Document:

exh_101.htm

exhibit 10.1

 

 

$50,000,000

Global Geophysical Services, Inc.

10.500% Senior Notes Due 2017

 

PURCHASE AGREEMENT

 

March 23, 2012

 

Barclays Capital Inc.

Citigroup Global Markets Inc.

Credit Suisse Securities (USA) LLC

As Representatives of the several

   Initial Purchasers named in Schedule I attached hereto,

c/o Barclays Capital Inc.

745 Seventh Avenue

New York, New York 10019

Ladies and Gentlemen:

 

Global Geophysical Services, Inc., a Delaware corporation (the “Company”), proposes, upon the terms and conditions set forth in this agreement (this “Agreement”), to issue and sell to you, as the initial purchasers (the “Initial Purchasers”), $50 million in aggregate principal amount of its 10.500% Senior Notes due 2017 (the “Notes”).  The Notes will (i) have terms and provisions that are summarized in the Offering Memorandum (as defined below), and (ii) are to be issued pursuant to an Indenture (the “Indenture”) to be entered into among the Company, the Guarantors (as defined below) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).  The Company’s obligations under the Notes, including the due and punctual payment of interest on the Notes, will be irrevocably and unconditionally guaranteed (the “Guarantees”) by the guarantors listed in Schedule II hereto (together the “Guarantors”).  As used herein, the term “Notes” shall include the Guarantees, unless the context otherwise requires.  This Agreement is to confirm the agreement concerning the purchase of the Notes from the Company by the Initial Purchasers.

 

1.            Purchase and Resale of the Notes.  The Notes will be offered and sold to the Initial Purchasers without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on an exemption pursuant to Section 4(2) under the Securities Act.  The Company and the Guarantors have prepared a preliminary offering memorandum, dated March 22, 2012 (as amended or supplemented at the date thereof, including any and all exhibits thereto and information incorporated by reference therein, the “Preliminary Offering Memorandum”), a pricing term sheet substantially in the form attached hereto as Schedule III (the “Pricing Term Sheet”) setting forth the terms of the Notes omitted from the Preliminary Offering Memorandum and certain other information and an offering memorandum, dated March 23, 2012 (as amended or supplemented at the date thereof, including any and all exhibits thereto 

 

  

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and information incorporated by reference therein, the “Offering Memorandum”), setting forth information regarding the Company, the Guarantors, the Notes, the Exchange Notes (as defined herein), the Guarantees and the Exchange Guarantees (as defined herein).  The Preliminary Offering Memorandum, as supplemented and amended as of the Applicable Time (as defined below), together with the Pricing Term Sheet and any of the documents listed on Schedule IV(A) hereto are collectively referred to as the “Pricing Disclosure Package”.  The Company and the Guarantors hereby confirm that they have authorized the use of the Pricing Disclosure Package and the Offering Memorandum in connection with the offering and resale of the Notes by the Initial Purchasers.  Unless stated to the contrary, any references herein to the terms “amend”, “amendment” or “supplement” with respect to the Pricing Disclosure Package, the Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to refer to and include any information filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), subsequent to the Closing Date that is incorporated by reference therein.

 

“Applicable Time” means 12:15 p.m. (New York City time) on the date of this Agreement.

 

You have advised the Company that you will offer and resell (the “Exempt Resales”) the Notes purchased by you hereunder on the terms set forth in each of the Pricing Disclosure Package and the Offering Memorandum, as amended or supplemented, solely to (i) persons whom you reasonably believe to be “qualified institutional buyers” as defined in Rule 144A under the Securities Act (“QIBs”), and (ii) outside the United States to certain persons who are not U.S. Persons (as defined in Regulation S under the Securities Act (“Regulation S”)) (such persons, “Non-U.S. Persons”) in offshore transactions in reliance on Regulation S.  As used herein, the terms “offshore transaction” and “United States” have the meanings assigned to them in Regulation S.  Those persons specified in clauses (i) and (ii) are referred to herein as “Eligible Purchasers”.

 

Holders (including subsequent transferees) of the Notes will have the registration rights set forth in the registration rights agreement (the “Registration Rights Agreement”) among the Company, the Guarantors and the Representatives, to be dated March 28, 2012, for so long as such Notes constitute “Transfer Restricted Securities” (as defined in the Registration Rights Agreement).  Pursuant to the Registration Rights Agreement, the Company and the Guarantors will agree to file with the Securities and Exchange Commission (the “Commission”) under the circumstances set forth therein, a registration statement under the Securities Act relating to the Company’s 10.500% Senior Notes due 2017 (the “Exchange Notes”) and the Guarantors’ Exchange Guarantees (the “Exchange Guarantees”) to be offered in exchange for the Notes and the Guarantees.  Such portion of the offering is referred to as the “Exchange Offer”.

 

2.            Representations, Warranties and Agreements of the Company and the Guarantors.  The Company and each of the Guarantors, jointly and severally, represent, warrant and agree as follows:

 

(a) When the Notes and Guarantees are issued and delivered pursuant to this Agreement, such Notes and Guarantees will not be of the same class (within the meaning of Rule 144A under the Securities Act) as securities of the Company or the Guarantors that are listed on a national securities exchange registered under Section 6 of the Exchange Act or that are quoted in a United States automated inter-dealer quotation system.

 

  

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(b) Assuming the accuracy of the representations and warranties of the Initial Purchasers in Section 3(b), the purchase and resale of the Notes pursuant hereto (including pursuant to the Exempt Resales) are exempt from the registration requirements of the Securities Act.

 

(c) No form of general solicitation or general advertising within the meaning of Regulation D (including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising) was used by the Company, the Guarantors, any of their respective affiliates or any of their respective representatives (other than you, as to whom the Company and the Guarantors make no representation) in connection with the offer and sale of the Notes.

 

(d) No directed selling efforts within the meaning of Rule 902 under the Securities Act were used by the Company, the Guarantors or any of their respective representatives (other than you, as to whom the Company and the Guarantors make no representation) with respect to Notes sold outside the United States to Non-U.S. Persons, and the Company, any affiliate of the Company and any person acting on its or their behalf (other than you, as to whom the Company and the Guarantors make no representation) has complied with and will implement the “offering restrictions” required by Rule 902 under the Securities Act.

 

(e) Each of the Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum, each as of its respective date, contains all the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act.

 

(f) Neither the Company, any Guarantor nor any other person acting on behalf of the Company or any Guarantor has sold or issued any securities that would be integrated with the offering of the Notes contemplated by this Agreement pursuant to the Securities Act, the rules and regulations thereunder or the interpretations thereof by the Commission.  The Company and the Guarantors will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Securities Act), of any Notes or any substantially similar security issued by the Company or any Guarantor, within six months subsequent to the date on which the distribution of the Notes has been completed (as notified to the Company by the Initial Purchasers), is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Notes in the United States and to U.S. persons contemplated by this Agreement as transactions exempt from the registration provisions of the Securities Act, including any sales pursuant to Rule 144A under, or Regulations D or S of, the Securities Act.

 

(g) The Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum have been prepared by the Company and the Guarantors for use by the Initial Purchasers in connection with the Exempt Resales.  No order or decree preventing the use of the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or any order asserting that the transactions contemplated by this Agreement are subject to the registration requirements of the Securities Act has been issued, and no proceeding for that purpose has commenced or is pending or, to the knowledge of the Company or any of the Guarantors is contemplated.

 

  

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(h) The Offering Memorandum will not, as of its date or as of the Closing Date, contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Offering Memorandum in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Initial Purchaser specifically for inclusion therein, which information is specified in Section 8(e).

 

(i) The Pricing Disclosure Package did not, as of the Applicable Time, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Pricing Disclosure Package in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Initial Purchaser specifically for inclusion therein, which information is specified in Section 8(e).

 

(j) The Company has not made any offer to sell or solicitation of an offer to buy the Notes that would constitute a “free writing prospectus” (if the offering of the Notes was made pursuant to a registered offering under the Securities Act), as defined in Rule 405 under the Securities Act (a “Free Writing Offering Document”) without the prior consent of the Representatives; any such Free Writing Offering Document the use of which has been previously consented to by the Initial Purchasers is listed on Schedule IV.

 

(k) The Pricing Disclosure Package, when taken together with each Free Writing Offering Document listed in Schedule IV(B) hereto, did not, as of the Applicable Time, contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Pricing Disclosure Package (or Free Writing Offering Document listed in Schedule IV(B) hereto) in reliance upon and in conformity with written information furnished to the Company through the Representatives by or on behalf of any Initial Purchaser specifically for inclusion therein, which information is specified in Section 8(e).

 

(l) The Company has been duly incorporated and is existing and in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the Pricing Disclosure Package; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, have a material adverse effect on the condition, financial or otherwise, or in the earnings, business, operations, properties or prospects, whether or not arising from transactions in the ordinary course of business, of the Company and its subsidiaries considered as one entity (a “Material Adverse Effect”).

 

  

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(m) Each subsidiary of the Company has been duly incorporated and is existing and in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Pricing Disclosure Package; and each subsidiary of the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, have a Material Adverse Effect; all of the issued and outstanding capital stock of each subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable; and at the Closing Date, other than Global Geophysical Services Arabia Ltd., of which the Company owns 98% of the outstanding equity interests, and Paisano Lease Co., Inc., of which the Company owns 80% of the outstanding shares of capital stock, the Company owns 100% of the outstanding partnership interests, membership interests or capital stock, as the case may be, in each subsidiary, directly or through subsidiaries, free from liens, encumbrances and defects, except for (i) any liens created, arising under or securing the Credit Agreement, dated as of April 30, 2010, by and among the Company and Bank of America, N.A., as administrative agent, swingline lender and L/C issuer and the lender parties thereto and (ii) encumbrances arising under that certain Joint Venture Agreement by and between the Company and MMS Holdings Group, LLC dated as of April 12, 2010, as supplemented by the Correction Addendum between such parties dated November 5, 2010. Except as set forth on Schedule V, the Company does not own or control, directly or indirectly, any corporation, association or other entity other than (i) the subsidiaries listed on Exhibit 21 to the Company’s Annual Report on Form 10-K for the most recent fiscal year or (ii) an entity in which the Company, directly or indirectly, owns not greater than a 10% voting interest and whose business is not material to the business of the Company.

 

(n) The Company has an authorized capitalization as set forth in each of the Pricing Disclosure Package and the Offering Memorandum, and all of the issued shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable.

 

(o) The Company and each Guarantor has all requisite corporate power and authority to execute, deliver and perform its obligations under the Indenture.  The Indenture has been duly and validly authorized by the Company and the Guarantors, and assuming due authorization, execution and delivery by the Trustee, constitutes the valid and binding agreement of the Company and the Guarantors, enforceable against the Company and the Guarantors in accordance with its terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).  No qualification of the Indenture under the Trust Indenture Act of 1939 (the “Trust Indenture Act”) is required in connection with the offer and sale of the Notes contemplated hereby or in connection with the Exempt Resales.  The Indenture conforms to the description thereof in each of the Pricing Disclosure Package and the Offering Memorandum.

 

  

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(p) The Company has all requisite corporate power and authority to execute, issue, sell and perform its obligations under the Notes.  The Notes have been duly authorized by the Company and, when duly executed by the Company in accordance with the terms of the Indenture, assuming due authentication of the Notes by the Trustee, upon delivery to the Initial Purchasers against payment therefor in accordance with the terms hereof, will be validly issued and delivered and will constitute valid and binding obligations of the Company entitled to the benefits of the Indenture, enforceable against the Company in accordance with their terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).  The Notes will conform in all material respects to the description thereof in each of the Pricing Disclosure Package and the Offering Memorandum.

 

(q) The Company has all requisite corporate power and authority to execute, issue and perform its obligations under the Exchange Notes.  The Exchange Notes have been duly and validly authorized by the Company and if and when issued and authenticated in accordance with the terms of the Indenture and delivered in accordance with the Exchange Offer provided for in the Registration Rights Agreement, will be validly issued and delivered and will constitute valid and binding obligations of the Company entitled to the benefits of the Indenture, enforceable against the Company in accordance with their terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

(r) Each Guarantor has all requisite corporate, partnership or limited liability company power and authority, as applicable, to execute, issue and perform its obligations under the Guarantees.  The Guarantees have been duly and validly authorized by the Guarantors and when the Indenture is duly executed and delivered by the Guarantors in accordance with its terms and upon the due execution, authentication and delivery of the Notes in accordance with the Indenture and the issuance of the Notes in the sale to the Initial Purchasers contemplated by this Agreement, will constitute valid and binding obligations of the Guarantors, enforceable against the Guarantors in accordance with their terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).  The Guarantees will conform in all material respects to the description thereof in each of the Pricing Disclosure Package and the Offering Memorandum.

 

(s) Each Guarantor has all requisite corporate, partnership or limited liability company power and authority, as applicable, to execute, issue and perform its obligations under the Exchange Guarantees.  The Exchange Guarantees have been duly and validly authorized by the Guarantors and when the Indenture is duly executed and delivered by the Guarantors in accordance with its terms and upon the due execution and authentication of the Exchange Notes in accordance with the Indenture and the issuance and delivery of the Exchange Notes in the Exchange Offer contemplated by the Registration Rights Agreement, will be validly issued and delivered and will constitute valid and binding obligations of the Guarantors entitled to the benefits of the Indenture, enforceable against the Guarantors in accordance with their terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

  

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(t) The Company and each Guarantor has all requisite corporate, partnership or limited liability company power and authority, as applicable, to execute, deliver and perform its obligations under the Registration Rights Agreement.  The Registration Rights Agreement has been duly and validly authorized by the Company and the Guarantors and, when executed and delivered by the Company and each Guarantor in accordance with the terms hereof and thereof, will be validly executed and delivered and (assuming the due authorization, execution and delivery thereof by you) will be the legally valid and binding obligation of the Company and each Guarantor in accordance with the terms thereof, enforceable against the Company and each Guarantor in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditor’s rights generally, by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, as to rights of indemnification and contribution, by principles of public policy.  The Registration Rights Agreement will conform to the description thereof in each of the Pricing Disclosure Package and the Offering Memorandum.

 

(u) The Company and each Guarantor has all requisite corporate power to execute, deliver and perform its obligations under this Agreement.  This Agreement has been duly and validly authorized, executed and delivered by the Company and each of the Guarantors.

 

(v) The issue and sale of the Notes and the Guarantees, the execution, delivery and performance by the Company and the Guarantors of the Notes, the Guarantees, the Exchange Notes, the Exchange Guarantees, the Indenture, the Registration Rights Agreement and this Agreement, the application of the proceeds from the sale of the Notes as described under “Use of Proceeds” in each of the Pricing Disclosure Package and the Offering Memorandum and the consummation of the transactions contemplated hereby and thereby, will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, impose any lien, charge or encumbrance upon any property or assets of the Company, the Guarantors or their respective subsidiaries, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, license, lease or other agreement or instrument to which the Company, the Guarantors or any of their respective subsidiaries is a party or by which the Company, the Guarantors or any of their respective subsidiaries is bound or to which any of the property or assets of the Company, the Guarantors or any of their respective subsidiaries is subject, (ii) result in any violation of the provisions of the charter or by-laws (or similar organizational documents) of the Company, the Guarantors or any of their respective subsidiaries, or (iii) result in any violation of any statute or any judgment, order, decree, rule or regulation of any court or governmental agency or body having jurisdiction over the Company, the Guarantors or any of their respective subsidiaries or any of their properties or assets, except, with respect to clauses (i) and (iii), conflicts or violations that would not reasonably be expected to have a Material Adverse Effect.

 

  

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(w) No consent, approval, authorization or order of, or filing, registration or qualification with any court or governmental agency or body having jurisdiction over the Company, the Guarantors or any of their respective subsidiaries or any of their properties or assets is required for the issue and sale of the Notes and the Guarantees, the execution, delivery and performance by the Company and the Guarantors of the Notes, the Guarantees, the Exchange Notes, the Exchange Guarantees, the Indenture, the Registration Rights Agreement and this Agreement, the application of the proceeds from the sale of the Notes as described under “Use of Proceeds” in each of the Pricing Disclosure Package and the Offering Memorandum and the consummation of the transactions contemplated hereby and thereby, except for the filing of a registration statement by the Company with the Commission pursuant to the Securities Act as required by the Registration Rights Agreement and such consents, approvals, authorizations, orders, filings, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Notes by the Initial Purchasers, each of which has been obtained and is in full force and effect.

 

(x) The historical financial statements (including the related notes and supporting schedules) included or incorporated by reference in the Pricing Disclosure Package and the Offering Memorandum present fairly in all material respects the financial condition, results of operations and cash flows of the entities purported to be shown thereby, at the dates and for the periods indicated, comply with the applicable accounting requirements of Regulation S-X and have been prepared in conformity with accounting principles generally accepted in the United States applied on a consistent basis throughout the periods involved.

 

(y) UHY LLP, who have certified certain financial statements of the Company, whose reports appear in the Pricing Disclosure Package and the Offering Memorandum and who have delivered the initial letter referred to in Section 7(g) hereof, are independent registered public accountants as required by the Securities Act and the rules and regulations thereunder.

 

(z) The Company and each of its subsidiaries maintains internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorization, (ii) transactions are recorded as necessary to permit preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States and to maintain accountability for its assets, (iii) access to the Company’s assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for the Company’s assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  As of the date of the most recent balance sheet of the Company and its consolidated subsidiaries reviewed or audited by UHY LLP and the audit committee of the board of directors of the Company, there were no material weaknesses in the Company’s internal controls.

 

  

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(aa) (i) The Company and each of its subsidiaries maintain disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act), (ii) such disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Company and its subsidiaries in the reports they file or submit under the Exchange Act is accumulated and communicated to management of the Company and its subsidiaries, including their respective principal executive officers and principal financial officers, as appropriate; and (iii) such disclosure controls and procedures are effective in all material respects to perform the functions for which they were established.

 

(bb) Since the date of the most recent balance sheet of the Company and its consolidated subsidiaries reviewed or audited by UHY LLP and the audit committee of the board of directors of the Company, (i) the Company has not been advised of or become aware of (A) any significant deficiencies in the design or operation of internal controls, that could adversely affect the ability of the Company or any of its subsidiaries to record, process, summarize and report financial data, or any material weaknesses in internal controls, and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the internal controls of the Company and each of its subsidiaries; and (ii) there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

(cc) The section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” set forth in the Preliminary Offering Memorandum contained in the Pricing Disclosure Package and the Offering Memorandum accurately and fully describes (i) the accounting policies that the Company believes are the most important in the portrayal of the Company’s financial condition and results of operations and that require management’s most difficult, subjective or complex judgments; (ii) the judgments and uncertainties affecting the application of critical accounting policies; and (iii) the likelihood that materially different amounts would be reported under different conditions or using different assumptions and an explanation thereof.

 

(dd) Except as described in each of the Pricing Disclosure Package and the Offering Memorandum, since the date of the latest audited financial statements included or incorporated by reference in the Pricing Disclosure Package and the Offering Memorandum, neither the Company, the Guarantors nor any of their respective subsidiaries has (i) sustained any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or court or governmental action, order or decree, (ii) issued or granted any securities, (iii) incurred any material liability or obligation, direct or contingent, other than liabilities and obligations that were incurred in the ordinary course of business, (iv) entered into any material transaction not in the ordinary course of business, (v) declared or paid any dividend on its capital stock, and (vi) since such date, there has not been any change in the capital stock, partnership or limited liability interests, as applicable, or long-term debt of the Company, the Guarantors or any of their respective subsidiaries or any adverse change, or any development involving a prospective adverse change, in or affecting the condition (financial or otherwise), results of operations, stockholders’ equity, properties, management, business or prospects of the Company and its subsidiaries, taken as a whole, in each case except as could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

  

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(ee) Except as set forth in the Pricing Disclosure Package, the Company, the Guarantors and each of their respective subsidiaries has good and marketable title to all real properties and all other properties and assets owned by them, in each case free from liens, charge, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or to be made thereof by them, and the Company, the Guarantors and their respective subsidiaries hold any leased real or personal property under valid and enforceable leases with no terms or provisions that would materially interfere with the use made or to be made thereof by them.

 

(ff) The Company and its subsidiaries possess, and are in compliance with the terms of, all certificates, authorizations, franchises, licenses and permits (“Licenses”) necessary or material to the conduct of the business now conducted or proposed in the Pricing Disclosure Package to be conducted by them and have not received any notice of proceedings relating to the revocation or modification of any Licenses that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect.

 

(gg) The Company and its subsidiaries own, possess or can acquire on reasonable terms sufficient trademarks, trade names, patent rights, copyrights, domain names, licenses, approvals, trade secrets, inventions, technology, know-how and other intellectual property and similar rights, including registrations and applications for registration thereof (collectively, “Intellectual Property Rights”) necessary or material to the conduct of the business now conducted or proposed in the Pricing Disclosure Package to be conducted by them, and the expected expiration of any such Intellectual Property Rights would not, individually or in the aggregate, have a Material Adverse Effect.  Except as disclosed in the Pricing Disclosure Package (i) there are no rights of third parties to any of the Intellectual Property Rights owned by the Company or its subsidiaries; (ii) there is no material infringement, misappropriation breach, default or other violation, or the occurrence of any event that with notice or the passage of time would constitute any of the foregoing, by the Company, its subsidiaries or third parties of any of the Intellectual Property Rights of the Company or its subsidiaries; (iii) there is no pending or threatened action, suit, proceeding or claim by others challenging the Company’s or any subsidiary’s rights in or to, or the violation of any of the terms of, any of their Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (iv) to the knowledge of the Company there is no pending or threatened action, suit, proceeding or claim by others challenging the validity, enforceability or scope of any such Intellectual Property Rights, and the Company is unaware of any facts which would form a reasonable basis for any such claim; (v) there is no pending or threatened action, suit, proceeding or claim by others that the Company or any subsidiary infringes, misappropriates or otherwise violates or conflicts with any Intellectual Property Rights or other proprietary rights of others and the Company is unaware of any other fact which would form a reasonable basis for any such claim; and (vi) none of the Intellectual Property Rights used by the Company or its subsidiaries in their businesses has been obtained or is being used by the Company or its subsidiaries in violation of any contractual obligation binding on the Company, any of its subsidiaries in violation of the rights of any persons, except in each case covered by clauses (i) – (vi) such as would not, if determined adversely to the Company or any of its subsidiaries, individually or in the aggregate, have a Material Adverse Effect.

 

  

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(hh) Except as disclosed in the Pricing Disclosure Package, there are no pending actions, suits or proceedings (including any inquiries or investigations by any court or governmental agency or body, domestic or foreign) against or affecting the Company, any of its subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company and the Guarantors to perform its obligations under this Agreement, the Indenture or the Notes or the consummation of any of the transactions contemplated hereby; and no such actions, suits or proceedings (including any inquiries or investigations by any court or governmental agency or body, domestic or foreign) are, to the Company’s and each Guarantors’ knowledge, threatened or contemplated.

 

(ii) There are no contracts or other documents that would be required to be described in a registration statement filed under the Securities Act or filed as exhibits to a registration statement of the Company pursuant to Item 601(10) of Regulation S-K that have not been described in the Pricing Disclosure Package and the Offering Memorandum.  The statements made in the Pricing Disclosure Package and the Offering Memorandum, insofar as they purport to constitute summaries of the terms of the contracts and other documents that are so described, constitute accurate summaries of the terms of such contracts and documents in all material respects.  Neither the Company, the Guarantors nor any of their respective subsidiaries has knowledge that any other party to any such contract or other document has any intention not to render full performance as contemplated by the terms thereof.

 

(jj) The statements made in the Pricing Disclosure Package and the Offering Memorandum under the captions “Description of the Notes”, insofar as they purport to constitute a summary of the terms of the Notes and the Guarantees, and “Certain United States Federal Income Tax Considerations”, “Description of Other Indebtedness,” “Business—Service Contracts,” “Certain Relationships and Related Transactions” and “Plan of Distribution”, insofar as they purport to constitute summaries of the terms of statutes, rules or regulations, legal or governmental proceedings or contracts and other documents, constitute accurate summaries of the terms of such statutes, rules and regulations, legal and governmental proceedings and contracts and other documents in all material respects.

 

(kk) The Company, the Guarantors and each of their respective subsidiaries are insured by insurers with appropriately rated claims paying abilities against such losses and risks and in such amounts as are prudent and customary for the businesses in which they are engaged; all policies of insurance insuring the Company, the Guarantors or any of their respective subsidiaries or their respective businesses, assets, employees, officers and directors are in full force and effect; the Company, the Guarantors and each of their respective subsidiaries are in compliance with the terms of such policies and instruments in all material respects; and there are no material claims by the Company, the Guarantors or any of their respective subsidiaries under any such policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause; neither the Company, the Guarantors nor any such subsidiary has been refused any insurance coverage sought or applied for; neither the Company, the Guarantors nor any such subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

 

  

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(ll) No relationship, direct or indirect, that would be required to be described in a registration statement of the Company pursuant to Item 404 of Regulation S-K, exists between or among the Company or any Guarantor and their respective subsidiaries, on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any Guarantor and their respective subsidiaries, on the other hand, that has not been described in the Pricing Disclosure Package and the Offering Memorandum.

 

(mm) No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company or any Guarantor, is imminent that could have a Material Adverse Effect.

 

(nn)  Neither the Company nor any of its subsidiaries (i) is in violation of its respective charter or by-laws (or similar organizational documents), (ii) is in default (or with the giving of notice or lapse of time would be in default) under any existing obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument to which any of them is a party or by which any of them is bound or to which any of the properties or assets of any of them is subject, or (iii) is in violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over it or its property or assets or has failed to obtain any license, permit, certificate, franchise or other governmental authorization or permit necessary to the ownership of its property or to the conduct of its business, except in the case of clauses (ii) and (iii), to the extent any such conflict, breach, violation or default could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(oo) Except as disclosed in the Pricing Disclosure Package, (a)(i) neither the Company nor any of its subsidiaries is in violation of, or has any liability under, any federal, state, local or non-U.S. statute, law, rule, regulation, ordinance, code, other requirement or rule of law (including common law), or decision or order of any domestic or foreign governmental agency, governmental body or court, relating to pollution, to the use, handling, transportation, treatment, storage, discharge, disposal or release of Hazardous Substances, to the protection or restoration of the environment or natural resources (including biota), to health and safety including as such relates to exposure to Hazardous Substances, and to natural resource damages (collectively, “Environmental Laws”), (ii) neither the Company nor any of its subsidiaries owns, occupies, operates or uses any real property contaminated with Hazardous Substances, (iii) neither the Company nor any of its subsidiaries is conducting or funding any investigation, remediation, remedial action or monitoring of actual or suspected Hazardous Substances in the environment, (iv) neither the Company nor any of its subsidiaries is liable or allegedly liable for any release or threatened release of Hazardous Substances, including at any off-site treatment, storage or disposal site, (v) neither the Company nor any of its subsidiaries is subject to any claim by any governmental agency or governmental body or person relating to Environmental Laws or Hazardous Substances, and (vi) the Company and its subsidiaries have received and are in compliance with all, and have no liability under any, permits, licenses, authorizations, identification numbers or other approvals required under applicable Environmental Laws to conduct their respective businesses, except in each case covered by clauses (i) – (vi) such as would not individually or in the aggregate have a Material Adverse Effect; (b) to the knowledge of the Company there are no facts or circumstances that would reasonably be expected to result in a violation of, liability under, or claim pursuant to any Environmental Law that would have a Material Adverse Effect; (c) to the knowledge of the Company there are no requirements proposed for adoption or implementation under any Environmental Law that would reasonably be expected to have a Material Adverse Effect; and (d) in the ordinary course of its business, the Company periodically evaluates the effect, including associated costs and liabilities, of Environmental Laws on the business, properties, results of operations and financial condition of it and its subsidiaries, and, on the basis of such evaluation, the Company has reasonably concluded that such Environmental Laws will not, singly or in the aggregate, have a Material Adverse Effect. For purposes of this subsection “Hazardous Substances” means (A) petroleum and petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and mold, and (B) any other chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant, contaminant or waste under Environmental Laws.

 

  

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(pp) The Company, the Guarantors and each of their respective subsidiaries have filed all material federal, state, local and non-U.S. tax returns that are required to be filed or have requested extensions thereof; and the Company, the Guarantors and their respective subsidiaries have paid all taxes (including any assessments, fines or penalties) required to be paid by them, except for any such taxes, assessments, fines or penalties currently being contested in good faith and for which full and adequate reserves have been provided in accordance with U.S. generally accepted accounting principals.

 

(qq)  The Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder (“ERISA”); no “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Company or any subsidiary would have any liability; neither the Company nor any subsidiary has incurred or expects to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the “Code”); and each “pension plan” for which the Company or any subsidiary would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.

 

(rr) The Company, the Guarantors and their respective subsidiaries are in compliance in all respects with all applicable provisions of the Occupational Safety and Health Act of 1970, as amended, including all applicable regulations thereunder, except for such noncompliance as would not, individually or in the aggregate, have a Material Adverse Effect.

 

(ss) No subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on shares of such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s properties or assets to the Company or any other subsidiary of the Company.

 

  

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(tt) Any third-party statistical and market-related data included or incorporated by reference in the Pricing Disclosure Package and the Offering Memorandum and the consolidated financial statements of the Company and its subsidiaries included or incorporated by reference in the Pricing Disclosure Package and the Offering Memorandum are based on or derived from sources that the Company believes to be reliable and accurate.

 

(uu) Neither the Company, the Guarantors nor any of their respective subsidiaries is, and after giving effect to the offer and sale of the Notes and the application of the proceeds therefrom as described under “Use of Proceeds” in each of the Pricing Disclosure Package and the Offering Memorandum will be, an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder.

 

(vv) Immediately after the consummation of the transaction, the Company will be Solvent.  As used in this paragraph, the term “Solvent” means, with respect to a particular date, that on such date (i) the present fair market value (or present fair saleable value) of the assets of the Company are not less than the total amount required to pay the probable liabilities of the Issuers on their total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (ii) the Company is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (iii) assuming the sale of the Notes as contemplated by this Agreement, the Pricing Disclosure Package and the Offering Memorandum, the Company is not incurring debts or liabilities beyond its ability to pay as such debts and liabilities mature, (iv) the Company is not engaged in any business or transaction, and is not about to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which the Company is engaged, and (v) the Company is not a defendant in any civil action that would result in a judgment that the Company is or would become unable to satisfy. In computing the amount of such contingent liabilities at any time, it is intended that such liabilities will be computed at the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

(ww) Except as described in the Pricing Disclosure Package, there are no contracts, agreements or understandings between the Company, any Guarantor and any person granting such person the right to require the Company or any Guarantor to file a registration statement under the Securities Act with respect to any securities of the Company or any Guarantor (other than the Registration Rights Agreement) owned or to be owned by such person or to require the Company or any Guarantor to include such securities in the securities registered pursuant to the Registration Rights Agreement or in any securities being registered pursuant to any other registration statement filed by the Company or any Guarantor under the Securities Act.

 

(xx) Except as disclosed in the Pricing Disclosure Package, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any of the Initial Purchasers for a brokerage commission, finder’s fee or other like payment in connection with this offering.

 

  

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(yy) None of the transactions contemplated by this Agreement (including, without limitation, the use of the proceeds from the sale of the Notes), will violate or result in a violation of Section 7 of the Exchange Act, or any regulation promulgated thereunder, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System.

 

(zz) The Company and its affiliates have not taken, directly or indirectly, any action designed to or that has constituted or that could reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company or the Guarantors in connection with the offering of the Notes.

 

(aaa) The Company has not taken any action or omitted to take any action (such as issuing any press release relating to any Notes without an appropriate legend) which may result in the loss by any of the Initial Purchasers of the ability to rely on any stabilization safe harbor provided by the Financial Services Authority under the Financial Services and Markets Act 2000.

 

(bbb) Neither the Company nor any of its subsidiaries is in violation of or has received notice of any violation with respect to any federal or state law relating to discrimination in the hiring, promotion or pay of employees, nor any applicable federal or state wage and hour laws, nor any state law precluding the denial of credit due to the neighborhood in which a property is situated, the violation of any of which could reasonably be expected to have a Material Adverse Affect.

 

(ccc) Neither the Company nor any of its subsidiaries nor, to the best knowledge of the Company and the Guarantors, any director, officer, agent, employee or other person associated with or acting on behalf of the Company, the Guarantors or any of their respective subsidiaries has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

 

(ddd) The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements and the money laundering statutes and the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

 

(eee) None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.  There is and has been no failure on the part of the Company and any of the Company’s directors or officers, in their capacities as such, to comply with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 relating to loans and Sections 302 and 906 relating to certifications.

 

  

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(fff) Any certificate signed by any officer of the Company or the Guarantor and delivered to the Representatives or counsel for the Initial Purchasers in connection with the offering of the Notes shall be deemed a representation and warranty by the Company or such Guarantor, jointly and severally, as to matters covered thereby, to each Initial Purchaser.

 

3.            Purchase of the Notes by the Initial Purchasers, Agreements to Sell, Purchase and Resell

 

(a) The Company and the Guarantors, jointly and severally hereby agree, on the basis of the representations, warranties, covenants and agreements of the Initial Purchasers contained herein and subject to all the terms and conditions set forth herein, to issue and sell to the Initial Purchasers and, upon the basis of the representations, warranties and agreements of the Company and the Guarantors herein contained and subject to all the terms and conditions set forth herein, each Initial Purchaser agrees, severally and not jointly, to purchase from the Company, at a purchase price of 92% of the principal amount thereof, the principal amount of Notes set forth opposite the name of such Initial Purchaser in Schedule I hereto.  The Company and the Guarantors shall not be obligated to deliver any of the securities to be delivered hereunder except upon payment for all of the securities to be purchased as provided herein.

 

(b) Each of the Initial Purchasers, severally and not jointly, hereby represents and warrants to the Company that it will offer the Notes for sale upon the terms and conditions set forth in this Agreement and in the Pricing Disclosure Package.  Each of the Initial Purchasers, severally and not jointly, hereby represents and warrants to, and agrees with, the Company, on the basis of the representations, warranties and agreements of the Company and the Guarantors, that such Initial Purchaser: (i) is a QIB with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in the Notes; (ii) is purchasing the Notes pursuant to a private sale exempt from registration under the Securities Act; (iii) in connection with the Exempt Resales, will solicit offers to buy the Notes only from, and will offer to sell the Notes only to, the Eligible Purchasers in accordance with this Agreement and on the terms contemplated by the Pricing Disclosure Package; and (iv) will not offer or sell the Notes, nor has it offered or sold the Notes by, or otherwise engaged in, any form of general solicitation or general advertising (within the meaning of Regulation D, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising) and will not engage in any directed selling efforts within the meaning of Rule 902 under the Securities Act, in connection with the offering of the Notes.  The Initial Purchasers have advised the Company that they will offer the Notes to Eligible Purchasers at a price initially equal to 94% of the principal amount thereof, plus accrued interest, if any, from March 28, 2012.  Such price may be changed by the Initial Purchasers at any time without notice.

 

  

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(c) The Initial Purchasers have not nor, prior to the later to occur of (A) the Closing Date and (B) completion of the distribution of the Notes, will not, use, authorize use of, refer to or distribute any material in connection with the offering and sale of the Notes other than (i) the Preliminary Offering Memorandum, the Pricing Disclosure Package, the Offering Memorandum, (ii) any written communication that contains no “issuer information” (as defined in Rule 433(h)(2) under the Securities Act) that was not included (including through incorporation by reference) in the Preliminary Offering Memorandum or any Free Writing Offering Document listed on Schedule IV hereto, (iii) the Free Writing Offering Documents listed on Schedule IV hereto, (iv) any written communication prepared by such Initial Purchaser and approved by the Company in writing, or (v) any written communication relating to or that contains the preliminary or final terms of the Notes or their offering and/or other information that was included (including through incorporation by reference) in the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum.

 

(d) Each of the Initial Purchasers hereby acknowledges that upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Securities Act, the Notes (and all securities issued in exchange therefor or in substitution thereof) shall bear legends substantially in the forms as set forth in the “Notice to Investors” section of the Pricing Disclosure Package and Offering Memorandum (along with such other legends as the Company and its counsel deem necessary).

 

Each of the Initial Purchasers understands that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Sections 7(c) through 7(f) hereof, counsel to the Company and counsel to the Initial Purchasers, will rely upon the accuracy and truth of the foregoing representations, warranties and agreements, and the Initial Purchasers hereby consent to such reliance.

 

4.            Delivery of the Notes and Payment Therefor.  Delivery to the Initial Purchasers of and payment for the Notes shall be made at the office of Latham & Watkins LLP, at 10:00 a.m., New York City time, on March 28, 2012 (the “Closing Date”).  The place of closing for the Notes and the Closing Date may be varied by agreement between the Initial Purchasers and the Company.

 

The Notes will be delivered to the Initial Purchasers, or the Trustee as custodian for The Depository Trust Company (“DTC”), against payment by or on behalf of the Initial Purchasers of the purchase price therefor by wire transfer in immediately available funds, by causing DTC to credit the Notes to the account of the Initial Purchasers at DTC.  The Notes will be evidenced by one or more global securities in definitive form (the “Global Notes”) and will be registered in the name of Cede & Co. as nominee of DTC.  The Notes to be delivered to the Initial Purchasers shall be made available to the Initial Purchasers in New York City for inspection and packaging not later than 10:00 a.m., New York City time, on the business day next preceding the Closing Date.

 

5.            Agreements of the Company and the Guarantors.  The Company and the Guarantors, jointly and severally, agree with each of the Initial Purchasers as follows:

 

(a) The Company and the Guarantors will furnish to the Initial Purchasers, without charge, within one business day of the date of the Offering Memorandum, such number of copies of the Offering Memorandum as may then be amended or supplemented as they may reasonably request.

 

  

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(b) The Company and the Guarantors will prepare the Offering Memorandum in a form approved by the Initial Purchasers and will not make any amendment or supplement to the Pricing Disclosure Package or to the Offering Memorandum of which the Initial Purchasers shall not previously have been advised or to which they shall reasonably object after being so advised.

 

(c) The Company and each of the Guarantors consents to the use of the Pricing Disclosure Package and the Offering Memorandum by the Initial Purchasers in accordance with the securities or Blue Sky laws of the jurisdictions in which the Notes are offered by the Initial Purchasers and by all dealers to whom Notes may be sold, in connection with the offering and sale of the Notes.

 

(d) If, at any time prior to completion of the distribution of the Notes by the Initial Purchasers to Eligible Purchasers, any event occurs or information becomes known that, in the judgment of the Company or any of the Guarantors or in the opinion of counsel for the Initial Purchasers, should be set forth in the Pricing Disclosure Package or the Offering Memorandum so that the Pricing Disclosure Package or the Offering Memorandum, as then amended or supplemented, does not include any untrue statement of material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary to supplement or amend the Pricing Disclosure Package or the Offering Memorandum in order to comply with any law, the Company and the Guarantors will forthwith prepare an appropriate supplement or amendment thereto, and will expeditiously furnish to the Initial Purchasers and dealers a reasonable number of copies thereof.

 

(e) None of the Company nor any Guarantor will make any offer to sell or solicitation of an offer to buy the Notes that would constitute a Free Writing Offering Document without the prior consent of the Representatives, which consent shall not be unreasonably withheld or delayed.  If at any time following issuance of a Free Writing Offering Document any event occurred or occurs as a result of which such Free Writing Offering Document conflicts with the information in the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum or, when taken together with the information in the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum, includes an untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, as promptly as practicable after becoming aware thereof, the Company will give notice thereof to the Initial Purchasers through the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Initial Purchaser a Free Writing Offering Document or other document which will correct such conflict, statement or omission.

 

(f) Promptly from time to time to take such action as the Initial Purchasers may reasonably request to qualify the Notes for offering and sale under the securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Notes; provided that in connection therewith the Company shall not be required to (i) qualify as a foreign corporation in any jurisdiction in which it would not otherwise be required to so qualify, (ii) file a general consent to service of process in any such jurisdiction, or (iii) subject itself to taxation in any jurisdiction in which it would not otherwise be subject.

 

  

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(g) For a period commencing on the date hereof and ending on the 180th day after the date of the Offering Memorandum, the Company and the Guarantors agree not to, directly or indirectly, (i) offer for sale, sell, or otherwise dispose of (or enter into any transaction or device that is designed to, or would be expected to, result in the disposition by any person at any time in the future of) any debt securities of the Company, whether secured or unsecured, substantially similar to the Notes or securities convertible into or exchangeable for such debt securities of the Company, or sell or grant options, rights or warrants with respect to such debt securities of the Company or securities convertible into or exchangeable for such debt securities of the Company, (ii) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of such debt securities of the Company, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of debt securities of the Company or other securities, in cash or otherwise, (iii) file or cause to be filed a registration statement, including any amendments, with respect to the registration of debt securities of the Company substantially similar to the Notes or securities convertible, exercisable or exchangeable into debt securities of the Company, or (iv) publicly announce an offering of any debt securities of the Company substantially similar to the Notes or securities convertible or exchangeable into such debt securities, in each case without the prior written consent of Barclays Capital Inc. on behalf of the Initial Purchasers, except in exchange for the Exchange Notes and the Exchange Guarantees in connection with the Exchange Offer.

 

(h) So long as any of the Notes are outstanding, the Company and the Guarantors will, furnish at their expense to the Initial Purchasers, and, upon request, to the holders of the Notes and prospective purchasers of the Notes the information required by Rule 144A(d)(4) under the Securities Act (if any).

 

(i) The Company and the Guarantors will apply the net proceeds from the sale of the Notes to be sold by it hereunder substantially in accordance with the description set forth in the Pricing Disclosure Package and the Offering Memorandum under the caption “Use of Proceeds.”

 

(j) The Company, the Guarantors and their respective affiliates will not take, directly or indirectly, any action designed to or that has constituted or that reasonably could be expected to cause or result in the stabilization or manipulation of the price of any security of the Company or the Guarantors in connection with the offering of the Notes.

 

(k) The Company and the Guarantors will not, and will not permit any of their respective affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Notes that have been acquired by any of them, except for Notes purchased by the Company, the Guarantors or any of their respective affiliates and resold in a transaction registered under the Securities Act.

 

(l) The Company and the Guarantors agree not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) that would be integrated with the sale of the Notes in a manner that would require the registration under the Securities Act of the sale to the Initial Purchasers or the Eligible Purchasers of the Notes.

 

  

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(m) The Company and the Guarantors agree to comply with all the terms and conditions of the Registration Rights Agreement and all agreements set forth in the representation letters of the Company and the Guarantors to DTC relating to the approval of the Notes by DTC for “book entry” transfer.

 

(n) The Company and the Guarantors will do and perform all things required or necessary to be done and performed under this Agreement by them prior to the Closing Date, and to satisfy all conditions precedent to the Initial Purchasers’ obligations hereunder to purchase the Notes.

 

6.            Expenses.  Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, the Company and the Guarantors, jointly and severally, agree, to pay all expenses, costs, fees and taxes incident to and in connection with: (a) the preparation, printing, filing and distribution of the Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum (including, without limitation, financial statements and exhibits) and all amendments and supplements thereto (including the fees, disbursements and expenses of the Company’s and the Guarantors’ accountants and counsel); (b) the preparation, printing (including, without limitation, word processing and duplication costs) and delivery of this Agreement, the Indenture, the Registration Rights Agreement, all Blue Sky memoranda and all other agreements, memoranda, correspondence and other documents printed and delivered in connection therewith and with the Exempt Resales (but not, however, legal fees and expenses of the Initial Purchasers’ counsel incurred in connection with any of the foregoing other than fees of such counsel plus reasonable disbursements incurred in connection with the preparation, printing and delivery of such Blue Sky memoranda); (c) the issuance and delivery by the Company of the Notes and by the Guarantors of the Guarantees and any taxes payable in connection therewith (and, if any Initial Purchaser pays any such taxes, to indemnify the Initial Purchaser therefor); (d) the qualification of the Notes and Exchange Notes for offer and sale under the securities or Blue Sky laws of the several states and any foreign jurisdictions as the Initial Purchasers may designate (including, without limitation, the reasonable fees and disbursements of the Initial Purchasers’ counsel relating to such registration or qualification); (e) the furnishing of such copies of the Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum, and all amendments and supplements thereto, as may be reasonably requested for use in connection with the Exempt Resales; (f) the preparation of certificates for the Notes (including, without limitation, printing and engraving thereof); (g) the approval of the Notes by DTC for “book-entry” transfer (including fees and expenses of counsel for the Initial Purchasers); (h) the rating of the Notes and the Exchange Notes; (i) the obligations of the Trustee, any agent of the Trustee and the counsel for the Trustee in connection with the Indenture, the Notes, the Guarantees, the Exchange Notes and the Exchange Guarantees; (j) the performance by the Company and the Guarantors of their other obligations under this Agreement; and (k) all travel expenses (including expenses related to chartered aircraft) of each Initial Purchaser and the Company’s officers and employees and any other expenses of each Initial Purchaser and the Company in connection with attending or hosting meetings with prospective purchasers of the Notes, and expenses associated with any electronic road show.

 

  

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7.            Conditions to Initial Purchasers’ Obligations.  The respective obligations of the Initial Purchasers hereunder are subject to the accuracy, when made and on and as of the Closing Date, of the representations and warranties of the Company and the Guarantors contained herein, to the performance by the Company and the Guarantors of their respective obligations hereunder, and to each of the following additional terms and conditions:

 

(a) The Initial Purchasers shall not have discovered and disclosed to the Company on or prior to the Closing Date that the Pricing Disclosure Package or the Offering Memorandum, or any amendment or supplement thereto, contains an untrue statement of a fact which, in the opinion of Latham & Watkins LLP, counsel to the Initial Purchasers, is material or omits to state a fact which, in the opinion of such counsel, is material and is necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading.

 

(b) All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the Notes, the Guarantees, the Exchange Notes, the Exchange Guarantees, the Registration Rights Agreement, the Indenture, the Pricing Disclosure Package and the Offering Memorandum, and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Initial Purchasers, and the Company and the Guarantors shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters.

 

(c) Each of Chamberlain, Hrdlicka, White, Williams & Aughtry, P.C. and Carter, Ledyard & Milburn LLP, as special New York law counsel to the Company, shall have furnished to the Initial Purchasers their written opinion, as counsel to the Company and the Guarantors, addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, substantially in the form of Exhibit A and Exhibit B hereto, respectively.

 

(d) Christopher P. Graham shall have furnished to the Initial Purchasers his written opinion, as Senior Vice President, Secretary and General Counsel to the Company, addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, substantially in the form of Exhibit C hereto.

 

(e) The Initial Purchasers shall have received from Latham & Watkins LLP, counsel for the Initial Purchasers, such opinion or opinions, dated the Closing Date, with respect to the issuance and sale of the Notes, the Pricing Disclosure Package, the Offering Memorandum and other related matters as the Initial Purchasers may reasonably require, and the Company shall have furnished to such counsel such documents and information as such counsel reasonably requests for the purpose of enabling them to pass upon such matters.

 

(f) At the time of execution of this Agreement, the Initial Purchasers shall have received from UHY, LLP a letter, in form and substance satisfactory to the Initial Purchasers, with respect to the Company, addressed to the Initial Purchasers and dated the date hereof (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Pricing Disclosure Package, as of a date not more than three days prior to the date hereof), the conclusions and findings of such firm with respect to the financial information and (iii) covering such other matters as are ordinarily covered by accountants’ “comfort letters” to underwriters in connection with registered public offerings.

 

  

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(g) With respect to the letter of UHY, LLP referred to in the preceding paragraph and delivered to the Initial Purchasers concurrently with the execution of this Agreement (the “initial letter”), the Company shall have furnished to the Initial Purchasers a “bring-down letter” of such accountants, with respect to the Company, addressed to the Initial Purchasers and dated the Closing Date (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the Closing Date (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in each of the Pricing Disclosure Package or the Offering Memorandum, as of a date not more than three days prior to the date of the Closing Date), the conclusions and findings of such firm with respect to the financial information and other matters covered by the initial letter, and (iii) confirming in all material respects the conclusions and findings set forth in the initial letter.

 

(h) Except as described in the Pricing Disclosure Package and the Offering Memorandum, (i) neither the Company, any Guarantor nor any of their respective subsidiaries shall have sustained, since the date of the latest audited financial statements included or incorporated by reference in the Pricing Disclosure Package and the Offering Memorandum, any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, or (ii) since such date, there shall not have been any change in the capital stock or long-term debt of the Company, any Guarantor or any of their respective subsidiaries or any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), results of operations, stockholders’ equity, properties, management, business or prospects of the Company, the Guarantors and their respective subsidiaries, taken as a whole, the effect of which, in any such case described in clause (i) or (ii), is, individually or in the aggregate, in the judgment of the Representatives, so material and adverse as to make it impracticable or inadvisable to proceed with the offering or the delivery of the Notes being delivered on the Closing Date on the terms and in the manner contemplated in the Pricing Disclosure Package and the Offering Memorandum.

 

(i) The Company and each Guarantor shall have furnished or caused to be furnished to the Initial Purchasers dated as of the Closing Date a certificate of the Chief Executive Officer and Chief Financial Officer of the Company and each Guarantor, or other officers satisfactory to the Initial Purchasers, as to such matters as the Representatives may reasonably request, including, without limitation, a statement that:

 

(i) The representations, warranties and agreements of the Company and the Guarantors in Section 2 are true and correct on and as of the Closing Date, and the Company has complied with all its agreements contained herein and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date; and

 

  

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(ii) They have examined the Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum, and, in their opinion, (A) the Preliminary Offering Memorandum, the Pricing Disclosure Package, as of the Applicable Time, and the Offering Memorandum, as of its date and as of the Closing Date, did not and do not contain any untrue statement of a material fact and did not and do not omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (B) since the date of the Pricing Disclosure Package and the Offering Memorandum, no event has occurred which should have been set forth in a supplement or amendment to the Pricing Disclosure Package and the Offering Memorandum.

 

(j) Subsequent to the earlier of the Applicable Time and the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Company’s debt securities by any “nationally recognized statistical rating organization,” as that term is used by the Commission for purposes of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company’s debt securities.

 

(k) The Notes shall be eligible for clearance and settlement through DTC.

 

(l) The Company and the Guarantors shall have executed and delivered the Registration Rights Agreement, and the Initial Purchasers shall have received an original copy thereof, duly executed by the Company and the Guarantors.

 

(m) The Company, the Guarantors and the Trustee shall have executed and delivered the Indenture, and the Initial Purchasers shall have received an original copy thereof, duly executed by the Company, the Guarantors and the Trustee.

 

(n) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following:  (i) trading in securities generally on the New York Stock Exchange, the NASDAQ or the NYSE Amex Equities or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or materially limited or the settlement of such trading generally shall have been materially disrupted or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a general moratorium on commercial banking activities shall have been declared by federal or state authorities or a material disruption has occurred in the securities settlement or clearance services in the United States, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States, or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions, including, without limitation, as a result of terrorist activities after the date hereof (or the effect of international conditions on the financial markets in the United States shall be such), as to make it, in the judgment of the Representatives, impracticable or inadvisable to proceed with the offering or delivery of the Notes being delivered on the Closing Date on the terms and in the manner contemplated in the Offering Memorandum or that, in the judgment of the Representatives, could materially and adversely affect the financial markets or the markets for the Notes and other debt securities.

 

  

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(o) On or prior to the Closing Date, the Company and the Guarantors shall have furnished to the Initial Purchasers such further certificates and documents as the Initial Purchasers may reasonably request.

 

All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Initial Purchasers.

 

8.            Indemnification and Contribution.

 

(a) The Company and each Guarantor, hereby agree, jointly and severally, to indemnify and hold harmless each Initial Purchaser, its affiliates, agents, directors, officers and employees and each person, if any, who controls any Initial Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of Notes), to which that Initial Purchaser, affiliate, agent, director, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Free Writing Offering Document taken together with the Pricing Disclosure Package, the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum or in any amendment or supplement thereto, (B) in any Blue Sky application or other document prepared or executed by the Company or any Guarantor (or based upon any written information furnished by the Company or any Guarantor) specifically for the purpose of qualifying any or all of the Notes under the securities laws of any state or other jurisdiction (any such application, document or information being hereinafter called a “Blue Sky Application”), or (C) in any materials or information provided to investors by, or with the approval of, the Company or any Guarantor in connection with the marketing of the offering of the Notes (“Marketing Materials”), including any road show or investor presentations made to investors by the Company (whether in person or electronically), or (ii) the omission or alleged omission to state in any Free Writing Offering Document taken together with the Pricing Disclosure Package, the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or in any amendment or supplement thereto, or in any Blue Sky Application or in any Marketing Materials, any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse each Initial Purchaser and each such affiliate, agent, director, officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by that Initial Purchaser, affiliate, agent, director, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company and the Guarantors shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Offering Memorandum, the Pricing Disclosure Package or Offering Memorandum, or in any such amendment or supplement thereto, or in any Blue Sky Application or in any Marketing Materials, in reliance upon and in conformity with written information concerning such Initial Purchaser furnished to the Company through the Representatives by or on behalf of any Initial Purchaser specifically for inclusion therein, which information consists solely of the information specified in Section 8(e). The foregoing indemnity agreement is in addition to any liability that the Company or the Guarantors may otherwise have to any Initial Purchaser or to any affiliate, agent, director, officer, employee or controlling person of that Initial Purchaser.

 

  

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(b) Each Initial Purchaser, severally and not jointly, hereby agrees to indemnify and hold harmless the Company, each Guarantor, their respective officers and employees, each of their respective directors, and each person, if any, who controls the Company or any Guarantor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company, any Guarantor or any such director, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Free Writing Offering Document, Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum or in any amendment or supplement thereto, (B) in any Blue Sky Application, or (C) in any Marketing Materials, or (ii) the omission or alleged omission to state in any Free Writing Offering Document, Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or in any amendment or supplement thereto, or in any Blue Sky Application or in any Marketing Materials any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such Initial Purchaser furnished to the Company through the Representatives by or on behalf of that Initial Purchaser specifically for inclusion therein, which information is limited to the information set forth in Section 8(e).  The foregoing indemnity agreement is in addition to any liability that any Initial Purchaser may otherwise have to the Company, any Guarantor or any such director, officer, employee or controlling person.

 

 

  

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(c) Promptly after receipt by an indemnified party under this Section 8 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability that it may have under this Section 8 except to the extent it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure and; provided, further, that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under this Section 8. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party.  After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 8 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the Initial Purchasers shall have the right to employ counsel to represent jointly the Initial Purchasers and their respective affiliates, agents, directors, officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the Initial Purchasers against the Company or any Guarantor under this Section 8, if (i) the Company, the Guarantors and the Initial Purchasers shall have so mutually agreed; (ii) the Company and the Guarantors have failed within a reasonable time to retain counsel reasonably satisfactory to the Initial Purchasers; (iii) the Initial Purchasers and their respective affiliates, agents, directors, officers, employees and controlling persons shall have reasonably concluded, based on the advice of counsel, that there may be legal defenses available to them that are different from or in addition to those available to the Company and the Guarantors; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Initial Purchasers or their respective affiliates, agents, directors, officers, employees or controlling persons, on the one hand, and the Company and the Guarantors, on the other hand, and representation of both sets of parties by the same counsel would present a conflict due to actual or potential differing interests between them, and in any such event the fees and expenses of such separate counsel shall be paid by the Company and the Guarantors.  No indemnifying party shall (x) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding and does not include a statement as to, or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party, or (y) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment.

 

  

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(d) If the indemnification provided for in this Section 8 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 8(a) or 8(b) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other, from the offering of the Notes, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other, with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations.  The relative benefits received by the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other, with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Notes purchased under this Agreement (before deducting expenses) received by the Company and the Guarantors, on the one hand, and the total purchase discounts and commissions received by the Initial Purchasers with respect to the Notes purchased under this Agreement, on the other hand, bear to the total gross proceeds from the offering of the Notes under this Agreement as set forth on the cover page of the Offering Memorandum.  The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, the Guarantors, or the Initial Purchasers, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission.  For purposes of the preceding two sentences, the net proceeds deemed to be received by the Company shall be deemed to be also for the benefit of the Guarantors, and information supplied by the Company shall also be deemed to have been supplied by the Guarantors.  The Company, the Guarantors, and the Initial Purchasers agree that it would not be just and equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation that does not take into account the equitable considerations referred to herein.  The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 8(d), no Initial Purchaser shall be required to contribute any amount in excess of the purchase discounts or commissions received by the Initial Purchasers with respect to the Notes purchased under this Agreement.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.  The Initial Purchasers’ obligations to contribute as provided in this Section 8(d) are several in proportion to their respective purchase obligations and not joint.

 

(e) The Initial Purchasers severally confirm and the Company and the Guarantors acknowledge and agree that the statements with respect to the offering of the Notes by the Initial Purchasers set forth in the third and ninth paragraphs of the section entitled “Plan of Distribution” in the Pricing Disclosure Package and the Offering Memorandum constitute the only information concerning such Initial Purchasers furnished in writing to the Company or any Guarantor by or on behalf of the Initial Purchasers specifically for inclusion in the Preliminary Offering Memorandum, the Pricing Disclosure Package and the Offering Memorandum or in any amendment or supplement thereto.

 

9.            Defaulting Initial Purchasers.

 

  

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(a) If, on the Closing Date, any Initial Purchaser defaults in its obligations to purchase the Notes that it has agreed to purchase under this Agreement, the remaining non-defaulting Initial Purchasers may in their discretion arrange for the purchase of such Notes by the non-defaulting Initial Purchasers or other persons satisfactory to the Company on the terms contained in this Agreement.  If, within 36 hours after any such default by any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for the purchase of such Notes, then the Company shall be entitled to a further period of 36 hours within which to procure other persons satisfactory to the non-defaulting Initial Purchasers to purchase such Notes on such terms.  In the event that within the respective prescribed periods, the non-defaulting Initial Purchasers notify the Company that they have so arranged for the purchase of such Notes, or the Company notifies the non-defaulting Initial Purchasers that it has so arranged for the purchase of such Notes, either the non-defaulting Initial Purchasers or the Company may postpone the Closing Date for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Initial Purchasers may be necessary in the Pricing Disclosure Package, the Offering Memorandum or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to the Pricing Disclosure Package or the Offering Memorandum that effects any such changes.  As used in this Agreement, the term “Initial Purchaser” includes, for all purposes of this Agreement unless the context requires otherwise, any party not listed in Schedule I hereto that, pursuant to this Section 9, purchases Notes that a defaulting Initial Purchaser agreed but failed to purchase.

 

(b) If, after giving effect to any arrangements for the purchase of the Notes of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Notes that remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Notes, then the Company shall have the right to require each non-defaulting Initial Purchaser to purchase the principal amount of Notes that such Initial Purchaser agreed to purchase hereunder plus such Initial Purchaser’s pro rata share (based on the principal amount of Notes that such Initial Purchaser agreed to purchase hereunder) of the Notes of such defaulting Initial Purchaser or Initial Purchasers for which such arrangements have not been made; provided that the non-defaulting Initial Purchasers shall not be obligated to purchase more than 110% of the aggregate principal amount of Notes that it agreed to purchase on the Closing Date pursuant to the terms of Section 3.

 

(c) If, after giving effect to any arrangements for the purchase of the Notes of a defaulting Initial Purchaser or Initial Purchasers by the non-defaulting Initial Purchasers and the Company as provided in paragraph (a) above, the aggregate principal amount of such Notes that remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Notes, or if the Company shall not exercise the right described in paragraph (b) above, then this Agreement shall terminate without liability on the part of the non-defaulting Initial Purchasers.  Any termination of this Agreement pursuant to this Section 9 shall be without liability on the part of the Company or the Guarantors, except that the Company and each of the Guarantors will continue to be liable for the payment of expenses as set forth in Sections 6 and 11 and except that the provisions of Section 8 shall not terminate and shall remain in effect.

 

(d) Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it may have to the Company, the Guarantors or any non-defaulting Initial Purchaser for damages caused by its default.

 

  

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10.          Termination.  The obligations of the Initial Purchasers hereunder may be terminated by the Initial Purchasers by notice given to and received by the Company prior to delivery of and payment for the Notes if, prior to that time, any of the events described in Sections 7(h), (j) or (n) shall have occurred or if the Initial Purchasers shall decline to purchase the Notes for any reason permitted under this Agreement.

 

11.          Reimbursement of Initial Purchasers’ Expenses.  Upon the consummation of the transactions contemplated by this Agreement, the Company and the Guarantors, jointly and severally, agree to reimburse the Initial Purchasers for fees and disbursements of their counsel up to $60,000.  If (a) the Company for any reason fails to tender the Notes for delivery to the Initial Purchasers, or (b) the Initial Purchasers shall decline to purchase the Notes for any reason permitted under this Agreement, the Company and the Guarantors shall reimburse the Initial Purchasers for all reasonable out-of-pocket expenses (including the fees and disbursements of counsel for the Initial Purchasers) incurred by the Initial Purchasers in connection with this Agreement and the proposed purchase of the Notes, and upon demand the Company and the Guarantors shall pay the full amount thereof to the Initial Purchasers.  If this Agreement is terminated pursuant to Section 9 by reason of the default of one or more Initial Purchasers, the Company and the Guarantors shall not be obligated to reimburse any defaulting Initial Purchaser on account of those expenses.

 

12.          Notices, etc.  All statements, requests, notices and agreements hereunder shall be in writing, and:

 

(a) if to the Initial Purchasers, shall be delivered or sent by mail or facsimile transmission to Barclays Capital Inc., 745 Seventh Avenue, New York, New York 10019, Attention: Syndicate Registration (Fax: 646-834-8133) with a copy to Latham & Watkins, LLP, Attention: Michael Chambers (Fax: 713-546-5401), and with a copy, in the case of any notice pursuant to Section 8(c), to the Director of Litigation, Office of the General Counsel, Barclays Capital Inc., 745 Seventh Avenue, New York, New York 10019;

 

(b) if to the Company or any Guarantor, shall be delivered or sent by mail, telex, overnight courier or facsimile transmission to Global Geophysical Services, Inc., 13927 South Gessner Road, Missouri City, Texas 77489, Attention: General Counsel (Fax: 713-972-1008), with a copy to Chamberlain, Hrdlicka, White, Williams & Aughtry, P.C., 1200 Smith Street, 14th Floor, Houston, Texas 77002, Attention: James J. Spring III (Fax: 713-656-2553);

 

provided, however, that any notice to an Initial Purchaser pursuant to Section 8(c) shall be delivered or sent by hand delivery, mail, telex or facsimile transmission to such Initial Purchaser at its address set forth in its acceptance telex to Barclays Capital Inc., which address will be supplied to any other party hereto by Barclays Capital Inc. upon request.  Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof.  The Company shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the Initial Purchasers by Barclays Capital Inc.

 

13.          Persons Entitled to Benefit of Agreement.  This Agreement shall inure to the benefit of and be binding upon the Initial Purchasers, the Company, the Guarantors and their respective successors.  This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that the representations, warranties, indemnities and agreements of the Company and the Guarantors contained in this Agreement shall also be deemed to be for the benefit of directors, officers and employees of the Initial Purchasers and each person or persons, if any, controlling any Initial Purchaser within the meaning of Section 15 of the Securities Act.  Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 13, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.

 

  

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14. Survival.  The respective indemnities, rights of contribution, representations, warranties and agreements of the Company, the Guarantors and the Initial Purchasers contained in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Notes and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of any of them or any person controlling any of them.

 

15. Definition of the Terms “Business Day”, “Affiliate”, and “Subsidiary”.  For purposes of this Agreement, (a) “business day” means any day on which the New York Stock Exchange, Inc. is open for trading, and (b) “affiliate” and “subsidiary” have the meanings set forth in Rule 405 under the Securities Act.

 

16. Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

17. Waiver of Jury Trial.  The Company and each of the Initial Purchasers hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

18. No Fiduciary Duty.  The Company and the Guarantors acknowledge and agree that in connection with this offering, or any other services the Initial Purchasers may be deemed to be providing hereunder, notwithstanding any preexisting relationship, advisory or otherwise, between the parties or any oral representations or assurances previously or subsequently made by the Initial Purchasers: (a) no fiduciary or agency relationship between the Company, any Guarantor and any other person, on the one hand, and the Initial Purchasers, on the other, exists; (b) the Initial Purchasers are not acting as advisors, experts or otherwise, to the Company or the Guarantors, including, without limitation, with respect to the determination of the purchase price of the Notes, and such relationship between the Company and the Guarantors, on the one hand, and the Initial Purchasers, on the other, is entirely and solely commercial, based on arms-length negotiations; (c) any duties and obligations that the Initial Purchasers may have to the Company and the Guarantors shall be limited to those duties and obligations specifically stated herein; (d) the Initial Purchasers and their respective affiliates may have interests that differ from those of the Company and the Guarantors; and (e) the Company and the Guarantors have consulted their own legal and financial advisors to the extent they deemed appropriate.  The Company and the Guarantors hereby waive any claims that the Company and the Guarantors may have against the Initial Purchasers with respect to any breach of fiduciary duty in connection with the Notes.

 

19. Counterparts.  This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument.

 

  

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20. Headings.  The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

 

  

31

  

 

If the foregoing correctly sets forth the agreement among the Company, the Guarantors, and the Initial Purchasers, please indicate your acceptance in the space provided for that purpose below.

 

Very truly yours,

 

 

Global Geophysical Services, Inc.

By   /s/ P. Mathew Verghese                                          

     Name: P. Mathew Verghese

     Title: Senior Vice President and 

   Chief Financial Officer

Autoseis, inc.

By   /s/ P. Mathew Verghese                                          

     Name: P. Mathew Verghese

     Title: Senior Vice President and

   Chief Financial Officer

GGS International holdings, Inc.

By   /s/ P. Mathew Verghese                                          

     Name: P. Mathew Verghese

     Title: Senior Vice President and

   Chief Financial Officer

Autoseis Development Company

By   /s/ P. Mathew Verghese                                      

     Name: P. Mathew Verghese

     Title: Senior Vice President and

   Chief Financial Officer

 

 

[Signatures Continued on Following Page]

  

  

  

Global Eurasia, LLC

By   /s/ P. Mathew Verghese                                       

     Name: P. Mathew Verghese

     Title: Senior Vice President and

   Chief Financial Officer

Paisano Lease Co., Inc.

By   /s/ P. Mathew Verghese                                      

     Name: P. Mathew Verghese

     Title: Senior Vice President and

   Chief Financial Officer

Global Microseismic Services, Inc.

By   /s/ P. Mathew Verghese                                   

     Name: P. Mathew Verghese

     Title: Senior Vice President and

   Chief Financial Officer

 

STRM, LLC

 

By   /s/ P. Mathew Verghese                                 

     Name: P. Mathew Verghese

     Title: Senior Vice President and

   Chief Financial Officer

Signature page to Purchase Agreement

  

  

  

Accepted:

 

Barclays Capital Inc.

By  /s/ Robert J. Anderson

    Name: Robert J. Anderson

    Title: Director

 

Citigroup Global Markets Inc.

By  /s/ John Bishop                                                               

    Name: John Bishop

    Title: Director

 

Credit Suisse Securities (USA) LLC

By  /s/ Ryan E. Tull                                                                

    Name: Ryan E. Tull

    Title: Director

 

Acting on behalf of themselves and

as the Representatives of the several Initial Purchasers

  

  

  

	
SCHEDULE I

	  	
Principal

	  	
Amount of

	  	
Notes

	  	
to be

	
Initial Purchasers

	
Purchased

	
Barclays Capital Inc.                                                                                                                

	
$30,000,000

	
Citigroup Global Markets Inc.                                                                                                                

	
10,000,000

	
Credit Suisse Securities (USA) LLC                                                                                                                

	
10,000,000

	
     Total                                                                                                                

	
$50,000,000

 

  

  

  

SCHEDULE II

LIST OF GUARANTORS

(i)     Autoseis, Inc.

 

(ii)    GGS International Holdings, Inc.

 

(iii)   Autoseis Development Company

 

(iv)   Paisano Lease Co., Inc.

 

(v)    Global Eurasia, LLC

 

(vi)   Global MicroSeismic Services, Inc.

 

(vii)  STRM, LLC

  

  

  

SCHEDULE III

 

Global Geophysical Services, Inc.

 

$50,000,000 10.500% Senior Notes due 2017

 

March 23, 2012

 

	
Pricing Supplement

	
Pricing Supplement dated March 23, 2012 to the Preliminary Offering Memorandum dated March 22, 2012 of Global Geophysical Services, Inc.  This Pricing Supplement is qualified in its entirety by reference to the Preliminary Offering Memorandum.  The information in this Pricing Supplement supplements the Preliminary Offering Memorandum and supersedes the information in the Preliminary Offering Memorandum to the extent it is inconsistent with the information in the Preliminary Offering Memorandum.  Capitalized terms used in this Pricing Supplement but not defined have the meanings given them in the Preliminary Offering Memorandum.

 

	
Issuer                                                    

	
Global Geophysical Services, Inc. (the “Company”)

	
Securities                                                    

	
$50.0 million of 10.500% Senior Notes due 2017 (the “notes”)

	
Aggregate Principal Amount                                                    

	
$50,000,000

	
Gross Proceeds                                                    

	
$47,000,000

	
Use of Proceeds                                                    

	
The Company estimates that its net proceeds from this offering will be approximately $45.5 million after deducting initial purchasers’ discounts and estimated offering expenses.  The Company intends to use the net proceeds from this offering to repay a portion of its revolving credit facility.

	
Form                                                    

	
144A/Reg S with registration rights

	
Maturity                                                    

	
May 1, 2017

	
Issue Price                                                    

	
94.000% plus accrued interest, if any, from March 28, 2012

	
Coupon                                                    

	
10.500%

	
Yield to Maturity                                                    

	
12.106%

	
Interest Payment Dates                                                    

	
Semi-annually on May 1 and November 1 of each year, beginning on May 1, 2012

	
Record Dates                                                    

	
April 15 and October 15

	
Optional Redemption                                                    

	
At any time on or after May 1, 2014, the Company may, at its option, redeem the notes, in whole or in part, at the redemption prices (expressed as a percentage of the principal amount thereof) set forth below, together with accrued and unpaid interest thereon, if any, to the redemption date (subject to the rights of holders of notes on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period beginning May 1 of the years indicated:

	  	
Year

	
Percentage

	  	
2014

	
105.250%

	  	
2015

	
102.625%

	  	
2016 and thereafter

	
100.000%

	  	
In addition, at any time prior to May 1, 2014, the Company may redeem all or a portion of the notes at a price equal to 100% of the principal amount plus a “make-whole” premium, using a discount rate of Treasuries plus 0.50%, plus accrued and unpaid interest, if any, to the redemption date.

	
Optional Redemption with Equity Proceeds

	
Prior to May 1, 2013, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of the notes issued under the Indenture with the net cash proceeds from one or more equity offerings at a redemption price of 110.500% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date (subject to the rights of holders of notes on the relevant record date to receive interest due on the relevant interest payment date).

	
Guarantees                                                    

	
The Company’s existing and future domestic subsidiaries will fully and unconditionally guarantee the notes.

	
Change of Control                                                    

	
101% plus accrued and unpaid interest.

	
Original Issue Discount                                                    

	
The notes will be issued with original issue discount (“OID”) for U.S. federal income tax purposes in excess of a statutorily defined de minimis amount.  As such, U.S. Holders, whether on the cash or accrual method of tax accounting, will be required to include any amounts representing OID in gross income (as ordinary income) on a constant yield to maturity basis for U.S. federal income tax purposes in advance of the receipt of cash payments to which such income is attributable.

	
Trade Date                                                    

	
March 23, 2012

	
Settlement Date                                                    

	
March 28, 2012 (T+3)

	
Joint Book-Running Managers

	
Barclays Capital Inc.

Citigroup Global Markets Inc.

Credit Suisse Securities (USA) LLC

	
Denominations                                                    

	
$2,000 and integral multiples of $1,000 in excess thereof.

	
CUSIP/ISIN Numbers                                                    

	
144A CUSIP and ISIN: 37946S AC1 and US37946SAC17

Regulation S CUSIP and ISIN: U3164M AC8 and USU3164MAC83

  

  

  

	
  

	
CAPITALIZATION

The following table sets forth the Company’s cash and cash equivalents and capitalization as of December 31, 2011:

 

	
•  

	
on a historic basis; and

 

	
•  

	
on an as adjusted basis to give effect to this offering and the application of proceeds from this offering.

 

You should read this table together with the sections of the Preliminary Offering Memorandum entitled “Use of Proceeds,” “Selected Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and with the Company’s financial statements and related notes included elsewhere in the Preliminary Offering Memorandum.

 

	  	 	

As of December 31, 2011

	 
	  	 	

Historical

	 	 	

As

Adjusted for

this Offering

	 
	  	 	 	 	 	
(unaudited)

	 
	  	 	
(in thousands)

	 
	
Cash and cash equivalents

	 	$	21,525	 	 	$	21,525	 
	
Revolving credit facility(1) 

	 	 	70,000	 	 	 	24,500	 
	
$200 million Existing 101⁄2% Senior Notes due 2017

	 	 	200,000	 	 	 	200,000	 
	
Notes offered hereby

	 	 	—	 	 	 	50,000	 
	
Other debt(2) 

	 	 	22,085	 	 	 	22,085	 
	
Total debt

	 	$	292,085	 	 	$	296,585	 
	
Stockholders’ equity:

	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 
	
Common stock, $.01 par value: 100,000,000 shares authorized and 37,042,019 shares outstanding

	 	$	467	 	 	$	467	 
	
Additional paid-in-capital

	 	 	246,104	 	 	 	246,104	 
	
Treasury stock: 9,671,119 shares (historical);

	 	 	(96,525	)	 	 	(96,525	)
	
Accumulated (deficit)

	 	 	(36,484	)	 	 	(36,484	)
	
Total stockholders’ equity

	 	 	113,562 	 	 	 	113,562 	 
	
Total capitalization

	 	$	405,647 	 	 	$	410,147 	 

	
  

	
_______________________

	 	
(1)  

	
Net proceeds of approximately $45.5 million used to repay revolver borrowings.

	
  

	
(2)

	
Includes $11.7 million of promissory notes, $0.5 million of notes payable, and $9.9 million of capital leases.

 

__________________________________________________

 

  

  

  

This material is strictly confidential and has been prepared by the Company solely for use in connection with the proposed offering of the securities described in the Preliminary Offering Memorandum. This material is personal to each offeree and does not constitute an offer to any other person or the public generally to subscribe for or otherwise acquire the securities. Please refer to the Preliminary Offering Memorandum for a complete description.

The securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and are being offered only to (1) “qualified institutional buyers” as defined in Rule 144A under the Securities Act and (2) outside the United States to non-U.S. persons in compliance with Regulation S under the Securities Act, and this communication is only being distributed to such persons.

This communication is not an offer to sell the securities and it is not a solicitation of an offer to buy the securities in any jurisdiction to any person to whom it is unlawful to make such offer or soliciation in such jurisdiction.

  

  

  

SCHEDULE IV

 

A.           Insert list of each document provided as an amendment or supplement to the Preliminary Offering Memorandum.

 

	
·  

	
Pricing Supplement, dated March 23, 2012

 

B.           Insert list of any “road show” materials that are Free Writing Offering Documents.

 

	
·  

	
None

  

  

  

SCHEDULE V

 

 

	
 

Entity

	
 

Jurisdiction of Organization

 

	
 

Tier 1 (Direct) Subsidiaries

 

	
Global Geophysical Services, Ltd.

	
Cayman Islands

	
Global Geophysical Services SpA

	
Chile

	
Global Geophysical Services S.A.

	
Ecuador

	
Global Geophysical Services, S. de R.L. de C.V.

	
Mexico

	
GGS Mexico Services, S. de R.L. de C.V.

	
Mexico

	
Global Servicos Geofisicos, Ltda.

	
Brazil

	
Global Geophysical Services Nigeria, Ltd.

	
Nigeria

	
Global Geophysical Services, Sp. z.o.o.

	
Poland

	
Global Geophysical Services Arabia, Ltd.

	
Saudi Arabia

	
Autoseis, Inc.

	
Texas, United States

	
GGS International Holdings, Inc.

	
Texas, United States

	
Global Microseismic Services, Inc.

	
Texas, United States

	
Paisano Lease Co., Inc.

	
Texas, United States

	
Global Eurasia, LLC

	
Delaware, United States

	
 

Tier 2 (Indirect) Subsidiaries

 

	
Global Geophysical Services (Isle of Man), Ltd

	
Isle of Man

	
Expertise for Seismic Services, LLC 

	
Iraq

	
Global Geophysical Services S.A.C.

	
Peru

	
Global Neftegeophysica, LLC

	
Russia

	
Autoseis Development Company

	
Texas, United States

	
STRM, LLC

	
Colorado, United States

 

	
 

Entity

	
 

Jurisdiction of Organization

 

	
Global Geophysical International Pensions, Ltd.

(1 issued share held by Citco Trustees (Cayman), Ltd.,  as trustee of the Global Geophysical International Retirement Plan)

	
Cayman Islands

 

  

  

  

Exhibit A

 

Company Counsel Opinion

 

The opinion of Chamberlain, Hrdlicka, White, Williams & Aughtry LLP, to be delivered pursuant to Section 7(c) of the Purchase Agreement, shall be to the effect that:

 

	
1.  

	
The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware; and the Company is duly qualified to do business as a foreign corporation in good standing in Alaska, Arkansas, California, Colorado, Kansas, Louisiana, Maryland, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, West Virginia, and Wyoming.

 

	
2.  

	
The Company has the requisite corporate power and authority (a) to own, lease and operate its properties and to conduct its business as described in the Pricing Disclosure Package and the Offering Memorandum and (b) to execute and deliver, as applicable, and perform its obligations under the Purchase Agreement, the Registration Rights Agreement, the Indenture, the Notes and the Exchange Notes.

 

	
3.  

	
Each Guarantor is a corporation or limited liability company duly formed, validly existing and in good standing under the laws of its jurisdiction of formation. Each Guarantor has the requisite corporate or limited liability company power and authority, as applicable, (a) to own or lease, as the case may be, and to operate its properties and to conduct its business as described in the Pricing Disclosure Package and the Offering Memorandum and (b) to execute and deliver and perform its obligations under the Purchase Agreement, the Registration Rights Agreement, the Indenture, the Guarantees and the Exchange Guarantees. Each Guarantor is duly qualified to do business as a foreign corporation or limited liability company in good standing in the jurisdictions listed on Exhibit A hereto.

 

	
4.  

	
All of the outstanding capital stock of each Guarantor has been duly authorized and is validly issued, fully paid and non-assessable and is owned of record by the Company, directly, or owned of record by a wholly-owned subsidiary of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, defect or claim, except as set forth in the Offering Memorandum.

 

	
5.  

	
The Purchase Agreement has been duly authorized, executed and delivered by each of the Company and each Guarantor (the “Opinion Parties”).

 

	
6.  

	
The Registration Rights Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, each of the Opinion Parties.

 

	
7.  

	
The Indenture (including the Guarantees contained therein with respect to the Guarantors) has been duly authorized, executed and delivered by each of the Opinion Parties and constitutes a valid and binding agreement of each of the Opinion Parties.

 

  

Exhibit A-1

  

	
8.  

	
The Notes are in the form specified by the Indenture, have been duly authorized by the Company for issuance and sale pursuant to the Purchase Agreement and the Indenture, and, when executed by authorized representatives of the Company and authenticated by the Trustee in the manner provided in the Indenture and delivered against payment of the purchase price therefor, will constitute valid and binding obligations of the Company.

 

	
9.  

	
The Exchange Notes have been duly and validly authorized for issuance by the Company, and, when issued and authenticated in accordance with the terms of the Indenture, the Registration Rights Agreement and the Exchange Offer, in each case in accordance with applicable law, will constitute valid and binding obligations of the Company.

 

	
10.  

	
The Exchange Guarantees have been duly and validly authorized for issuance by the Guarantors, and, when issued in accordance with the terms of the Indenture, the Registration Rights Agreement and the Exchange Offer, in each case in accordance with applicable law, will constitute valid and binding obligations of the Guarantors.

 

	
11.  

	
The Notes and the Indenture conform in all material respects to the descriptions thereof contained in the Pricing Disclosure Package and the Offering Memorandum.

 

	
12.  

	
The statements under the caption “Description of the Notes” in the Pricing Disclosure Package and the Offering Memorandum insofar as they purport to constitute a summary of the terms of the Indenture, the Notes and the Registration Rights Agreement and the Guarantees and the statements under the under the captions “Description of Certain Other Indebtedness,” “Plan of Distribution,” and “Certain United States Federal Income Tax Considerations,” insofar as they purport to describe or summarize certain provisions of the documents or U.S. federal laws referred to therein  fairly and accurately describe or summarize the matters therein described in all material respects.

 

	
13.  

	
The statements under the caption “Environmental Disclosures and Regulation” in the Pricing Disclosure Package and the Offering Memorandum, insofar as they purport to constitute summaries of legal matters, fairly summarize the matters therein described in all material respects.

 

	
14.  

	
No filing, consent, approval, authorization, order, registration or qualification of or with any court or Governmental Authority is required under Applicable Law for the execution, delivery and performance by the Opinion Parties of the Indenture, the Purchase Agreement or the Registration Rights Agreement, or of the delivery and performance by the Opinion Parties of the Notes, the Guarantees, the Exchange Notes or the Exchange Guarantees, as applicable, or the offering, issuance, sale and delivery of the Notes, the Exchange Notes, the Guarantees or the Exchange Guarantees, or consummation of the transactions contemplated by the Purchase Documents or the Exchange Notes or the Exchange Guarantees and by the Pricing Disclosure Package and the Offering Memorandum, except such as have been obtained or made by the Company or the Guarantors and are in full force and effect, and except such as may be required by applicable state securities or blue sky laws or federal and state securities laws with respect to the Company’s and the Guarantors’ obligations under the Registration Rights Agreement.

 

  

Exhibit A-2

  

	
15.  

	
The execution and delivery of the Purchase Documents, the Exchange Notes and the Exchange Guarantees by the Opinion Parties party thereto and the performance by such Opinion Party and compliance by such Opinion Party with the terms of their respective obligations thereunder, and consummation by such Opinion Party of the transactions contemplated thereby, as applicable, will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of such Opinion Party pursuant to any of the agreements listed on Exhibit C (the “Material Agreements”); (ii) result in any violation of the provisions of Organizational Documents of such Opinion Party; or (iii) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under any Applicable Law.

 

	
16.  

	
None of the Opinion Parties is and, after giving effect to the offering and sale of the Notes and the application of the proceeds thereof as described in the Pricing Disclosure Package and the Offering Memorandum, will be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

	
17.  

	
Assuming the accuracy of, and compliance by all parties with, the representations, warranties and covenants of the Company and the Guarantors and the Initial Purchasers contained in the Purchase Documents, no registration of the Notes or the Guarantees under the Securities Act, and no qualification of an indenture under the Trust Indenture Act with respect thereto, is required in connection with the purchase of the Notes by the Initial Purchasers in the manner contemplated under the Purchase Agreement or the initial resale of the Notes by the Initial Purchasers in the Exempt Resales.

 

Such counsel shall state that such counsel acted as counsel to the Opinion Parties in connection with the preparation of the Pricing Disclosure Package and the Offering Memorandum. Such counsel may note that except to the extent expressly set forth in numbered paragraphs 12 and 13 such counsel has not undertaken to verify independently any of the factual matters set forth in the Pricing Disclosure Package and the Offering Memorandum and that many determinations required to be made in the preparation of the Pricing Disclosure Package and the Offering Memorandum involved matters of a non-legal nature. Such counsel shall state that in the course of acting as counsel to the Opinion Parties in connection with the preparation of the Pricing Disclosure Package and the Offering Memorandum, such counsel reviewed the Pricing Disclosure Package and the Offering Memorandum, and participated in conferences and telephone conversations with officers and other representatives of the Opinion Parties, during which conferences and conversations the contents of the Pricing Disclosure Package and the Offering Memorandum and related matters were discussed. Such counsel shall also state that it reviewed and relied upon certain corporate records and documents, letters from accountants, and oral and written statements of officers and other representatives of the Opinion Parties and others as to the existence and consequence of certain factual and other matters. Such counsel may state that based exclusively on the participation, review and reliance described in the preceding two sentences, such counsel advises that no facts came to such counsel’s attention that caused us to believe that:(i) the Pricing Disclosure Package, as of the Applicable Time, contained or contains any untrue statement of material fact or omitted or omits to state any material fact either required to be stated therein or would be necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (ii) the Offering

 

  

Exhibit A-3

  

Memorandum, as of its date and as of the Closing Date, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (except that such counsel may state that in each case it does not express any view as to the financial statements and related notes and schedules thereto, and other financial and accounting data derived from such financial statements and related notes). Such counsel may also state that (1) such counsel is not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Pricing Disclosure Package or the Offering Memorandum related to accounting matters, or to financial statements or the notes thereto, or factual matters derived from such financial statements or the notes thereto; and (2) such counsel makes no representation that it has independently verified the accuracy, completeness or fairness of such statements, except to the extent set forth in the numbered paragraphs above.

 

  

Exhibit A-4

  

Exhibit B

 

New York Counsel Opinion

 

The opinion of Carter, Ledyard & Milburn LLP, to be delivered pursuant to Section 7(c) of the Purchase Agreement, shall be to the effect that:

 

1.  The Registration Rights Agreement has been duly delivered by each of the Company and each Guarantor (the “Covered Parties”) and constitutes a valid and binding agreement of each of the Covered Parties, enforceable against each of the Covered Parties in accordance with its terms.

 

2.  The Indenture (including the Guarantees contained therein with respect to the Guarantors) has been duly delivered by each of the Covered Parties and constitutes a valid and binding agreement of each of the Covered Parties, enforceable against each of the Covered Parties in accordance with its terms.

 

3.  The Notes are in the form contemplated by the Indenture, and, when executed by the Company and authenticated by the Trustee in the manner provided in the Indenture and delivered against payment of the purchase price therefor, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and will be entitled to the benefits of the Indenture.

 

4.  The Exchange Notes, when issued and authenticated in accordance with the terms of the Indenture, the Registration Rights Agreement and the Exchange Offer (in each case in accordance with the terms of the Operative Documents and applicable law), will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and will be entitled to the benefits of the Indenture.

 

5.  The Exchange Guarantees, when issued in accordance with the terms of the Indenture, the Registration Rights Agreement and the Exchange Offer (in each case in accordance with the terms of the Operative Documents and applicable law), will constitute valid and binding obligations of the Guarantors, enforceable against the Guarantors in accordance with their terms and will be entitled to the benefits of the Indenture.

 

  

Exhibit B-1

  

6.  No filing, consent, approval, authorization, order, registration or qualification of or with any New York court or New York governmental authority is required for the execution, delivery and performance by the Covered Parties of the Operative Documents or the Exchange Notes or the Exchange Guarantees, or the offering, issuance, sale and delivery of the Notes, the Exchange Notes, the Guarantees or the Exchange Guarantees, or consummation of the transactions contemplated by the Operative Documents or the Exchange Notes or the Exchange Guarantees and by the Pricing Disclosure Package and the Offering Memorandum, except such as have been obtained or made by the Company or the Guarantors and are in full force and effect, and except such as may be required by applicable state securities or blue sky laws or federal and state securities laws with respect to the Company’s and the Guarantors’ obligations under the Registration Rights Agreement.

 

7.  The execution and delivery of the Operative Documents, the Exchange Notes and the Exchange Guarantees by the Covered Parties, as applicable, and the performance by the Covered Parties and compliance by the Covered Parties with the terms of their respective obligations thereunder, and consummation by the Covered Parties of the transactions contemplated thereby, as applicable, will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under any New York statute, rule or regulation.

  

Exhibit B-2

  

Exhibit C

 

General Counsel Opinion

 

The opinion of Christopher P. Graham, General Counsel of Global Geophysical Services, Inc. (the “Company”), to be delivered pursuant to Section 7(d) of the Purchase Agreement, shall be to the effect that:

 

A.           To such counsel’s knowledge, the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, have a material adverse effect on the condition, financial or otherwise, or in the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business of the Company and its subsidiaries considered as one entity (a “Material Adverse Effect”).

 

B.           To such counsel’s knowledge, each subsidiary of the Company listed on Exhibit B to his opinion has been duly incorporated or formed and is validly existing as a corporation or limited liability company in good standing under the laws of the jurisdiction of its incorporation or formation, as the case may be, has corporate power and authority to own, or lease, as the case may be, and to operate its properties and to conduct its business as described in the Pricing Disclosure Package and the Offering Memorandum and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, have a Material Adverse Effect.

 

C.           To such counsel’s knowledge, there are no legal or governmental actions, suits or proceedings pending or threatened which are required to be disclosed in the Pricing  Disclosure Package or the Offering Memorandum.

D.           To such counsel’s knowledge, except as disclosed in Pricing Disclosure Package and the Offering Memorandum,  (i) neither the Company nor any of its subsidiaries is a party to, and (ii) neither the property nor the assets of the Company or any of its subsidiaries are subject to, any pending or threatened action or proceeding that may individually or in the aggregate have (X) a material adverse effect on the transactions contemplated by the Operative Documents or (Y) a Material Adverse Effect.

E.           The Indenture (including the Guarantees contained therein with respect to the Guarantors) has been duly authorized, executed and delivered by each of the Company and the Guarantors.

  

Exhibit C-1

  

Such counsel shall also state that he has acted as counsel to the Company and each subsidiary of the Company listed on Exhibit B (collectively, the Opinion Parties”) in connection with the preparation of the Pricing Disclosure Package and the Offering Memorandum, and based on such counsel’s examination of the Pricing Disclosure Package and the Offering Memorandum and conferences with certain officers and employees of and with auditors for, and other representatives of, the Opinion Parties, representatives of the Initial Purchasers and counsel for the Initial Purchasers, no facts have come to the attention of such counsel that leads such counsel to believe that (i) the Pricing Disclosure Package, as of the Applicable Time contained or contains any untrue statement of material fact or omits to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or (ii) the Offering Memorandum, or any amendment or supplement thereto, as of its date and as of the Closing Date, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading Notwithstanding anything to the contrary contained in this paragraph, I express no belief with respect to the financial statements and related notes and schedules thereto, and other financial, accounting and statistical data derived from such financial statements and related notes, included in the Pricing Disclosure Package or the Offering Memorandum. Such counsel may also state that (1) such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Pricing Disclosure Package or the Offering Memorandum related to accounting matters, or to financial statements or the notes thereto, or factual matters derived from such financial statements or the notes thereto; and (2) such counsel makes no representation that it has independently verified the accuracy, completeness or fairness of such statements.

 

  

Exhibit C-2exh_1017.htm

Exhibit 10.17

 

 

LOAN AGREEMENT

State Energy Program American Recovery and Reinvestment Act Revolving Loan Program

Date of Agreement: July 1, 2010

	
Borrower Name and Address:

	
Lender Name and Address:

	
Advanced Environmental Recycling Technologies, Inc.

	
Oklahoma Department of Commerce

	
914 N. Jefferson

	
900 North Stiles Avenue

	
Springdale, Arkansas 72764

	
Oklahoma City, Oklahoma 73104-3234

	  	  
	
State of Organization: Delaware

	
Attn.:  Vaughn Clark, Division Director

The undersigned Borrower, with mailing address as shown above, hereby applies to the Lender for the loan and/or extension of credit described in Section 1(c) hereof, for the specific purpose of completing a certain State Energy Program – American Recovery and Reinvestment Act (SEP ARRA) Project hereinafter referred to as Project.

In consideration of Lender making such loan and/or credit extensions, or any part thereof, the Borrower agrees with the Lender as follows:

1.      REPRESENTATIONS AND WARRANTIES:   The Borrower represents and warrants to Lender that:

	
  

	
a.

	
Borrower is duly organized, existing and in good standing under the laws of the state indicated above, and is registered to do business in the State of Oklahoma.

	
  

	
b.

	
The borrowing hereunder and the execution, delivery and performance by Borrower of this Agreement, any promissory note payable to holder or its order, or any other agreements contemplated in connection herewith have been duly authorized by all necessary action of Borrower and are not in contravention of any law, rule or regulation or of the terms of the Borrower's Articles of Incorporation or Bylaws, or of any agreement or instrument to which Borrower is a party or by which Borrower may be bound.

	
  

	
c.

	
Proceeds of loans and extensions of credit arising hereunder will be used only for the purposes shown below:

Acquisition of equipment to assist Advanced Environmental Recycling Technologies, Inc., in the employment of the latest technologies to recycle polyethylene at their facility in Watts, Oklahoma.

	
2.

	
CONDITIONS PRECEDENT TO LOAN:  At or prior to the initial advance of a loan or extension of credit, the Borrower shall deliver or caused to be delivered to the Lender the following items, to be in form and substance satisfactory to the Lender at the Lender's sole discretion.

	
a.  

	
Closing Documents.  This Agreement, the State Energy Program – American Recovery and Reinvestment Act Promissory Note and any and all security, collateral, and other documentation required of Borrower by Lender.

	
b.  

	
The Lender will be granted a purchase money security interest in all equipment purchased with the loan proceeds from the Lender.  The Borrower will be responsible for preparing and filing the UCC financing statements with the County Clerks of Oklahoma and Adair Counties for each piece of equipment.  Copies of the file stamped financing statements must be sent to the Lender before any future requests for funds will be honored.

 

Borrower shall initial each page here [______] [______]

  

-1-

  

	
c.  

	
The Borrower will only be permitted to draw loan proceeds for the acquisition of identifiable pieces of equipment.  The requests of funds must include copies of purchase orders or invoices from the vendors of the equipment.

	
d.  

	
Proof of insurance on all of the collateral pledged to the Lender will be provided.

	
3.   

	
AFFIRMATIVE AGREEMENTS: Until payment in full of the State Energy Program – American Recovery and Reinvestment Act Loan Program Note and performance of all obligations owing to the Lender under this Agreement and the instruments executed pursuant hereto, unless the Lender shall otherwise consent in writing, the Borrower covenants and agrees as follows:

	
  

	
a.

	
The Borrower shall maintain adequate records, in accordance with generally accepted accounting practices, of all transactions so that at any time and from time to time the true and complete financial condition of the Borrower may be readily determined. The Borrower shall make available at the Lender's request such records for Lender's inspection, furnish promptly to Lender and in such form as Lender may request any additional financial or other information concerning the assets, liabilities, operations and transactions of Borrower, and permit Lender to make and obtain copies of any such records or information.

	
  

	
b.

	
The Borrower shall inform Lender promptly of any litigation, or of any claim or controversy which might become the subject of litigation, against Borrower or affecting any of Borrower's property, if such litigation or potential litigation, in the event of an unfavorable outcome, would have a material adverse effect on Borrower's financial condition or would be reasonably expected to cause a Default.

	
  

	
c.

	
The Borrower shall permit representatives of the Lender to visit and inspect any of the properties of Borrower from time to time as the Lender may request or require and without prior notice or appointment.

	
  

	
d.  The Borrower will promptly and punctually perform all of its obligations hereunder and under all other instruments executed or delivered pursuant hereto, and under the terms of any other contract or agreement entered into by the Borrower in connection with the Project; provided that the Borrower shall have the right to contest in good faith any bona fide dispute under the terms of a contract or agreement entered into by the Borrower, and reserves deemed adequate by Lender have been established therefor.

	
  

	
e.

	
Throughout the term of this Agreement the Borrower will pay for the following items:

	
  

	 

	
  

	
The Borrower agrees to pay or reimburse all of the reasonable fees, expenses and charges of Lender (including attorney fees), for any expenses it may have in collecting the amount due hereunder.

	
  

	
f.

	
The Borrower shall maintain its operations for use as represented in its application, and for no other purpose without the prior written consent of the Lender, which shall not be unreasonably withheld.  Borrower shall not alter use of the real estate, nor any other assets. It is understood that this restriction is for the protection and information of the Lender regarding any changes in operations which may include any environmental hazard, illegal activity, or cessation of operations, or other alteration which may effect repayment, and is not to be used as a method of control by the Lender

	
  

	
g.

	
The Borrower covenants that it will not take or omit to take any action which action or omission will cause the proceeds of the State Energy Program – American Recovery and Reinvestment Act Promissory Note to be applied other than to the payment of the costs of the Project and the costs and expenses related to the issuance of the State Energy Program - American Recovery and Reinvestment Act Loan Program Promissory Note in the manner provided in the proposed Project budget upon which State Energy Program – American Recovery and Reinvestment Act Loan Program approval was based. There shall be no variation from the amounts, categories, nor individual line item expenditures as set forth in the approved Project budget.

Borrower shall initial each page here [______] [______]

  

-2-

  

	
4.

	
PAYMENTS AND ADVANCES:  Funding will be made as set forth in paragraph 2(c).

	
5.

	
EVENTS OF DEFAULT:  The Borrower shall be in default under this agreement upon the happening of any one of the following events or conditions, herein called "Default:

	
  

	
a.

	
Borrower fails to make any payment when required by any note or obligation of the Borrower to Lender is not made when due or in accordance with the terms of the applicable contract.

	
  

	
b.

	
Borrower defaults in the performance of any material covenant, obligation, warranty, or provision contained in this Agreement or in any note, obligation, contract, or undertaking of the Borrower to or with Lender

	
  

	
c.

	
Any representation, statement, certificate, schedule, financial statement, or report made or furnished to the Lender by or in behalf of Borrower is found to be false or erroneous in any material respect when made or furnished, regardless of when the false act was committed or discovered.

	
  

	
d.

	
Failure by Borrower to pay any indebtedness at maturity, or the occurrence of any event which results in the acceleration of the maturity of any obligation of Borrower to Lender under any promissory note, agreement, or undertaking.

	
  

	
e.

	
Dissolution or termination of existence of Borrower.

	
  

	
f.

	
The initiation, whether voluntary or involuntary on the part of the Borrower, of any bankruptcy, reorganization, liquidation or receivership proceedings by or against the Borrower.

	
  

	
g.

	
The issuance of any final order, decree or judgment pursuant to any judicial or administrative proceeding declaring that the Project, or the operation or use thereof, is in violation of any law, ordinance, rule or regulation of any agency, department, commission, board, bureau or instrumentality of the Lender, State of Oklahoma, or United States; provided that the Borrower shall have the right to diligently pursue in good faith any bona fide appeal which is available from any such order, decree or judgment, and thereafter the Borrower is granted ninety (90) days from the issuance of any official order, decree or judgment, to comply therewith.

	
  

	
h.

	
Relocation of the principal place of business without thirty days’ prior written notice to Lender, or any abandonment or vacation of premises, whether by declaration, intent, or in fact.

	
  

	
i.

	
Upon the occurrence or the existence of a Default, Lender may, at its option and without notice or demand to Borrower and without demand or presentment which are hereby waived, immediately declare due and payable all liabilities and obligations of Borrower to Lender, cease extending credit to Borrower, and exercise any and all rights and remedies possessed by Lender.

 

	
6.

	
INSOLVENCY, BANKRUPTCY OR RECEIVERSHIP

 

	
  

	
a.

	
The Borrower shall immediately notify the Lender of any of the following events: (i) the Borrower filing of a voluntary case seeking liquidation or reorganization under the Bankruptcy Act; (ii) the Borrower’s consent to the institution of an involuntary case under the Bankruptcy Act against the Borrower; (iii) the filing of any similar proceeding for or against the Borrower, or the Borrower’s consent to, the dissolution, winding-up or readjustment of your debts, appointment of a receiver, conservator, trustee, or other officer with similar powers over the Borrower, under any other applicable state or federal law; or (iv) the Borrower’s insolvency due to the Borrower’s inability to pay its debts generally as they become due.

Borrower shall initial each page here [______] [______]

  

-3-

  

	
  

	
b.

	
Such notification shall be in writing and shall: (i) specifically set out the details of the occurrence of an event referenced in paragraph (a); (ii) provide the facts surrounding that event; and (iii) provide the impact such event will have on the project being funded by this award.

	
  

	
c.

	
Upon the occurrence of any of the four events described in the first paragraph, Lender reserves the right to conduct a review of your award to determine your compliance with the required elements of the award (including such items as cost share, progress towards technical project objectives, and submission of required reports). If the Lender review determines that there are significant deficiencies or concerns with your performance under the award, Lender reserves the right to impose additional requirements, as needed, including (i) change your payment method; or (ii) institute payment controls.

	
  

	
d.

	
Failure of the Borrower to comply with this provision may be considered a material noncompliance of this financial assistance award by the Lender.

	
7.

	
PREPAYMENT OF STATE ENERGY PROGRAM – AMERICAN RECOVERY AND REINVESTMENT ACT LOAN PROGRAM NOTE:

	
  

	
a.

	
Lender hereby grants Borrower the option, exercisable at any time, to prepay all or any portion of the State Energy Program – American Recovery and Reinvestment Act Loan Program Promissory Note, without penalty.  Unless specifically modified under the terms of the note, payments received shall be applied first to interest and then to principal.

	
  

	
b.

	
Mandatory Payment of Note Upon Condemnation, Damage, Destruction or Sale of Assets.  Borrower shall prepay the State Energy Program – American Recovery and Reinvestment Act Loan Program Promissory Note in full prior to the expiration of this State Energy Program – American Recovery and Reinvestment Act Loan Program Loan Agreement if (1) all or substantially all of the Project is condemned (or sold in lieu thereof) or damaged or destroyed and Borrower does not elect, as evidenced by a certificate delivered to the Lender within 120 days after the occurrence of such event, to rebuild or restore the Project, or (2) all or substantially all of the assets of the Borrower are sold or disposed of in any manner.  Upon the occurrence of any of the above, the Borrower shall prepay the State Energy Program – American Recovery and Reinvestment Act Loan Program Promissory Note in full upon a date specified by Lender.  Upon Lender's receipt of such mandatory prepayment, this State Energy Program – American Recovery and Reinvestment Act Loan Program Loan Agreement shall be terminated.

	
8.

	
LENDER'S OBLIGATION LIMITED:  Nothing in this Agreement is intended to require or obligate nor shall anything herein be interpreted to require or obligate the Lender to make any payment or advance from any of its funds or property, other than the funds derived from the issuance of the State Energy Program – American Recovery and Reinvestment Act Loan Program Promissory Note proceeds for the purposes given.

	
9.

	
GENERAL PROVISIONS:  Borrower agrees to the following:

	
  

	
a.  No modification, consent, or waiver of any provision of this Agreement, nor consent by Lender to any departure by Borrower therefrom, shall be effective unless the same shall be in writing and signed by an officer of the Lender, and then shall be effective only in the specific instance and for the purpose for which given.

	
  

	
b.  No act, delay, or omission, including Lender's waiver of remedy because of any default hereunder, shall constitute a waiver of any of Lender's rights and remedies under this Agreement or any other agreement between the parties. All rights and remedies of Lender are cumulative and may be exercised singly or concurrently, and the exercise of any one or more remedies will not be waiver of any other. No waiver, change, modification, or discharge of any of Lender's rights or of Borrower's duties as so specified or allowed will be effective unless in writing and signed by a duly authorized officer of the Lender, and any such waiver will not be a bar to the exercise of any right or remedy on any subsequent default.  In the event the Lender shall elect to selectively and successively enforce its rights under any of the covenants, terms, or conditions of this Agreement or any other agreement or document, such action shall not be deemed a waiver or discharge of any other covenants, terms, or condition lien, encumbrance or security instrument securing payment of the State Energy Program – American Recovery and Reinvestment Act Loan Program Promissory Note, and all costs and other expenses due to the Lender.  The foreclosure of any lien provided pursuant to this Agreement without the simultaneous foreclosure of all such liens shall not merge the liens granted which are not foreclosed with any interest which the Lender might obtain as a result of such selective and successive foreclosure.

Borrower shall initial each page here [______] [______]

  

-4-

  

	
  

	
c.  This Agreement shall inure to the benefit of the successors and assigns of Lender and shall be binding on the executors, administrators, successors, and assigns of Borrower.

	
  

	
d.  Lender at any time and at its option may pledge, transfer, or assign its rights under this Agreement in whole or in part, and any pledgee, transferee, or assignee shall have the rights of Lender as to the rights or parts thereof so pledged, transferred, or assigned.

	
  

	
e.  If any provision of this Agreement shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein.

	
  

	
f.  The Lender shall have the right, but not the obligation, at the Borrower's expense, to commence, to appear in or to defend any action or proceeding purporting to affect the rights or duties of the parties hereunder and in connection therewith pay out of the funds of the loan all necessary expenses, including fees of counsel, if the Borrower fails to so commence, appear in or defend any such action or proceeding with counsel satisfactory to the Lender, except in a suit by the Borrower against the Lender, in which case the prevailing party shall be entitled to such fees and expenses as a part of any judgment obtained.

	
  

	
g.  The Borrower agrees to pay all fees, expenses and charges in respect to the loan contemplated by this Agreement, including, without limiting the generality thereof, the following:

	
  

	
1)  Reasonable fees and charges of the Lender for any extraordinary services performed and expenses incurred by them in connection with the administration of this loan;

	
  

	
2)  Reasonable fees and expenses of counsel and bond counsel employed by the Lender, in connection with any litigation arising out of or relating to this transaction and the issuance of the Promissory Note;

	
  

	
3)

	
Recording and filing fees (excepting only Oklahoma mortgage tax);

	
  

	
4)  Fees and expenses of any architect, engineer or agent employed by the Lender to inspect the Project or submit reports to the Lender concerning the Project; and

	
  

	
5)  Other reasonable fees and expenses involved in the closing of this loan and the reasonable fees and expenses payable by the Lender which are incident to the enforcement or defense of this Agreement or any instrument executed pursuant hereto.

	
  

	
h.

	
Nothing in this Agreement shall be construed to constitute the Lender as a joint venture with the Borrower or to constitute a partnership among the parties.

Borrower shall initial each page here [______] [______]

  

-5-

  

	
10.

	
POLITICAL ACTIVITY

	
  

	
a.

	
All employees of the Borrower shall observe the limitations on political activities to which they may be subject under the Hatch Act, 5 USC§1501, et seq., 18 USC§595 and 18 USC§1913.

	
  

	
b.

	
No loan funds may be used for any political activity or to further the election or defeat of any candidate for public office.

	
  

	
c.

	
No loan funds may be used to provide voters or prospective voters with transportation to the polls or similar assistance in connection with an election or any voter registration activity (42 USC§9904(c)(7).

	
  

	
d.

	
No portion of the loan funds may be used for lobbying activities.

11.      LOBBYING RESTRICTIONS

By accepting funds under this award, you agree that none of the funds obligated on the award shall be expended, directly or indirectly, to influence congressional action on any legislation or appropriation matters pending before Congress, other than to communicate to Members of Congress as described in 18 U.S.C. 1913. This restriction is in addition to those prescribed elsewhere in statute and regulation.

	
  

	
12.  ADMINSTRATIVE AND NATIONAL POLICY REQUIREMENTS

	
a.

	
Administrative Requirements

	
  

	
1) The administrative requirements for DOE grants, loans and cooperative agreements are contained in 10 CFR part 600 and 10 CFR part 420 (see http://ecfr.gpoaccess.gov).

	
  

	
b.

	
American Recovery and Reinvestment Act (ARRA) 2009 Award Administration Information

	
  

	
1)

	
Special Provisions relating to work funded under American Recovery and Reinvestment Act of 2009, Pub. L. 111-5 shall apply.  Also, the Office of Management and Budget may be promulgating additional provisions or modifying existing provisions.  Those additions and modifications will be incorporated into the Special Provisions as they become available.  A draft of these Special Provisions is located at

	
  

	 	
http://management.energy.gov/business_doe/business_forms.htm.

	
c.

	
Special Terms and Conditions and National Policy Requirements

	
  

	
1)

	
The  DOE Special Terms and Conditions for Use in Most Grants, Loans and Cooperative Agreements are located at http://management.energy.gov/documents/ARRAAttachment3.pdf.

	
  

	
2)

	
The National Policy Assurances to Be Incorporated as Award Terms are located at DOE http://www.management.energy.gov/documents/NationalPolicyAssurances5-06.pdf.

	
  

	
3)

	
The standard DOE financial assistance intellectual property provisions applicable to the various types of recipients are located at  http://www.gc.doe.gov/financial_assistance_awards.htm.

	
  

	
d.

	
Legal Authority

	
  

	
1)

	
SEP is authorized under PL 94-385, PL 94-163, PL 95-619, PL 94-580, PL 101-440, PL 102-486, PL 109-58, and PL 111-5.  All loans made under this program must comply with applicable legislation.

Borrower shall initial each page here [______] [______]

  

-6-

  

	
  

	
2)

	
SEP is governed by program regulations (10 CFR part 420) published in the Federal Register on July 8, 1996, and amended in the Federal Registers dated May 14, 1997, August 24, 1999, and May 1, 2000, and the DOE Financial Assistance Rules (10 CFR part 600).  DOE published a Final Rule on October 2, 2006, which amends 10 CFR 420 to incorporate the provisions of the Energy Policy Act of 2005, as described above.

13.      STATEMENT OF FEDERAL STEWARDSHIP

Lender will exercise stewardship in overseeing the project activities performed under this award. Stewardship activities include, but are not limited to, conducting site visits; reviewing performance and financial reports; providing technical assistance and/or temporary intervention in unusual circumstances to correct deficiencies which develop during the project; assuring compliance with terms and conditions; and reviewing technical performance after project completion to ensure that the award objectives have been accomplished.

 

 

14.           SITE VISITS

Lender’s authorized representatives have the right to make site visits at reasonable times to review project accomplishments and management control systems and to provide technical assistance, if required. All site visits and evaluations must be performed in a manner that does not unduly interfere with or delay the work.

15.           FEDERAL, STATE, AND MUNICIPAL REQUIREMENTS

You must obtain any required permits and comply with applicable federal, state, and municipal laws, codes, and regulations for work performed under this award.

	
16.

	
PRESERVATION OF OPEN COMPETITION AND GOVERNMENT NEUTRALITY TOWARDS CONTRACTORS’ LABOR RELATIONS ON FEDERALLY FUNDED CONSTRUCTION PROJECTS [Applicable if the objective of the award is to construct, rehabilitate, alter, convert, extend, or repair buildings, highways, or make other improvements to real property.]

	
  

	
a.

	
Unless in conflict with State or local laws, you must ensure that bid specifications, project agreement, or other controlling documents in construction contracts awarded pursuant to this agreement, or pursuant to a sub-award to this agreement, do not:

	
  

	
1)

	
Require or prohibit bidders, offerors, contractors, or subcontractors to enter into or adhere to agreements with one or more labor organizations, on the same or other related construction project(s); or

	
  

	
2)

	
Otherwise discriminate against bidders, offerors, contractors, or subcontractors for becoming or refusing to become or remain signatories or otherwise to adhere to agreements with one or more labor organizations, on the same or other related construction project(s).

	
  

	
b.

	
The term “construction contract” as used in this provision means any contract for the construction, rehabilitation, alteration, conversion, extension, or repair of buildings, highways, or other improvements to real property.

	
  

	
c.

	
Nothing in this provision prohibits bidders, offerors, contractors or subcontractors from voluntarily entering into agreements with labor organizations.

	
17.

	
DECONTAMINATION AND/OR DECOMMISSIONING (D&D) COSTS [Applicable if the objective of the award is to construct, rehabilitate, alter, convert, extend, or repair buildings, highways, or make other improvements to real property and if there is a possibility that the recipient's facilities will need to be restored or rehabilitated to approximately the same condition existing immediately prior to commencement of the Federal award.]

Borrower shall initial each page here [______] [______]

  

-7-

  

Notwithstanding any other provisions of this Agreement, the Government shall not be responsible for or have any obligation to the recipient for (i) Decontamination and/or Decommissioning (D&D) of any of the recipient’s facilities, or (ii) any costs which may be incurred by the recipient in connection with the D&D of any of its facilities due to the performance of the work under this Agreement, whether said work was performed prior to or subsequent to the effective date of this Agreement.

	
  

	
18.  REPORTING

	
  

	
a.

	
Management Reporting

	
  

	
1)

	
Progress Report – The Progress Report must provide a concise narrative assessment of the status of work and include information identified under Special Instructions on the Federal Assistance Reporting Checklist available at http://management.energy.gov/business_doe/business_forms.htm.

	
  

	
2)

	
Recipients of SEP ARRA funds will be required to submit both monthly and quarterly progress reports     to the Lender in compliance with the U.S. Department of Energy regulations.

	
  

	
b.

	
Closeout Reports

	
  

	
1)    Property Certification – The Borrower must provide the Property Certification, including the required inventories of non-exempt property, located at http://management.energy.gov/property_management.htm.

	
  

	
c.

	
  SEP Performance Metrics

	
  

	
1)   President Obama has committed to transparency and accountability in the use of the funds provided through ARRA.  It is important therefore that the activities carried out and the results achieved with those funds are tracked carefully and reported clearly and quantifiably.  The results achieved with SEP ARRA funding will be assessed according to the following performance metrics:

	
(a)  

	
Jobs Created

(b)      Energy (kwh/therms/gallons/BTUs/etc.) saved

(c)      Renewable energy installed capacity and generated

(d)      GHG emissions reduced (CO2 equivalents)

(e)      Energy cost savings

(f)      Funds leveraged

	
  

	
d.

	
The State of Oklahoma has adopted a centralized reporting option for the delivery of 1512 information to federal reporting.gov; therefore, the Borrower will not be required to register in Federal reporting.gov.

	
  

	
In compliance with the States reporting requirements, all contractors receiving stimulus funding will be required to submit ARRA reports on sub-recipient and vendor data.  These reports will be sent via email to the Lender.  Reports must be submitted by the determined deadline and completed in its entirety.

	
  

	
Submit contact information to include name, phone number, agency name, and email address to arra@okcommerce.gov.

Borrower shall initial each page here [______] [______]

  

-8-

  

	
19.

	
RECAPTURE

	
  

	
a.

	
ARRA funds were loaned to projects that could be started and completed expeditiously. Borrower will be monitored closely on the expenditure rate of ARRA funding to ensure the targets and purposes set out by ARRA are met.  This is a requirement that is mandated upon the Lender.   

	
  

	
b.

	
Borrowers must demonstrate that they are in compliance with federal programmatic goals and financial requirements.  This will be accomplished by the Borrower reporting to Lender on the accountability objectives in the OMB Guidance: which state: (1) the recipients and uses of all funds are transparent to the public, and the public benefits of these funds are reported clearly, accurately, and in a timely manner; and (2) funds are used for authorized purposes and instances of fraud, waste, error, and abuse are mitigated.  The Lender will provide the forms and the deadlines for the reporting, which shall also include reporting on the progress of the project.  The Lender reserves the right to recapture and redistribute funds distributed to a Borrower if these requirements are not met, or if project completion is delayed.

20.  SPECIAL CONDITIONS

	
  

	
a.

	
Borrower shall segregate obligations and expenditures related to funding under ARRA.  Financial and accounting systems should be revised as necessary to segregate, track and maintain these funds apart and separate from other revenue streams.

	
b.     

	
None of the funds provided under the ARRA may be used for any casino or other gambling establishment, aquarium, zoo, golf course, or swimming pool.

	
  

	
c.

	
Assurance of Compliance

	
  

	
1)

	
Davis-Bacon Act – The Borrower will assure that all laborers and mechanics on projects funded directly by or assisted in whole or in part by and through funding appropriated by the American Recovery and Reinvestment Act of 2009 are paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by subchapter IV of Chapter 31 of title 40, United States Code (Davis-Bacon Act), under this program in which the Borrower receives financial assistance from the Lender.

	
  

	
For more information on Davis/Bacon requirements go to:

	
  

	
http://www.dol.gov/compliance/laws/comp-dbra.htm

	
  

	
d.

	
Section 1605, Buy American:  Under Section 1605 of the ARRA, no funds appropriated by the Act may be used for a public buildings/works project unless “all iron, steel and manufactured goods used are produced in the U.S.”

	
  

	
Exceptions are allowed for cases

	
§  

	
  where the head of the federal agency concerned determines adherence would be “inconsistent with the public interest”,

	
§  

	
where iron/steel/manufactures are not produced in the U.S. in sufficient and available quantities, or

§ inclusion of U.S. products would increase overall project cost by 25%

Notice of a waiver of the ARRA Buy American requirements must be noticed and justified in the Federal Register.

 

Borrower shall initial each page here [______] [______]

  

-9-

  

	
  

	
e.

	
  NEPA:  All Projects receiving financial assistance from DOE must be reviewed under the National Environmental Policy Act (NEPA) of 1969 – 42 U.S.C. Section 4321 et seq.  The first step in DOE’s NEPA review process requires financial assistance recipients to submit information to DOE regarding the potential environmental impacts of the project receiving DOE funds.  Borrowers must complete the Environmental Checklist (DOE PMC EF-1) on-line at the following site: https://www.eere-pmc.energy.gov/NEPA.asp

	
  

	
  f.

	
Historical Preservation:  Section 106 of the National Historic Preservation Act requires entities using federal funds in historic properties or potentially historic properties to submit appropriate documentation to the State Historic Preservation Office (SHPO) prior to completion of work to ensure that there is no adverse affect on the property. A historic property is identified as on or eligible for the National Register of Historic Places. There are levels of significance required for eligible properties, but the minimum requirement is an age of 50 years or older.

21.      AUDITING, DISALLOWED COSTS

	
  

	
a.

	
Borrower shall comply with the Lender's Audit Policies and Audit Procedures, which are incorporated herein and made a part hereof.

	
  

	
b.

	
Borrower shall not pay audit costs as an expense to this Agreement.  Audit costs may be used as a match expense but are not reimbursable.

	
  

	
c.

	
In the event auditing results in the determination that the Borrower has expended ARRA funds on unallowable costs, the Borrower shall reimburse the Lender in full for all such costs.

	
  

	
d.

	
Borrower awarded proceeds from this Agreement will be required to procure the following type of audit over the contract and submit the audit results to the Lender:

	
1)  

	
For Borrowers expending $500,000 or more of total federal awards, including awards under this Agreement, during a fiscal year, the Borrower will be required to procure a single audit (financial statement audit and compliance audit over federal awards) pursuant to the requirements of the Single Audit Act Amendments of 1996 and 10 CFR 600.316, Audits of States, Local Governments and Non-Profit Organizations. This Agreement must be included in the Borrower’s required supplementary information schedule of expenditures of federal awards, and separately identified from other contracts and awards.

	
2)  

	
For Borrowers expending less than $500,000 of total federal awards, during a fiscal year, that are otherwise by law, regulation, or contract (exclusive of this Agreement) required to undergo an annual financial statement audit, the Borrowers may meet its audit requirements through procuring a financial statement audit performed in accordance with Government Auditing Standards (yellow book), and must include a supplemental information schedule within the financial  report that separately identifies and reports the revenues and expenditures related to this Agreement.

	
3)  

	
For Borrowers expending less than $500,000 of total federal awards, during a fiscal year, that are “not” otherwise by law, regulation, or contract required to undergo an annual financial statement audit, the Borrower may meet its audit requirements through procuring an special-purpose audit of a schedule of contract revenues and expenditures specific to this Agreement. The form and minimum content of the schedule of contract revenues and expenditures will be determined by the Lender. Such audit will be performed in accordance with the financial audit requirements of Government Auditing Standards and include tests of compliance with the allowable costs and activities in relation to the Agreement. The auditor will be required to report on the financial schedule as a special-purpose financial presentation pursuant to AICPA AU Section 623.22-.30, Special-Purpose Financial Presentations to Comply with Contractual Agreements or Regulatory Provisions. In addition, the auditor will report on contract compliance pursuant to the provisions of AICPA AU section 623.19-.21, Compliance with Aspects of Contractual Agreements or Regulatory Requirements Related to Audited Financial Statements.

Borrower shall initial each page here [______] [______]

  

-10-

  

	
  

	
e.

	
All Borrowers awarded proceeds from this Agreement are required to have designed and implemented appropriate internal controls over the receipt and expenditure of contract monies to ensure the following control objectives are met:

	
  

	
1)

	
Protection of contract assets,

	
  

	
2)

	
Reliability of contract financial information and;

	
  

	
3)

	
Adherence to applicable organizational policies, governmental regulations, and other compliance requirements, including those compliance requirements specifically applicable to this Agreement.

These internal requirements and objectives apply to the Borrower regardless as to whether the contract resources are expended directly by the Borrower or passed through to sub-contractors.

As a by-product of the audits performed over the contract financial information as noted in item (d) above, the auditor will be required to communicate and report significant deficiencies and material weaknesses identified in conducting the audits to those charged with governance within the Borrower’s entity. Such communication may be in the form of the internal control and compliance reports required pursuant to Government Auditing Standards and OMB Circular A-133, where applicable, or may be in a separate written communication consistent with AICPA AU Section 325, Communicating Internal Control Related Matters Identified in an Audit.

These written reports and communications on internal control will be provided by the Borrower to the Lender, along with the audited financial statements or financial schedule, upon completion of the audits.

22.    TERMINATION. This Agreement shall terminate, except as otherwise provided herein, on the following date:

June 1, 2026

Any obligation of Lender to extend credit or renew outstanding obligations of Borrower shall terminate on the termination date indicated above. However, such termination date shall not have application to Borrower in the event that any obligation of Borrower to Lender is unpaid, in which event all of the provisions of this Agreement shall remain in full force and effect as they relate to Borrower until such obligation and all other liabilities of Borrower to Lender have been paid in full.

Borrower shall initial each page here [______] [______]

  

-11-

  

	
SIGNATURES

 

 

	Accepted:  	Borrower:

 

	  	  
	  	  
	
Name of Lender: Oklahoma Department of Commerce

	
Name of Borrower: Advanced Environmental Recycling Technologies, Inc.

	
/s/     Vaughn Clark

	
/s/ Joe G. Brooks, CEO

	  	  
	  	
Officer                                                                                    Title

	
          Division Director

	
/s/ J.R.B. Hanna, CFO

	  	  
	
Officer                                                                                Title

	
Officer                                                                                    Title

 

Borrower shall initial each page here [______] [______]

-12-

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