated to the reasonable satisfaction of
Agent;

(g) sales, transfers, leases or other dispositions constituting Investments
permitted under Section 10.2.4 or constituting Distributions permitted by
Section 10.2.3;

(h) non-exclusive licenses of Intellectual Property;

(i) abandonment, allowing to lapse or other disposal of any Intellectual
Property determined in good faith by the management of the Borrower to be no
longer useful, necessary or otherwise not material in the operation of the
business of the Borrower or any of the Consolidated Subsidiaries;

(j) sales, transfers, leases or other dispositions of drill pipe or down hole
equipment lost, abandoned or destroyed in the Ordinary Course of Business;

 

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(k) the sale of past due Accounts permitted by Section 10.2.6;

(l) the sale, transfer, lease or other disposition of tangible Property to the
extent located outside of the United States on the Closing Date and Equity
Interests in Foreign Subsidiaries in existence on the Closing Date; and

(m) transactions contemplated by the Prepackaged Plan on the Closing Date.

10.2.10 Transactions with Affiliates. The Borrower will not, and will not permit
any Restricted Subsidiary to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate of the Borrower (other than the Borrower or another
Restricted Subsidiary) (each, an “Affiliate Transaction”), involving aggregate
consideration in excess of $1.0 million, unless:

(a) the Affiliate Transaction is on terms that taken as a whole are not
materially less favorable to the Borrower or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by the
Borrower or such Restricted Subsidiary with an unrelated Person; and

(b) the Borrower delivers to Agent with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $40 million, a resolution of the Board of Directors of the Borrower
certifying that such Affiliate Transaction complies with this covenant and that
such Affiliate Transaction has been approved by a majority of the disinterested
members, if any, of the Board of Directors of the Borrower;

provided that the foregoing shall not apply to (i) reimbursements for
out-of-pocket expenses paid to Platinum or any of its Affiliates by the Borrower
or any Restricted Subsidiary in an aggregate amount not to exceed $1,000,000 in
any Fiscal Year and (ii) management, consulting, advisory and monitoring fees
and related indemnities, charges and expenses paid or accrued to or on behalf of
Platinum or any of its Affiliates not to exceed $3,000,000 per Fiscal Year,
which fees may be paid (x) commencing with the Fiscal Year ending December 31,
2017, on an annual basis solely from any amount of Excess Cash Flow with respect
to such Fiscal Year not required to be applied by the Borrower to purchase Loans
pursuant to an ECF Offer under Section 5.4.2 and (y) commencing with the Fiscal
Year ending December 31, 2018, without limit, so long as the Leverage Ratio as
of the date of such payment is less than 2.00 to 1.00.

10.2.11 Subsidiaries. The Borrower will not, and will not permit any Subsidiary
to, create or acquire any additional Subsidiary unless the Borrower gives prior
written notice to Agent of such creation or acquisition and complies with
Section 10.1.13. The Borrower shall not, and shall not permit any Restricted
Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in any
Subsidiary except in compliance with Section 10.2.9(c) and except that Equity
Interests in Foreign Subsidiaries owned on the Closing Date may be sold,
assigned or otherwise disposed of in connection with Asset Dispositions
permitted by Section 10.2.9(l).

10.2.12 Limitation on Issuance of Equity Interests. The Borrower shall not
permit any Restricted Subsidiary to issue any Equity Interest (including by way
of sales of

 

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treasury stock) or any options or warrants to purchase, or securities
convertible into, any Equity Interest, except for (i) issuances of Equity
Interests to an Obligor or another Restricted Subsidiary or (ii) stock splits,
stock dividends and other issuances which do not decrease the percentage
ownership of Borrower and its Restricted Subsidiaries in any class of the Equity
Interests of such Restricted Subsidiary. The Borrower and its Subsidiaries shall
comply with Section 10.1.13 with respect to any such issued Equity Interests.

10.2.13 Restrictive Agreements. The Borrower will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or suffer to exist any
Restrictive Agreement (other than this Agreement, the Security Documents,
documents governing Purchase Money Liens securing Permitted Purchase Money Debt,
the ABL Credit Agreement or documents covering Permitted Junior Priority Secured
Debt and other Debt permitted hereunder); provided that the foregoing shall not
prohibit the Borrower or any Restricted Subsidiary from creating, incurring,
assuming or suffering any agreement which contains restrictions existing by
reason of (i) restrictions imposed by applicable law, (ii) customary provisions
in joint venture agreements and other similar agreements applicable to joint
ventures entered into in the ordinary course of business (iii) customary
provisions contained in licenses, sublicenses, covenants not to sue, releases
and other agreements in connection with Intellectual Property and other similar
agreements entered into in the ordinary course of business, (iv) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest, (v) customary provisions restricting assignment of any
agreement entered into in the ordinary course of business, (vi) customary
restrictions and conditions contained in any agreement relating to the sale,
transfer, lease or other disposition of any asset permitted under Section 10.2.9
pending the consummation of such sale, transfer, lease or other disposition,
(vii) customary net worth provisions contained in real property leases entered
into by the Borrower or its Restricted Subsidiaries, so long as the Borrower has
determined in good faith that such net worth provisions would not reasonably be
expected to impair the ability of the Borrower and its Restricted Subsidiaries
to meet their ongoing obligations and (viii) restrictions on cash or other
deposits imposed by customers under contracts entered into in the ordinary
course of business.

10.2.14 Hedging Agreements. The Borrower will not, and will not permit any
Restricted Subsidiary to, enter into any Hedging Agreements except to hedge
risks arising in the Ordinary Course of Business and not for speculative
purposes.

10.2.15 Sale and Leaseback. The Borrower shall not, and shall not permit any
Restricted Subsidiary to, enter into any arrangement, directly or indirectly,
with any Person whereby it shall sell or transfer any Property, whether now
owned or hereafter acquired, and thereafter rent or lease such Property which it
intends to use for substantially the same purpose or purposes as the Property
being sold or transferred.

10.2.16 Amendments to Organic Documents or Fiscal Year End.

(a) The Borrower shall not, and shall not permit any Restricted Subsidiary to,
amend, supplement or otherwise modify (or permit to be amended, supplemented or
modified) its Organic Documents in a manner that would be adverse to the Lenders
in any material respect.

 

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(b) The Borrower shall not, and shall not permit any Restricted Subsidiary to,
(i) change the last day of its Fiscal Year from December 31 of each year, or the
last days of the first three Fiscal Quarters in each of its Fiscal Years from
March 31, June 30 and September 30 of each year, respectively or (ii) make any
material change in accounting treatment or reporting practices, except as
required by GAAP.

(c) The Borrower shall not, and shall not permit any Restricted Subsidiary to,
except as permitted by the Intercreditor Agreement, amend, modify, waive or
otherwise change, consent or agree to any amendment, supplement, modification,
waiver or other change to, any of the terms of the ABL Credit Agreement.

10.2.17 Tax Consolidation. The Borrower shall not, and shall not permit any
Restricted Subsidiary to, file or consent to the filing of any consolidated
income tax return with any Person other than the Borrower and its Restricted
Subsidiaries.

10.2.18 Plans. The Borrower shall not, and shall not permit any Restricted
Subsidiary to, become a party to any Multiemployer Plan or Foreign Plan, other
than any in existence on the Closing Date, except where becoming such a party
could not reasonably be expected to have a Material Adverse Effect.

10.2.19 Additional Deposits in the TL Proceeds and Priority Collateral Account
Prohibited. The Borrower shall not, and shall not permit any Restricted
Subsidiary to, deposit any funds or other Property in, or credit any funds or
other Property to, the TL Proceeds and Priority Collateral Account other than up
to $45,000,000 deposited therein on the Closing Date, any funds that do not
constitute ABL Priority Collateral (as defined in the Intercreditor Agreement)
deposited therein from time to time, identifiable proceeds of Asset Dispositions
of Term Priority Collateral, and identifiable proceeds of insurance resulting
from casualty of the Term Priority Collateral and of awards arising from
condemnation of the Term Priority Collateral.

10.2.20 SPV. The Borrower shall not permit the SPV to (a) engage in any
activity, other than holding certain real property of the Obligors transferred
to the SPV pursuant to Section 7.3 and activities related to the maintenance of
its corporate existence, (b) incur any Debt, other than (i) intercompany
obligations subject to subordination agreements reasonably acceptable to Agent,
(ii) pursuant to leases governing any leasehold interests held by the SPV and
(iii) providing guarantees in favor of Agent or (c) grant any Liens, other than
Liens that arise pursuant to leases governing any leasehold interests held by
the SPV or by operation of law; provided, that, for the avoidance of doubt, in
no event shall the SPV be required to qualify as a “bankruptcy remote” entity.

10.2.21 Transactions Contemplated by the Prepackaged Plan. Notwithstanding any
other provision of this Agreement, the implementation of the transactions
specifically provided for in the Prepackaged Plan in accordance with the terms
of the Prepackaged Plan, shall be deemed to be permitted by this Agreement so
long as they are consummated in a manner not inconsistent with the terms of this
Agreement.

 

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10.3 Financial Covenants.

10.3.1 Asset Coverage Ratio. As long as any Obligations are outstanding, the
Borrower shall not permit the Asset Coverage Ratio to be less than 1.35 to 1.00
as of the last day of any Fiscal Quarter; provided that such Asset Coverage
Ratio shall only be tested upon the delivery of the Compliance Certificate for
such period in accordance with Section 10.1.2(e).

10.3.2 Liquidity. As long as any Obligations are outstanding, the Borrower shall
not permit Liquidity to be less than $37,500,000 (of which at least $20,000,000
must be comprised of unrestricted cash and Cash Equivalents held in Deposit
Accounts) as of the last day of any Fiscal Quarter; provided that the Borrower
shall deliver evidence of Liquidity as of the last day of any Fiscal Quarter to
Agent within ten (10) Business Days of the last day of such Fiscal Quarter.

10.3.3 Cure. Notwithstanding the foregoing, in the event the Asset Coverage
Ratio as of the last day of any Fiscal Quarter is less than 1.35 to 1.00 or
Liquidity as of the last day of any Fiscal Quarter is less than $37,500,000 (or
unrestricted cash and Cash Equivalents held in Deposit Accounts as of the last
day of any Fiscal Quarter is less than $20,000,000) and, with respect to a
deficiency in the Asset Coverage Ratio, the Borrower has taken one or more of
the following actions described in Sections 10.3.3(a) through (c) or, with
respect to a deficiency in Liquidity, the Borrower has taken the action
described in Section 10.3.3(c), at any time during the period (the “Cure
Period”) beginning on the last day of such Fiscal Quarter and ending on the
tenth (10th) Business Day following the date the Borrower delivers the
Compliance Certificate for such period in accordance with Section 10.1.2(e),
then for purposes of determining compliance with Section 10.3.1 or
Section 10.3.2, as applicable, the Borrower shall be permitted to calculate the
Asset Coverage Ratio or Liquidity after giving pro forma effect to such
action(s) (and, for the avoidance of doubt, in no event shall the Borrower be
deemed to be in Default with respect to Section 10.3.1 or 10.3.2 until the
expiration of the Cure Period):

(a) taking all steps necessary to grant a first priority, perfected Lien in
additional Term Priority Collateral in favor of Agent for the benefit of the
Secured Parties such that after giving pro forma effect to such increase in Term
Priority Collateral, the Borrower is in compliance with Section 10.3.1. as of
the last day of such Fiscal Quarter;

(b) prepaying Loans in accordance with Section 5.3.1 in an amount such that
after giving effect to the reduction in the Debt outstanding under the Loan
Documents, the Borrower is in compliance with Section 10.3.1 as of the last day
of such Fiscal Quarter; provided that no cash or Cash Equivalents included in
(x) the definition of the numerator of the Asset Coverage Ratio for purposes of
Section 10.3.1 or (y) the definition of Liquidity for purposes of
Section 10.3.2, in each case, with respect to any Fiscal Quarter, may be applied
to prepay Loans in accordance with this clause (b) in such fiscal quarter;
and/or

(c) issuing common or preferred Equity Interests of the Borrower or subordinated
Debt of the Obligors for cash (such preferred Equity Interests to the extent
constituting Disqualified Stock or subordinated Debt shall be on terms
reasonably satisfactory to the Required Lenders), which, at the request of the
Borrower, will be considered, as applicable, (a) an addition to Liquidity to the
extent unrestricted and held in a Deposit Account or (b) a dollar-for-dollar
reduction to the denominator of the Asset Coverage Ratio (but not an addition to
the numerator thereof), such that the Borrower is in compliance with
Section 10.3.1 or 10.3.2, as applicable, as of the last day of such Fiscal
Quarter;

 

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provided that the Borrower shall be entitled to calculate the Asset Coverage
Ratio or Liquidity, as applicable, on a pro forma basis after giving effect to
actions taken under the foregoing Section 10.3.3(b) or Section 10.3.3(c) (i) not
more than twice in any four Fiscal Quarter period, and (ii) not more than five
times during the term of this Agreement.

 

SECTION 11. GUARANTY

11.1 Guaranty. For value received, the sufficiency of which is hereby
acknowledged, and in consideration of credit and/or financial accommodation
heretofore or hereafter from time to time made or granted to the Borrower by the
Secured Parties, each Guarantor hereby absolutely, unconditionally and
irrevocably guarantees to Agent, for the ratable benefit of the Secured Parties,
the full and prompt payment when due, whether at stated maturity, by required
prepayment, upon acceleration, demand or otherwise, and at all times thereafter,
of the Guaranteed Obligations (as hereafter defined) and the punctual
performance of all of the terms contained in the documents executed by the
Borrower in favor of one or more Secured Parties in connection with the
Guaranteed Obligations. This Guaranty is a guaranty of payment and performance
and is not merely a guaranty of collection. As used herein, the term “Guaranteed
Obligations” means any and all existing and future Obligations of the Borrower
to any Secured Party, whether associated with any credit or other financial
accommodation made to or for the benefit of the Borrower by any Secured Party or
otherwise and whenever created, arising, evidenced or acquired (including all
renewals, extensions, amendments, refinancings and other modifications thereof
and all costs, attorneys’ fees and expenses incurred by the Secured Parties in
connection with the collection or enforcement thereof). Without limiting the
generality of the foregoing, the Guaranteed Obligations shall include any such
indebtedness, obligations, and liabilities which may be or hereafter become
unenforceable or shall be an allowed or disallowed claim under any proceeding or
case commenced by or against any Guarantor or the Borrower under the Bankruptcy
Code, any successor statute or any other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief laws of the
United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally (collectively, “Debtor Relief
Laws”), and shall include interest that accrues after the commencement by or
against the Borrower of any proceeding under any Debtor Relief Laws. Anything
contained herein to the contrary notwithstanding, the obligations of each
Guarantor hereunder at any time shall be limited to an aggregate amount equal to
the largest amount that would not render its obligations hereunder subject to
avoidance as a fraudulent transfer or conveyance under Section 548 of the
Bankruptcy Code or any comparable provisions of any similar federal or state
law.

11.2 No Setoff or Deductions; Taxes; Payments. Each Guarantor shall make all
payments hereunder without setoff or counterclaim and free and clear of and
without deduction for any levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any nature (other
than Taxes, which shall be governed by Section 5.10) now or hereafter imposed or
levied by any jurisdiction or any political subdivision thereof or authority
therein unless such Guarantor is compelled by law to make such deduction or

 

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withholding. If any such obligation (other than one arising with respect to
Taxes) is imposed upon a Guarantor with respect to any amount payable by it
hereunder, such Guarantor will pay to the applicable Secured Party, on the date
on which such amount is due and payable hereunder, such additional amount in
U.S. dollars as shall be necessary to enable such Secured Party to receive the
same net amount which such Secured Party would have received on such due date
had no such obligation been imposed upon such Guarantor. Each Guarantor will
deliver promptly to such Secured Party certificates or other valid vouchers for
all charges deducted from or paid with respect to payments made by such
Guarantor hereunder. The obligations of each Guarantor under this Section 11.2
shall survive the payment in full of the Guaranteed Obligations and termination
of the Guaranty.

11.3 Rights of Secured Parties. Each Guarantor consents and agrees that the
Secured Parties may, at any time and from time to time, without notice or
demand, and without affecting the enforceability or continuing effectiveness
hereof: (a) amend (including increase), modify, extend, renew, compromise,
discharge, accelerate or otherwise change the time for payment or the terms of
the Guaranteed Obligations or any part thereof; (b) take, hold, exchange,
enforce, waive, release, fail to perfect, sell, or otherwise dispose of any
security for the payment of this Guaranty or any Guaranteed Obligations;
(c) apply such security and direct the order or manner of sale thereof as the
Secured Parties in their sole discretion may determine; and (d) release or
substitute one or more of any endorsers or other guarantors of any of the
Guaranteed Obligations. Without limiting the generality of the foregoing, each
Guarantor consents to the taking of, or failure to take, any action which might
in any manner or to any extent vary the risks of such Guarantor under this
Guaranty or which, but for this provision, might operate as a discharge of such
Guarantor.

11.4 Certain Waivers. Each Guarantor waives to the fullest extent permitted by
law (a) any defense arising by reason of any disability or other defense of the
Borrower or any other guarantor, or the cessation from any cause whatsoever
(including any act or omission of any Secured Party) of the liability of the
Borrower; (b) any defense based on any claim that such Guarantor’s obligations
exceed or are more burdensome than those of the Borrower; (c) the benefit of any
statute of limitations affecting such Guarantor’s liability hereunder; (d) any
right to require any Secured Party to proceed against the Borrower, proceed
against or exhaust any security for the Guaranteed Obligations, or pursue any
other remedy in any Secured Party’s power whatsoever and any defense based upon
the doctrines of marshalling of assets or of election of remedies; (e) any
benefit of and any right to participate in any security now or hereafter held by
any Secured Party; (f) any defense relating to the failure of any Secured Party
to comply with the applicable laws in connection with the sale or other
disposition of Collateral for all or any part of the Guaranteed Obligations;
(g) any amendment or waiver of the term of any Guaranteed Obligation; (h) any
law or regulation of any jurisdiction or any other event affecting any term of a
Guaranteed Obligation; (i) any fact or circumstance related to the Guaranteed
Obligations which might otherwise constitute a defense to the obligations of
such Guarantor under this Guaranty and (j) any and all other defenses or
benefits that may be derived from or afforded by applicable law limiting the
liability of or exonerating guarantors or sureties, other than the defense that
the Guaranteed Obligations have been fully performed and indefeasibly paid in
full in cash.

 

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Each Guarantor expressly waives all setoffs and counterclaims and all
presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor and all other
notices or demands of any kind or nature whatsoever with respect to the
Guaranteed Obligations, and all notices of acceptance of this Guaranty or of the
existence, creation or incurrence of new or additional Guaranteed Obligations.
This Guaranty shall not be affected by the genuineness, validity, regularity or
enforceability of the Guaranteed Obligations or any instrument or agreement
evidencing any Guaranteed Obligations, or by the existence, validity,
enforceability, perfection, non-perfection or extent of any Collateral therefor,
or by any fact or circumstance relating to the Guaranteed Obligations which
might otherwise constitute a defense to the obligations of any Guarantor under
this Guaranty, and each Guarantor hereby irrevocably waives any defenses it may
now have or hereafter acquire in any way relating to any or all of the
foregoing.

11.5 Obligations Independent. The obligations of each Guarantor hereunder are
those of primary obligor, and not merely as surety, and are independent of the
Guaranteed Obligations and the obligations of any other guarantor, and a
separate action may be brought against each Guarantor to enforce this Guaranty
whether or not the Borrower or any other person or entity is joined as a party.

11.6 Subrogation. No Guarantor shall exercise any right of subrogation,
contribution, indemnity, reimbursement or similar rights with respect to any
payments it makes under this Guaranty until Full Payment of all Guaranteed
Obligations and any amounts payable under this Guaranty. If any amounts are paid
to any Guarantor in violation of the foregoing limitation, then such amounts
shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to Agent (for the benefit of itself and the other Secured
Parties) to reduce the amount of the Guaranteed Obligations, whether matured or
unmatured.

11.7 Termination; Reinstatement. This Guaranty is a continuing and irrevocable
guaranty of all Guaranteed Obligations now or hereafter existing and shall
remain in full force and effect until Full Payment of all Guaranteed Obligations
and any amounts payable under this Guaranty. Notwithstanding the foregoing, this
Guaranty shall continue in full force and effect or be revived, as the case may
be, if any payment by or on behalf of the Borrower or any Guarantor is made, or
any Secured Party exercises its right of setoff, in respect of the Guaranteed
Obligations 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
Secured Party in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any proceeding under any Debtor Relief Laws or
otherwise, all as if such payment had not been made or such setoff had not
occurred and whether or not such Secured Party is in possession of or has
released this Guaranty and regardless of any prior revocation, rescission,
termination or reduction. The obligations of each Guarantor under this
Section 11.7 shall survive termination of this Guaranty.

11.8 Subordination. Each Guarantor hereby subordinates the payment of all
obligations and indebtedness of the Borrower owing to such Guarantor, whether
now existing or hereafter arising, including but not limited to any obligation
of the Borrower to such Guarantor as subrogee of any Secured Party or resulting
from such Guarantor’s performance under this Guaranty, to the Full Payment of
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obligation or indebtedness of the Borrower to any Guarantor shall be enforced
and performance received by such Guarantor as trustee for Agent and the proceeds
thereof, as well as any other amounts received by such Guarantor in violation of
this Section 11.8, shall be paid over to Agent on account of the Guaranteed
Obligations, but without reducing or affecting in any manner the liability of
such Guarantor under this Guaranty.

11.9 Stay of Acceleration. In the event that acceleration of the time for
payment of any of the Guaranteed Obligations is stayed, in connection with any
case commenced by or against any Guarantor or the Borrower under any Debtor
Relief Laws, or otherwise, all such amounts shall nonetheless be payable by any
Guarantor immediately upon demand by Agent.

11.10 Expenses. Each Guarantor shall pay on demand all reasonable and documented
out-of-pocket expenses (including reasonable attorneys’ fees and expenses) in
any way relating to the enforcement or protection of the any Secured Party’s
rights under this Guaranty or in respect of the Guaranteed Obligations,
including any incurred during any “workout” or restructuring in respect of the
Guaranteed Obligations and any incurred in the preservation, protection or
enforcement of any rights of any Secured Party in any proceeding under any
Debtor Relief Laws. The obligations of each Guarantor under this Section 11.10
shall survive the Full Payment of the Guaranteed Obligations and termination of
this Guaranty.

11.11 Miscellaneous. Agent’s books and records showing the amount of the
Guaranteed Obligations shall be admissible in evidence in any action or
proceeding, and shall be binding upon each Guarantor and conclusive, absent
manifest error, for the purpose of establishing the amount of the Guaranteed
Obligations. No failure by any Secured Party to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy or power
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law or in equity. The unenforceability
or invalidity of any provision of this Guaranty shall not affect the
enforceability or validity of any other provision herein. Unless otherwise
agreed by Agent and each Guarantor in writing, this Guaranty is not intended to
supersede or otherwise affect any other guaranty now or hereafter given by any
Guarantor or any other guarantor for the benefit of the Secured Parties or any
term or provision thereof.

11.12 Condition of Borrower. Each Guarantor acknowledges and agrees that it has
the sole responsibility for, and has adequate means of, obtaining from the
Borrower and any other guarantor such information concerning the financial
condition, business and operations of the Borrower and any such other guarantor
as each Guarantor requires, and that the Secured Parties have no duty, and each
Guarantor is not relying on any Secured Party at any time, to disclose to such
Guarantor any information relating to the business, operations or financial
condition of the Borrower or any other guarantor (the guarantor waiving any duty
on the part of any Secured Party to disclose such information and any defense
relating to the failure to provide the same).

11.13 Additional Guarantors. Each Person that is required to become a party to
this Guaranty pursuant to Section 10.1.13 shall become a Guarantor for all
purposes of this Guaranty upon execution and delivery by such Person of a
supplement in form reasonably satisfactory to Agent.

 

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SECTION 12. EVENTS OF DEFAULT; REMEDIES ON DEFAULT

12.1 Events of Default. Each of the following shall be an “Event of Default” if
it occurs for any reason whatsoever, whether voluntary or involuntary, by
operation of law or otherwise:

(a) the Borrower fails to pay principal on any Loan when due (whether at stated
maturity, on demand, upon acceleration or otherwise), or Borrower fails to pay
any interest, fee or any other Obligation, and such failure continues unremedied
for a period of five Business Days;

(b) any representation, warranty or other written statement of an Obligor made
in connection with any Loan Documents or transactions contemplated thereby is
incorrect or misleading in any material respect when given;

(c) the Borrower breaches or fail to perform any covenant contained in Sections
7.2, 7.3, 7.4, 7.6, 8.1, 8.3, 8.4.2, 10.1.1, 10.1.2(e), 10.1.4, 10.2 or 10.3;

(d) an Obligor breaches or fails to perform any other covenant contained in any
Loan Documents, and such breach or failure is not cured within (i) with respect
to any failure to provide any report or notice required hereunder, 30 days and
(b) with respect to any other covenant (other than those subject to clause
(a) and (c) above), 60 days after a Senior Officer of such Obligor has knowledge
thereof or receives notice thereof from Agent, whichever is sooner; provided,
that such notice and opportunity to cure shall not apply if the breach or
failure to perform is not capable of being cured within such period or is a
willful breach by an Obligor;

(e) a Guarantor repudiates, revokes or attempts to revoke its Guaranty; an
Obligor or third party denies or contests the validity or enforceability of any
Loan Documents (or any material provision thereof) or Obligations, or the
perfection or priority of any Lien granted to Agent; any Loan Document ceases to
be in full force or effect for any reason (other than a waiver or release by
Agent and Lenders); or any Security Document ceases to create a perfected
security interest having the priority required by this Agreement in a material
portion of the Collateral in favor of Agent for any reason (other than pursuant
to the terms hereof or thereof or a waiver or release by Agent and Lenders);

(f) any (i) failure of any Obligor to make any payment or (ii) other breach or
default of an Obligor occurs under any instrument or agreement to which it is a
party or by which it or any of its Properties is bound, in each case, relating
to any Material Debt; provided, however, that any breach or default or any event
of default under the ABL Credit Agreement as a result of breach of any financial
covenant under Section 10.3 of the ABL Credit Agreement will not constitute an
Event of Default under this clause (f) until the acceleration of the Debt under
the ABL Credit Agreement;

(g) the failure by the Borrower or any of its Restricted Subsidiaries to pay
final judgments aggregating in excess of $30,000,000 (excluding amounts covered
by insurance), which judgments are either (i) not paid within 60 days after the
date payment is due or (ii) not discharged or stayed for a period of 60 days
from the date of such judgment;

 

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(h) an Insolvency Proceeding is commenced by an Obligor; an Obligor makes an
offer of settlement, extension or composition to its unsecured creditors
generally; a trustee is appointed to take possession of any substantial Property
of or to operate any of the business of an Obligor; or an Insolvency Proceeding
is commenced against an Obligor and: the Obligor consents to institution of the
proceeding, the petition commencing the proceeding is not timely contested by
the Obligor, the petition is not dismissed within 30 days after filing, or an
order for relief is entered in the proceeding; or

(i) except for such matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, an ERISA Event
occurs with respect to a Pension Plan or Multiemployer Plan that has resulted or
could reasonably be expected to result in liability of an Obligor to a Pension
Plan, Multiemployer Plan or PBGC, or that constitutes grounds for appointment of
a trustee for or termination by the PBGC of any Pension Plan or Multiemployer
Plan; an Obligor or ERISA Affiliate fails to pay when due any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan; or any event similar to the foregoing occurs or
exists with respect to a Foreign Plan.

12.2 Remedies upon Default. If any Event of Default (other than an Event of
Default described in clause (h) of Section 12.1) exists, Agent may (with the
consent of the Required Lenders) and shall (upon written direction of Required
Lenders) do any one or more of the following from time to time:

(a) declare any Obligations immediately due and payable (an “acceleration”)
which amount shall include, if such acceleration occurs prior to third
anniversary of the Closing Date, the Applicable Premium in effect on the date of
such acceleration, as if such acceleration were an optional or mandatory
prepayment on the principal amount of Loans accelerated, whereupon they shall be
due and payable without diligence, presentment, demand, protest or notice of any
kind, all of which are hereby waived by Borrower to the fullest extent permitted
by law;

(b) if an Event of Default described in clause (h) of Section 12.1 occurs and is
continuing, any Obligations will become immediately due and payable without any
further action or notice on the part of Agent or any Lenders;

(c) require Obligors to Cash Collateralize their Obligations that are contingent
or not yet due and payable; and

(d) exercise any other rights or remedies afforded under any agreement, by law,
at equity or otherwise, including the rights and remedies of a secured party
under the UCC. Such rights and remedies include the rights to (i) take
possession of any Collateral; (ii) require Borrower to assemble Collateral, at
Borrower’s expense, and make it available to Agent at a place designated by
Agent; (iii) enter any premises where Collateral is located and store Collateral
on such premises until sold (and if the premises are owned or leased by
Borrower, Borrower agrees not to charge for such storage); and (iv) sell or
otherwise dispose of any Collateral in its then condition, or after any further
manufacturing or processing thereof, at public or private sale, with such notice
as may be required by Applicable Law, in lots or in bulk, at such

 

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locations, all as Agent, in its discretion, deems advisable. The Borrower agrees
that 10 days’ notice of any proposed sale or other disposition of Collateral by
Agent shall be reasonable, and that any sale conducted on the internet or to a
licensor of Intellectual Property shall be commercially reasonable. Agent may
conduct sales on any Obligor’s premises, without charge, and any sale may be
adjourned from time to time in accordance with Applicable Law. Agent shall have
the right to sell, lease or otherwise dispose of any Collateral for cash, credit
or any combination thereof, and Agent may purchase any Collateral at public or,
if permitted by law, private sale and, in lieu of actual payment of the purchase
price, may credit bid and set off the amount of such price against the
Obligations.

12.3 License. Agent is hereby granted an irrevocable, non-exclusive license or
other right to use, license or sub-license (without payment of Royalties or
other compensation to any Person) any or all Intellectual Property of Borrower,
computer hardware and software, trade secrets, brochures, customer lists,
promotional and advertising materials, labels, packaging materials and other
Property, in advertising for sale, marketing, selling, collecting, completing
manufacture of, or otherwise exercising any rights or remedies with respect to,
any Collateral. The Borrower’s rights and interests under Intellectual Property
shall inure to Agent’s benefit.

12.4 Setoff. At any time during an Event of Default, Agent, Lenders, and any of
their Affiliates are authorized, to the fullest extent permitted by Applicable
Law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by Agent, such Lender or
such Affiliate to or for the credit or the account of an Obligor against its
Obligations, whether or not Agent, such Lender or such Affiliate shall have made
any demand under this Agreement or any other Loan Document and although such
Obligations may be contingent or unmatured or are owed to a branch or office of
Agent, such Lender or such Affiliate different from the branch or office holding
such deposit or obligated on such indebtedness. The rights of Agent, each Lender
and each such Affiliate under this Section 12.4 are in addition to other rights
and remedies (including other rights of setoff) that such Person may have.

12.5 Remedies Cumulative; No Waiver.

12.5.1 Cumulative Rights. All agreements, warranties, guaranties, indemnities
and other undertakings of Obligors under the Loan Documents are cumulative and
not in derogation of each other. The rights and remedies of Agent and Lenders
under the Loan Documents are cumulative, may be exercised at any time and from
time to time, concurrently or in any order, and are not exclusive of any other
rights or remedies available by agreement, by law, at equity or otherwise. All
such rights and remedies shall continue in full force and effect until Full
Payment of all Obligations.

12.5.2 Waivers. No waiver or course of dealing shall be established by (a) the
failure or delay of Agent or any Lender to require strict performance by any
Obligor under any Loan Document, or to exercise any rights or remedies with
respect to Collateral or otherwise; (b) the making of any Loan during a Default,
Event of Default or other failure to satisfy any conditions precedent; or
(c) acceptance by Agent or any Lender of any payment or performance by an
Obligor under any Loan Documents in a manner other than that specified therein.
Any failure to satisfy a financial covenant on a measurement date shall not be
cured or remedied by satisfaction of such covenant on a subsequent date except
as provided in Section 10.3.3.

 

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SECTION 13. AGENT

13.1 Appointment, Authority and Duties of Agent.

13.1.1 Appointment and Authority. Each Lender appoints and designates Cortland
Corp. as Agent under all Loan Documents and, solely with respect to the
Vehicles, Cortland LLC as Agent under all Loan Documents. Agent may, and each
Lender authorizes Agent to, enter into all Loan Documents to which Agent is
intended to be a party and accept all Security Documents. Any action taken by
Agent in accordance with the provisions of the Loan Documents, and the exercise
by Agent of any rights or remedies set forth therein, together with all other
powers reasonably incidental thereto, shall be authorized by and binding upon
all Lenders. Without limiting the generality of the foregoing, Agent shall have
the sole and exclusive authority to (a) act as the disbursing and collecting
agent for Lenders with respect to all payments and collections arising in
connection with the Loan Documents; (b) execute and deliver, as Agent, each Loan
Document, including the Intercreditor Agreement and any other intercreditor or
subordination agreement, and accept delivery of each Loan Document; (c) act as
collateral agent for Secured Parties for purposes of perfecting and
administering Liens under the Loan Documents, and for all other purposes stated
therein; (d) manage, supervise or otherwise deal with Collateral; and (e) take
any Enforcement Action or otherwise exercise any rights or remedies with respect
to any Collateral or under any Loan Documents, Applicable Law or otherwise. In
addition to the foregoing, each Lender hereby irrevocably authorizes Agent, at
Agent’s option and discretion, to enter into, or amend, the Intercreditor
Agreement (or similar agreements with the same or similar purpose) and any other
subordination or intercreditor agreement to effect the subordination of Liens
securing Obligations under the Loan Documents contemplated by Sections 10.2.1(h)
and 10.2.1(i) as agent for and on its behalf in accordance with the terms
specified in this Agreement. Any such Intercreditor Agreement or subordination
or intercreditor agreement entered into by Agent on behalf of the Secured
Parties shall be binding upon each Secured Party. Each Lender (and each Person
that becomes a Lender hereunder pursuant to Section 14.3) hereby authorizes and
directs Agent to enter into the Intercreditor Agreement and any such
subordination and intercreditor agreement on behalf of such Lender and agrees
that Agent may take such actions on its behalf as is contemplated by the terms
of the Intercreditor Agreement and any such subordination or intercreditor
agreement. Agent shall notify the Lenders of the effectiveness of the
Intercreditor Agreement and any such subordination or intercreditor agreement
when executed and shall provide a copy of the executed Intercreditor Agreement
and any such subordination or intercreditor agreement to the Lenders as and when
effective.

13.1.2 Duties. The title of “Agent” is used solely as a matter of market custom
and the duties of Agent are administrative in nature only. Agent has no duties
except those expressly set forth in the Loan Documents, and in no event does
Agent have any agency, fiduciary or implied duty to or relationship with any
Lender or other Person by reason of any Loan Document or related transaction.
The conferral upon Agent of any right shall not imply a duty to exercise such
right, unless instructed to do so by Lenders in accordance with this Agreement.

 

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13.1.3 Agent Professionals. Agent may perform its duties through agents and
employees. Agent may consult with and employ Agent Professionals, and shall be
entitled to act upon, and shall be fully protected in any action taken in good
faith reliance upon, any advice given by an Agent Professional. Agent shall not
be responsible for the negligence or misconduct of any agents, employees or
Agent Professionals selected by it with reasonable care.

13.1.4 Instructions of Required Lenders. The rights and remedies conferred upon
Agent under the Loan Documents may be exercised without the necessity of joining
any other party, unless required by Applicable Law. In determining compliance
with a condition for any action hereunder, including satisfaction of any
condition in Section 6, Agent may presume that the condition is satisfactory to
a Lender unless Agent has received notice to the contrary from such Lender
before Agent takes the action. Agent may request instructions from Required
Lenders with respect to any act (including the failure to act) in connection
with any Loan Documents or Collateral, and may seek assurances to its
satisfaction from Lenders of their indemnification obligations against Claims
that could be incurred by Agent. Agent may refrain from any act until it has
received such instructions or assurances, and shall not incur liability to any
Person by reason of so refraining. Instructions of Required Lenders shall be
binding upon all Lenders, and no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
pursuant to instructions of Required Lenders. Notwithstanding the foregoing,
instructions by and consent of specific parties shall be required to the extent
provided in Section 15.1.1. In no event shall Agent be required to take any
action that it determines in its discretion is contrary to Applicable Law or any
Loan Documents or could subject any Agent Indemnitee to liability.

13.2 Agreements Regarding Collateral and Borrower Materials.

13.2.1 Lien Releases; Care of Collateral. The Lenders authorize Agent to release
any Lien with respect to any Collateral (a) upon Full Payment of the
Obligations; (b) that is the subject of a disposition or Lien that Borrower
certifies in writing is permitted pursuant to this Agreement or a Permitted Lien
entitled to priority over Agent’s Liens (and Agent may rely conclusively on any
such certificate without further inquiry); (c) that does not constitute a
material part of the Collateral; or (d) subject to Section 15.1, with the
consent of Required Lenders. The Lenders authorize Agent to subordinate its
Liens to any Purchase Money Lien or other Lien entitled to priority hereunder.
Agent has no obligation to assure that any Collateral exists or is owned by an
Obligor, or is cared for, protected or insured, nor to assure that Agent’s Liens
have been properly created, perfected or enforced, or are entitled to any
particular priority, nor to exercise any duty of care with respect to any
Collateral.

13.2.2 Possession of Collateral. Agent and the Lenders appoint each Lender as
agent (for the benefit of Secured Parties) for the purpose of perfecting Liens
in any Collateral held or controlled by such Lender, to the extent such Liens
are perfected by possession or control. If any Lender obtains possession or
control of any Collateral, it shall notify Agent thereof and, promptly upon
Agent’s request, deliver such Collateral to Agent or otherwise deal with it in
accordance with Agent’s instructions.

13.2.3 Reports. Agent shall promptly provide to Lenders, when complete, any
field examination, audit or appraisal report prepared for Agent with respect to
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Collateral (“Report”). Reports and other Borrower Materials may be made
available to Lenders by providing access to them on the Platform, but Agent
shall not be responsible for system failures or access issues that may occur
from time to time. Each Lender agrees (a) that Reports are not intended to be
comprehensive audits or examinations, and that Agent or any other Person
performing an audit or examination will inspect only limited information and
will rely significantly upon Borrower’s books, records and representations;
(b) that Agent makes no representation or warranty as to the accuracy or
completeness of any Borrower Materials and shall not be liable for any
information contained in or omitted from any Borrower Materials, including any
Report; and (c) to keep all Borrower Materials confidential and strictly for
such Lender’s internal use, not to distribute any Report or other Borrower
Materials (or the contents thereof) to any Person (except to such Lender’s
Participants, attorneys and accountants), and to use all Borrower Materials
solely for administration of the Obligations. Each Lender shall indemnify and
hold harmless Agent and any other Person preparing a Report from any action such
Lender may take as a result of or any conclusion it may draw from any Borrower
Materials, as well as from any Claims arising as a direct or indirect result of
Agent furnishing same to such Lender, via the Platform or otherwise.

13.3 Reliance By Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any certification, notice or other communication
(including those by telephone, telex, telegram, telecopy or e-mail) believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person. Agent shall have a reasonable and practicable amount of time to act upon
any instruction, notice or other communication under any Loan Document, and
shall not be liable for any delay in acting.

13.4 Action Upon Default. Agent shall not be deemed to have knowledge of any
Default or Event of Default, or of any failure to satisfy any conditions in
Section 6, unless it has received written notice from the Borrower or Required
Lenders specifying the occurrence and nature thereof. If any Lender acquires
knowledge of a Default, Event of Default or failure of such conditions, it shall
promptly notify Agent and the other Lenders thereof in writing. Each Lender
agrees that, except as otherwise provided in any Loan Documents or with the
written consent of Agent and Required Lenders, it will not take any Enforcement
Action, accelerate Obligations or assert any rights relating to any Collateral.

13.5 Ratable Sharing. If any Lender obtains any payment or reduction of any
Obligation, whether through set-off or otherwise, in excess of its ratable share
of such Obligation, such Lender shall forthwith purchase from the other Lenders
participations in the affected Obligation as are necessary to share the excess
payment or reduction on a Pro Rata basis or in accordance with Section 5.8, as
applicable. If any of such payment or reduction is thereafter recovered from the
purchasing Lender, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest. Notwithstanding
the foregoing, if a Defaulting Lender obtains a payment or reduction of any
Obligation, it shall immediately turn over the full amount thereof to Agent for
application under Section 4.2.2 and it shall provide a written statement to
Agent describing the Obligation affected by such payment or reduction. No Lender
shall set off against a Dominion Account (as defined in the ABL Credit
Agreement) without Agent’s prior consent.

 

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13.6 Indemnification; Waiver.

(a) EACH LENDER SHALL INDEMNIFY AND HOLD HARMLESS AGENT INDEMNITEES, TO THE
EXTENT NOT REIMBURSED BY OBLIGORS, ON A PRO RATA BASIS, AGAINST ALL CLAIMS THAT
MAY BE INCURRED BY OR ASSERTED AGAINST ANY SUCH INDEMNITEE, PROVIDED THAT ANY
CLAIM AGAINST AN AGENT INDEMNITEE RELATES TO OR ARISES FROM ITS ACTING AS OR FOR
AGENT (IN THE CAPACITY OF AGENT). In Agent’s discretion, it may reserve for any
Claims made against an Agent Indemnitee, and may satisfy any judgment, order or
settlement relating thereto, from proceeds of Collateral prior to making any
distribution of Collateral proceeds to Secured Parties. If Agent is sued by any
receiver, trustee or other Person for any alleged preference or fraudulent
transfer, then any monies paid by Agent in settlement or satisfaction of such
proceeding, together with all interest, costs and expenses (including attorneys’
fees) incurred in the defense of same, shall be promptly reimbursed to Agent by
each Lender to the extent of its Pro Rata share.

(b) The Borrower acknowledges and agrees that if payment of the Obligations are
accelerated or the Loans and other Obligation otherwise become due prior to the
Maturity Date, in each case, in respect of any Event of Default (including, but
not limited to, upon the occurrence of a bankruptcy or insolvency event
(including the acceleration of claims by operation of law)), the Applicable
Premium with respect to an optional or mandatory redemption of the Loans will
also be due and payable as though the Loans were redeemed and shall constitute
part of the Obligations, in view of the impracticability and extreme difficulty
of ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of each Lender’s lost profits as a result thereof. Any
premium payable above shall be presumed to be the liquidated damages sustained
by each holder as the result of the early redemption and the Borrower agrees
that it is reasonable under the circumstances currently existing. The premium
shall also be payable in the event the Loans are satisfied or released by
foreclosure (whether by power of judicial proceeding), deed in lieu of
foreclosure or by any other means. THE BORROWER EXPRESSLY WAIVES (TO THE FULLEST
EXTENT IT MAY LAWFULLY DO SO) THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR
LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING PREMIUM IN
CONNECTION WITH ANY SUCH ACCELERATION. The Borrower expressly agrees (to the
fullest extent it may lawfully do so) that: (A) the premium is reasonable and is
the product of an arm’s length transaction between sophisticated business
people, ably represented by counsel; (B) the premium shall be payable
notwithstanding the then prevailing market rates at the time payment is made;
(C) there has been a course of conduct between holders and the Borrower giving
specific consideration in this transaction for such agreement to pay the
premium; and (D) the Borrower shall be estopped hereafter from claiming
differently than as agreed to in this paragraph. The Borrower expressly
acknowledges that its agreement to pay the premium to Lenders as herein
described is a material inducement to Lenders to purchase the Loans.

13.7 Limitation on Responsibilities of Agent. Agent shall not be liable to any
Lender for any action taken or omitted to be taken under the Loan Documents,
except for losses directly and solely caused by Agent’s gross negligence or
willful misconduct. Agent does not assume any responsibility for any failure or
delay in performance or any breach by any Obligor or Lender of any obligations
under the Loan Documents. Agent does not make any express or implied
representation, warranty or guarantee to the Lenders with respect to any
Obligations, Collateral,

 

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Liens, Loan Documents or Obligor. No Agent Indemnitee shall be responsible to
Secured Parties for any recitals, statements, information, representations or
warranties contained in any Loan Documents or Borrower Materials; the execution,
validity, genuineness, effectiveness or enforceability of any Loan Documents;
the genuineness, enforceability, collectability, value, sufficiency, location or
existence of any Collateral, or the validity, extent, perfection or priority of
any Lien therein; the validity, enforceability or collectability of any
Obligations; or the assets, liabilities, financial condition, results of
operations, business, creditworthiness or legal status of any Obligor or Account
Debtor. No Agent Indemnitee shall have any obligation to any Secured Party to
ascertain or inquire into the existence of any Default or Event of Default, the
observance by any Obligor of any terms of the Loan Documents, or the
satisfaction of any conditions precedent contained in any Loan Documents.

13.8 Successor Agent and Co-Agents.

13.8.1 Resignation; Successor Agent. Either Cortland Corp. or Cortland LLC may
resign at any time by giving at least 30 days written notice thereof to Lenders
and Borrower. If Cortland Corp. or Cortland LLC is a Defaulting Lender under
clause (d) of the definition thereof, Required Lenders may, to the extent
permitted by Applicable Law, remove such Agent by written notice to Borrower and
Agent. Required Lenders may appoint a successor to replace the resigning or
removed Agent, which successor shall be (a) a Lender or an Affiliate of a
Lender; or (b) a financial institution reasonably acceptable to Required Lenders
and (provided no Default or Event of Default exists) Borrower. If no successor
agent is appointed prior to the effective date of Agent’s resignation or
removal, then Cortland Corp. or Cortland LLC, as applicable, may appoint a
successor agent that is a financial institution acceptable to it (which shall be
a Lender unless no Lender accepts the role) or in the absence of such
appointment, Required Lenders shall on such date assume all rights and duties of
Agent hereunder. Upon acceptance by any successor Agent of its appointment
hereunder, such successor Agent shall thereupon succeed to and become vested
with all the powers and duties of the retiring Agent without further act. On the
effective date of its resignation or removal, the retiring or removed Agent
shall be discharged from its duties and obligations hereunder but shall continue
to have all rights and protections under the Loan Documents with respect to
actions taken or omitted to be taken by it while Agent, including the
indemnification set forth in Sections 13.6 and 15.2, and all rights and
protections under this Section 13. Any successor to Cortland Corp. or Cortland
LLC by merger or acquisition of stock or this loan shall continue to be Agent
hereunder without further act on the part of any Lender or Obligor.

13.8.2 Co-Collateral Agent. If appropriate under Applicable Law, Agent may
appoint a Person to serve as a co-collateral agent or separate collateral agent
under any Loan Document. Each right, remedy and protection intended to be
available to Agent under the Loan Documents shall also be vested in such agent.
Lenders shall execute and deliver any instrument or agreement that Agent may
request to effect such appointment. If any such agent shall die, dissolve,
become incapable of acting, resign or be removed, then all the rights and
remedies of the agent, to the extent permitted by Applicable Law, shall vest in
and be exercised by Agent until appointment of a new agent.

13.9 Due Diligence and Non-Reliance. Each Lender acknowledges and agrees that it
has, independently and without reliance upon Agent or any other Lenders, and
based upon such

 

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documents, information and analyses as it has deemed appropriate, made its own
credit analysis of each Obligor and its own decision to enter into this
Agreement and to fund Loans hereunder. Each Lender has made such inquiries as it
feels necessary concerning the Loan Documents, Collateral and Obligors. Each
Lender acknowledges and agrees that the other Secured Parties have made no
representations or warranties concerning any Obligor, any Collateral or the
legality, validity, sufficiency or enforceability of any Loan Documents or
Obligations. Each Lender will, independently and without reliance upon any other
Secured Party, and based upon such financial statements, documents and
information as it deems appropriate at the time, continue to make and rely upon
its own credit decisions in making Loans, and in taking or refraining from any
action under any Loan Documents. Except for notices, reports and other
information expressly requested by a Lender, Agent shall have no duty or
responsibility to provide any Lender with any notices, reports or certificates
furnished to Agent by any Obligor or any credit or other information concerning
the affairs, financial condition, business or Properties of any Obligor (or any
of its Affiliates) which may come into possession of Agent or its Affiliates.

13.10 Remittance of Payments and Collections.

13.10.1 Remittances Generally. All payments by any Lender to Agent shall be made
by the time and on the day set forth in this Agreement, in immediately available
funds. If no time for payment is specified or if payment is due on demand by
Agent and request for payment is made by Agent by 1:00 p.m. on a Business Day,
payment shall be made by Lender not later than 3:00 p.m. on such day, and if
request is made after 1:00 p.m., then payment shall be made by 11:00 a.m. on the
next Business Day. Payment by Agent to any Lender shall be made by wire
transfer, in the type of funds received by Agent. Any such payment shall be
subject to Agent’s right of offset for any amounts due from such payee under the
Loan Documents.

13.10.2 Failure to Pay. If any Lender fails to pay any amount when due by it to
Agent pursuant to the terms hereof, such amount shall bear interest, from the
due date until paid in full, at the greater of the Federal Funds Rate or the
rate determined by Agent as customary for interbank compensation for two
Business Days and thereafter at the Default Rate. In no event shall Borrower be
entitled to credit for any interest paid by a Lender to Agent, nor shall a
Defaulting Lender be entitled to interest on amounts held by Agent pursuant to
Section 4.2.

13.10.3 Recovery of Payments. If Agent pays an amount to a Lender in the
expectation that a related payment will be received by Agent from an Obligor and
such related payment is not received, then Agent may recover such amount from
the Lender. If Agent determines that an amount received by it must be returned
or paid to an Obligor or other Person pursuant to Applicable Law or otherwise,
then Agent shall not be required to distribute such amount to any Lender. If any
amounts received and applied by Agent to Obligations held by a Lender are later
required to be returned by Agent pursuant to Applicable Law, such Lender shall
pay to Agent, on demand, its share of the amounts required to be returned.

13.11 Individual Capacities. Agent, Lenders and their Affiliates may accept
deposits from, lend money to, provide Bank Products to, act as financial or
other advisor to, and generally engage in any kind of business with, Obligors
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Lenders hereunder, without any duty to account therefor to any Secured Party. In
their individual capacities, Agent, Lenders and their Affiliates may receive
information regarding Obligors, their Affiliates and their Account Debtors
(including information subject to confidentiality obligations), and shall have
no obligation to provide such information to any Secured Party.

13.12 Titles. Each Lender that is designated in connection with this credit
facility as an “Agent” of any kind shall have no right or duty under any Loan
Documents other than those applicable to all Lenders, and shall in no event have
any fiduciary duty to any Secured Party.

13.13 No Third Party Beneficiaries. This Section 13 is an agreement solely among
Lenders and Agent, and shall survive Full Payment of the Obligations. Except as
set forth in Section 13.8 with respect to the Borrower, this Section 13 does not
confer any rights or benefits upon the Borrower or any other Person. As between
the Borrower and Agent, any action that Agent may take under any Loan Documents
or with respect to any Obligations shall be conclusively presumed to have been
authorized and directed by the Lenders.

 

SECTION 14. BENEFIT OF AGREEMENT; ASSIGNMENTS

14.1 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Borrower, Agent, Lenders, Secured Parties, and their
respective successors and assigns, except that (a) the Borrower shall not have
the right to assign its rights or delegate its obligations under any Loan
Documents; and (b) any assignment by a Lender must be made in compliance with
Section 14.3. Agent may treat the Person which made any Loan as the owner
thereof for all purposes until such Person makes an assignment in accordance
with Section 14.3. Any authorization or consent of a Lender shall be conclusive
and binding on any subsequent transferee or assignee of such Lender.

14.2 Participations.

14.2.1 Permitted Participants; Effect. Subject to Section 14.3.3, any Lender may
sell to a financial institution (“Participant”) a participating interest in the
rights and obligations of such Lender under any Loan Documents. Despite any sale
by a Lender of participating interests to a Participant, such Lender’s
obligations under the Loan Documents shall remain unchanged, it shall remain
solely responsible to the other parties hereto for performance of such
obligations, it shall remain the holder of its Loans for all purposes, all
amounts payable by Borrower shall be determined as if it had not sold such
participating interests, and Borrower and Agent shall continue to deal solely
and directly with such Lender in connection with the Loan Documents. Each Lender
shall be solely responsible for notifying its Participants of any matters under
the Loan Documents, and Agent and the other Lenders shall not have any
obligation or liability to any such Participant. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of
Section 5.10 unless Borrower agrees otherwise in writing.

14.2.2 Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, waiver or other
modification of a Loan Document other than that which forgives principal,
interest or fees, reduces the stated interest rate or fees payable with respect
to any Loan in which such Participant has an interest, postpones the Maturity
Date or any date fixed for any regularly scheduled payment of principal,
interest or fees on such Loan, or releases the Borrower, any Guarantor or
substantially all Collateral.

 

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14.2.3 Participant Register. Each Lender that sells a participation shall,
acting as a non-fiduciary agent of Borrower (solely for tax purposes), maintain
a register in which it enters the Participant’s name, address and interest in
Loans (including principal and stated interest). Entries in the register shall
be conclusive, absent manifest error, and such Lender shall treat each Person
recorded in the register as the owner of the participation for all purposes,
notwithstanding any notice to the contrary. No Lender shall have an obligation
to disclose any information in such register except to the extent necessary to
establish that a Participant’s interest is in registered form under the Code.

14.2.4 Benefit of Setoff. Borrower agrees that each Participant shall have a
right of set-off in respect of its participating interest to the same extent as
if such interest were owing directly to a Lender, and each Lender shall also
retain the right of set-off with respect to any participating interests sold by
it. By exercising any right of set-off, a Participant agrees to share with
Lenders all amounts received through its set-off, in accordance with
Section 13.5 as if such Participant were a Lender.

14.3 Assignments.

14.3.1 Permitted Assignments. A Lender may assign to an Eligible Assignee any of
its rights and obligations under the Loan Documents, as long as (a) each
assignment is of a constant, and not a varying, percentage of the transferor
Lender’s rights and obligations under the Loan Documents and, in the case of a
partial assignment, is in a minimum principal amount of $1,000,000 (unless
otherwise agreed by Agent in its discretion) and integral multiples of
$1,000,000 in excess of that amount; (b) the prior written consent of Agent
shall have been obtained, which consent shall not be unreasonably withheld,
conditioned or delayed, provided, that, the consent of Agent shall not be
required in connection with an assignment to another Lender, any Affiliate of a
Lender, any Approved Fund, an Affiliated Lender or the Borrower or any of its
Subsidiaries and (c) the parties to each such assignment shall execute and
deliver an Assignment to Agent for acceptance and recording. Nothing herein
shall limit the right of a Lender to pledge or assign any rights under the Loan
Documents to secure obligations of such Lender, including a pledge or assignment
to a Federal Reserve Bank; provided, however, that no such pledge or assignment
shall release the Lender from its obligations hereunder nor substitute the
pledge or assignee for such Lender as a party hereto.

14.3.2 Effect; Effective Date. Upon delivery to Agent of a fully executed
Assignment in the form of Exhibit A-1 or Exhibit A-2, as applicable, and a
processing fee of $3,500 (unless otherwise agreed or waived by Agent in its
discretion), the assignment shall become effective as specified in the
Assignment, if it complies with this Section 14.3. From such effective date, the
Eligible Assignee shall for all purposes be a Lender under the Loan Documents,
and shall have all rights and obligations of a Lender thereunder. Upon
consummation of an assignment, the transferor Lender, Agent and Borrower shall
make appropriate arrangements for issuance of replacement and/or new notes, if
applicable. The transferee Lender shall comply with Section 5.11 and deliver,
upon request, an administrative questionnaire satisfactory to Agent.

 

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14.3.3 Certain Assignees.

(a) No assignment or participation may be made to any Defaulting Lender or
natural person. Agent shall have no obligation to determine whether any assignee
is permitted under the Loan Documents. Assignment by a Defaulting Lender shall
be effective only if there is concurrent satisfaction of all outstanding
obligations of the Defaulting Lender under the Loan Documents in a manner
satisfactory to Agent, including payment by the Eligible Assignee or Defaulting
Lender to Agent of an aggregate amount sufficient upon distribution (through
direct payment, purchases of participations or other methods acceptable to
Agent) to satisfy all funding and payment liabilities of the Defaulting Lender.
If assignment by a Defaulting Lender occurs (by operation of law or otherwise)
without compliance with the foregoing sentence, the assignee shall be deemed a
Defaulting Lender for all purposes until compliance occurs.

(b) (i) Any Lender who, together with its Affiliates, owns more than 20% of the
Equity Interests of any Person identified in clause (a)(ii) of the definition of
“Disqualified Institution” will not be entitled to receive any private-side
information and (ii) the consent of any Lender who, together with its
Affiliates, owns more than 50% of the Equity Interests of any Person identified
in clause (a)(ii) of the definition of “Disqualified Institution” will be
excluded from any vote hereunder that requires the consent of such Lender other
than any vote in connection with any waiver, modification or amendment of the
Loan Documents which would (x) reduce the amount of, or waive or delay payment
of, any principal, interest or fees payable to such Lender (except as provided
in Section 4.2); (y) extend the Maturity Date; or (z) require the consent of all
Lenders or each affected Lender and which by its terms affects such Lender more
adversely than other affected Lenders; it being understood and agreed that the
foregoing limitations shall be apply to the Lenders as of the Closing Date (or
any of their Affiliates).

14.3.4 Assignments to Affiliated Lenders and Borrower.

(a) Loans may be purchased by and assigned to Platinum or any of its Affiliates
(each, an “Affiliated Lender”, which shall be deemed to exclude the Borrower and
its Subsidiaries and any natural person) on a non-pro rata basis through
(a) open market purchases (which includes, for the avoidance of doubt, through
privately negotiated transactions) and/or (b) Dutch auctions open to all Lenders
on a pro rata basis in accordance with customary procedures, in each case, so
long as no Default or Event of Default has occurred; provided that
(i) Affiliated Lenders (x) shall not receive information provided solely to
Lenders or be permitted to attend or participate in Lender-only conference calls
or meetings (in each case in their capacity as a Lender), (y) shall not have
access to any electronic site established for the Lenders or confidential
communications from counsel to or financial advisors of Agent or Lenders and
(z) shall not be permitted to receive the advice of counsel to Agent or the
Lenders and shall not, solely acting in its capacity as an Affiliated Lender,
have the right to challenge the Lenders’ attorney-client privilege, (ii) for
purposes of any amendment, waiver or modification of the Loan Documents that
does not require the consent of each Lender or each affected Lender and
adversely affects such Affiliated Lender more adversely than other affected
Lenders, Affiliated Lenders shall be deemed to have voted in the same proportion
as non-affiliated Lenders voting on such matter, (iii) in connection with a plan
of reorganization under any insolvency proceeding unless the plan of
reorganization affects the Affiliated Lender in its capacity as a Lender in a
disproportionally adverse manner than its effect on the other Lenders Agent
shall vote on behalf

 

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of the Affiliated Lenders, (iv) such Loans owned or held by an Affiliated Lender
shall not, in the aggregate, exceed 25% of Loans outstanding at any time and
(v) the applicable assignee Affiliated Lender shall make a representation to the
assigning Lender that it does not possess material non-public information with
respect to the Borrower and its Subsidiaries that has not been disclosed to the
Lenders generally (other than Lenders that have elected not to receive such
information). For the avoidance of doubt, the limitations of the preceding
clauses (i) through (v) in the immediately preceding sentence shall not apply to
Debt Fund Affiliates; provided that in any vote requiring the consent of the
Required Lenders, Debt Fund Affiliates cannot, in the aggregate, account for
more than 49.9% of the amounts included in determining whether such consent or
waiver has been obtained.

(b) Notwithstanding any other provision of this Section 14.3, the Affiliated
Lenders, may, at their option, contribute Loans to the Borrower solely for the
purpose of cancelling such Loans. Such contribution may include contributions
made to the Borrower (whether through any of its direct or indirect parent
entities or otherwise) in exchange for Debt or Equity Interests of such parent
entity or the Borrower that are otherwise permitted to be issued hereunder by
such entity at such time; provided that, immediately upon the effectiveness of
the contribution of any Loan by an Affiliated Lender to the Borrower, such
contributed Loan shall be automatically and permanently cancelled and shall
thereafter no longer be outstanding for any purpose hereunder.

(c) So long as no Event of Default has occurred and is continuing, Loans may be
purchased by and assigned to the Borrower or any of its Subsidiaries on a
non-pro rata basis through (a) open-market purchases (which includes, for the
avoidance of doubt, through privately negotiated transactions) and/or (b) Dutch
auctions open to all Lenders on a pro rata basis in accordance with customary
procedures; provided that (1) immediately upon purchasing any Loan, such Loan
shall be automatically and permanently cancelled upon the effectiveness of such
purchase and shall thereafter no longer be outstanding for any purpose
hereunder, and (2) in connection with such purchase the Borrower shall make a
representation to the assigning Lender that it does not possess material
non-public information with respect to the Borrower and its Subsidiaries that
has not been disclosed to the Lenders generally (other than Lenders that have
elected not to receive such information).

14.3.5 Register. Agent, acting as a non-fiduciary agent of Borrower (solely for
tax purposes), shall maintain (a) a copy (or electronic equivalent) of each
Assignment delivered to it, and (b) a register for recordation of the names,
addresses of, and the Loans, principal and interest owing to, each Lender.
Entries in the register shall be conclusive, absent manifest error, and
Borrower, Agent and Lenders shall treat each Person recorded in such register as
a Lender for all purposes under the Loan Documents, notwithstanding any notice
to the contrary. Agent may choose to show only one Borrower as the borrower in
the register, without any effect on the liability of any Obligor with respect to
the Obligations. The register shall be available for inspection by Borrower or
any Lender, from time to time upon reasonable notice.

14.4 Replacement of Certain Lenders. If a Lender (a) within the last 120 days
failed to give its consent to any amendment, waiver or action for which consent
of all Lenders was required and Required Lenders consented, (b) is a Defaulting
Lender, or (c) within the last 120

 

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days gave a notice under Section 3.5 or requested payment or compensation under
Section 3.7 or 5.10 (and has not designated a different Lending Office pursuant
to Section 3.8), then Agent or the Borrower may, upon 10 days’ notice to such
Lender, require it to assign its rights and obligations under the Loan Documents
to Eligible Assignee(s), pursuant to appropriate Assignment(s), within 20 days
after such notice. Agent is irrevocably appointed as attorney-in-fact to execute
any such Assignment if the Lender fails to execute it. Such Lender shall be
entitled to receive, in cash, concurrently with such assignment, all amounts
owed to it under the Loan Documents through the date of assignment.

 

SECTION 15. MISCELLANEOUS

15.1 Consents, Amendments and Waivers.

15.1.1 Amendment. No modification of any Loan Document, including any extension
or amendment of a Loan Document or any waiver of a Default or Event of Default,
shall be effective without the prior written agreement of Agent (with the
consent of Required Lenders) and each Obligor party to such Loan Document;
provided, however, that

(a) without the prior written consent of Agent, no modification shall alter any
provision in a Loan Document that relates to any rights, duties or discretion of
Agent;

(b) without the prior written consent of each affected Lender, including a
Defaulting Lender, no modification shall (i) reduce the amount of, or waive or
delay payment of, any principal, interest or fees payable to such Lender (except
as provided in Section 4.2); (ii) extend the Maturity Date; or (iii) amend this
clause (b);

(c) without the prior written consent of all Lenders (except any Defaulting
Lender), no modification shall (i) waive the conditions precedent contained in
Section 6; (ii) alter Section 5.8.2, 7.1 (except to add Collateral), 13.5 or
15.1.1; (iii) change any provision of this Section 15.1.1(c) or the definition
of “Required Lenders”, or any other provision hereof specifying the number or
percentages of Lenders required to amend, waive or otherwise modify any rights
hereunder or any other Loan Document or make any determination or grant any
consent hereunder; (iv) release all or substantially all Collateral; or
(v) except in connection with a merger, disposition or similar transaction
expressly permitted hereby, release any Obligor from liability for any
Obligations;

and, provided further that, notwithstanding the foregoing, Lenders accepting
Extension Offers may enter into (or direct Agent to enter into) Extension
Amendments as contemplated by Section 2.5.4.

15.1.2 Limitations. The agreement of Borrower shall not be required for any
modification of a Loan Document that deals solely with the rights and duties of
Lenders and/or Agent as among themselves but the parties to such shall provide
prompt written notice thereof to the Borrower. Only the consent of the parties
to any agreement relating to fees or a Bank Product shall be required for
modification of such agreement, and no Bank Product provider (in such capacity)
shall have any right to consent to modification of any Loan Document other than
its Bank Product agreement. Any waiver or consent granted by Agent or Lenders
hereunder shall be effective only if in writing and only for the matter
specified.

15.1.3 Payment for Consents. No Borrower will, directly or indirectly, pay any
remuneration or other thing of value, whether by way of additional interest, fee
or otherwise, to any Lender (in its capacity as a Lender hereunder) as
consideration for agreement by such Lender with any modification of any Loan
Documents, unless such remuneration or value is concurrently paid, on the same
terms, on a Pro Rata basis to all Lenders providing their consent.

 

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15.2 Indemnity. THE BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES
AGAINST ANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE,
INCLUDING CLAIMS ASSERTED BY ANY OBLIGOR OR OTHER PERSON AND, IN ALL CASES,
WHETHER OR NOT CAUSED OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE OR
SOLE NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan Document
have any obligation thereunder to indemnify or hold harmless an Indemnitee with
respect to a Claim (a) that is determined in a final, non-appealable judgment by
a court of competent jurisdiction to result from the bad faith, gross negligence
or willful misconduct of such Indemnitee or (b) arises out of or is in
connection with any claim, litigation, loss or proceeding not involving an act
or omission of the Borrower or any of its Affiliates and that is brought by an
Indemnitee against another Indemnitee (other than against Agent in its capacity
as such); and Claims consisting of attorneys’ fees and expenses incurred by the
Indemnitees will be limited to the reasonable and documented fees, disbursements
and other charges of one firm of counsel to the Indemnitees taken as a whole and
one firm of local counsel to the Indemnitees taken as a whole in each
appropriate jurisdiction and, in the case of an actual or potential conflict of
interest as determined by the affected Indemnitee, one additional counsel to
such affected Indemnitee.

15.3 Notices and Communications

15.3.1 Notice Address. All notices and other communications by or to a party
hereto shall be in writing and shall be given to the Borrower, at the Borrower’s
address shown on the signature pages hereof, and to any other Person at its
address shown on the signature pages hereof (or, in the case of a Person who
becomes a Lender after the Closing Date, at the address shown on its
Assignment), or at such other address as a party may hereafter specify by notice
in accordance with this Section 15.3. Each communication shall be effective only
(a) if given by facsimile transmission, when transmitted to the applicable
facsimile number, if confirmation of receipt is received; (b) if given by mail,
three Business Days after deposit in the U.S. mail, with first-class postage
pre-paid, addressed to the applicable address; or (c) if given by personal
delivery, when duly delivered to the notice address with receipt acknowledged.
Notwithstanding the foregoing, no notice to Agent pursuant to Section 3.1.2
shall be effective until actually received by the individual to whose attention
at Agent such notice is required to be sent. Any written communication that is
not sent in conformity with the foregoing provisions shall nevertheless be
effective on the date actually received by the noticed party.

15.3.2 Communications. Electronic communications (including e-mail, messaging
and websites) may be used only in a manner acceptable to Agent and only for
routine communications, such as delivery of Borrower Materials, administrative
matters and distribution of Loan Documents. Secured Parties make no assurance as
to the privacy or security of electronic communications. E-mail and voice mail
shall not be effective notices under the Loan Documents.

 

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15.3.3 Platform. Borrower Materials shall be delivered pursuant to procedures
approved by Agent, including electronic delivery (if possible) upon request by
Agent to an electronic system maintained by Agent (“Platform”). Borrower shall
notify Agent of each posting of Borrower Materials on the Platform and the
materials shall be deemed received by Agent only upon its receipt of such
notice. Borrower Materials and other information relating to this credit
facility may be made available to Secured Parties on the Platform. The Platform
is provided “as is” and “as available.” Agent does not warrant the accuracy or
completeness of any information on the Platform nor the adequacy or functioning
of the Platform, and expressly disclaims liability for any errors or omissions
in the Borrower Materials or any issues involving the Platform. NO WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS, OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY AGENT
WITH RESPECT TO BORROWER MATERIALS OR THE PLATFORM. No Agent Indemnitee shall
have any liability to Borrower, Secured Parties or any other Person for losses,
claims, damages, liabilities or expenses of any kind (whether in tort, contract
or otherwise) relating to use by any Person of the Platform, including any
unintended recipient, nor for delivery of Borrower Materials and other
information via the Platform, internet, e-mail, or any other electronic platform
or messaging system.

15.3.4 Public Information. Obligors and Secured Parties acknowledge that
“public” information may not be segregated from material non-public information
on the Platform. Secured Parties acknowledge that Borrower Materials may include
Obligors’ material non-public information, and should not be made available to
personnel who do not wish to receive such information or may be engaged in
investment or other market-related activities with respect to an Obligor’s
securities.

15.3.5 Non-Conforming Communications. Agent and Lenders may rely upon any
communications purportedly given by or on behalf of the Borrower even if they
were not made in a manner specified herein, were incomplete or were not
confirmed, or if the terms thereof, as understood by the recipient, varied from
a later confirmation. The Borrower shall indemnify and hold harmless each
Indemnitee from any liabilities, losses, costs and expenses arising from any
electronic or telephonic communication purportedly given by or on behalf of the
Borrower.

15.4 Performance of Borrower’s Obligations. Agent may, in its discretion at any
time and from time to time, at Borrower’s expense, pay any amount or, upon
notice to Borrower unless an Event of Default exists, do any act required of the
Borrower under any Loan Documents or otherwise lawfully requested by Agent to
(a) enforce any Loan Documents or collect any Obligations; (b) protect, insure,
maintain or realize upon any Collateral; or (c) defend or maintain the validity
or priority of Agent’s Liens in any Collateral, including any payment of a
judgment, insurance premium, warehouse charge, finishing or processing charge,
or landlord claim, or any discharge of a Lien. All reasonable and documented
payments, costs and expenses (including Extraordinary Expenses) of Agent under
this Section 15.4 shall be reimbursed to Agent by Borrower, on demand, with
interest from the date incurred until paid in full, at the Default Rate. Any
payment made or action taken by Agent under this Section 15.4 shall be without
prejudice to any right to assert an Event of Default or to exercise any other
rights or remedies under the Loan Documents.

 

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15.5 Credit Inquiries. Agent and the Lenders may (but shall have no obligation)
to respond to usual and customary credit inquiries from third parties concerning
any Obligor or Subsidiary.

15.6 Severability. Wherever possible, each provision of the Loan Documents shall
be interpreted in such manner as to be valid under Applicable Law. If any
provision is found to be invalid under Applicable Law, it shall be ineffective
only to the extent of such invalidity and the remaining provisions of the Loan
Documents shall remain in full force and effect.

15.7 Cumulative Effect; Conflict of Terms. The provisions of the Loan Documents
are cumulative. The parties acknowledge that the Loan Documents may use several
limitations or measurements to regulate similar matters, and they agree that
these are cumulative and that each must be performed as provided. Except as
otherwise provided in another Loan Document (by specific reference to the
applicable provision of this Agreement), if any provision contained herein is in
direct conflict with any provision in another Loan Document (other than the
Intercreditor Agreement), the provision herein shall govern and control.

15.8 Counterparts; Execution. Any Loan Document 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 Agreement shall become effective when
Agent has received counterparts bearing the signatures of all parties hereto.
Delivery of a signature page of any Loan Document by telecopy or other
electronic means shall be effective as delivery of a manually executed
counterpart of such agreement. Any signature, contract formation or
record-keeping through electronic means, which shall have the same legal
validity and enforceability as manual or paper-based methods, to the fullest
extent permitted by Applicable Law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any similar state law based on the Uniform Electronic
Transactions Act.

15.9 Entire Agreement. Time is of the essence with respect to all Loan Documents
and Obligations. The Loan Documents constitute the entire agreement, and
supersede all prior understandings and agreements, among the parties relating to
the subject matter hereof and thereof.

15.10 Relationship with Lenders. The obligations of each Lender hereunder are
several, and no Lender shall be responsible for the obligations of any other
Lender. Amounts payable hereunder to each Lender shall be a separate and
independent debt. It shall not be necessary for Agent or any other Lender to be
joined as an additional party in any proceeding for such purposes. Nothing in
this Agreement and no action of Agent, Lenders or any other Secured Party
pursuant to the Loan Documents or otherwise shall be deemed to constitute Agent
and any Secured Party to be a partnership, joint venture or similar arrangement,
nor to constitute control of any Obligor.

 

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15.11 No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated by any Loan Document, Borrower acknowledges and
agrees that (a)(i) this credit facility and any arranging or other services by
Agent, any Lender, any of their Affiliates or any arranger are arm’s-length
commercial transactions between Borrower and its Affiliates, on one hand, and
Agent, any Lender, any of their Affiliates or any arranger, on the other hand;
(ii) Borrower has consulted its own legal, accounting, regulatory and tax
advisors to the extent it has deemed appropriate; and (iii) Borrower is capable
of evaluating, and understand and accept, the terms, risks and conditions of the
transactions contemplated by the Loan Documents; (b) each of Agent, Lenders,
their Affiliates and any arranger is and has been acting solely as a principal
and, except as expressly agreed in writing by the relevant parties, has not
been, is not, and will not be acting as an advisor, agent or fiduciary for
Borrower, its Affiliates or any other Person, and has no obligation with respect
to the transactions contemplated by the Loan Documents except as expressly set
forth therein; and (c) Agent, Lenders, their Affiliates and any arranger may be
engaged in a broad range of transactions that involve interests that differ from
those of Borrower and its Affiliates, and have no obligation to disclose any of
such interests to Borrower or its Affiliates. To the fullest extent permitted by
Applicable Law, the Borrower hereby waives and releases any claims that it may
have against Agent, Lenders, their Affiliates and any arranger with respect to
any breach of agency or fiduciary duty in connection with any transaction
contemplated by a Loan Document.

15.12 Confidentiality. Each of Agent and Lenders shall maintain the
confidentiality of all Information (as defined below), except that Information
may be disclosed (a) to its Affiliates, and to its and their partners,
directors, officers, employees, agents, advisors and representatives (provided
they are informed of the confidential nature of the Information and instructed
to keep it confidential); (b) to the extent requested by any governmental,
regulatory or self-regulatory authority purporting to have jurisdiction over it
or its Affiliates; provided that unless specifically prohibited by Applicable
Law, each of Agent and each Lender shall endeavor to notify the Borrower
(without any liability for a failure to so notify the Borrower) of any request
made to such Lender or Agent, as applicable, by any governmental, regulatory or
self-regulatory agency or representative thereof (other than any such request in
connection with an examination of the financial condition of such Lender by such
governmental agency) for disclosure of any such Information prior to disclosure
of such Information; (c) to the extent required by Applicable Law or by any
subpoena or other legal process; (d) to any other party hereto; (e) in
connection with any action or proceeding relating to any Loan Documents or
Obligations; (f) subject to an agreement containing provisions substantially the
same as this Section 15.12, to any Transferee or any actual or prospective party
(or its advisors) to any Bank Product or to any swap, derivative or other
transaction under which payments are to be made by reference to an Obligor or
Obligor’s obligations; (g) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section 15.12 or (ii) is
available to Agent, any Lender, or any of their Affiliates on a nonconfidential
basis from a source other than Borrower; (h) on a confidential basis to a
provider of a Platform; or (i) with the consent of the Borrower. Notwithstanding
the foregoing, Agent and Lenders may publish or disseminate general information
concerning this credit facility for league table, tombstone and advertising
purposes, and may use Borrower’s logos, trademarks or product photographs
approved by Borrower in advertising materials; provided, however that (x) Agent
and Lenders provide Borrower with a copy for its review prior to publishing or
disseminating such information and (y) such general information does not include
any Information required to be kept confidential by this Section 15.12.

 

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As used herein, “Information” means information received from an Obligor or
Subsidiary relating to it or its business that is identified as confidential
when delivered. A Person required to maintain the confidentiality of Information
pursuant to this Section 15.12 shall be deemed to have complied if it exercises
a degree of care similar to that accorded its own confidential information. Each
of Agent and Lenders acknowledges that (i) Information may include material
non-public information; (ii) it has developed compliance procedures regarding
the use of such information; and (iii) it will handle the material non-public
information in accordance with Applicable Law.

15.13 GOVERNING LAW. UNLESS EXPRESSLY PROVIDED IN ANY LOAN DOCUMENT, THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL CLAIMS SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW
PRINCIPLES EXCEPT FEDERAL LAWS RELATING TO NATIONAL BANKS.

15.14 Consent to Forum.

15.14.1 Forum. THE BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY
STATE COURT SITTING IN NEW YORK COUNTY OR THE UNITED STATES DISTRICT COURT OF
THE SOUTHERN DISTRICT OF NEW YORK, IN ANY DISPUTE, ACTION, LITIGATION OR OTHER
PROCEEDING RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY
DISPUTE, ACTION, LITIGATION OR OTHER PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN
ANY SUCH COURT. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL CLAIMS,
OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING ANY SUCH COURT’S PERSONAL OR
SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM. EACH PARTY HERETO
IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION
15.3.1. A final judgment in any proceeding of any such court shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or any other
manner provided by Applicable Law.

15.14.2 Other Jurisdictions. Nothing herein shall limit the right of Agent or
any Lender to bring proceedings against any Obligor in any other court, nor
limit the right of any party to serve process in any other manner permitted by
Applicable Law. Nothing in this Agreement shall be deemed to preclude
enforcement by Agent of any judgment or order obtained in any forum or
jurisdiction.

15.15 Waivers by Borrower. To the fullest extent permitted by Applicable Law,
the Borrower waives (a) the right to trial by jury (which Agent and each Lender
hereby also waives) in any proceeding or dispute of any kind relating in any way
to any Loan Documents, Obligations or Collateral; (b) presentment, demand,
protest, notice of presentment, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any commercial paper, accounts,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which the Borrower may in any way be liable, and

 

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hereby ratifies anything Agent may do in this regard; (c) notice prior to taking
possession or control of any Collateral; (d) any bond or security that might be
required by a court prior to allowing Agent to exercise any rights or remedies;
(e) the benefit of all valuation, appraisement and exemption laws; (f) any claim
against any party hereto, on any theory of liability, for special, indirect,
consequential, exemplary or punitive damages (as opposed to direct or actual
damages) in any way relating to any Enforcement Action, Obligations, Loan
Documents or transactions relating thereto (which Agent and each Lender hereby
also waives); and (g) notice of acceptance hereof. The Borrower acknowledges
that the foregoing waivers are a material inducement to Agent and Lenders
entering into this Agreement and that they are relying upon the foregoing in
their dealings with the Borrower. The Borrower has reviewed the foregoing
waivers with its legal counsel and has knowingly and voluntarily waived its jury
trial and other rights following consultation with legal counsel. In the event
of litigation, this Agreement may be filed as a written consent to a trial by
the court.

15.16 PATRIOT Act Notice. Agent and Lenders hereby notify Borrower that pursuant
to the PATRIOT Act, Agent and Lenders are required to obtain, verify and record
information that identifies the Borrower, including its legal name, address, tax
ID number and other information that will allow Agent and Lenders to identify it
in accordance with the PATRIOT Act. Agent and Lenders will also require
information regarding each personal guarantor, if any, and may require
information regarding Borrower’s management and owners, such as legal name,
address, social security number and date of birth. Borrower shall, promptly upon
request, provide all documentation and other information as Agent or any Lender
may request from time to time in order to comply with any obligations under any
“know your customer,” anti-money laundering or other requirements of Applicable
Law.

15.17 NO ORAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

[Remainder of page intentionally left blank; signatures begin on following page]

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the
date set forth above.

 

BORROWER: KEY ENERGY SERVICES, INC. By:   J. Marshall Dodson   Name:   J.
Marshall Dodson   Title:   Senior Vice President, Chief Financial Officer &
Treasurer

Address for Borrower:

1301 McKinney Street, Suite 1800

Houston, TX 77010

Attn: Marshall Dodson

Telecopy: 713.651.4556

 

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GUARANTOR:

KEY ENERGY SERVICES, LLC

By:   J. Marshall Dodson   Name:   J. Marshall Dodson   Title:   Senior Vice
President, Chief Financial Officer & Treasurer

Address for Borrower:

1301 McKinney Street, Suite 1800

Houston, TX 77010

Attn: Marshall Dodson

Telecopy: 713.651.4556

 

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AGENT AND LENDERS: CORTLAND PRODUCTS CORP., as Agent By:   /s/ Polina Arsentyeva
  Name:   Polina Arsentyeva   Title:   Associate Counsel

 

Address:    

225 W. Washington Street

Suite 2100

Chicago , Illinois 60606

Attn:

Telecopy: 312-376-0751

 

Address:     CORTLAND CAPITAL MARKET SERVICES LLC, as Agent   225 W. Washington
Street         Suite 2100   By:   /s/ Matthew Trybula   Chicago , Illinois 60606
    Name:   Matthew Trybula   Attn:     Title:   Associate Counsel   Telecopy:
312-376-0751                      

 

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BLUE MOUNTAIN CREDIT ALTERNATIVES MASTER FUND L.P.,

as a Lender

By:   BlueMountain Capital Management, LLC, its investment adviser By:   /s/
David M. O’Mara  

Name:

Title:

 

David M. O’Mara

Deputy General Counsel

 

Address:        

280 Park Ave, 12th Floor

New York, NY 10017

legalnotices@bmcm.com

Attn:

Telecopy:

 

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BLUE MOUNTAIN GUADALUPE PEAK FUND L.P.,

as a Lender

By:   BlueMountain Capital Management, LLC, its investment adviser By:   /s/
David M. O’Mara  

Name:

Title:

 

David M. O’Mara

Deputy General Counsel

 

Address:        

280 Park Ave, 12th Floor

New York, NY 10017

legalnotices@bmcm.com

Attn:

Telecopy:

 

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BLUE MOUNTAIN LOGAN OPPORTUNITIES MASTER FUND L.P.,

as a Lender

By:   BlueMountain Capital Management, LLC, its investment adviser By:   /s/
David M. O’Mara  

Name:

Title:

 

David M. O’Mara

Deputy General Counsel

 

Address:        

280 Park Ave, 12th Floor

New York, NY 10017

legalnotices@bmcm.com

Attn:

Telecopy:

 

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BLUE MOUNTAIN MONTENVERS MASTER FUND SCA SICA V-SIF,

as a Lender

By:   BlueMountain Capital Management, LLC, its investment adviser By:   /s/
David M. O’Mara  

Name:

Title:

 

David M. O’Mara

Deputy General Counsel

 

Address:        

280 Park Ave, 12th Floor

New York, NY 10017

legalnotices@bmcm.com

Attn:

Telecopy:

 

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BLUEMOUNTAIN SUMMIT TRADING L.P.,

as a Lender

By:   BlueMountain Capital Management, LLC, its investment adviser By:   /s/
David M. O’Mara  

Name:

Title:

 

David M. O’Mara

Deputy General Counsel

 

Address:        

280 Park Ave, 12th Floor

New York, NY 10017

legalnotices@bmcm.com

Attn:

Telecopy:

 

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BLUEMOUNTAIN TIMBERLINE LTD.,

as a Lender

By:   BlueMountain Capital Management, LLC, its investment adviser By:   /s/
David M. O’Mara  

Name:

Title:

 

David M. O’Mara

Deputy General Counsel

 

Address:        

280 Park Ave, 12th Floor

New York, NY 10017

legalnotices@bmcm.com

Attn:

Telecopy:

 

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BLUEMOUNTAIN FOINAVEN MASTER FUND L.P.,

as a Lender

By:   BlueMountain Capital Management, LLC, its investment adviser By:   /s/
David M. O’Mara  

Name:

Title:

 

David M. O’Mara

Deputy General Counsel

 

Address:        

280 Park Ave, 12th Floor

New York, NY 10017

legalnotices@bmcm.com

Attn:

Telecopy:

 

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BLUEMOUNTAIN KICKING HORSE FUND L.P.,

as a Lender

By:   BlueMountain Capital Management, LLC, its investment adviser By:   /s/
David M. O’Mara  

Name:

Title:

 

David M. O’Mara

Deputy General Counsel

 

Address:        

280 Park Ave, 12th Floor

New York, NY 10017

legalnotices@bmcm.com

Attn:

Telecopy:

 

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CONTRARIAN FUNDS, LLC,

as a Lender

By:   /s/ Jon Bauer   Name:   Jon Bauer   Title:   Authorized Signatory

Address:    

411 West Putnam Ave #425

Greenwich, CT 06830

 

Attn: Jon Bauer

Telecopy: (203) 629-1977

 

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SPCP Group, LLC,

as a Lender

By:   /s/ Michael A. Gatto   Name:   Michael A. Gatto   Title:   Authorized
Signatory

Address:    

c/o Silver Point Capital

2 Greenwich Plaza, 1st Floor

Greenwich, CT 06830

Attn: Credit Admin

Telecopy: 201-719-2157

Email: CreditAdmin@silverpointcapital.com

 

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QPB Holdings LTD.,

as a Lender

By:   /s/ Thomas O’Grady   Name:   Thomas O’Grady   Title:   Attorney-in-Fact

Address:    

c/o Soros Fund Management LLC

250 West 55th Street

New York, NY 10019

Attn: Thomas O’Grady

Telecopy: 646-731-5793

 

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SPECIAL SITUATIONS INVESTING

GROUP, INC.,

as a Lender

By:   /s/ Daniel Oneglia   Name:   Daniel Oneglia   Title:   Authorized
Signatory

Address:    

30 Hudson Street, 5th Floor

Jersey City, NJ 07302

Attn: Thierry Le Jouan

Telecopy: N/A

 

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TENNENBAUM ENERGY OPPORTUNITIES

CO., LLC,

as a Lender

By:   /s/ David Adler   Name:   David Adler   Title:   Partner

Address:    

 

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TENNENBAUM ENHANCED YIELD

OPERATING I, LLC,

as a Lender

By:   /s/ David Adler   Name:   David Adler   Title:   Partner

Address:    

 

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TENNENBAUM SENIOR LOAN FUND V, LLC,

as a Lender

By:   /s/ David Adler   Name:   David Adler   Title:   Partner

Address:    

 

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TENNENBAUM SENIOR LOAN FUNDING

III, LLC,

as a Lender

By:   /s/ David Adler   Name:   David Adler   Title:   Partner

Address:    

 

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TENNENBAUM SENIOR LOAN SPV, LLC,

as a Lender

By:   /s/ David Adler   Name:   David Adler   Title:   Partner

Address:    

 

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TAO FUND, LLC,

as a Lender

By:   /s/ Joshua Peck   Name:   Joshua Peck   Title:   Vice President

Address:    

 

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TPG SPECIALTY LENDING, INC.,

as a Lender

By:   /s/ Josh Easterly   Name:   Josh Easterly   Title:  

Address:    

 

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WHITEBOX CREDIT PARTNERS, LP,

as a Lender

By:   /s/ Mark Strefling   Name:  

Mark Strefling

  Title:  

General Counsel & Chief

Operating Officer

Whitebox Advisors LLC

Address:    

3033 Excelsior Blvd, Ste 300

Minneapolis, MN 55416

Attn: Cindy Delano

Telecopy: 612-355-2198

 

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WHITEBOX MULTI-STRATEGY PARTNERS, LP,

as a Lender

By:   /s/ Mark Strefling   Name:   Mark Strefling   Title:  

General Counsel & Chief

Operating Officer

Whitebox Advisors LLC

Address:    

3033 Excelsior Blvd, Ste 300

Minneapolis, MN 55416

Attn: Cindy Delano

Telecopy: 612-355-2198

 

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WHITEBOX RELATIVE VALUE PARTNERS, LP,

as a Lender

By:   /s/ Mark Strefling   Name:   Mark Strefling   Title:  

General Counsel & Chief

Operating Officer

Whitebox Advisors LLC

Address:    

3033 Excelsior Blvd, Ste 300

Minneapolis, MN 55416

Attn: Cindy Delano

Telecopy: 612-355-2198

 

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