Document:

Exhibit 10.1

 

Execution Version

 

ION Geophysical Corporation

(Delaware corporation)

 

$175,000,000 8.125% Senior Secured Second Priority Notes due 2018

 

PURCHASE AGREEMENT

 

Dated:  May 8, 2013

 

 

Table of Contents

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
Representations and Warranties   of the Company
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Preliminary Offering   Memorandum, Time of Sale Memorandum and Offering Memorandum
    	
3
    
	
 
    	
(b)
    	
Incorporated Documents
    	
3
    
	
 
    	
(c)
    	
Additional Written Communications
    	
3
    
	
 
    	
(d)
    	
Organization and Good Standing of the Company   and its Subsidiaries
    	
3
    
	
 
    	
(e)
    	
Financial Statements
    	
4
    
	
 
    	
(f)
    	
No Material Adverse Effect
    	
4
    
	
 
    	
(g)
    	
Capitalization
    	
4
    
	
 
    	
(h)
    	
Legal Power and Authority
    	
4
    
	
 
    	
(i)
    	
No Registration Rights
    	
5
    
	
 
    	
(j)
    	
Purchase Agreement
    	
5
    
	
 
    	
(k)
    	
Registration Rights Agreement
    	
5
    
	
 
    	
(l)
    	
Indenture
    	
5
    
	
 
    	
(m)
    	
The Notes, the Exchange Notes and the   Guarantees
    	
5
    
	
 
    	
(n)
    	
Collateral Documents
    	
6
    
	
 
    	
(o)
    	
Security Interest
    	
6
    
	
 
    	
(p)
    	
No Financing Statements
    	
6
    
	
 
    	
(q)
    	
Description of this Agreement, the   Registration Rights Agreement, the Securities, the Exchange Securities and   the Indenture
    	
7
    
	
 
    	
(r)
    	
No Violation or Default
    	
7
    
	
 
    	
(s)
    	
No Conflicts
    	
7
    
	
 
    	
(t)
    	
Accuracy of Disclosure
    	
7
    
	
 
    	
(u)
    	
No Consents Required
    	
8
    
	
 
    	
(v)
    	
Legal Proceedings
    	
8
    
	
 
    	
(w)
    	
Independent Accountants
    	
8
    
	
 
    	
(x)
    	
Reporting Compliance
    	
9
    
	
 
    	
(y)
    	
Compliance with Sarbanes-Oxley
    	
9
    
	
 
    	
(z)
    	
Disclosure Controls and Procedures
    	
9
    
	
 
    	
(aa)
    	
Internal Control Over Financial Reporting
    	
9
    
	
 
    	
(bb)
    	
Intellectual Property Rights
    	
10
    
	
 
    	
(cc)
    	
Title to Real and Personal Property
    	
10
    
	
 
    	
(dd)
    	
No Undisclosed Relationships
    	
10
    
	
 
    	
(ee)
    	
Investment Company Act
    	
10
    
	
 
    	
(ff)
    	
Environmental Laws
    	
10
    
	
 
    	
(gg)
    	
Taxes
    	
11
    
	
 
    	
(hh)
    	
Compliance with Labor Laws
    	
11
    
	
 
    	
(ii)
    	
Licenses and Permits
    	
12
    
	
 
    	
(jj)
    	
Compliance with ERISA
    	
12
    
	
 
    	
(kk)
    	
Insurance
    	
12
    
	
 
    	
(ll)
    	
No Unlawful Contributions or Other Payments
    	
12
    
	
 
    	
(mm)
    	
No Conflict with Anti-Money Laundering Laws
    	
13
    
					

 

i

 

	
 
    	
(nn)
    	
Compliance with OFAC
    	
13
    
	
 
    	
(oo)
    	
Statistical and Market Data
    	
13
    
	
 
    	
(pp)
    	
Regulations T, U, X
    	
13
    
	
 
    	
(qq)
    	
Solvency
    	
13
    
	
 
    	
(rr)
    	
No Restrictions on Subsidiaries
    	
14
    
	
 
    	
(ss)
    	
No Broker’s Fees
    	
14
    
	
 
    	
(tt)
    	
No Registration Required
    	
14
    
	
 
    	
(uu)
    	
No Stabilization
    	
14
    
	
 
    	
(vv)
    	
Eligibility for Resale under Rule 144A
    	
14
    
	
 
    	
(ww)
    	
Integration
    	
14
    
	
 
    	
(xx)
    	
No General Solicitation or Directed Selling   Efforts
    	
14
    
	
 
    	
 
    	
 
    
	
2.
    	
Purchase and Resale of the   Securities
    	
15
    
	
 
    	
 
    	
 
    
	
3.
    	
Payment and Delivery
    	
16
    
	
 
    	
 
    	
 
    
	
4.
    	
Further Agreements of the   Company
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Offering Memorandum,   Amendments or Supplements
    	
16
    
	
 
    	
(b)
    	
Additional Written Communications
    	
16
    
	
 
    	
(c)
    	
Ongoing Compliance of the Offering Memorandum   and Time of Sale Memorandum
    	
17
    
	
 
    	
(d)
    	
Delivery of Copies
    	
17
    
	
 
    	
(e)
    	
Notice to the Representative
    	
17
    
	
 
    	
(f)
    	
Blue Sky Compliance
    	
17
    
	
 
    	
(g)
    	
Agreement Not to Offer or Sell Securities
    	
18
    
	
 
    	
(h)
    	
Use of Proceeds
    	
18
    
	
 
    	
(i)
    	
Supplying Information
    	
18
    
	
 
    	
(j)
    	
Updating Information
    	
18
    
	
 
    	
(k)
    	
The Depositary
    	
18
    
	
 
    	
(l)
    	
Indenture Qualification
    	
18
    
	
 
    	
(m)
    	
No Resales by the Company
    	
19
    
	
 
    	
(n)
    	
No Integration
    	
19
    
	
 
    	
(o)
    	
No General Solicitation or Directed Selling   Efforts
    	
19
    
	
 
    	
(p)
    	
No Stabilization
    	
19
    
	
 
    	
(q)
    	
Legended Securities
    	
19
    
	
 
    	
(r)
    	
Collateral Filings
    	
19
    
	
 
    	
 
    	
 
    
	
5.
    	
Conditions of Initial   Purchasers’ Obligations
    	
19
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Representations and   Warranties
    	
19
    
	
 
    	
(b)
    	
No Downgrade
    	
19
    
	
 
    	
(c)
    	
No Material Adverse Effect
    	
20
    
	
 
    	
(d)
    	
Officer’s Certificate
    	
20
    
	
 
    	
(e)
    	
Comfort Letters
    	
20
    
	
 
    	
(f)
    	
Opinion of Counsel for the Company and the   Guarantors
    	
20
    
	
 
    	
(g)
    	
Opinion of Counsel for the Initial Purchasers
    	
21
    

 

ii

 

	
 
    	
(h)
    	
Senior Secured Credit Facility Consent
    	
21
    
	
 
    	
(i)
    	
No Legal Impediment to Issuance
    	
21
    
	
 
    	
(j)
    	
Good Standing
    	
21
    
	
 
    	
(k)
    	
Indenture and Registration Rights Agreement
    	
21
    
	
 
    	
(l)
    	
Collateral Documents
    	
21
    
	
 
    	
(m)
    	
Additional Documents
    	
21
    
	
 
    	
(n)
    	
Solvency Certificate
    	
21
    
	
 
    	
(o)
    	
Deliverables to Collateral Agent
    	
22
    
	
 
    	
 
    	
 
    
	
6.
    	
Indemnification and   Contribution
    	
23
    
	
 
    	
 
    	
 
    
	
 
    	
(a)
    	
Indemnification of the   Initial Purchasers
    	
23
    
	
 
    	
(b)
    	
Indemnification of the Company and the   Guarantors
    	
24
    
	
 
    	
(c)
    	
Notifications and Procedures
    	
24
    
	
 
    	
(d)
    	
Settlements
    	
25
    
	
 
    	
(e)
    	
Contribution
    	
25
    
	
 
    	
(f)
    	
Limitation on Liability
    	
26
    
	
 
    	
(g)
    	
Non-Exclusive Remedies
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
Termination
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
Defaulting Initial Purchaser
    	
27
    
	
 
    	
 
    	
 
    
	
9.
    	
Payment of Expenses
    	
27
    
	
 
    	
 
    	
 
    
	
10.
    	
Persons Entitled to Benefit   of Agreement
    	
28
    
	
 
    	
 
    	
 
    
	
11.
    	
Survival
    	
28
    
	
 
    	
 
    	
 
    
	
12.
    	
No Advisory or Fiduciary   Responsibility
    	
29
    
	
 
    	
 
    	
 
    
	
13.
    	
Authority of the   Representative
    	
29
    
	
 
    	
 
    	
 
    
	
14.
    	
Partial Unenforceability
    	
29
    
	
 
    	
 
    	
 
    
	
15.
    	
Notices
    	
29
    
	
 
    	
 
    	
 
    
	
16.
    	
Governing Law
    	
30
    
	
 
    	
 
    	
 
    
	
17.
    	
Definition of the Terms   “Business Day” and “Subsidiary”
    	
30
    
	
 
    	
 
    	
 
    
	
18.
    	
Counterparts
    	
30
    
	
 
    	
 
    	
 
    
	
19.
    	
Headings
    	
31
    

 

iii

 

May 8, 2013

 

Citigroup Global Markets Inc.

Wells Fargo Securities, LLC

As Representatives of the Initial Purchasers

 

c/o Citigroup Global Markets Inc.

Three World Financial Center

388 Greenwich Street
 New York, New York 10013

 

c/o Wells Fargo Securities, LLC

550 S. Tryon Street

Charlotte, North Carolina 28202

 

Ladies and Gentlemen:

 

ION Geophysical Corporation, a Delaware corporation (the “Company”), proposes to issue and sell to the several initial purchasers listed in Schedule 1 hereto (the “Initial Purchasers”), for whom you are acting as representatives (the “Representatives”), $175,000,000 aggregate principal amount of its 8.125% Senior Secured Second Priority Notes due 2018 (the “Notes”).  The Notes will be fully and unconditionally guaranteed (the “Guarantees”) on a senior secured basis, jointly and severally by (i) the guarantors named in Schedule 2 hereto (collectively, the “Guarantors”) and (ii) any subsidiary of the Company or the Guarantors formed or acquired after the Closing Date (as defined herein) that executes an additional guarantee in accordance with the terms of the Indenture, and their respective successors and assigns, pursuant to their guarantees.  The Notes and the Guarantees are herein collectively referred to as the “Securities.”  The Securities will be issued pursuant to an Indenture to be dated as of May 13, 2013 (the “Indenture”) among the Company, the Guarantors and Wilmington Trust, National Association, as trustee (the “Trustee”).

 

The Securities will be sold to the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon an exemption therefrom.  In connection with the sale of the Securities, the Company has prepared a preliminary offering memorandum dated May 1, 2013 (the “Preliminary Offering Memorandum”) and has prepared a pricing supplement substantially in the form attached hereto as Exhibit B (the “Pricing Supplement”) dated May 8, 2013, setting forth or including a description of the terms of the Securities, each for use by the Initial Purchasers in connection with the offering of the Securities.  The Preliminary Offering Memorandum and the information included in Exhibit A hereto, if any, are herein referred to as the “Time of Sale Memorandum.”  Promptly after the Time of Sale (as defined below), the Company will prepare and deliver to each Initial Purchaser an offering memorandum (the “Offering Memorandum”), which will consist of the Preliminary Offering Memorandum with such changes therein as are required to reflect the information contained in the Pricing Supplement, and from and after the time such Offering Memorandum is delivered to each Initial Purchaser, all references herein to the Offering

 

1

 

Memorandum shall be deemed to be a reference to both the Preliminary Offering Memorandum and the Offering Memorandum.  The time when sales of the Securities were first made means 11:35 a.m., New York City Time, on the date of this Agreement (the “Time of Sale”).  References herein to the Preliminary Offering Memorandum, the Time of Sale Memorandum and the Offering Memorandum shall be deemed to refer to and include any document incorporated by reference therein.

 

Holders of the Securities will be entitled to the benefits of a registration rights agreement, to be dated as of May 13, 2013 (the “Registration Rights Agreement”), among the Company, the Guarantors and the Initial Purchasers, pursuant to which the Company and the Guarantors may be required to file with the Securities and Exchange Commission (the “Commission”), under the circumstances set forth therein, (i) a registration statement under the Securities Act relating to another series of debt securities of the Company with terms substantially identical to the Notes (the “Exchange Notes,” and together with the Guarantees, the “Exchange Securities”) to be offered in exchange for the Securities (the “Exchange Offer”) and (ii) a shelf registration statement pursuant to Rule 415 of the Securities Act relating to the resale by certain holders of the Securities, and in each case, to use its reasonable best efforts to cause such registration statements to be declared effective.

 

As described in the Time of Sale Memorandum and the Offering Memorandum, the Securities will be secured on a second-priority basis by liens on the Collateral described in the Indenture and set forth in the respective Collateral Documents (as defined below), and will be documented by: (i) an intercreditor agreement (the “Intercreditor Agreement”) to be entered into as of the Closing Date among the Company, the Guarantors, the Trustee, U.S. Bank National Association, in its capacity as collateral agent under the Indenture (in such capacity, the “Collateral Agent”), China Merchants Bank Co., Ltd., New York Branch (“CMB”), in its capacity as administrative agent under the senior secured credit facility entered into by, inter alios, the Company, CMB and the lenders party thereto on March 25, 2010 (as subsequently amended, restated, supplemented or otherwise modified, the “Senior Secured Credit Facility”), and CMB, in its capacity as collateral agent under the Senior Secured Credit Facility; (ii) a second lien security and pledge agreement to be entered into as of the Closing Date among the Company, the Guarantors and the Collateral Agent (the “Security Agreement”); (iii) the Guarantee issued pursuant to the Indenture as contained in Article 11 thereof and (iv) each other security document or pledge agreement delivered in accordance with this Agreement, the Indenture or the Security Agreement to grant a valid, perfected Parity Lien (as defined in the Indenture) on the Collateral, and all UCC or other financing statements or instruments of perfection required by this Agreement, the Indenture or the Security Agreement (the documents described in clauses (i)-(iv) above, as each may be supplemented or otherwise amended, collectively referred to as the “Collateral Documents”).

 

For the purposes of this Agreement, the term “Collateral” shall have the meaning assigned to such term under the heading “Description of Notes” in the Time of Sale Memorandum and the Offering Memorandum.

 

The Company hereby confirms its agreement with the several Initial Purchasers concerning the purchase and resale of the Securities, as follows:

 

2

 

1.                                      Representations and Warranties of the Company.  Each of the Company and the Guarantors, jointly and severally, represents and warrants to each Initial Purchaser that:

 

(a)                                 Preliminary Offering Memorandum, Time of Sale Memorandum and Offering Memorandum.  The Preliminary Offering Memorandum, as of its date, did not, the Time of Sale Memorandum, at the Time of Sale, did not, and at the Closing Date will not, and the Offering Memorandum, as of its date and as of the Closing Date, will not, contain any 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 the Company makes no representation or warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representatives expressly for use in the Preliminary Offering Memorandum, the Time of Sale Memorandum or the Offering Memorandum.

 

(b)                                 Incorporated Documents. The documents incorporated by reference in each of the Time of Sale Memorandum and the Offering Memorandum, when filed with the Commission, conformed or will conform, as the case may be, in all material respects to the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Commission thereunder.

 

(c)                                  Additional Written Communications.  The Company and each of the Guarantors (including their agents and representatives, other than the Initial Purchasers in their capacity as such) have not prepared, made, used, authorized, approved or distributed and will not prepare, make, use, authorize, approve or distribute any written communication that constitutes an offer to sell or solicitation of an offer to buy the Securities other than (i) the Preliminary Offering Memorandum, (ii) the Pricing Supplement, (iii) the Offering Memorandum, (iv) the documents listed on Exhibit A hereto and (v) any electronic road show or other written communications, in each case used in accordance with Section 4(b).

 

(d)                                 Organization and Good Standing of the Company and its Subsidiaries. Each of the Company and its subsidiaries has been duly incorporated or formed, as applicable, and is validly existing as a corporation, limited partnership or limited liability company (or the foreign equivalent thereof), as applicable, in good standing (or the foreign equivalent thereof) under the laws of the jurisdiction of its incorporation or formation, as applicable, and has corporate, partnership or limited liability company (or the foreign equivalent thereof), as applicable, power and authority to own, lease and operate its properties and to conduct its business as described in the Time of Sale Memorandum and the Offering Memorandum and, in the case of the Company and the Guarantors, to enter into and perform its obligations under this Agreement, the Registration Rights Agreement, the Securities, the Exchange Securities, the Indenture and the Collateral Documents.  Each of the Company and each subsidiary is duly qualified as a foreign corporation, limited partnership or limited liability company, as applicable, to transact business and is in good standing or equivalent status 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 business, properties, condition (financial or otherwise), results of operations or prospects of the

 

3

 

Company and its subsidiaries taken as a whole or on the performance by the Company of its obligations under the Securities (a “Material Adverse Effect”).

 

(e)                                  Financial Statements.  The financial statements together with the related schedules and notes thereto included or incorporated by reference in each of the Time of Sale Memorandum and the Offering Memorandum, present fairly the consolidated financial position of the Company and its subsidiaries and of INOVA Geophysical Equipment Limited (“INOVA”), as applicable, as of the dates indicated and the consolidated results of their operations and the consolidated changes in their cash flows for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles as applied in the United States and the requirements of Regulation S-X applied on a consistent basis throughout the periods covered thereby, except as disclosed therein; and the other financial information included or incorporated by reference in each of the Time of Sale Memorandum and the Offering Memorandum has been derived from the accounting records of the Company and its subsidiaries or INOVA, as applicable, and presents fairly the information shown thereby.

 

(f)                                   No Material Adverse Effect.  Subsequent to the respective dates as of which information is contained in the Time of Sale Memorandum and the Offering Memorandum, (i) neither the Company nor any of its subsidiaries has incurred any liabilities or obligations, direct or contingent, or entered into or agreed to enter into any transactions or contracts (written or oral) not in the ordinary course of business, which liabilities, obligations, transactions or contracts would, individually or in the aggregate, result in a Material Adverse Effect, (ii) neither the Company nor any of its subsidiaries has sustained any material 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 any action, order or decree of any court or arbitrator or governmental or regulatory authority and (iii) there shall not have been any change in the long-term indebtedness or material change in the capital stock of the Company or any of its subsidiaries, except in each case as otherwise disclosed in the Time of Sale Memorandum.

 

(g)                                  Capitalization.  At December 31, 2012, on a consolidated basis, after giving pro forma effect to the issuance and sale of the Securities pursuant hereto, the Company would have an authorized and outstanding capitalization as set forth in the Offering Memorandum under the caption “Capitalization” (other than for subsequent issuances of capital stock, if any, pursuant to employee benefit plans described in the Offering Memorandum or upon exercise of outstanding options described in the Time of Sale Memorandum or the Offering Memorandum).  There are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries other than those accurately described in the Time of Sale Memorandum or the Offering Memorandum.

 

(h)                                 Legal Power and Authority.  The Company and the Guarantors each possess all necessary corporate or organizational power and authority to execute, delivery and perform their respective obligations under this Agreement, the Registration Rights Agreement, the Indenture, the Collateral Documents, the Securities and the Exchange Securities and to consummate the transactions contemplated hereby.

 

4

 

(i)                                     No Registration Rights.  Except as described in each of the Time of Sale Memorandum and the Offering Memorandum, and pursuant to the Registration Rights Agreement, there are no contracts, commitments, agreements, arrangements, understandings or undertakings of any kind to which the Company is a party, or by which it is bound, granting to any person the right (other than rights that have been waived in writing in connection with the transactions contemplated by this Agreement or otherwise satisfied) to require either the Company to file a registration statement under the Securities Act with respect to any securities of the Company or requiring the Company to include such securities with the Securities registered pursuant to any registration statement.

 

(j)                                    Purchase Agreement.  This Agreement has been duly executed and delivered by the Company and the Guarantors.

 

(k)                                 Registration Rights Agreement. The Registration Rights Agreement has been duly authorized by the Company and the Guarantors and on the Closing Date will be duly executed and delivered by the Company and the Guarantors and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company enforceable against the Company in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

 

(l)                                     Indenture.  The Indenture has been duly authorized by the Company and the Guarantors and, at the Closing Date, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company enforceable against the Company and the Guarantors in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.  The Indenture meets the requirements for qualification under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).

 

(m)                             The Notes, the Exchange Notes and the Guarantees.  The Notes have been duly authorized by the Company and the Guarantors and, when duly executed, authenticated, issued and delivered as provided in the Indenture and paid for as provided herein, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles, and will be entitled to the benefits of the Indenture.  The Guarantees of the Notes on the Closing Date and the Guarantees of the Exchange Notes have been duly authorized for issuance pursuant to this Agreement and the Indenture; the Guarantees of the Notes, at the Closing Date, will have been duly executed by each of the Guarantors and, when the Notes have been duly executed and authenticated in the manner provided for in the Indenture and issued and delivered against payment of the purchase price therefor, the Guarantees of the Notes will constitute valid and binding agreements of the Guarantors in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or

 

5

 

by general equitable principles.  The Exchange Notes have been duly and validly authorized for issuance by the Company and the Guarantors, and when issued and authenticated in accordance with the terms of the Indenture and the terms of the Exchange Offer, will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles and will be entitled to the benefits of the Indenture.  When the Exchange Notes have been duly executed and authenticated in the manner provided for in the Indenture and issued and delivered in accordance with the Registration Rights Agreement, the Guarantees of the Exchange Notes will constitute valid and binding agreements of the Guarantors, in each case, enforceable in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles and will be entitled to the benefits of the Indenture.

 

(n)                                 Collateral Documents.  Each of the Collateral Documents has been duly authorized by the Company and each of the Guarantors (to the extent party thereto), and when executed by the Company and each of the Guarantors (to the extent party thereto), and delivered by the Company and each of the Guarantors, and assuming due authorization, execution and delivery thereof by the other parties thereto, will constitute a valid and binding obligation of the Company and each of the Guarantors (to the extent party thereto), enforceable against the Company and each of the Guarantors (to the extent party thereto) in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equitable principles. The Collateral Documents will conform in all material respects to the descriptions therein in the Offering Memorandum.

 

(o)                                 Security Interest.  Upon (i) the Initial Purchasers’ payment for the Notes in accordance with the terms hereof and (ii) the filing of appropriate Uniform Commercial Code (the “UCC”) financing statements and the taking of other actions described herein, in the Collateral Documents and in the Indenture, the security interests of the Collateral Agent for the benefit of the holders of the Securities and the liens on the rights of the Company and the Guarantors in the Collateral will be a valid and perfected security interest in all Collateral that can be perfected by the filing of a UCC financing statement under the UCC as in effect in any jurisdiction and the liens will have the priority described in each of the Time of Sale Memorandum and the Offering Memorandum (subject to Permitted Liens (as defined in the Indenture)), subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equitable principles.  As of the Closing Date, the filing of all necessary UCC financing statements in the proper filing offices and other filings and actions contemplated by the Collateral Documents, will have been duly made or taken and will be in full force and effect, or will have been provided to the Collateral Agent for filing or recording, in each case to the extent required by the Collateral Documents, except as otherwise set forth in Exhibit C.

 

(p)                                 No Financing Statements.  As of the Closing Date, there will be no currently effective financing statement, security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any filing records, registry, or other public

 

6

 

office, that purports to cover, affect or give notice of any present or possible future lien on any assets or property of the Company or any Guarantor or any rights thereunder, except for Permitted Liens (as defined in the Indenture).

 

(q)           Description of this Agreement, the Registration Rights Agreement, the Securities, the Exchange Securities and the Indenture.  This Agreement, the Registration Rights Agreement, the Securities, the Exchange Securities and the Indenture will conform in all material respects to the respective statements relating thereto contained in the Time of Sale Memorandum and the Offering Memorandum.

 

(r)            No Violation or Default.  Neither the Company nor any of the Guarantors or their respective subsidiaries is (i) in violation of its charter or by-laws (or other organizational documents); (ii) in breach of or default under (nor has any event occurred that, with notice or passage of time or both, would constitute a default under) or in violation of any of the terms or provisions of any indenture, mortgage, deed of trust, loan agreement, note, lease, license, franchise agreement, permit, certificate, contract or other agreement or instrument to which any of them is a party or to which any of them or their respective properties or assets is subject; or (iii) in violation of any law or statute or any judgment, decree, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii) above, for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.

 

(s)            No Conflicts.  The execution, delivery and performance by the Company and each of the Guarantors of this Agreement, the Registration Rights Agreement, the Indenture, the Collateral Documents, the Securities and the Exchange Securities by the Company and the Guarantors and the performance by the Company and the Guarantors of their respective obligations thereunder 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 (except as disclosed in the Time of Sale Memorandum and the Offering Memorandum) result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the charter or by-laws or similar organizational documents of the Company or any of its subsidiaries or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i) and (iii) above, for any such conflict, breach, violation or default that would not, individually or in the aggregate, have a Material Adverse Effect.

 

(t)            Accuracy of Disclosure.  The statements in the Time of Sale Memorandum and the Offering Memorandum under the captions “Risk Factors—Risks Related To Our Business—Our operations, and the operations of our customers, are subject to numerous government regulations, which could adversely limit our operating flexibility,” “Management,” “Certain Relationships and Related Transactions,” “Our Business—Intellectual Property,” “Our Business—Regulatory Matters,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—WesternGeco Legal Proceedings,”

 

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“Description of Certain Indebtedness and Other Securities” and “Description of Notes,” insofar as such statements summarize legal matters, agreements, documents or proceedings discussed therein, are accurate and fair summaries of such legal matters, agreements, documents and proceedings.

 

(u)           No Consents Required.  No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company and the Guarantors of this Agreement, the Registration Rights Agreement, the Indenture, the Collateral Documents, the Securities and the Exchange Securities by the Company and the Guarantors and the performance by the Company and the Guarantors of their respective obligations thereunder, except (i) for such consents, approvals, authorizations, orders and registrations or qualifications that have been, or prior to the Closing Date will be, obtained, (ii) for the filing of a registration statement by the Issuers with the Commission pursuant to the Securities Act and the qualification of the Indenture under the Trust Indenture Act as required by the Registration Rights Agreement, (iii) for such consents, approvals, authorizations, orders and registrations or qualifications as may be required under state securities or “Blue Sky” laws in connection with the purchase and distribution of the Securities by the Initial Purchasers (iv) for such filings required to be made under the Exchange Act, (v) for such consents, approvals, authorizations, orders and registrations or qualifications that, if not obtained, would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (vi) filings necessary to perfect the secured interests in the Collateral and (vii) as disclosed in the Time of Sale Memorandum and the Offering Memorandum.

 

(v)           Legal Proceedings.  Except as described in each of the Time of Sale Memorandum and the Offering Memorandum, there are no legal, governmental or regulatory investigations, actions, suits or proceedings pending to which the Company or any of its subsidiaries is or may be a party or to which any property of the Company or any of its subsidiaries is or may be the subject that, individually or in the aggregate, if determined adversely to the Company or any of its subsidiaries, would reasonably be expected to have a Material Adverse Effect; and to the best knowledge of the Company, no such investigations, actions, suits or proceedings are threatened or contemplated by any governmental or regulatory authority or by others.  The Company believes it maintains adequate reserves for loss contingencies relating to pending legal, governmental or regulatory investigations, actions, suits or proceedings, and such reserves are maintained in conformity with GAAP and are based on assumptions the Company believes to be reasonable and accurate.  No labor dispute with the employees of the Company or any of its subsidiaries, or with the employees of any principal supplier of the Company or any Guarantor, exists or, to the best of the Company’s knowledge, is threatened or imminent.

 

(w)          Independent Accountants.  Ernst & Young LLP (the “Independent Accountants”),  who have audited certain financial statements of the Company and its subsidiaries and of INOVA, and supporting schedules filed with the Commission and included in the Time of Sale Memorandum and the Offering Memorandum are (i) independent public or certified public accountants as required by the Securities Act; (ii) in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X; and (iii) registered public accounting firms as defined by the Public Company

 

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Accounting Oversight Board whose registration have not been suspended or revoked and who have not requested such registration to be withdrawn.

 

(x)           Reporting Compliance.  The Company is subject to, and is in compliance in all material respects with, the reporting requirements of Section 13 and Section 15(d), as applicable, of the Exchange Act.

 

(y)           Compliance with Sarbanes-Oxley.  The Company and its subsidiaries and their respective officers and directors are in compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder).

 

(z)           Disclosure Controls and Procedures.  The Company has established and maintains disclosure controls and procedures (as such term is defined in Rules 13a-15 and 15d-14 under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to the Company and its subsidiaries is made known to the chief executive officer and chief financial officer of the Company by others within the Company or any of its subsidiaries, and such disclosure controls and procedures are reasonably effective to perform the functions for which they were established subject to the limitations of any such control system; the Company’s auditors and the Audit Committee of the Board of Directors of the Company have been advised of:  (i) any significant deficiencies or material weaknesses in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize, and report financial data; and (ii) any fraud, whether or not material, that involves management or other employees who have a role in the Company’s internal controls; and since the date of the most recent evaluation of such disclosure controls and procedures, 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.

 

(aa)         Internal Control Over Financial Reporting.  The Company and its subsidiaries maintain effective internal control over financial reporting (as defined under Rules 13a-15 and 15d-15 under the Exchange Act) and a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences and (iv) the interactive data in eXtensible Business Reporting Language incorporated by reference in the Time of Sale Memorandum and the Offering Memorandum fairly presents the information called for in all material respects and is prepared in accordance with the Commission’s rules and guidelines applicable thereto.  Since the end of the Company’s most recent audited fiscal year, there has been (1) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (2) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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(bb)         Intellectual Property Rights.  Except as described in each of the Time of Sale Memorandum and the Offering Memorandum, the Company and its subsidiaries own or possess sufficient trademarks, trade names, patent rights, copyrights, licenses, approvals, trade secrets and other similar rights (collectively, “Intellectual Property Rights”) reasonably necessary to conduct their businesses as now conducted, and the expected expiration of any of such Intellectual Property Rights would not result in a Material Adverse Effect.  Except as described in each of the Time of Sale Memorandum and the Offering Memorandum, neither the Company nor any of its subsidiaries has received any notice of infringement or conflict with asserted Intellectual Property Rights of others, which infringement or conflict, if the subject of an unfavorable decision, would result in a Material Adverse Effect.  None of the Intellectual Property Rights employed by the Company or any of its subsidiaries have been obtained or are being used by the Company or any of its subsidiaries in violation of any contractual obligation binding on the Company or any of its subsidiaries or, to the knowledge or the Company, or any of its or its subsidiaries’ officers, directors or employees, otherwise in violation of the rights of any persons, except for such violations as would not, individually or in the aggregate, result in a Material Adverse Effect.

 

(cc)         Title to Real and Personal Property.  The Company and its subsidiaries have good and marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of real and personal property that are material to the respective businesses of the Company and its subsidiaries, including, without limitation, all Collateral (as defined in the Indenture), in each case free and clear of all liens, encumbrances, claims and defects and imperfections of title except those that (i) do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries, (ii) could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, (iii) are created pursuant to the Indenture and the Collateral Documents and (iv) are Permitted Liens (as defined in the Indenture).

 

(dd)         No Undisclosed Relationships.  No relationship, direct or indirect, exists between or among the Company or any of its subsidiaries, on the one hand, and the directors, officers, stockholders or other affiliates of the Company or any of its subsidiaries, on the other, that would be required by the Securities Act to be described in a registration statement to be filed with the Commission and that is not so described in each of the Time of Sale Memorandum and the Offering Memorandum.

 

(ee)         Investment Company Act.   Neither the Company nor any of its subsidiaries is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Time of Sale Memorandum and the Offering Memorandum, neither the Company nor any of its subsidiaries will be required to be, registered as an “investment company,” as such term is defined in the Investment Company Act of 1940, as amended.

 

(ff)          Environmental Laws.  Except as would not, individually or in the aggregate, result in a Material Adverse Effect, the Company and its subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all

 

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permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses; (iii) are in compliance with all terms and conditions of any such permit, license or approval; (iv) there are no pending or, to the knowledge of the Company, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries; and (iv) there are no events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries pursuant to any Environmental Laws. There are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) that would, individually or in the aggregate, have a Material Adverse Effect.

 

(gg)         Taxes.  The Company and its subsidiaries have paid all federal, state, local and foreign taxes and filed all tax returns required to be paid or filed through the date hereof, except for those taxes that would not be reasonably likely to result in a Material Adverse Effect; and except as otherwise disclosed in each of the Time of Sale Memorandum and the Offering Memorandum, there is no tax deficiency that has been, or could reasonably be expected to be, asserted against the Company or any of its subsidiaries or any of their respective properties or assets that would be reasonably likely to result in a Material Adverse Effect.  The Company has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 1(e) above in respect of all federal, state, local and foreign taxes for all periods as to which the tax liability of the Company or any of its consolidated subsidiaries has not been finally determined, except as would not reasonably be expected to have a Material Adverse Effect.

 

(hh)         Compliance with Labor Laws.  Except as would not, individually or in the aggregate, result in a Material Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or, to the best of the Company’s knowledge, threatened against the Company or any of its subsidiaries before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under collective bargaining agreements pending, or to the best of the Company’s knowledge, threatened against the Company or any of its subsidiaries, (B) no strike, labor dispute, slowdown or stoppage pending or, to the best of the Company’s knowledge, threatened against the Company or any of its subsidiaries and (C) no union representation question existing with respect to the employees of the Company or any of its subsidiaries and, to the best of the Company’s knowledge, no union organizing activities taking place; (ii) there has been no violation of any federal, state or local law relating to discrimination in hiring, promotion or pay of employees or of any applicable wage or hour laws; (iii) there is no worker’s compensation liability, experience or matter that could be reasonably expected to have a Material Adverse Effect; (iv) to the best of the Company’s knowledge, there is no threatened or pending liability against the Company or the Guarantors pursuant to the Worker Adjustment Retraining and Notification Act of 1988, as amended (“WARN”), or any similar state or local law; and (v) to the best of the Company’s knowledge, no employee or agent of the Company or the Guarantors has committed any act or omission giving rise to liability for any violation identified in subsection (i)(A), (ii) and (iv) above, other than such acts or omissions that would not, individually or in the aggregate, have a Material Adverse Effect.

 

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(ii)           Licenses and Permits.  Each of the Company and its subsidiaries possesses all licenses, permits, certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings with, all federal, state, local and other foreign governmental authorities, all self-regulatory organizations and all courts and other tribunals, presently required or necessary to own or lease, as the case may be, and to operate its respective properties and to carry on its respective businesses as now or proposed to be conducted as set forth in the Time of Sale Memorandum and the Offering Memorandum (“Permits”), except where the failure to obtain such Permits would not, individually or in the aggregate, have a Material Adverse Effect; each of the Company and its subsidiaries has fulfilled and performed all of its obligations with respect to such Permits and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other material impairment of the rights of the holder of any such Permit, except where such revocation or termination would not, individually or in the aggregate, have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of any proceeding relating to revocation or modification of any such Permit, except as described in the Time of Sale Memorandum or the Offering Memorandum and except where such revocation or modification would not, individually or in the aggregate, have a Material Adverse Effect.

 

(jj)           Compliance with ERISA.  Neither the Company nor any of its subsidiaries has any liability for any prohibited transaction or funding deficiency or any complete or partial withdrawal liability with respect to any pension, profit sharing or other plan that is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), to which the Company or any of its subsidiaries makes or ever has made a contribution and in which any employee of the Company or of any of its subsidiaries is or has ever been a participant.  With respect to such plans, the Company and each subsidiary is in compliance in all material respects with all applicable provisions of ERISA.

 

(kk)         Insurance.  The Company and its subsidiaries have insurance covering their respective properties, operations, personnel and businesses, including business interruption insurance, which insurance is in amounts and insures against such losses and risks as are adequate to protect the Company and its subsidiaries and their respective businesses, and neither the Company nor any of its subsidiaries has (i) received notice from any insurer or agent of such insurer that capital improvements or other expenditures are required or necessary to be made in order to continue such insurance or (ii) 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 at a cost that is not materially higher than its existing insurance coverage from similar insurers as may be necessary to continue its business.

 

(ll)           No Unlawful Contributions or Other Payments.  Neither the Company nor any of its subsidiaries or affiliates, nor any director, officer, or employee, nor, to the Company’s knowledge, any agent or representative of the Company or of any of its subsidiaries or affiliates, has taken or will take any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or

 

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secure an improper advantage; and the Company and its subsidiaries and affiliates have conducted their businesses in compliance with applicable anti-corruption laws and have instituted and maintained and will continue to maintain policies and procedures designed to promote and achieve compliance with such laws and with the representation and warranty contained herein.

 

(mm)      No Conflict with Anti-Money Laundering Laws.  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 of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the “Anti-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 Anti-Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

 

(nn)         Compliance with OFAC.  Neither the Company, any of its subsidiaries nor, 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 of the Securities hereunder, 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.

 

(oo)         Statistical and Market Data.  The statistical and market-related data included in the Time of Sale Memorandum and the Offering Memorandum are based on or derived from sources that the Company and its subsidiaries believe to be reliable and accurate.

 

(pp)         Regulations T, U, X.  Neither the Company nor any Guarantor nor any of their respective subsidiaries nor any agent thereof acting on their behalf has taken, and none of them will take, any action that might cause this Agreement or the issuance or sale of the Securities to violate Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System.

 

(qq)         Solvency.  Each of the Company and the Guarantors is, and immediately after the Closing Date will be, Solvent.  As used herein, the term “Solvent” means, with respect to any person on a particular date, that on such date (i) the fair market value of the assets of such person is greater than the total amount of liabilities (including contingent liabilities) of such person, (ii) the present fair salable value of the assets of such person is greater than the amount that will be required to pay the probable liabilities of such person on its debts as they become absolute and mature, (iii) such person is able to realize upon its assets and pay its debts and other liabilities, including contingent obligations, as they mature and (iv) such person does not have unreasonably small capital.

 

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(rr)           No Restrictions on Subsidiaries.  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 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 except as set forth in the Senior Secured Credit Facility or as described in or contemplated by the Time of Sale Offering Memorandum and the Offering Memorandum.

 

(ss)          No Broker’s Fees.  There is no broker, finder or other party that is entitled to receive from the Company or any Guarantor any brokerage or finder’s fee or other similar payment as a result of any transactions contemplated by this Agreement.

 

(tt)           No Registration Required.  Subject to compliance by the Initial Purchasers with the representations and warranties set forth in Section 2(b) hereof, it is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers and to each subsequent purchaser in the manner contemplated by this Agreement and the Time of Sale Memorandum and the Offering Memorandum to register the Securities under the Securities Act or, until such time as the Exchange Securities are issued pursuant to an effective registration statement, to qualify the Indenture under the Trust Indenture Act.

 

(uu)         No Stabilization.  Neither the Company nor any of the Guarantors has taken, directly or indirectly, any action designed to or that could be reasonably expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.

 

(vv)         Eligibility for Resale under Rule 144A.  The Securities are eligible for resale pursuant to Rule 144A under the Securities Act (“Rule 144A”) and will not be, at the Closing Date, of the same class as securities listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated interdealer quotation system.

 

(ww)       Integration.  Neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D under the Securities Act, an “Affiliate”) of the Company has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) which is or will be integrated with the sale of the Securities in a manner that would require the registration under the Securities Act of the Securities or (ii) offered, solicited offers to buy or sold the Securities by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.

 

(xx)         No General Solicitation or Directed Selling Efforts.  Neither the Company, its Affiliates nor any person acting on its or their behalf has engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities; and the Company and its Affiliates and any person acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S, except no

 

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representation, warranty or agreement is made by the Company in this paragraph with respect to the Initial Purchasers.

 

Any certificate signed by an officer of the Company or any Guarantor and delivered to the Initial Purchasers or to counsel for the Initial Purchasers shall be deemed to be a representation and warranty by the Company or such Guarantor to each Initial Purchaser as to the matters set forth therein.

 

2.             Purchase and Resale of the Securities.  (a)  The Company hereby agrees to issue and sell the Securities to the several Initial Purchasers as provided in this Agreement, and each Initial Purchaser, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the Company the respective principal amount of Securities set forth opposite such Initial Purchaser’s name in Schedule 1 hereto at a price equal to 97.5% of the principal amount thereof (the “Purchase Price”) plus accrued interest, if any, from May 13, 2013.

 

(b)           The Company understands that the Initial Purchasers intend to offer the Securities for resale on the terms set forth in the Time of Sale Memorandum.  Each Initial Purchaser, severally and not jointly, represents, warrants and agrees that:

 

(i)            it is a qualified institutional buyer within the meaning of Rule 144A (a “QIB”) and an accredited investor within the meaning of Rule 501(a) under the Securities Act;

 

(ii)           it has not solicited offers for, or offered or sold, such Securities by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act; and

 

(iii)          it has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Securities as part of their initial offering except:

 

(A)          within the United States, to persons whom it reasonably believes to be QIBs in transactions pursuant to Rule 144A and in connection with each such sale, it has taken or will take reasonable steps to ensure that the purchaser of the Securities is aware that such sale is being made in reliance on Rule 144A; and

 

(B)          in the case of offers outside the United States, to persons other than U.S. persons (“foreign purchasers,” which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for foreign beneficial owners (other than an estate or trust)) in reliance upon Regulation S under the Securities Act;

 

that, in each case, in purchasing such Securities are deemed to have represented and agreed as provided in the Offering Memorandum under the caption “Notice to Investors”.

 

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(c)           Each Initial Purchaser acknowledges and agrees that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Sections 5(f) and 5(g), counsel for the Company and counsel for the Initial Purchasers, respectively, may rely upon the accuracy of the representations and warranties of the Initial Purchasers, and compliance by the Initial Purchasers with their agreements, contained in paragraph (b) above, and each Initial Purchaser hereby consents to such reliance.

 

(d)           The Company acknowledges and agrees that the Initial Purchasers may offer and sell Securities to or through any affiliate of an Initial Purchaser and that any such affiliate may offer and sell Securities purchased by it to or through any Initial Purchaser.

 

3.             Payment and Delivery.  (a)  Payment for and delivery of the Securities will be made to the Company in Federal or other funds immediately available in New York City against delivery of the Securities for the respective accounts of the several Initial Purchasers at the offices of Latham & Watkins LLP at 811 Main Street, Suite 3700, Houston, TX 77002 at 10:00 A.M., New York City time, on May 13, 2013, or at such other time or place on the same or such other date, not later than the fifth business day thereafter, as the Representatives and the Company may agree upon in writing.  The time and date of such payment and delivery is referred to herein as the “Closing Date.”  The Company hereby acknowledges that circumstances under which the Representatives may provide notice to postpone the Closing Date as originally scheduled include, but are in no way limited to, any determination by the Company or the Initial Purchasers to recirculate to investors copies of an amended or supplemented Offering Memorandum or a delay as contemplated by the provisions of Section 8 hereof.

 

(b)           The Securities shall be in definitive form or global form, as specified by the Initial Purchasers, and registered in such names and in such denominations, as the Initial Purchasers shall request in writing not later than one full business day prior to the Closing Date.  The Securities shall be delivered to the Initial Purchasers on the Closing Date for the respective accounts of the several Initial Purchasers, with any transfer taxes payable in connection with the transfer of the Securities to the Initial Purchasers duly paid, against payment of the Purchase Price therefor plus accrued interest, if any, to the date of payment and delivery.

 

4.             Further Agreements of the Company.  Each of the Company and the Guarantors, jointly and severally, covenants and agrees with each Initial Purchaser that:

 

(a)           Offering Memorandum, Amendments or Supplements.  Before finalizing the Offering Memorandum or making or distributing any amendment or supplement to any of the Time of Sale Memorandum or the Offering Memorandum or filing with the Commission any document that will be incorporated by reference therein, the Company will furnish to the Representatives and counsel for the Initial Purchasers a copy of the proposed Offering Memorandum or such amendment or supplement or document to be incorporated by reference therein for review, and will not distribute any such proposed Offering Memorandum, amendment or supplement or file any such document with the Commission to which the Representatives reasonably object.

 

(b)           Additional Written Communications.  Before using, authorizing, approving or referring to any written communication (as defined in the Securities Act) that constitutes an

 

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offer to sell or a solicitation of an offer to buy the Securities (a “Company Written Communication”) (other than written communications that are listed on Exhibit A hereto and the Offering Memorandum), the Company will furnish to the Representatives and counsel for the Initial Purchasers a copy of such written communication for review and will not use, authorize, approve or refer to any such written communication to which the Representatives reasonably object.

 

(c)           Ongoing Compliance of the Offering Memorandum and Time of Sale Memorandum.  If at any time prior to the Closing Date (i) any event shall occur or condition shall exist as a result of which the Time of Sale Memorandum as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (ii) it is necessary to amend or supplement the Time of Sale Memorandum to comply with law, the Company and the Guarantors will immediately notify the Initial Purchasers thereof and forthwith prepare and (subject to Section 4(a) and (b) hereof) furnish to the Initial Purchasers such amendments or supplements to the Time of Sale Memorandum as may be necessary so that the statements in the Time of Sale Memorandum as so amended or supplemented will not, in the light of the circumstances under which they were made, be misleading or so that the Time of Sale Memorandum will comply with all applicable law.

 

(d)           Delivery of Copies.  The Company will deliver to the Initial Purchasers as many copies of the Preliminary Offering Memorandum, the Time of Sale Memorandum and the Offering Memorandum (including all amendments and supplements thereto) as the Initial Purchasers may reasonably request.

 

(e)           Notice to the Representatives.  The Company will advise the Representatives promptly, and confirm such advice in writing, (i) of the issuance by any governmental or regulatory authority of any order preventing or suspending the use of any of the Time of Sale Memorandum or the Offering Memorandum or the initiation or threatening of any proceeding for that purpose; (ii) of the occurrence of any event at any time prior to the completion of the initial offering of the Securities as a result of which any of the Time of Sale Memorandum or the Offering Memorandum as then amended or supplemented would include any 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 existing when such Time of Sale Memorandum or the Offering Memorandum is delivered to a purchaser, not misleading; and (iii) of the receipt by the Company of any notice with respect to any suspension of the qualification of the Securities for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company will use its reasonable best efforts to prevent the issuance of any such order preventing or suspending the use of any of the Time of Sale Memorandum or the Offering Memorandum or suspending any such qualification of the Securities and, if any such order is issued, will obtain as soon as possible the withdrawal thereof.

 

(f)            Blue Sky Compliance.  The Company will cooperate with the Initial Purchasers in arranging for the qualification of the Securities for offering and sale under the securities or “Blue Sky” laws of such jurisdictions as the Initial Purchasers may designate and  will continue such qualifications in effect for as long as may be necessary to complete the resale

 

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of the Securities; provided, however, that in connection therewith, the Company shall not be required to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction or subject itself to taxation in any such jurisdiction where it is not then so subject.

 

(g)           Agreement Not to Offer or Sell Securities.  During the period from the date hereof through and including the date that is 60 days after the date hereof, the Company will not, without the prior written consent of the Representatives, offer, sell, contract to sell or otherwise dispose of any debt securities issued or guaranteed by the Company and having a tenor of more than one year.

 

(h)           Use of Proceeds.  The Company will apply the net proceeds from the sale of the Securities as set forth under “Use of Proceeds” in the Time of Sale Memorandum and the Offering Memorandum.

 

(i)            Supplying Information.  While the Securities remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Company will, during any period in which the Company is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, furnish to holders of the Securities, prospective purchasers of the Securities designated by such holders and securities analysts, in each case upon request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

(j)            Updating Information.  If, prior to the completion of the placement of the Securities by the Initial Purchasers, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Offering Memorandum, as then amended or supplemented, in order to make the statements therein, in the light of the circumstances when the Offering Memorandum is delivered to a subsequent purchaser, not misleading, or if in the judgment of the Representatives or counsel for the Initial Purchasers it is otherwise necessary to amend or supplement the Offering Memorandum to comply with law, the Company and the Guarantors agree to promptly prepare (subject to this Section 4) and furnish at its own expense to the Initial Purchasers, amendments or supplements to the Offering Memorandum so that the statements in the Offering Memorandum as so amended or supplemented will not, in the light of the circumstances at the Closing Date and at the time of sale of Securities, be misleading or so that the Offering Memorandum, as amended or supplemented, will comply with all applicable law.

 

(k)           The Depositary.  The Company will cooperate with the Initial Purchasers and use its best efforts to permit the Securities to be eligible for clearance and settlement through the facilities of The Depository Trust Company (“DTC”).

 

(l)            Indenture Qualification.  Prior to any registration of the Securities pursuant to the Registration Rights Agreement, or at such earlier time as may be so required, the Company shall qualify the Indenture under the Trust Indenture Act and to enter into any necessary supplemental indentures in connection therewith.

 

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(m)          No Resales by the Company.  During the one-year period after the Closing Date, neither the Company nor any of its affiliates (as defined in Rule 144 under the Securities Act) will resell any of the Securities that have been reacquired by any of them.

 

(n)           No Integration.  Neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) which could be integrated with the sale of the Securities in a manner which would require registration under the Securities Act.

 

(o)           No General Solicitation or Directed Selling Efforts.  The Company will not, and will not permit any of its subsidiaries to, engage in any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) in connection with the offering of the Securities or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act.

 

(p)           No Stabilization.  The Company will not take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities and will not take any action prohibited by Regulation M under the Exchange Act in connection with the distribution of the Securities contemplated hereby.

 

(q)           Legended Securities.  Each certificate for a Security will bear the legend contained in “Transfer Restrictions” in the Time of Sale Memorandum for the time period and upon the other terms stated in the Time of Sale Memorandum.

 

(r)            Collateral Filings.  The Company will, and will cause each Guarantor to, deliver to the Collateral Agent on or prior to the Closing Date all UCC financing statements required in connection with the perfection of security interests as and to the extent contemplated by the Collateral Documents to have been have been completed by the Closing Date.

 

5.             Conditions of Initial Purchasers’ Obligations.  The obligation of each Initial Purchaser to purchase Securities on the Closing Date as provided herein is subject to the performance by the Company and the Guarantors of their covenants and other obligations hereunder and to the following additional conditions:

 

(a)           Representations and Warranties.  The representations and warranties of the Company and the Guarantors contained herein shall be true and correct on the date hereof and on and as of the Closing Date, and the statements of the Company and its officers made in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date.

 

(b)           No Downgrade.  Subsequent to the execution and delivery of this Agreement, there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded the Company or any of its subsidiaries or any of their securities or indebtedness by any “nationally recognized statistical

 

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rating organization” as such term is defined for purposes of Rule 15c3-1 under the Exchange Act.

 

(c)           No Material Adverse Effect.  There shall not have occurred a Material Adverse Effect, which in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the Time of Sale Memorandum and the Offering Memorandum.

 

(d)           Officer’s Certificate.  On the Closing Date the Initial Purchasers shall have received a written certificate executed by the Chairman of the Board, Chief Executive Officer or President of the Company and each Guarantor and the Chief Financial Officer or Chief Accounting Officer of the Company and each Guarantor, dated as of the Closing Date, to the effect set forth in Section 5(b) hereof, and further to the effect that:

 

(i)            for the period from and after the date of this Agreement and prior to the Closing Date there has not occurred any Material Adverse Effect;

 

(ii)           the representations, warranties and covenants of the Company and the Guarantors set forth in Section 1 hereof were true and correct as of the date hereof and are true and correct as of the Closing Date with the same force and effect as though expressly made on and as of the Closing Date;

 

(iii)          the Company believes it maintains adequate reserves for loss contingencies relating to pending legal, governmental or regulatory investigations, actions, suits or proceedings, and such reserves are maintained in conformity with GAAP and are based on assumptions the Company believes to be reasonable and accurate; and

 

(iv)          the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date.

 

(e)           Comfort Letters.  On the date hereof, the Initial Purchasers shall have received from the Independent Accountants a comfort letter dated the date hereof, in form and substance satisfactory to counsel for the Initial Purchasers with respect to the audited financial information in the Preliminary Offering Memorandum.  On the Closing Date, the Initial Purchasers shall have received from the Independent Accountants a comfort letter dated the Closing Date, in form and substance satisfactory to counsel for the Initial Purchasers, which shall extend to the financial information, if any, contained in the Offering Memorandum and not contained in the Preliminary Offering Memorandum.

 

(f)            Opinion of Counsel for the Company and the Guarantors.  The Initial Purchasers shall have received on and as of the Closing Date favorable opinions from (i) Mayer Brown LLP, counsel for the Company and the Guarantors, (ii) David L. Roland, Esq., Senior Vice President, General Counsel and Corporate Secretary of the Company, and (iii) any additional local counsel opinions, in each case, addressed to the Initial Purchasers, in form and

 

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substance reasonably satisfactory to the Representatives, and collectively covering the opinions set forth in Exhibit D hereto.

 

(g)           Opinion of Counsel for the Initial Purchasers.  The Representatives shall have received on and as of the Closing Date an opinion of Latham & Watkins LLP, counsel for the Initial Purchasers, with respect to such matters as the Representatives may reasonably request, and such counsel shall have received such documents and information as they may reasonably request to enable them to pass upon such matters.

 

(h)           Senior Secured Credit Facility Consent.  Concurrently with or prior to the issuance and sale of the Securities, the Company shall have entered into a consent agreement relating to the Senior Secured Credit Facility, by and among the Company, the guarantors party thereto, the lenders party thereto and CMB, in form and substance reasonably satisfactory to the Initial Purchasers, which consent agreement permits the issuance and sale of the Securities, and the Representatives shall have received conformed counterparts thereof.

 

(i)            No Legal Impediment to Issuance.  No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or sale of the Securities; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date, prevent the issuance or sale of the Securities.

 

(j)            Good Standing.  The Representatives shall have received on and as of the Closing Date satisfactory evidence of the good standing of the Company and its subsidiaries in their respective jurisdictions of organization and their good standing in such other jurisdictions as the Representatives may reasonably request, in each case in writing or any standard form of telecommunication, from the appropriate governmental authorities of such jurisdictions.

 

(k)           Indenture and Registration Rights Agreement.  The Initial Purchasers shall have received a counterpart of the Indenture and the Registration Rights Agreement that shall have been executed and delivered by a duly authorized officer of the Company.

 

(l)            Collateral Documents.  Subject to Exhibit C, at the Closing Date, the Collateral Documents shall have been executed and delivered by all the parties thereto, and the Collateral Agent shall have a valid security interest in all Collateral (as described in the Collateral Documents), in each case to the extent required by the Collateral Documents.

 

(m)          Additional Documents.  On or prior to the Closing Date, the Initial Purchasers and counsel for the Initial Purchasers shall have received such information, documents and opinions as they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Securities as contemplated herein, or in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

 

(n)           Solvency Certificate.  On the Closing Date the Initial Purchasers shall have received a written certificate of solvency executed by the Chief Financial Officer or Chief

 

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Accounting Officer of the Company and each Guarantor, dated as of the Closing Date, in the form of Exhibit E attached hereto.

 

(o)           Deliverables to Collateral Agent.  The Collateral Agent shall have received (with a copy for the Representatives) on or prior to the Closing Date:

 

(i)            copies of all material Loan Documents relating to and as defined under the Senior Secured Credit Facility;

 

(ii)           details of the legal and capital structure of the Company and its subsidiaries, which shall be reasonably satisfactory to the Collateral Agent;

 

(iii)          copies of all membership and stock certificates of the Company and its subsidiaries currently in the possession of CMB constituting Collateral, as collateral agent under the Company’s Senior Secured Credit Facility, together with copies of the related stock and membership powers executed in blank;

 

(iv)          copies of insurance policies or certificates and endorsements of insurance evidencing liability, casualty, property and business interruption insurance meeting the requirements set forth herein or in the Collateral Documents.  The Collateral Agent shall be named (i) as loss payee, as its interest may appear, with respect to any such insurance providing coverage in respect of any Collateral and (ii) as additional insured, as its interest may appear, with respect to any such insurance providing liability coverage, and the Company and its subsidiaries will use their commercially reasonable efforts to have each provider of any such insurance agree, by endorsement upon the policy or policies issued by it or by independent instruments to be furnished to the Collateral Agent, that it will give the Collateral Agent thirty (30) days (ten (10) days for non-payment) prior written notice before any such policy or policies shall be altered or cancelled;

 

(v)           appropriately completed copies, which have been duly authorized for filing by the appropriate person, of UCC-1 financing statements or equivalent filings naming the Company and each Guarantor as debtor and the Collateral Agent as the secured party covering the Collateral to be filed under the UCC of all jurisdictions as may be necessary to perfect the security interests of the Collateral Agent in any Collateral held by the Company or the Guarantors to the extent that such security interests can be perfected by the filing of a UCC-1 financing statement, securing the obligations of the Company and the Guarantors with respect to the Securities;

 

(vi)          appropriately completed copies of Uniform Commercial Code Form UCC-3 termination statements, if any, necessary to release all Liens (as defined in the Indenture) (other than Permitted Liens (as defined in the Indenture)) of any Person in any of the Collateral and previously granted by any Person shall have been delivered to CT Corporation System or another similar filing service company reasonably acceptable to the Collateral Agent;

 

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(vii)         reports of UCC, tax and judgment lien searches conducted by a reputable search firm with respect to each of the Company and the Guarantors in each location reasonably requested by the Collateral Agent and the information disclosed in such reports shall be reasonably satisfactory to the Collateral Agent (none of which shall cover any collateral described in any Collateral Document, other than such financing statements that evidence Permitted Liens (as defined in the Indenture));

 

(viii)        all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001) the “PATRIOT Act”);

 

(ix)          such other approvals, opinions, or documents as the Collateral Agent may reasonably request in advance in form and substance reasonably satisfactory to the Collateral Agent; and

 

(x)           the Collateral Agent and its counsel shall be reasonably satisfied that (a) the lien granted to the Collateral Agent, for the benefit of the Secured Parties (as defined in the Security Agreement) in the Collateral will be, upon proper filing of the UCC financing statements described in clause (v) above, of the priority described in the Time of Sale Document and the Final Offering Memorandum; and (b) no Lien exists on any of the Collateral other than the Lien created in favor of the Collateral Agent, for the benefit of the Secured Parties (as defined in the Security Agreement), pursuant to the Collateral Documents, in each case subject to the Permitted Liens (as defined in the Indenture).

 

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

 

6.             Indemnification and Contribution.

 

(a)           Indemnification of the Initial Purchasers.  Each of the Company and the Guarantors, jointly and severally, agrees to indemnify and hold harmless each Initial Purchaser, its agents, affiliates, directors and officers 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, against any losses, claims, damages or liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of any material fact contained in the Preliminary Offering Memorandum, the Time of Sale Memorandum, any Company Written Communication or the Offering Memorandum (or any amendment or supplement thereto), or (ii) any omission or alleged omission to state, in the Preliminary Offering Memorandum, the Time of

 

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Sale Memorandum, any Company Written Communication prepared by or on behalf of, used by or referred to by the Company or the Offering Memorandum (or any amendment or supplement thereto), a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made not misleading in each case, except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representatives expressly for use therein, which information consists solely of the information described as such in subsection (b) below.

 

(b)           Indemnification of the Company and the Guarantors.  Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company, each Guarantor, each of their directors and officers 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 to the same extent as the indemnity set forth in paragraph (a) above, but only with reference to information relating to such Initial Purchaser furnished to the Company in writing by such Initial Purchaser through the Representatives expressly for use in the Preliminary Offering Memorandum, the Time of Sale Memorandum, any Company Written Communication prepared by or on behalf of, used by or referred to by the Company, or the Offering Memorandum (or any amendment or supplement thereto), it being understood and agreed that the only such information consists of the following: under the caption “Plan of Distribution” in the Preliminary Offering Memorandum and the Offering Memorandum, the third paragraph, the fourth sentence of the seventh paragraph, the ninth paragraph and the tenth paragraph.

 

(c)           Notifications and Procedures.  If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) of this Section 6, such person (the “Indemnified Party”) shall promptly notify the person against whom such indemnification may be sought (the “Indemnifying Party”) in writing; provided that the failure to notify the Indemnifying Party shall not relieve it from any liability that it may have under this Section 6 except to the extent that it has been materially prejudiced as a proximate result of 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 paragraph (a) or (b) under this Section 6, as applicable.  If any such proceeding shall be brought or asserted against an Indemnified Party and it shall have notified the Indemnifying Party thereof, the Indemnifying Party shall retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party and any others the Indemnifying Party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding.  In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the contrary; (ii) the Indemnifying Party has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Party; (iii) the defendants in any such proceeding include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to it and/or other Indemnified Parties that are different from or

 

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additional to those available to the Indemnifying Party, or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  It is understood and agreed that the Indemnifying Party shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Parties and that all such fees and expenses shall be reimbursed as they are incurred.  Such firm shall be designated in writing by the Representatives, in the case of parties indemnified pursuant to Section 6(a), and by the Company, in the case of parties indemnified pursuant to Section 6(b).

 

(d)           Settlements.  The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify each Indemnified Party from and against any loss or liability by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at any time an Indemnified Party shall have requested that an Indemnifying Party reimburse the Indemnified Party for fees and expenses of counsel as contemplated by Section 6(c), the Indemnifying Party shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Party of such request and (ii) the Indemnifying Party shall not have reimbursed the Indemnified Party in accordance with such request prior to the date of such settlement.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any Indemnified Party is or could have been a party and indemnity was or could have been sought hereunder by such Indemnified Party, unless such settlement, compromise or consent (i) includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such action, suit or proceeding and (ii) does not include any statements as to or any findings of fault, culpability or failure to act by or on behalf of any Indemnified Party.

 

(e)           Contribution.  If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified Party or otherwise insufficient to hold harmless an Indemnified Party in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Party under such paragraph shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities (i) in such proportion as is 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 Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company and the Guarantors on the one hand and the Initial Purchasers on the other in connection with the statements or omissions or inaccuracies in the representations and warranties herein that resulted in such losses, claims, damages or liabilities, 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 shall be deemed to be in the same respective proportions as the net proceeds (before deducting expenses) received by the Company and the Guarantors from the sale of the Securities and the total discounts and commissions received by the Initial Purchasers in

 

25

 

connection therewith, as provided in this Agreement, bear to the aggregate offering price of the Securities.  The relative fault of the Company and the Guarantors on the one hand and the Initial Purchasers on the other shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact or any such inaccurate or alleged inaccurate representation or warranty relates to information supplied by the Company and the Guarantors, on the one hand, or the Initial Purchasers, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission or inaccuracy.

 

(f)            Limitation on Liability.  The Company, the Guarantors and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 6 were 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 in paragraph (e) above.  The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages and liabilities referred to in paragraph (e) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Party in connection with any such action or claim.  Notwithstanding the provisions of this Section 6, in no event shall an Initial Purchaser be required to contribute any amount in excess of the total discounts and commissions received by such Initial Purchaser in connection with the Securities distributed by it.  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 pursuant to this Section 6 are several in proportion to their respective purchase obligations hereunder and not joint.

 

(g)           Non-Exclusive Remedies.  The remedies provided for in this Section 6 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Party at law or in equity.

 

7.             Termination.  This Agreement may be terminated in the absolute discretion of the Representatives, by notice to the Company, if after the execution and delivery of this Agreement and on or prior to the Closing Date (i) trading generally shall have been suspended or materially limited on the New York Stock Exchange or the NASDAQ Global Market, (ii)  trading of any securities of the Company or the Guarantors shall have been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities shall have been declared by federal or New York State authorities, (iv) a material disruption in securities settlement, payment or clearance services in the United States shall have occurred, or (v) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis, either within or outside the United States, that, in the judgment of the Representatives, is material and adverse and makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in the manner contemplated by this Agreement, the Time of Sale Memorandum and the Offering Memorandum.  Termination of this Agreement pursuant to this Section 7 shall be without liability of any party to any other party except as provided in Section 6 hereof and that the Company and the Guarantors shall be obligated to reimburse the expenses of the Initial Purchasers pursuant to Section 9(b).

 

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8.             Defaulting Initial Purchaser.  (a)  If, on the Closing Date, any one or more of the Initial Purchasers defaults on its obligation to purchase Securities that it or they have agreed to purchase hereunder, and the aggregate principal amount of Securities which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase does not exceed one-tenth of the aggregate principal amount of Securities to be purchased on the Closing Date, the other Initial Purchasers shall be obligated, severally, in the proportions that the principal amount of Securities set forth opposite their respective names on Schedule 1 bears to the aggregate principal amount of Securities set forth opposite the names of all such non-defaulting Initial Purchasers, or in such other proportions as may be specified by the Initial Purchasers with the consent of the non-defaulting Initial Purchasers, to purchase the Securities which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase on the Closing Date; provided that in no event shall the principal amount of Securities that any Initial Purchaser has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 8 by an amount in excess of one-ninth of such principal amount of Securities without the written consent of such Initial Purchaser.

 

(b)           If any one or more of the Initial Purchasers shall fail or refuse to purchase Securities hereunder and the aggregate principal amount of Securities with respect to which such default occurs is more than one-tenth of the aggregate principal amount of Securities to be purchased on Closing Date, and arrangements satisfactory to the Initial Purchasers and the Company for the purchase of such Securities are not made within 48 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Initial Purchaser or of the Company.  In any such case either the Initial Purchasers or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Time of Sale Memorandum, the Offering Memorandum or in any other documents or arrangements may be effected.

 

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

 

9.             Payment of Expenses.  (a)  The Company agrees to pay all costs and expenses incident to the performance of its obligations under this Agreement, the Registration Rights Agreement, the Indenture and the Collateral Documents, whether or not the transactions contemplated herein are consummated or this Agreement is terminated pursuant to Section 7 or Section 8(b) hereof, including all costs and expenses incident to (i) the cost of production and printing of documents with respect to the transactions  contemplated hereby, including any costs of printing the Preliminary Offering Memorandum, the Time of Sale Memorandum and any Offering Memorandum and any amendment or supplement thereto, and any “Blue Sky” memoranda,  (ii) all arrangements relating to the delivery to the Initial Purchasers of copies of the foregoing documents, (iii) the fees, disbursements and expenses of the Company’s counsel and the Independent Accountants in connection with the issuance and sale of the Securities, (iv) all costs and expenses related to the transfer and delivery of the Securities to the Initial Purchasers, including any transfer or other taxes payable thereon, (v) the qualification of the Securities under state securities and “Blue Sky” laws, including filing fees and fees and disbursements of counsel for the Initial Purchasers relating thereto,  (vi) any fees charged by rating agencies for the rating of the Securities, (vii) all fees and expenses (including reasonable

 

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fees and expenses of counsel) of the Company and the Guarantors in connection with approval of the Securities by the DTC for “book-entry” transfer, and the performance by the Company and the Guarantors of their respective other obligations under this Agreement, (viii) the costs and charges of the Trustee and Collateral Agent including fees and expenses of counsel, (ix) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the offering of the Securities, including, without limitation, expenses associated with the preparation or dissemination of any electronic road show, expenses associated with production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and one-half the cost of any aircraft chartered in connection with the road show, (x) the document production charges and expenses associated with printing this Agreement, (xi) all costs and expenses in connection with the creation and perfection of liens pursuant to the Collateral Documents (including without limitation, filing and recording fees, search fees, taxes, costs of title policies and the reasonable fees and disbursements of counsel to the Initial Purchasers, with respect to such matters), and (xii) all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section.  The Company and the Guarantors shall not be required to pay for any of the Initial Purchasers’ costs and expenses, other than as set forth in this Section 9(a) or as otherwise described in this Agreement.

 

(b)           It is understood, however, that if (i) this Agreement is terminated pursuant to Section 7 or Section 8(b), (ii) the Company for any reason fails to tender the Securities for delivery to the Initial Purchasers or (iii) the Initial Purchasers decline to purchase the Securities for any reason permitted under this Agreement, the Company agrees to reimburse the Initial Purchasers for all out-of-pocket costs and expenses (including the fees and expenses of their counsel) reasonably incurred by the Initial Purchasers in connection with this Agreement and the offering contemplated hereby.

 

10.          Persons Entitled to Benefit of Agreement.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and any controlling persons referred to herein, and the affiliates, officers and directors of the Company, each Guarantor and each Initial Purchaser referred to in Section 6 hereof.  Nothing in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.  No purchaser of Securities from any Initial Purchaser shall be deemed a successor merely by reason of such purchase.

 

11.          Survival.  The respective indemnities, rights of contribution, representations, warranties and agreements of the Company and the Initial Purchasers contained in this Agreement or made by or on behalf of the Company or the Initial Purchasers pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Securities and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company or the Initial Purchasers.

 

28

 

12.          No Advisory or Fiduciary Responsibility.  The Company acknowledges and agrees that (i) the purchase and sale of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the Company, on the one hand, and the Initial Purchasers, on the other, (ii) in connection therewith and with the process leading to such transaction each Initial Purchaser is acting solely as a principal and not the agent or fiduciary of the Company, (iii) no Initial Purchaser has assumed an advisory or fiduciary responsibility in favor of the Company with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Initial Purchaser has advised or is currently advising the Company on other matters) or any other obligation to the Company except the obligations expressly set forth in this Agreement and (iv) the Company has consulted its own legal and financial advisors to the extent it deemed appropriate.  The Company agrees that it will not claim that any Initial Purchaser has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company, in connection with such transaction or the process leading thereto.

 

This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company, the Guarantors and the several Initial Purchasers, or any of them, with respect to the subject matter hereof.  The Company and the Guarantors hereby waive and release, to the fullest extent permitted by law, any claims that the Company and the Guarantors may have against the several Initial Purchasers with respect to any breach or alleged breach of fiduciary duty.

 

13.          Authority of the Representatives.  Any action by the Initial Purchasers hereunder may be taken by the Representatives on behalf of the Initial Purchasers, and any such action taken by the Representatives shall be binding upon the Initial Purchasers.

 

14.          Partial Unenforceability.  The invalidity or unenforceability of any section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other section, paragraph or provision hereof.  If any section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

 

15.          Notices.  All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of telecommunication.

 

If to the Initial Purchasers:

 

Citigroup Global Markets Inc.

Three World Financial Center

388 Greenwich Street
 New York, New York 10013

Facsimile: (212) 816-7912
 Attention: Citigroup General Counsel

 

Wells Fargo Securities, LLC

 

29

 

550 S. Tryon Street

Charlotte, North Carolina 28202

Facsimile: (704) 410-4874
 Attention: High Yield Syndicate

 

with a copy to:

 

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, Texas 77002

Counsel for the Initial Purchasers
 Facsimile: (713) 546-5401
 Attention: J. Michael Chambers

 

If to the Company or the Guarantors:

 

ION Geophysical Corporation
 2105 CityWest Boulevard, Suite 400

Houston, Texas 77042
 Facsimile: 281-879-3600
 Attention: General Counsel

 

with a copy to:

 

Mayer Brown LLP
 700 Louisiana Street, Suite 3400

Houston, Texas 77002

Counsel for the Company and the Guarantors
 Facsimile: 713-238-4888
 Attention: Marc H. Folladori

 

16.          Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN.

 

17.          Definition of the Terms “Business Day” and “Subsidiary”.   For purposes of this Agreement, (a) “business day” means each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close and (b) “subsidiary” has the meaning set forth in Rule 405.

 

18.          Counterparts.  This Agreement may be signed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

30

 

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

 

[Signature Page Follows.]

 

31

 

If the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space provided below.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
THE   COMPANY:
    
	
 
    	
 
    
	
 
    	
ION GEOPHYSICAL   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ David L. Roland
    
	
 
    	
 
    	
Name: 
    	
David L. Roland
    
	
 
    	
 
    	
Title:
    	
Senior Vice President, General Counsel
    
	
 
    	
 
    	
 
    	
and Corporate Secretary
    
	
 
    	
 
    
	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
GX TECHNOLOGY   CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ David L. Roland
    
	
 
    	
 
    	
Name:
    	
David L. Roland
    
	
 
    	
 
    	
Title:
    	
Senior Vice President
    
	
 
    	
 
    
	
 
    	
ION EXPLORATION   PRODUCTS (U.S.A.), INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ David L. Roland
    
	
 
    	
 
    	
Name:
    	
David L. Roland
    
	
 
    	
 
    	
Title:
    	
Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
I/O MARINE   SYSTEMS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ David L. Roland
    
	
 
    	
 
    	
Name:
    	
David L. Roland
    
	
 
    	
 
    	
Title:
    	
Vice President
    

 

[Signature Page to Purchase Agreement]

 

 

	
Accepted: May 8, 2013
    	
 

	
 
    	
 
    	
 

	
By CITIGROUP GLOBAL   MARKETS INC.
    	
 

	
 
    	
 
    	
 
    	
 

	
 
    	
By
    	
/s/ Robert Waldron
    	
 
    
	
 
    	
 
    	
Name:
    	
Robert Waldron
    	
 
    
	
 
    	
 
    	
Title:
    	
Vice President
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By WELLS FARGO   SECURITIES, LLC
    	
 
    	
 

	
 
    	
 
    	
 
    	
 
    	
 

	
 
    	
By
    	
/s/ Jeff Gore
    	
 
    	
 

	
 
    	
 
    	
Name:
    	
Jeff Gore
    	
 

	
 
    	
 
    	
Title:
    	
Managing Director
    	
 

 

Acting on behalf of themselves
 and as the Representatives of the

several Initial Purchasers listed
 in Schedule 1 hereto.

 

[Signature Page to Purchase Agreement]

 

 

SCHEDULE 1

 

	
Initial Purchasers
    	
 
    	
Aggregate
   Principal Amount
   of Securities
    	
 
    
	
Citigroup Global   Markets Inc. 
    	
 
    	
$
    	
56,980,000
    	
 
    
	
Wells Fargo   Securities, LLC 
    	
 
    	
56,980,000
    	
 
    
	
Pareto Securities   AS(1) 
    	
 
    	
40,040,000
    	
 
    
	
Dougherty &   Company 
    	
 
    	
5,250,000
    	
 
    
	
Johnson   Rice & Company L.L.C. 
    	
 
    	
5,250,000
    	
 
    
	
PNC Capital Markets   LLC 
    	
 
    	
5,250,000
    	
 
    
	
Westlake   Securities, LLC 
    	
 
    	
5,250,000
    	
 
    
	
Total 
    	
 
    	
$
    	
175,000,000
    	
 
    

 

(1)         The activities of Pareto Securities AS in the United States will be effected through Pareto Securities Inc. in accordance with Rule 15a-6 under the Exchange Act.

 

 

SCHEDULE 2

 

GX TECHNOLOGY CORPORATION, a Texas corporation

ION EXPLORATION PRODUCTS (U.S.A.), Inc., a Delaware corporation

I/O MARINE SYSTEMS, INC., a Louisiana corporation

 

 

EXHIBIT A

 

Additional Time of Sale Memorandum

 

1.         Pricing Supplement containing the terms of the securities, substantially in the form of Exhibit B.

 

 

EXHIBIT B

 

ION GEOPHYSICAL CORPORATION

 

$175,000,000 8.125% Senior Secured Second Priority Notes due 2018

 

Pricing Supplement

 

Pricing Supplement, dated May 8, 2013, to the Preliminary Offering Memorandum, dated May 1, 2013, of ION Geophysical Corporation (the “Preliminary Offering Memorandum”).  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 but not defined herein shall have the meanings given to them in the Preliminary Offering Memorandum.

 

	
Issuer:
    	
 
    	
ION Geophysical Corporation
    
	
 
    	
 
    	
 
    
	
Notes Offered:
    	
 
    	
8.125% Senior Secured Second Priority Notes   due 2018 (the “notes”)
    
	
 
    	
 
    	
 
    
	
Issue Price:
    	
 
    	
100% of principal amount
    
	
 
    	
 
    	
 
    
	
Principal Amount:
    	
 
    	
$175,000,000
    
	
 
    	
 
    	
 
    
	
Interest:
    	
 
    	
8.125%
    
	
 
    	
 
    	
 
    
	
Yield to Maturity
    	
 
    	
8.125%
    
	
 
    	
 
    	
 
    
	
Maturity Date:
    	
 
    	
May 15, 2018
    
	
 
    	
 
    	
 
    
	
Treasury Benchmark:
    	
 
    	
0.625% UST due 4/30/2018
    
	
 
    	
 
    	
 
    
	
Spread to Treasury:
    	
 
    	
738 bps
    
	
 
    	
 
    	
 
    
	
Interest Payment Dates:
    	
 
    	
May 15 and November 15, commencing   November 15, 2013.
    
	
 
    	
 
    	
 
    
	
Record Dates:
    	
 
    	
May 1 and November 1
    
	
 
    	
 
    	
 
    
	
Use of Proceeds:
    	
 
    	
The Issuer intends to use approximately $97.3   million of the net proceeds from this offering to repay outstanding   indebtedness under its senior secured credit facility and the remainder to   pay the fees and expenses incurred in connection with this offering and for   general corporate purposes including for potential additional capital   contributions to the Issuer’s GeoRXT joint venture.
    
	
 
    	
 
    	
 
    
	
Guarantors:
    	
 
    	
The payment of the notes will initially be   fully and unconditionally guaranteed, jointly and severally, by each of the   Issuer’s material domestic subsidiaries.
    
	
 
    	
 
    	
 
    
	
Security:
    	
 
    	
The notes and the guarantees will be secured   on a second-priority basis by liens, subject to certain exceptions and   permitted liens, on substantially all of the Issuer’s personal property and   the personal property of the guarantors and proceeds thereof, including liens   on the Issuer’s and the guarantors’ seismic equipment and proprietary data   libraries, to the extent such assets constitute collateral under the Issuer’s
    

 

 

	
 
    	
 
    	
senior secured credit facility. Pursuant to   the terms of an intercreditor agreement, the liens on the assets securing the   notes and the guarantees will be contractually subordinated and junior to   liens securing the Issuer’s senior secured credit facility, additional   permitted first lien indebtedness and future indebtedness incurred to replace   or refinance the Issuer’s senior secured credit facility and such other indebtedness.
    
	
 
    	
 
    	
 
    
	
Make-Whole Redemption:
    	
 
    	
Prior to May 15, 2015, the Issuer may,   at its option, redeem the notes, in whole or in part, at the “make-whole”   redemption price, together with accrued and unpaid interest, if any, to the   date of redemption.
    
	
 
    	
 
    	
 
    
	
Optional Redemption:
    	
 
    	
On or after May 15, 2015, the Issuer   may, at its option, redeem all or part of the notes at the applicable   redemption prices set forth below plus accrued but unpaid interest, and   Special Interest, if any, if redeemed during the 12-month period beginning on   May 15th of the years indicated below.
    
	
 
    	
 
    	
 
    
	
 
	
Year 
    	
 
    	
Redemption Price
    	
 
    	
 

	
 
	
2015
    	
 
    	
104.063
    	
%
    	
 

	
 
	
2016
    	
 
    	
102.031
    	
%
    	
 

	
 
	
2017 and   thereafter 
    	
 
    	
100.000
    	
%
    	
 

	
 
	
 
    	
 
    	
 
    	
 
    	
 

	
Equity Clawback:
    	
 
    	
Prior to May 15, 2015, the Issuer may,   at its option, redeem up to 35% of the aggregate principal amount of the   notes using the net proceeds of certain equity offerings at a price equal to   108.125% of the principal amount thereof, plus accrued and unpaid interest,   if any, to the date of redemption.
    
	
 
    	
 
    	
 
    
	
Distribution:
    	
 
    	
144A/Regulation S
    
	
 
    	
 
    	
 
    
	
Ratings of the Notes*:
    	
 
    	
B3/B+
    
	
 
    	
 
    	
 
    
	
Initial Purchasers:
    	
 
    	
Citigroup Global Markets Inc.

Wells Fargo Securities, LLC  

Pareto Securities AS

Dougherty & Company  

Johnson Rice & Company L.L.C.  

PNC Capital Markets LLC  

Westlake Securities, LLC
    
	
 
    	
 
    	
 
    
	
Trade Date:
    	
 
    	
May 8, 2013
    
	
 
    	
 
    	
 
    
	
Settlement Date:
    	
 
    	
May 13, 2013 (“T+3”)
    
	
 
    	
 
    	
 
    
	
CUSIP:
    	
 
    	
144A: 462044   AD0

Regulation   S: U4608C AC2
    
	
 
    	
 
    	
 
    
	
ISIN:
    	
 
    	
144A:   US462044AD05

Regulation   S: USU4608CAC20
    

 

*Note: A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time and each rating should be evaluated independently of any other rating.

 

 

Modifications to “Description of Notes” in the Preliminary Offering Memorandum

 

The summary of certain material provisions of the indenture appearing in the attached Exhibit A supersedes and replaces in their entirety those provisions as appearing in the Preliminary Offering Memorandum.  Deletions from those provisions as appearing in the Preliminary Offering Memorandum will appear in strikethrough and provisions and language that will be added to the indenture as summarized in the Preliminary Offering Memorandum are in bold and underlined.

 

This communication is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy any security.  No offer to buy securities described herein can be accepted, and no part of the purchase price thereof can be received, unless the person making such investment decision has received and reviewed the information contained in the relevant prospectus or offering memorandum in making their investment decisions.  This communication is not intended to be a confirmation as required under Rule 10b-10 of the Securities Exchange Act of 1934, as amended.  A formal confirmation will be delivered to you separately.  This notice shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful.  The notes will be offered and sold to qualified institutional buyers in the United States in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to persons in offshore transactions in reliance on Regulation S under the Securities Act.  The notes have not been registered under the Securities Act or any state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirement.

 

ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED.  SUCH DISCLAIMERS OR OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.

 

 

Exhibit A

 

Description of Notes—Certain Covenants—Restricted Payments

 

Clause (10) appearing under the caption “Description of Notes—Certain Covenants—Restricted Payments” on page 120 of the Preliminary Offering Memorandum is revised in its entirety to read as follows:

 

(10)                          so long as no Default (other than a Reporting Default) or Event of Default has occurred and is continuing, the payment to the holder(s) of repurchase of up to $40.0 million in shares of Series D Preferred Stock outstanding on the date of the indenture in a total amount of up to $10.0 million in connection with the conversion or repurchase of the shares of Series D Preferred Stock outstanding on such date and the payment of dividends thereon; provided that if ION or a Restricted Subsidiary directly or indirectly uses the proceeds of any Indebtedness to make such repurchase, then at the time of, and immediately after giving effect to, any such repurchase pursuant to this clause (10), the Total Leverage Ratio is less than 1.00 to 1.00;Exhibit 10.2

 

EXECUTION COPY

 

SECOND LIEN INTERCREDITOR AGREEMENT

 

Dated as of May 13, 2013

 

among

 

CHINA MERCHANTS BANK CO., LTD., NEW YORK BRANCH

as First Lien Representative and First Lien Collateral Agent for the First Lien Secured Parties,

 

WILMINGTON TRUST, NATIONAL ASSOCIATION,
 as Second Lien Representative for the Second Lien Secured Parties,

 

and

 

U.S. BANK NATIONAL ASSOCIATION,

as Second Lien Collateral Agent for the Second Lien Secured Parties,

 

and acknowledged and agreed to by

 

ION GEOPHYSICAL CORPORATION,

as the Company and the other

Grantors referred to herein

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
SECTION 1.
    	
Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
1.1
    	
Defined Terms
    	
2
    
	
1.2
    	
Terms Generally
    	
12
    
	
 
    	
 
    	
 
    
	
SECTION 2.
    	
Lien Priorities
    	
12
    
	
 
    	
 
    	
 
    
	
2.1
    	
Relative Priorities
    	
12
    
	
2.2
    	
Prohibition on Contesting Liens; No Marshalling
    	
13
    
	
2.3
    	
No New Liens
    	
14
    
	
2.4
    	
Similar Liens and Agreements
    	
15
    
	
2.5
    	
Perfection of Liens
    	
16
    
	
 
    	
 
    	
 
    
	
SECTION 3.
    	
Enforcement
    	
16
    
	
 
    	
 
    	
 
    
	
3.1
    	
Exercise of Remedies
    	
16
    
	
3.2
    	
Actions Upon Breach; Specific Performance
    	
20
    
	
 
    	
 
    	
 
    
	
SECTION 4.
    	
Payments
    	
21
    
	
 
    	
 
    	
 
    
	
4.1
    	
Application of Proceeds
    	
21
    
	
4.2
    	
Payments Over
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 5.
    	
Other Agreements
    	
23
    
	
 
    	
 
    	
 
    
	
5.1
    	
Releases
    	
23
    
	
5.2
    	
Insurance
    	
25
    
	
5.3
    	
Amendments to First Lien Documents and Second Lien   Documents
    	
26
    
	
5.4
    	
Confirmation of Subordination in Second Lien Collateral   Documents
    	
27
    
	
5.5
    	
Gratuitous Bailee/Agent for Perfection
    	
27
    
	
5.6
    	
When Discharge of Obligations Deemed to Not Have Occurred
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 6.
    	
Insolvency or Liquidation Proceedings
    	
29
    
	
 
    	
 
    	
 
    
	
6.1
    	
Finance and Sale Issues
    	
29
    
	
6.2
    	
Relief from the Automatic Stay
    	
31
    
	
6.3
    	
Adequate Protection
    	
31
    
	
6.4
    	
No Waiver
    	
33
    
	
6.5
    	
Avoidance Issues
    	
33
    
	
6.6
    	
Reorganization Securities
    	
33
    
	
6.7
    	
Post-Petition Interest
    	
33
    
	
6.8
    	
Waiver
    	
34
    
	
6.9
    	
Separate Grants of Security and Separate Classification
    	
34
    
	
6.10
    	
Effectiveness in Insolvency or Liquidation Proceedings
    	
35
    
	
 
    	
 
    	
 
    
	
SECTION 7.
    	
Reliance; Waivers; Etc.
    	
35
    
	
 
    	
 
    	
 
    
	
7.1
    	
Reliance
    	
35
    
	
7.2
    	
No Warranties or Liability
    	
35
    
	
7.3
    	
No Waiver of Lien Priorities
    	
36
    
					

 

i

 

	
7.4
    	
Obligations Unconditional
    	
38
    
	
 
    	
 
    	
 
    
	
SECTION 8.
    	
Miscellaneous
    	
39
    
	
 
    	
 
    	
 
    
	
8.1
    	
Integration/Conflicts
    	
39
    
	
8.2
    	
Effectiveness; Continuing Nature of this Agreement;   Severability
    	
39
    
	
8.3
    	
Amendments; Waivers
    	
40
    
	
8.4
    	
Information Concerning Financial Condition of the Grantors   and their Subsidiaries
    	
40
    
	
8.5
    	
Subrogation
    	
41
    
	
8.6
    	
Application of Payments
    	
41
    
	
8.7
    	
Additional Debt Facilities
    	
42
    
	
8.8
    	
Submission to Jurisdiction; Certain Waivers
    	
44
    
	
8.9
    	
WAIVER OF JURY TRIAL.
    	
45
    
	
8.10
    	
Notices
    	
46
    
	
8.11
    	
Further Assurances
    	
46
    
	
8.12
    	
Agency Capacities
    	
46
    
	
8.13
    	
GOVERNING LAW
    	
46
    
	
8.14
    	
Binding on Successors and Assigns
    	
46
    
	
8.15
    	
Section Headings
    	
47
    
	
8.16
    	
Counterparts
    	
47
    
	
8.17
    	
Authorization
    	
47
    
	
8.18
    	
No Third Party Beneficiaries/ Provisions Solely to Define   Relative Rights
    	
47
    
	
8.19
    	
No Indirect Actions
    	
47
    
	
 
    	
 
    
	
EXHIBITS
    	
 
    
	
 
    	
Exhibit I - Joinder Agreement   (Additional First Lien Debt)
    	
 
    
	
 
    	
Exhibit II - Joinder Agreement   (Replacement First Lien Credit Agreement)
    	
 
    
	
 
    	
Exhibit III - Additional Debt   Designation
    	
 
    
					

 

ii

 

SECOND LIEN INTERCREDITOR AGREEMENT

 

SECOND LIEN INTERCREDITOR AGREEMENT dated as of May 13, 2013 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), among CHINA MERCHANTS BANK CO., LTD., NEW YORK BRANCH (“CMB”), as administrative agent, as first lien representative for the First Lien Secured Parties (in such capacity and together with its successors in such capacity, and together with any Replacement First Lien Representative, the “First Lien Representative”) and collateral agent, (or the equivalent) for the First Lien Secured Parties (in such capacity and together with its successors in such capacity, and together with any Replacement First Lien Collateral Agent, the “First Lien Collateral Agent”), WILMINGTON TRUST, NATIONAL ASSOCIATION, as trustee, as second lien representative for the Second Lien Secured Parties (in such capacity and together with its successors in such capacity, the “Second Lien Representative”), U.S. Bank National Association, as collateral agent for the Second Lien Secured Parties (in such capacity and together with its successors in such capacity, the “Second Lien Collateral Agent”) and each First Lien Representative and First Lien Collateral Agent that from time to time becomes a party hereto pursuant to Section 8.7, and acknowledged and agreed to by ION GEOPHYSICAL CORPORATION, a Delaware corporation (the “Company”) and the other Grantors referred to below.  Capitalized terms used in this Agreement have the meanings assigned to them in Section 1 below.

 

WHEREAS, the Company intends to issue 8.125% Senior Secured Second Priority Notes due 2018 (including any related exchange notes, the “Notes”) in an aggregate principal amount of $175,000,000 pursuant to an Indenture dated as of the date hereof (as amended, supplemented, amended and restated or otherwise modified and in effect from time to time, the “Indenture”) among the Company, the guarantors party thereto and the Second Lien Representative;

 

WHEREAS, the Company and the other Grantors also intend to enter into the Second Lien Collateral Documents pursuant to which the Second Lien Collateral Agent will be granted a second priority security interest in the Second Lien Collateral, which security interest is subordinate to the security interest of the First Lien Representative; and

 

WHEREAS, the Company and the other Grantors have secured the First Lien Obligations under the First Lien Credit Agreement on a priority basis and, subject to such priority, intend to secure the Second Lien Obligations under the Indenture, with Liens on all present and future Collateral to the extent that such Liens have been provided for in the applicable Collateral Documents, and the Secured Parties desire to enter into this Agreement to confirm their relative rights with respect to the Collateral as provided in this Agreement.

 

In consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the First Lien Representative (for itself and on behalf of the First Lien Secured Parties), the Second Lien Representative (for itself and on behalf of the Second Lien Secured Parties), and the Second Lien Collateral Agent (for itself and on behalf of the Second Lien Secured Parties), intending to be legally bound, hereby agree as follows:

 

 

SECTION 1.                         Definitions.

 

1.1                               Defined Terms.  As used in this Agreement, the following terms shall have the following meanings:

 

“Additional First Lien Collateral Agent” has the meaning set forth in the definition of “First Lien Collateral Agent”.

 

“Additional First Lien Debt” means any Indebtedness and guarantees thereof that is incurred, issued or guaranteed by the Company and/or any Grantor (other than the Initial First Lien Debt) which Indebtedness and guarantees are secured by the First Lien Collateral (or a portion thereof) on a basis senior to the Second Lien Obligations; provided, however, that with respect to any such Indebtedness incurred after the date hereof (i) such Indebtedness is permitted to be incurred, secured and guaranteed on such basis by each First Lien Document and Second Lien Document, (ii) unless already a party with respect to that Series of Additional First Lien Debt, each of the First Lien Representative and the First Lien Collateral Agent for the holders of such Indebtedness shall have become party to (A) this Agreement pursuant to, and by satisfying the conditions set forth in, Section 8.7 hereof and (B) the First Lien Pari Passu Intercreditor Agreement pursuant to, and by satisfying the conditions set forth in, Section 5.14 thereof; provided, further, that, if such Indebtedness will be the initial Additional First Lien Debt incurred by the Company or any other Grantor after the date hereof, then the Grantors, the Initial First Lien Representative, the Initial First Lien Collateral Agent, the Second Lien Representative for such Indebtedness and the Second Lien Collateral Agent for such Indebtedness shall have executed and delivered the First Lien Pari Passu Intercreditor Agreement and (iii) each of the other requirements of Section 8.7 shall have been complied with.  The requirements of clause (i) shall be tested only as of (x) the date of execution of such Joinder Agreement, if pursuant to a commitment entered into at the time of such Joinder Agreement and (y) with respect to any later commitment or amendment to those terms to permit such Indebtedness, as of the date of such commitment and/or amendment.  Additional First Lien Debt shall include any Registered Equivalent Notes and guarantees thereof by the Grantors issued in exchange therefor.

 

“Additional First Lien Documents” means, with respect to any Series of Additional First Lien Debt, the loan agreements, promissory notes, indentures and other operative agreements evidencing or governing such Indebtedness, and the First Lien Collateral Documents securing such Series of Additional First Lien Debt.

 

“Additional First Lien Obligations” means, with respect to any Series of Additional First Lien Debt, (a) principal, interest (including without limitation any Post-Petition Interest), premium (if any), penalties, fees, expenses (including, without limitation, fees, expenses and disbursements of agents, professional advisors and legal counsel), indemnifications, reimbursements, damages and other liabilities, and guarantees of the foregoing amounts, in each case whether or not allowed or allowable in an Insolvency or Liquidation Proceeding, payable with respect to such Additional First Lien Debt, (b) all other amounts payable to the related Additional First Lien Secured Parties under the related Additional First Lien Documents (other than in respect of any Indebtedness not constituting Additional First Lien Debt), and (c) any renewals or extensions of the foregoing.

 

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“Additional First Lien Representative” has the meaning set forth in the definition of “First Lien Representative”.

 

“Additional First Lien Secured Parties” means, with respect to any Series of Additional First Lien Debt, the holders of such Indebtedness, the First Lien Representative with respect thereto, the First Lien Collateral Agent with respect thereto, any trustee or agent therefor under any related Additional First Lien Documents and the beneficiaries of each indemnification obligation undertaken by the Company or any other Grantor under any related Additional First Lien Documents and the holders of any other Additional First Lien Obligations secured by the First Lien Collateral Documents for such Series of Additional First Lien Debt.

 

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, Controls, is Controlled by or is under common control with such Person or is a director or officer of such Person.

 

“Bank Product Obligations” means, all obligations and liabilities (whether direct or indirect, absolute or contingent, due or to become due or now existing or hereafter incurred) of the Company or any other Grantor, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses or otherwise, which may arise under, out of, or in connection with any treasury, investment, depository, clearing house, wire transfer, cash management or automated clearing house transfers of funds services or any related services, to any Person permitted to be a secured party in respect of such obligations under the applicable First Lien Documents.

 

“Bankruptcy Case” means a case under the Bankruptcy Code or any other Bankruptcy Law.

 

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.

 

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

 

“Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

 

“Cap Amount” has the meaning assigned to that term in the definition of First Lien Obligations.

 

“Collateral” means, at any time, all properties and assets at any time owned or acquired by the Company or any other Grantor in which the holders of First Lien Obligations under at least one Series of First Lien Obligations (or their Collateral Agents or Representatives) and the holders of Second Lien Obligations (or their Collateral Agent or Representative) hold, or purport to hold, a security interest at such time (or, in the case of the First Lien Obligations, are deemed pursuant to Article II to hold a security interest), including any property subject to Liens granted pursuant to Section 6.1, and shall exclude any properties and assets in which any Collateral Agent is required to release its Liens pursuant to Section 5.1; provided, that, if such Liens are required to be released as a result of the sale, transfer or other disposition of any

 

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properties or assets of the Company or any other Grantor, such assets or properties will cease to be excluded from the Collateral if the Borrower or any other Grantor thereafter acquires or reacquires such assets or properties.

 

“Collateral Agent” means any First Lien Collateral Agent and/or the Second Lien Collateral Agent, as the context may require.

 

“Collateral Documents” means the First Lien Collateral Documents and the Second Lien Collateral Documents.

 

“Company” has the meaning set forth in the Preamble to this Agreement.

 

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

 

“Designated First Lien Collateral Agent” means (i) if at any time there is only one Series of First Lien Obligations with respect to which the Discharge of First Lien Obligations has not occurred, the First Lien Collateral Agent for the First Lien Secured Parties in such Series and (ii) at any time when clause (i) does not apply, the “Applicable Collateral Agent” (as defined in the First Lien Pari Passu Intercreditor Agreement) at such time.

 

“Designated First Lien Representative” means (i) if at any time there is only one Series of First Lien Obligations with respect to which the Discharge of First Lien Obligations has not occurred, the First Lien Representative for the First Lien Secured Parties in such Series and (ii) at any time when clause (i) does not apply, the “Applicable Representative” (as defined in the First Lien Pari Passu Intercreditor Agreement) at such time.

 

“Designation” means a designation of Additional First Lien Indebtedness or Indebtedness under a Replacement First Lien Credit Agreement in substantially the form of Exhibit II attached hereto.

 

“DIP Financing” has the meaning set forth in Section 6.1.

 

“Discharge” means, with respect to any Series of First Lien Obligations or the Second Lien Obligations, as the case may be, except to the extent otherwise provided in Section 5.6:

 

(a)                                 payment in full in cash of the principal of and interest (including interest accruing on or after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest would be allowed in such Insolvency or Liquidation Proceeding) on all Indebtedness outstanding under the applicable First Lien Documents and constituting First Lien Obligations with respect to such Series of First Lien Obligations or the applicable Second Lien Documents and constituting Second Lien Obligations, as the case may be;

 

(b)                                 payment in full in cash of all Hedging Obligations constituting First Lien Obligations secured by the First Lien Collateral Documents or the cash collateralization of all

 

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such Hedging Obligations on terms satisfactory to each applicable counterparty (or the making of other arrangements satisfactory to the applicable counterparty);

 

(c)                                  payment in full in cash of all other First Lien Obligations or Second Lien Obligations under the applicable First Lien Documents of such Series or the applicable Second Lien Documents, as the case may be, that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid (other than any indemnification obligations for which no claim or demand for payment, whether oral or written, has been made at such time);

 

(d)                                 termination or expiration of all commitments, if any, to extend credit that would constitute First Lien Obligations under such Series or Second Lien Obligations, as the case may be; and

 

(e)                                  termination or cash collateralization (in an amount and manner reasonably satisfactory to the applicable letter of credit issuer, but in no event in an amount greater than 105% of the aggregate undrawn face amount), or the making of other arrangements satisfactory to the applicable letter of credit issuer of all letters of credit issued under the applicable First Lien Documents constituting First Lien Obligations of such Series.

 

The term “Discharged” shall have a corresponding meaning.

 

“Discharge of First Lien Obligations” means, except to the extent otherwise provided in Section 5.6, the date on which the Discharge of each Series of First Lien Obligations has occurred; provided, that the Discharge of First Lien Obligations shall be deemed not to have occurred if a Replacement First Lien Credit Agreement is entered into.

 

“Discharge of Second Lien Obligations” means the date on which the Discharge of Second Lien Obligations has occurred.

 

“Disposition” has the meaning set forth in Section 5.1(b).

 

“Enforcement Action” means any action to:

 

(a)                                 foreclose, execute, levy, or collect on, take possession or control of, sell or otherwise realize upon (judicially or non-judicially), or lease, license, or otherwise dispose of (whether publicly or privately), Collateral, or otherwise exercise or enforce remedial rights with respect to Collateral under the First Lien Documents or the Second Lien Documents (including by way of setoff, recoupment, notification of a public or private sale or other disposition pursuant to the UCC or other applicable law, notification to account debtors, notification to depositary banks under deposit account control agreements, or exercise of rights under landlord consents, if applicable);

 

(b)                                 solicit bids from third Persons, approve bid procedures for any proposed disposition of Collateral, conduct the liquidation or disposition of Collateral or engage or retain sales brokers, marketing agents, investment bankers, accountants, appraisers, auctioneers, or other third Persons for the purposes of valuing, marketing, promoting, and selling Collateral;

 

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(c)                                  receive a transfer of Collateral in satisfaction of Indebtedness or any other Obligation secured thereby;

 

(d)                                 otherwise enforce a security interest or exercise another right or remedy, as a secured creditor or otherwise, pertaining to the Collateral at law, in equity, or pursuant to the First Lien Documents or Second Lien Documents (including the commencement of applicable legal proceedings or other actions with respect to all or any portion of the Collateral to facilitate the actions described in the preceding clauses, and exercising voting rights in respect of equity interests comprising Collateral); or

 

(e)                                  the Disposition of Collateral by any Grantor after the occurrence and during the continuation of an event of default under any of the First Lien Documents or the Second Lien Documents with the consent of the applicable First Lien Collateral Agent or Second Lien Collateral Agent.

 

“Excess First Lien Obligations” means any Obligations that would constitute First Lien Obligations if not for the Cap Amount.

 

“Excluded Assets” has the meaning given to such term in the Indenture as in effect on the date hereof.

 

“First Lien Collateral” means any “Collateral” as defined in any First Lien Document or any other assets of the Company or any other Grantor with respect to which a Lien is granted or purported to be granted or required to be granted pursuant to a First Lien Document as security for any First Lien Obligations and shall include any property or assets subject to replacement Liens or adequate protection Liens in favor of any First Lien Secured Party.

 

“First Lien Collateral Agent” means (i) in the case of any Initial First Lien Obligations or the Initial First Lien Secured Parties, the Initial First Lien Representative, acting in the capacity of a collateral agent under the First Lien Collateral Documents, together with its successors in such capacity and (ii) in the case of any Additional First Lien Obligations and the Additional First Lien Secured Parties thereunder, the Person serving as collateral agent (or the equivalent) for such Additional First Lien Obligations and that is named as the First Lien Collateral Agent in respect of such Additional First Lien Obligations in the applicable Joinder Agreement (each, an “Additional First Lien Collateral Agent”).

 

“First Lien Collateral Documents” means the “Security Documents” or “Collateral Documents” (as defined in the applicable First Lien Documents) and any other agreement, document or instrument pursuant to which a Lien is granted securing any First Lien Obligations or pursuant to which any such Lien is perfected.

 

“First Lien Credit Agreement” means that certain Credit Agreement, dated as of March 25, 2010, as amended by that certain First Amendment to Credit Agreement and Loan Documents dated as of May 29, 2012, among, inter alios, the Company, the First Lien Representative, and the lenders party thereto, as the same may be further amended, restated, amended and restated, extended, supplemented or otherwise modified from time to time and shall also include any Replacement First Lien Credit Agreement.

 

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“First Lien Debt” means the Initial First Lien Debt and any Additional First Lien Debt.

 

“First Lien Documents” means the Initial First Lien Documents and any Additional First Lien Documents.

 

“First Lien Obligations” means the Initial First Lien Obligations and any Additional First Lien Obligations; provided, that if the sum of: (1) Indebtedness constituting principal outstanding under the First Lien Credit Agreement and all other First Lien Documents; plus (2) the aggregate face amount of any letters of credit issued and outstanding under the First Lien Credit Agreement and all other First Lien Documents (whether or not drawn, but without duplication of any amounts included in clause (1)), exceeds an aggregate principal amount equal to the greater of (i) $175,000,000 and (ii) 20% of the Company’s Consolidated Net Tangible Assets (as such term is defined in the Indenture and as calculated as of the date of the incurrence of such indebtedness after giving effect to the application of the proceeds therefrom) in the aggregate (the “Cap Amount”), then only that portion of such Indebtedness and such aggregate face amount of letters of credit (on a pro rata basis based on the aggregate outstanding principal amount of such Indebtedness and face amount of letters of credit) equal to the Cap Amount shall be included in First Lien Obligations and interest and reimbursement obligations with respect to such Indebtedness and letters of credit shall only constitute First Lien Obligations to the extent related to Indebtedness and face amounts of letters of credit included in the First Lien Obligations.  For avoidance of doubt, (1) Hedging Obligations, (2) Bank Product Obligations, (3) costs, expenses, indemnities and other liabilities arising under the First Lien Documents and (4) accrued, unpaid interest, fees and premium accruing in respect of or attributable to the aggregate principal amount of the First Lien Obligations, which do not exceed the Cap Amount, including, without limitation, any interest and fees that accrue after the commencement by or against the Company or any Grantor of any Insolvency or Liquidation Proceeding naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding, including guarantees of the foregoing, shall be deemed First Lien Obligations and shall not be subject to the Cap Amount.

 

“First Lien Pari Passu Intercreditor Agreement” means an agreement among each First Lien Representative and each First Lien Collateral Agent allocating rights among the various Series of First Lien Obligations.

 

“First Lien Representative” means (i) in the case of the Initial First Lien Obligations or the Initial First Lien Secured Parties, the Initial First Lien Representative and (ii) in the case of any Additional First Lien Obligations and the Additional First Lien Secured Parties thereunder, each trustee, administrative agent, collateral agent, security agent and similar agent that is named as the First Lien Representative in respect of such Additional First Lien Obligations in the applicable Joinder Agreement (each, an “Additional First Lien Representative”).

 

“First Lien Secured Parties” means the Initial First Lien Secured Parties and any Additional First Lien Secured Parties.

 

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“Governmental Authority” means any federal, state local or foreign court or governmental department, authority, instrumentality, regulatory body or other agency.

 

“Grantors” means the Company and each Subsidiary which has granted a security interest pursuant to any Collateral Document to secure any Secured Obligations.

 

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:

 

(1)                                 interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

 

(2)                                 other agreements or arrangements designed to manage interest rates or interest rate risk; and

 

(3)                                 other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices.

 

“Indebtedness” means indebtedness in respect of borrowed money; for avoidance of doubt, “Indebtedness” shall not include reimbursement or other obligations in respect of letters of credit, Hedging Obligations or Bank Product Obligations.

 

“Initial First Lien Agreement” means the First Lien Credit Agreement.

 

“Initial First Lien Debt” means the Indebtedness and guarantees thereof now or hereafter incurred pursuant to the Initial First Lien Documents.

 

“Initial First Lien Documents” means that certain Initial First Lien Agreement and the other “Loan Documents” as defined in the Initial First Lien Agreement and any other document or agreement entered into for the purpose of evidencing, governing, securing or perfecting the Initial First Lien Obligations.

 

“Initial First Lien Obligations” means the “Obligations” as defined in the First Lien Credit Agreement.

 

“Initial First Lien Representative” has the meaning set forth in the introductory paragraph to this Agreement.

 

“Initial First Lien Secured Parties” means the “Secured Parties” as defined in the Initial First Lien Documents.

 

“Insolvency or Liquidation Proceeding” means:

 

(a)         any case commenced by or against the Company or any other Grantor under Title 11, U.S. Code or any similar federal or state law for the relief of debtors, any other proceeding for the reorganization, recapitalization or adjustment or marshalling of the assets or liabilities of the Company or any other Grantor, any receivership or assignment for the benefit of creditors relating to the Company or any other Grantor or any similar case or proceeding relative

 

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to the Company or any other Grantor or its creditors, as such, in each case whether or not voluntary;

 

(b)         any liquidation, dissolution, marshalling of assets or liabilities or other winding up of or relating to the Company or any other Grantor, in each case whether or not voluntary and whether or not involving bankruptcy or insolvency; or

 

(c)          any other proceeding of any type or nature in which substantially all claims of creditors of the Company or any other Grantor are determined and any payment or distribution is or may be made on account of such claims..

 

“Joinder Agreement” means a supplement to this Agreement in the form of Exhibit I or Exhibit II hereto, as applicable, required to be delivered by an Additional First Lien Representative, an Additional First Lien Collateral Agent or a Replacement First Lien Collateral Agent or Replacement First Lien Representative to each other then-existing Representative and Collateral Agent pursuant to Section 8.7 hereof in order to include Additional First Lien Debt or a Replacement First Lien Credit Agreement hereunder and to become the First Lien Representative or First Lien Collateral Agent, as the case may be, hereunder in respect thereof for the applicable Additional First Lien Secured Parties under such Additional First Lien Debt or the First Lien Secured Parties under such First Lien Debt.

 

“Lien” means any lien (including, judgment liens and liens arising by operation of law), mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, call, trust (whether contractual, statutory, deemed, equitable, constructive, resulting or otherwise), UCC financing statement or other preferential arrangement having the practical effect of any of the foregoing, including any right of set-off or recoupment.

 

“Obligations” means any principal (including reimbursement obligations with respect to loans, advances and letters of credit whether or not drawn), interest (including, to the extent legally permitted, all interest accrued thereon after the commencement of any insolvency or liquidation proceeding at the rate, including any applicable post-default rate, specified in the First Lien Documents, even if such interest is not enforceable, allowable or allowed as a claim in such proceeding), premium (if any), fees, indemnifications, reimbursements, expenses and other liabilities payable under the documentation governing any Indebtedness.

 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

“Pledged Collateral” has the meaning set forth in Section 5.5.

 

“Post-Petition Interest” means interest, fees, expenses and other charges that pursuant to the First Lien Documents or the Second Lien Documents, as applicable, continue to accrue after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest, fees, expenses and other charges are allowed or allowable under the Bankruptcy Law or in any such Insolvency or Liquidation Proceeding.

 

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“Recovery” has the meaning set forth in Section 6.5.

 

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, defease, amend, modify, supplement, restructure, refund, replace or repay, or to issue other Indebtedness whether of the same principal amount or greater or lesser principal amount in exchange or replacement for such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

 

“Registered Equivalent Notes” means, with respect to any notes originally issued in a Rule 144A or other private placement transaction under the Securities Act of 1933, substantially identical notes (having the same guarantees) issued in a dollar-for-dollar exchange therefor pursuant to an exchange offer registered with the SEC.

 

“Replacement First Lien Collateral Agent” means, in respect of any Replacement First Lien Credit Agreement, the collateral agent or person serving in similar capacity under the Replacement First Lien Credit Agreement.

 

“Replacement First Lien Credit Agreement” means any loan agreement, indenture or other agreement that (i) Refinances the First Lien Credit Agreement so long as, after giving effect to such Refinancing, the agreement that was the First Lien Credit Agreement immediately prior to such Refinancing is no longer secured, or required to be secured, by any of the First Lien Collateral and (ii) becomes the First Lien Credit Agreement hereunder by designation as such pursuant to Section 8.7.

 

“Replacement First Lien Representative” means, in respect of any Replacement First Lien Credit Agreement, the administrative agent, trustee or person serving in similar capacity under the Replacement First Lien Credit Agreement.

 

“Representative” means any First Lien Representative and/or the Second Lien Representative, as the context may require.

 

“Responsible Officer” means the chief executive officer, president, chief financial officer or treasurer of the Company or the applicable Grantor.

 

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

 

“Second Lien Adequate Protection Payments” has the meaning set forth in Section 6.3(b)(2).

 

“Second Lien Collateral” means any “Collateral” as defined in any Second Lien Document or any other assets of the Company or any other Grantor with respect to which a Lien is granted or purported to be granted or required to be granted pursuant to a Second Lien Document as security for any Second Lien Obligation and shall include any property or assets subject to replacement Liens or adequate protection Liens in favor of any Second Lien Secured Party.

 

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“Second Lien Collateral Agent” has the meaning set forth in the introductory paragraph to this Agreement.

 

“Second Lien Collateral Documents” means the “Security Documents” or “Collateral Documents” (as defined in the applicable Second Lien Documents) and any other agreement, document or instrument pursuant to which a Lien is granted securing any Second Lien Obligations or pursuant to which any such Lien is perfected.

 

“Second Lien Debt” means the Indebtedness and guarantees thereof now or hereafter incurred pursuant to the Second Lien Documents.  Second Lien Debt shall include any Registered Equivalent Notes and guarantees thereof by the Grantor issued in exchange thereof.

 

“Second Lien Default” means any Event of Default under, and as defined in, any Second Lien Document.

 

“Second Lien Documents” means the Indenture and the other “Note Documents” as defined in the Indenture and any other document or agreement entered into for the purpose of evidencing, governing, securing or perfecting the Second Lien Obligations.

 

“Second Lien Obligations” means the “Parity Lien Obligations” or the “Secured Obligations”, as applicable and each as defined in the Second Lien Documents.

 

“Second Lien Representative” has the meaning set forth in the introductory paragraph to this Agreement.

 

“Second Lien Secured Parties” means the holders of the Second Lien Obligations and the Second Lien Representative.

 

“Secured Obligations” means the First Lien Obligations and/or the Second Lien Obligations, as the context may require.

 

“Secured Parties” means the First Lien Secured Parties and/or the Second Lien Secured Parties, as the context may require.

 

“Series” means, (x) with respect to First Lien Debt, all First Lien Debt represented by the same Representative acting in the same capacity and (y) with respect to First Lien Obligations, all such obligations secured by the same First Lien Collateral Documents.

 

“Subsidiary” means, with respect to any Person, of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or Controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof.

 

“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

 

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1.2                               Terms Generally.  The definitions of terms in this Agreement shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise:

 

(a)                                 any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented, modified, renewed or extended and any reference herein to any statute or regulations shall include any amendment, renewal, extension or replacement thereof;

 

(b)                                 any reference herein to any Person shall be construed to include such Person’s successors and assigns;

 

(c)                                  the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof;

 

(d)                                 all references herein to Sections shall be construed to refer to Sections of this Agreement; and

 

(e)                                  the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

SECTION 2.                         Lien Priorities.

 

2.1                               Relative Priorities.  Notwithstanding the date, time, method, manner or order of grant, attachment or perfection of any Liens securing the Second Lien Obligations granted on the Collateral or of any Liens securing the First Lien Obligations granted on the Collateral and notwithstanding any provision of the UCC, or any other applicable law or the Second Lien Documents or any defect or deficiencies in, or failure to perfect or lapse in perfection of, or avoidance as a fraudulent conveyance or otherwise of, the Liens securing the First Lien Obligations, the subordination of such Liens to any other Liens, or any other circumstance whatsoever, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, the Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, hereby agrees that:

 

(a)                                 any Lien on the Collateral securing any First Lien Obligations now or hereafter held by or on behalf of any First Lien Representative, any First Lien Collateral Agent or any First Lien Secured Parties or any agent or trustee therefor, regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be senior in all respects and prior to any Lien on the Collateral securing any Second Lien Obligations; and

 

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(b)                                 any Lien on the Collateral securing any Second Lien Obligations now or hereafter held by or on behalf of the Second Lien Representative, the Second Lien Collateral Agent, any Second Lien Secured Parties or any agent or trustee therefor regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Collateral securing any First Lien Obligations.  All Liens on the Collateral securing any First Lien Obligations shall be and remain senior in all respects and prior to all Liens on the Collateral securing any Second Lien Obligations for all purposes, whether or not such Liens securing any First Lien Obligations are subordinated to any Lien securing any other obligation of the Company, any other Grantor or any other Person; and

 

(c)                                  any Lien on the Collateral securing any Excess First Lien Obligations now or hereafter held by or on behalf of any First Lien Representative, any First Lien Collateral Agent, any First Lien Secured Parties or any agent or trustee therefor, regardless of how acquired, whether by grant, possession, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to any Lien on the Collateral securing any Second Lien Obligations.

 

It is acknowledged that, subject to the Cap Amount (as provided herein), (i) the aggregate amount of the First Lien Obligations may be increased from time to time pursuant to the terms of the First Lien Documents, (ii) a portion of the First Lien Obligations consists or may consist of Indebtedness that is revolving in nature, and the amount thereof that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed, and (iii) subject to Section 8.7(b), the First Lien Obligations may be increased, extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, refinanced or otherwise amended or modified from time to time, all without affecting the subordination of the Liens securing the Second Lien Obligations hereunder or the provisions of this Agreement defining the relative rights of the First Lien Secured Parties and the Second Lien Secured Parties.

 

2.2                               Prohibition on Contesting Liens; No Marshalling.  The Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of each Second Lien Secured Party represented by it, and each First Lien Representative and each First Lien Collateral Agent, for itself and on behalf of each First Lien Secured Party represented by it, agrees that it will not (and hereby waives any right to) directly or indirectly contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the priority, validity, perfection, extent or enforceability of a Lien held, or purported to be held, by or on behalf of any of the First Lien Secured Parties in the First Lien Collateral or by or on behalf of any of the Second Lien Secured Parties in the Second Lien Collateral, as the case may be, or the provisions of this Agreement.  The Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of each Second Lien Secured Party represented by it, agrees that it (i) will not take or cause to be taken any action the purpose or effect of which is, or could be, to make any Liens pari passu with, or to give any Second Lien Secured Party any preference or priority relative to, any Lien securing the First Lien Obligations with respect to the Collateral or any part thereof, (ii) will not challenge or question in any proceeding the validity or enforceability of any First Lien Obligations or First Lien Document, or the validity or enforceability of the priorities, rights or duties established by the provisions of this Agreement, (iii) will not take or cause to be taken any action the purpose or

 

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effect of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other Disposition of the Collateral permitted under the First Lien Documents and this Agreement by any First Lien Secured Party or any First Lien Collateral Agent acting on their behalf, (iv) shall have no right to (A) direct any First Lien Collateral Agent or any other First Lien Secured Party to exercise any right, remedy or power with respect to any Collateral or (B) consent to the exercise by any First Lien Collateral Agent or any other First Lien Secured Party of any right, remedy or power with respect to any Collateral, (v) except as permitted by this Agreement, will not institute any suit or assert in any suit or Insolvency or Liquidation Proceeding any claim against any First Lien Collateral Agent or other First Lien Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to, and neither any First Lien Collateral Agent nor any other First Lien Secured Party shall be liable for, any action taken or omitted to be taken by the any First Lien Collateral Agent or other First Lien Secured Party with respect to any First Lien Collateral, (vi) will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Agreement, (vii) object to forbearance by any First Lien Collateral Agent or any First Lien Secured Party, and (viii) until the Discharge of First Lien Obligations, will not assert, and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or claim the benefit of any marshaling, appraisal, valuation or other similar right that may be available under applicable law with respect to the Collateral or any similar rights a junior secured creditor may have under applicable law; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any First Lien Representative, any First Lien Collateral Agent or any First Lien Secured Party to enforce this Agreement, including the provisions of this Agreement relating to the priority of the Liens securing the First Lien Obligations as provided in Sections 2.1 and 3.1.

 

2.3                               No New Liens.  So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, the parties hereto agree that the Company shall not, and shall not permit any other Grantor to:

 

(a)                                 grant or permit any additional Liens on any asset or property to secure any Second Lien Obligation unless it has granted or concurrently grants a Lien on such asset or property to secure the First Lien Obligations, the parties hereto agreeing that any such Lien shall be subject to Section 2.1 hereof; or

 

(b)                                 grant or permit any additional Liens on any asset or property to secure any First Lien Obligations (other than an Excluded Asset) unless it has granted or concurrently grants a Lien on such asset or property to secure the Second Lien Obligations.

 

If the Second Lien Representative, the Second Lien Collateral Agent or any Second Lien Secured Party shall hold any Lien on any assets or property of any Grantor securing any Second Lien Obligations that are not also subject to the first-priority Liens securing all First Lien Obligations under the First Lien Collateral Documents, such Second Lien Representative, Second Lien Collateral Agent or Second Lien Secured Party shall notify the Designated First Lien Representative promptly upon becoming aware thereof and, unless such Grantor shall promptly grant a similar Lien on such assets or property to each First Lien Collateral Agent as

 

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security for the First Lien Obligations represented by it, such Second Lien Representative, Second Lien Collateral Agent and Second Lien Secured Parties shall be deemed to hold and have held such Lien for the benefit of each First Lien Representative, each First Lien Collateral Agent and the other First Lien Secured Parties as security for the First Lien Obligations.  To the extent that the foregoing provisions are not complied with for any reason, without limiting any other rights and remedies available to any First Lien Representative, any First Lien Collateral Agent and/or the First Lien Secured Parties, the Second Lien Representative and the Second Lien Collateral Agent, on behalf of the Second Lien Secured Parties represented by it, agrees that any amounts received by or distributed to any of them pursuant to or as a result of Liens granted in contravention of this Section 2.3 shall be subject to Section 4.2.

 

Notwithstanding anything in this Agreement to the contrary, cash and cash equivalents may be pledged to secure reimbursement obligations in respect of letters of credit without granting a Lien thereon to secure any other First Lien Obligations or any other Second Lien Obligations.

 

2.4                               Similar Liens and Agreements.  Except as provided in Section 2.3, except to the extent any asset constitutes an Excluded Asset, the parties hereto agree that it is their intention that the First Lien Collateral and the Second Lien Collateral be substantially identical.  In furtherance of the foregoing and of Section 8.11, the parties hereto agree, subject to the other provisions of this Agreement:

 

(a)                                 upon request by any First Lien Collateral Agent or the Second Lien Collateral Agent, to cooperate in good faith (and to direct their counsel to cooperate in good faith) from time to time in order to determine the specific items included in the First Lien Collateral and the Second Lien Collateral and the steps taken to perfect their respective Liens thereon and the identity of the respective parties obligated under the First Lien Documents and the Second Lien Documents;

 

(b)                                 that the documents and agreements creating or evidencing the First Lien Collateral and the Second Lien Collateral and guarantees for the First Lien Obligations and the Second Lien Obligations, subject to Section 2.3, shall be in all material respects the same forms of documents other than (i) with respect to the priority nature of the Liens created thereunder in such Collateral, (ii) such other modifications to such Second Lien Security Documents which are less restrictive than the corresponding First Lien Security Documents and (iii) provisions in the Second Lien Security Documents which are solely applicable to the rights and duties of the Second Lien Representative and/or the Second Lien Collateral Agent, and

 

(c)                                  that at no time shall there be (i) any Grantor that is an obligor in respect of the Second Lien Obligations that is not also an obligor in respect of the First Lien Obligations or (ii) any Grantor that is an obligor in respect of the First Lien Obligations that is not also an obligor in respect of the Second Lien Obligations.

 

The foregoing to the contrary notwithstanding, it is understood by each of the parties that to the extent that (y) any Collateral constitutes an Excluded Asset, or (z) any Lien on any Second Lien Collateral is released pursuant to the terms of the Second Lien Documents, the Collateral

 

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securing the First Lien Obligations and the Second Lien Obligations will not be identical, and the provisions of the documents, agreements and instruments evidencing such Liens also will not be substantively similar, and any such difference in the scope or extent of perfection with respect to the Collateral resulting therefrom are hereby expressly permitted by this Agreement.

 

2.5                               Perfection of Liens.  Except for the arrangements contemplated by Section 5.5, none of the First Lien Representatives, First Lien Collateral Agents or the First Lien Secured Parties shall be responsible for perfecting and maintaining the perfection of Liens with respect to the Collateral for the benefit of the Second Lien Representative, the Second Lien Collateral Agent or the Second Lien Secured Parties, which shall be the responsibility of the Company.  The provisions of this Agreement are intended solely to govern the respective Lien priorities as between the First Lien Secured Parties on the one hand and the Second Lien Secured Parties on the other hand and such provisions shall not impose on the First Lien Representatives, First Lien Collateral Agents, the First Lien Secured Parties, the Second Lien Representative, the Second Lien Collateral Agent, the Second Lien Secured Parties or any agent or trustee therefor any obligations in respect of the disposition of proceeds of any Collateral which would conflict with prior-perfected claims therein in favor of any other Person or any order or decree of any court or governmental authority or any applicable law.

 

SECTION 3.                         Enforcement.

 

3.1                               Exercise of Remedies.

 

(a)                                 Until the Discharge of First Lien Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, the Second Lien Representative, the Second Lien Collateral Agent and the Second Lien Secured Parties:

 

(1)                                 will not commence or maintain, or seek to commence or maintain, any Enforcement Action or otherwise exercise any rights or remedies with respect to the Collateral;

 

(2)                                 will not contest, protest or object to any foreclosure proceeding or action brought by any First Lien Representative, any First Lien Collateral Agent or any First Lien Secured Party or any other exercise by any First Lien Representative, any First Lien Collateral Agent or any First Lien Secured Party of any rights and remedies relating to the Collateral under the First Lien Documents or otherwise (including any Enforcement Action initiated by or supported by any First Lien Representative, any First Lien Collateral Agent or any First Lien Secured Party); and

 

(3)                                 will not object to (and will waive any and all claims with respect to) the forbearance by any First Lien Representative, any First Lien Collateral Agent or the First Lien Secured Parties from bringing or pursuing any foreclosure proceeding or action or any other exercise of any rights or remedies relating to the Collateral,

 

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in each case so long as any proceeds received by any First Lien Representative in excess of those necessary to achieve a Discharge of First Lien Obligations are distributed in accordance with Section 4.1.

 

(b)                                 Until the Discharge of First Lien Obligations has occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, subject to Section 3.1(a)(1), the First Lien Representatives, the First Lien Collateral Agents and the First Lien Secured Parties shall have the exclusive right to commence and maintain an Enforcement Action or otherwise enforce rights, exercise remedies (including set-off, recoupment and the right to credit bid their debt (including debt related to any DIP Financing) in any sale, except that the Second Lien Representative shall have the credit bid rights set forth in Section 3.1(c)(5)), and subject to Section 5.1, make determinations regarding the release, disposition, or restrictions with respect to the Collateral without any consultation with or the consent of the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party; provided that any proceeds received by any First Lien Representative in excess of those necessary to achieve a Discharge of any First Lien Obligations are distributed in accordance with Section 4.1 hereof.  In commencing or maintaining any Enforcement Action or otherwise exercising rights and remedies with respect to the Collateral, the First Lien Representatives, First Lien Collateral Agents and the First Lien Secured Parties may enforce the provisions of the First Lien Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion in compliance with any applicable law and without consultation with the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party and regardless of whether any such exercise is adverse to the interest of any Second Lien Secured Party.  Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Collateral upon foreclosure, to incur expenses in connection with such sale or disposition, and to exercise all the rights and remedies of a secured creditor under the UCC and of a secured creditor under Bankruptcy Laws of any applicable jurisdiction.

 

(c)                                  Notwithstanding the foregoing, the Second Lien Representative, the Second Lien Collateral Agent and any Second Lien Secured Party may:

 

(1)                                 file a claim or statement of interest with respect to the Second Lien Obligations; provided that an Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor;

 

(2)                                 take any action (not adverse to the priority status of the Liens on the Collateral securing the First Lien Obligations, or the rights of any First Lien Representative, any First Lien Collateral Agent or the First Lien Secured Parties to exercise remedies in respect thereof) in order to create, perfect, preserve or protect its Lien on the Collateral;

 

(3)                                 file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of the

 

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Second Lien Secured Parties, including any claims secured by the Collateral, if any, in each case in accordance with the terms of this Agreement;

 

(4)                                 subject to Section 6.1(b), vote on any plan of reorganization, arrangement, compromise or liquidation, file any proof of claim, make other filings and make any arguments and motions that are, in each case, in accordance with the terms of this Agreement, with respect to the Second Lien Obligations and the Collateral; provided that no filing of any claim or vote, or pleading related to such claim or vote, to accept or reject a disclosure statement, plan of reorganization, arrangement, compromise or liquidation, or any other document, agreement or proposal similar to the foregoing by the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party may be inconsistent with the provisions of this Agreement;

 

(5)                                 bid for or purchase Collateral at any public, private or judicial foreclosure upon such Collateral initiated by any First Lien Representative, any First Lien Collateral Agent or any other First Lien Secured Party, or any sale of Collateral during an Insolvency or Liquidation Proceeding; provided that such bid may not include a “credit bid” in respect of any Second Lien Obligations unless the cash proceeds of such bid are otherwise sufficient to cause the Discharge of First Lien Obligations; and

 

(6)                                 object to any proposed acceptance of Collateral by a First Lien Representative, a First Lien Collateral Agent or First Lien Secured Party pursuant to Section 9-620 of the UCC.

 

The Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, agrees that it will not take or receive any Collateral or any proceeds of Collateral in connection with the exercise of any right or remedy (including set-off and recoupment) with respect to any Collateral in its capacity as a creditor, unless and until the Discharge of First Lien Obligations has occurred, except in connection with any foreclosure expressly permitted by Section 3.1(a)(1) to the extent such Second Lien Representative or such Second Lien Collateral Agent and Second Lien Secured Parties represented by it are permitted to retain the proceeds thereof in accordance with Section 4.2 of this Agreement.  Without limiting the generality of the foregoing, unless and until the Discharge of First Lien Obligations has occurred, except as expressly provided in Sections 3.1(a), 3.1(b) and this Section 3.1(c), the sole right of the Second Lien Representative, the Second Lien Collateral Agent and the other Second Lien Secured Parties with respect to the Collateral is to hold a Lien on the Collateral pursuant to the Second Lien Collateral Documents for the period and to the extent granted therein and to receive a share of the proceeds thereof, if any, after the Discharge of First Lien Obligations has occurred.

 

(d)                                 Subject to Sections 3.1(a) and (c):

 

(1)                                 the Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties represented by it, agrees that such Second Lien Representative or such Second

 

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Lien Collateral Agent and such Second Lien Secured Parties represented by it will not take any action that would hinder any exercise of remedies under the First Lien Documents or is otherwise prohibited hereunder, including any sale, lease, exchange, transfer or other disposition of the Collateral, whether by foreclosure or otherwise;

 

(2)                                 the Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties represented by it, hereby waives any and all rights such Second Lien Representative or such Second Lien Collateral Agent or such Second Lien Secured Parties represented by it may have as a junior lien creditor or otherwise to object to the manner in which any First Lien Representative, any First Lien Collateral Agent or other First Lien Secured Party seeks to enforce or collect the First Lien Obligations or Liens securing the First Lien Obligations granted in any of the First Lien Collateral undertaken in accordance with this Agreement, regardless of whether any action or failure to act by or on behalf of any First Lien Representative, any First Lien Collateral Agent or other First Lien Secured Party is adverse to the interest of any Second Lien Secured Party; and

 

(3)                                 the Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties represented by it, hereby acknowledges and agrees that no covenant, agreement or restriction contained in any Second Lien Document (other than this Agreement) shall be deemed to restrict in any way the rights and remedies of any First Lien Representative, any First Lien Collateral Agent or any other First Lien Secured Party with respect to the Collateral as set forth in this Agreement and the First Lien Documents.

 

(e)                                  Except as specifically set forth in this Agreement, the Second Lien Representative, the Second Lien Collateral Agent and the other Second Lien Secured Parties may exercise rights and remedies as unsecured creditors against the Company or any other Grantor that has guaranteed or granted Liens to secure the Second Lien Obligations in accordance with the terms of the Second Lien Documents and applicable law (other than initiating or joining in an involuntary case or proceeding under any Insolvency or Liquidation Proceeding with respect to any Grantor); provided that in the event that any Second Lien Secured Party becomes a judgment Lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor with respect to the Second Lien Obligations, such judgment Lien shall be subject to the terms of this Agreement for all purposes (including in relation to the First Lien Obligations) in the same manner as the other Liens securing the Second Lien Obligations are subject to this Agreement.

 

(f)                                   Nothing in this Agreement shall prohibit the receipt by the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party of the required payments of interest, principal and other amounts owed in respect of the Second Lien Obligations so long as such receipt is not the direct or indirect result of the exercise by the Second Lien Representative, the Second Lien Collateral Agent or any

 

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other Second Lien Secured Party of rights or remedies as a secured creditor (including set-off and recoupment) or enforcement in contravention of this Agreement of any Lien held by any of them or as a result of any other violation by any Second Lien Secured Party of the express terms of this Agreement.  Nothing in this Agreement impairs or otherwise adversely affects any rights or remedies any First Lien Representative, any First Lien Collateral Agent or other First Lien Secured Party may have with respect to the First Lien Collateral.

 

(g)                                  The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby acknowledges and agrees that no covenant, agreement or restriction contained in any Second Lien Security Document or any other Second Lien Document shall be deemed to restrict in any way the rights and remedies of the First Lien Collateral Agent or the other First Lien Secured Parties with respect to the Collateral as set forth in this Agreement.

 

3.2                               Actions Upon Breach; Specific Performance.

 

(a)                                 If any Second Lien Secured Party, in contravention of the terms of this Agreement, in any way takes, attempts to or threatens to take any action with respect to the Collateral (including, without limitation, any attempt to realize upon or enforce any remedy with respect to this Agreement), or fails to take any action required by this Agreement, this Agreement shall create an irrebuttable presumption and admission by such Second Lien Secured Party that relief against such Second Lien Secured Party by injunction, specific performance and/or other appropriate equitable relief is necessary to prevent irreparable harm to the First Lien Secured Parties, it being understood and agreed by the Second Lien Representative and the Second Lien Collateral Agent, on behalf of each Second Lien Secured Party represented by it, that (i) the First Lien Secured Parties’ damages from actions of any Second Lien Secured Party may at that time be difficult to ascertain and may be irreparable and (ii) each Second Lien Secured Party waives any defense that the Grantors and/or the First Lien Secured Parties cannot demonstrate damage and/or be made whole by the awarding of damages.  Each of the First Lien Representatives and/or First Lien Collateral Agents may demand specific performance of this Agreement.  The Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of specific performance in any action which may be brought by any First Lien Representative, any First Lien Collateral Agent or any other First Lien Secured Party.  No provision of this Agreement shall constitute or be deemed to constitute a waiver by any First Lien Representative or any First Lien Collateral Agent on behalf of itself and the First Lien Secured Parties represented by it of any right to seek damages from any Person in connection with any breach or alleged breach of this Agreement.

 

(b)                                 If any First Lien Secured Party, in contravention of the terms of this Agreement, in any way takes, attempts to or threatens to take any action with respect to the Collateral (including, without limitation, any attempt to realize upon or enforce any remedy with respect to this Agreement), or fails to take any action required by this

 

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Agreement, this Agreement shall create an irrebuttable presumption and admission by such First Lien Secured Party that relief against such First Lien Secured Party by injunction, specific performance and/or other appropriate equitable relief is necessary to prevent irreparable harm to the Second Lien Secured Parties, it being understood and agreed by each First Lien Representative and each First Lien Collateral Agent, on behalf of each First Lien Secured Party represented by it, that (i) the Second Lien Secured Parties’ damages from actions of any First Lien Secured Party may at that time be difficult to ascertain and may be irreparable and (ii) each First Lien Secured Party waives any defense that the Grantors and/or the Second Lien Secured Parties cannot demonstrate damage and/or be made whole by the awarding of damages.  Each of the Second Lien Representative and/or Second Lien Collateral Agent may demand specific performance of this Agreement.  Each First Lien Representative and each First Lien Collateral Agent, on behalf of itself and the First Lien Secured Parties represented by it, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense which might be asserted to bar the remedy of specific performance in any action which may be brought by the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party.  No provision of this Agreement shall constitute or be deemed to constitute a waiver by the Second Lien Representative or any Second lien Collateral Agent on behalf of itself and the Second Lien Secured Parties represented by it of any right to seek damages from any Person in connection with any breach or alleged breach of this Agreement.

 

SECTION 4.                         Payments.

 

4.1                               Application of Proceeds.

 

(a)                                 So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, any Collateral or any proceeds thereof received in connection with any Enforcement Action or other exercise of remedies by any First Lien Representative, any First Lien Collateral Agent or any First Lien Secured Party shall be applied by the Designated First Lien Collateral Agent and the other First Lien Collateral Agents or the First Lien Representatives, as applicable, to the First Lien Obligations in such order as specified in the relevant First Lien Documents and, if then in effect, the First Lien Pari Passu Intercreditor Agreement; provided, that any non-cash Collateral or non-cash proceeds may be held by the applicable First Lien Collateral Agent, in its discretion, as Collateral.  Upon the Discharge of First Lien Obligations, each First Lien Collateral Agent shall (x) unless the Discharge of Second Lien Obligations has already occurred, deliver any proceeds of Collateral held by it to the Second Lien Collateral Agent, to be applied by the Second Lien Collateral Agent and the Second Lien Representative, as applicable, to the applicable Second Lien Obligations in such order as specified in the applicable Second Lien Collateral Documents, (y) if the Discharge of Second Lien Obligations has already occurred, apply such proceeds of Collateral to any Excess First Lien Obligations in such order as specified in the relevant First Lien Documents, and (z) if there are no Excess First Lien Obligations, deliver such proceeds of Collateral to the Grantors, their successors or assigns, or to whomever may be lawfully entitled to receive the same.  Without limiting the obligations of the Second Lien Secured

 

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Parties under Section 4.2 hereof, after the Discharge of First Lien Obligations has occurred, upon the Discharge of Second Lien Obligations, the Second Lien Collateral Agent shall deliver any proceeds of Collateral held by it, (x) if there are any Excess First Lien Obligations, to the First Lien Collateral Agent, for application by the First Lien Collateral Agent to the Excess First Lien Obligations in such order as specified in the relevant First Lien Documents until the payment in full in cash of all Excess First Lien Obligations, and (y) if there are no such Excess First Lien Obligations, to the Grantors, their successors or assigns, or to whomever may be lawfully entitled to receive the same.

 

(b)                                 Whenever a Representative shall be required, in connection with the exercise of its rights or the performance of its obligations hereunder, to determine the existence or amount of any First Lien Obligations (or the existence of any commitment to extend credit that would constitute First Lien Obligations) or Second Lien Obligations, or the existence of any Lien securing any such obligations, or the Collateral subject to any such Lien, it may request that such information be furnished to it in writing by the other Representative and shall be entitled to make such determination on the basis of the information so furnished; provided, however, that if a Representative shall fail or refuse reasonably promptly to provide the requested information, the requesting Representative shall be entitled to make any such determination by such method as it may, in the exercise of its good faith judgment, determine, including by reliance upon a certificate of the Company.  Each Representative may rely conclusively, and shall be fully protected in so relying, on any determination made by it in accordance with the provisions of the preceding sentence (or as otherwise directed by a court of competent jurisdiction) and shall have no liability to the Company, Grantors or any of their subsidiaries, any Secured Party or any other person as a result of such determination.

 

4.2                               Payments Over.

 

(a)                                 So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against the Company or any other Grantor, any Collateral or any proceeds thereof (including assets or proceeds subject to Liens referred to in the final sentence of the second to last paragraph of Section 2.3 and any assets or proceeds subject to Liens that have been avoided or otherwise invalidated) received by the Second Lien Representative, Second Lien Collateral Agent or any other Second Lien Secured Party in connection with any Enforcement Action or other exercise of any right or remedy relating to the Collateral in contravention of this Agreement in all cases shall be segregated and held in trust and forthwith paid over to the Designated First Lien Collateral Agent for the benefit of the First Lien Secured Parties in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct.  The Designated First Lien Collateral Agent is hereby authorized to make any such endorsements as agent for the Second Lien Representative, Second Lien Collateral Agent or any such other Second Lien Secured Party.  This authorization is coupled with an interest and is irrevocable until the Discharge of First Lien Obligations.

 

(b)                                 So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced

 

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by or against the Company or any other Grantor, any Collateral or proceeds thereof (including assets or proceeds subject to Liens referred to in the final sentence of the second to last paragraph of Section 2.3 and assets or proceeds subject to Liens that have been avoided or otherwise invalidated) received by the Second Lien Representative, the Second Lien Collateral Agent or any Second Lien Secured Party in connection with any Enforcement Action or other exercise of any right or remedy relating to the Collateral not in contravention of this Agreement shall be segregated and held in trust and forthwith paid over to the First Lien Collateral Agent for the benefit of the First Lien Secured Parties in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct in partial satisfaction of the First Lien Obligations.  The First Lien Collateral Agent is hereby authorized to make any such endorsements as agent for the Second Lien Representative, the Second Lien Collateral Agent or any such other Second Lien Secured Party.  This authorization is coupled with an interest and is irrevocable until the Discharge of First Lien Obligations.

 

(c)                                  So long as the Discharge of First Lien Obligations has not occurred, if the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party shall receive Collateral or any distribution of money or other property in respect of the Collateral (including any assets or proceeds subject to Liens that have been avoided or otherwise invalidated) such money or other property shall be segregated and held in trust and forthwith paid over to the First Lien Collateral Agent for the benefit of the First Lien Secured Parties in the same form as received, with any necessary endorsements. Any Lien received by the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party in respect of any of the Second Lien Obligations in any Insolvency or Liquidation Proceeding shall be subject to the terms of this Agreement.

 

SECTION 5.                         Other Agreements.

 

5.1                               Releases.

 

(a)                                 If in connection with any Enforcement Action by any First Lien Representative or any First Lien Collateral Agent or any other exercise of any First Lien Representative’s or any First Lien Collateral Agent’s remedies in respect of the Collateral, in each case prior to the Discharge of First Lien Obligations, such First Lien Collateral Agent, for itself or on behalf of any of the First Lien Secured Parties, releases any of its Liens on any part of the Collateral or such First Lien Representative, for itself or on behalf of any of the First Lien Secured Parties releases any Grantor from its obligations under its guaranty of the First Lien Obligations, then the Liens, if any, of the Second Lien Collateral Agent, for itself or for the benefit of the Second Lien Secured Parties, on such Collateral, and the obligations of such Grantor under its guaranty of the Second Lien Obligations, shall be automatically, unconditionally and simultaneously released.  If in connection with any Enforcement Action or other exercise of rights and remedies by any First Lien Representative or any First Lien Collateral Agent, in each case prior to the Discharge of First Lien Obligations, the equity interests of any Person are foreclosed upon or otherwise disposed of and such First Lien Collateral Agent releases its Lien on the property or assets of such Person then the Liens of the Second

 

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Lien Collateral Agent with respect to the property or assets of such Person will be automatically released to the same extent as the Liens of such First Lien Collateral Agent.  The Second Lien Representative and the Second Lien Collateral Agent, for itself or on behalf of any Second Lien Secured Parties represented by it, shall promptly execute and deliver to the First Lien Representatives, First Lien Collateral Agents or such Grantor such termination statements, releases and other documents as any First Lien Representative, First Lien Collateral Agent or such Grantor may request, in writing, to effectively confirm the foregoing releases.

 

(b)                                 If any First Lien Collateral Agent, for itself or on behalf of any of the First Lien Secured Parties represented by it, releases any of its Liens on any part of the Collateral, or any First Lien Representative, for itself or on behalf of any of the First Lien Secured Parties represented by it, releases any Grantor from its obligations under its guaranty of the First Lien Obligations, (including, without limitation) in connection with any sale, lease, exchange, transfer or other disposition of any Collateral by any Grantor (collectively, a “Disposition”) permitted under the terms of the First Lien Documents and not expressly prohibited under the terms of the Second Lien Documents (other than in connection with an Enforcement Action or other exercise of any First Lien Representative’s and/or First Lien Collateral Agent’s remedies in respect of the Collateral, which shall be governed by Section 5.1(a) above), in each case other than in connection with, or following, the Discharge of First Lien Obligations, then the Liens, if any, of the Second Lien Collateral Agent, for itself or for the benefit of the Second Lien Secured Parties represented by it, on such Collateral, and the obligations of such Grantor under its guaranty of the Second Lien Obligations, shall be automatically, unconditionally and simultaneously released.  The Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of each Second Lien Secured Party represented by it, shall promptly execute and deliver to the First Lien Representatives, the First Lien Collateral Agents or such Grantor such termination statements, releases and other documents as any First Lien Representative, First Lien Collateral Agent or such Grantor may request, in writing, to effectively confirm such release.

 

(c)                                  Until the Discharge of First Lien Obligations occurs, the Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties represented by it, hereby irrevocably constitutes and appoints the First Lien Collateral Agent and any officer or agent of the First Lien Collateral Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Second Lien Representative, such Second Lien Collateral Agent and such Second Lien Secured Parties or in the First Lien Collateral Agent’s own name, from time to time in the First Lien Collateral Agent’s discretion, for the purpose of carrying out the terms of this Section 5.1, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary to accomplish the purposes of this Section 5.1, including any endorsements or other instruments of transfer or release.  This power is coupled with an interest and is irrevocable until the Discharge of First Lien Obligations.

 

(d)                                 Until the Discharge of First Lien Obligations occurs, to the extent that any First Lien Collateral Agent, any First Lien Representative or First Lien Secured

 

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Parties (i) have released any Lien on Collateral or any Grantor from its obligation under its guaranty and any such Liens or guaranty are later reinstated or (ii) obtain any new liens or additional guarantees from any Grantor, then the Second Lien Collateral Agent, for itself and for the Second Lien Secured Parties represented by it, shall be granted a Lien on any such Collateral, subject to the lien subordination provisions of this Agreement, and the Second Lien Representative, for itself and for the Second Lien Secured Parties represented by it, shall be granted an additional guaranty, as the case may be.

 

(e)                                  In the event of a Discharge of First Lien Obligations or a voluntary release of Liens securing the First Lien Obligations by the First Lien Secured Parties on all or substantially all of the Collateral (other than when such release occurs in connection with the First Lien Secured Parties’ foreclosure upon or other exercise of rights and remedies with respect to such Collateral), no release of the Liens on such Collateral securing the Second Lien Obligations shall be made unless (A) consent to the release of such Liens securing the Second Lien Obligations has been given by the requisite percentage or number of the Second Lien Secured Parties at the time outstanding as provided for in the applicable Second Lien Documents and (B) the Company has delivered an officers’ certificate to the Designated First Lien Collateral Agent and the Second Lien Collateral Agent certifying that all such consents have been obtained.

 

5.2                               Insurance.  Unless and until the Discharge of First Lien Obligations has occurred, the First Lien Representatives, the First Lien Collateral Agents and the other First Lien Secured Parties shall have the sole and exclusive right, subject to the rights of the Grantors under the First Lien Documents, to adjust settlement for any insurance policy covering the Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding (or any deed in lieu of condemnation) affecting the Collateral.  Unless and until the Discharge of First Lien Obligations has occurred, and subject to the rights of the Grantors under the First Lien Documents, all proceeds of any such policy and any such award (or any payments with respect to a deed in lieu of condemnation) if in respect of the Collateral shall be paid to the Designated First Lien Collateral Agent for the benefit of the First Lien Secured Parties pursuant to the terms of the First Lien Documents and, if then in effect, the First Lien Pari Passu Intercreditor Agreement, (including for purposes of cash collateralization of letters of credit) and, thereafter, to the extent no First Lien Obligations are outstanding, and subject to the rights of the Grantors under the Second Lien Documents, to the Second Lien Collateral Agent for the benefit of the Second Lien Secured Parties to the extent required under the Second Lien Documents and then, to the extent no Second Lien Obligations are outstanding, to the owner of the subject property, such other Person as may be entitled thereto or as a court of competent jurisdiction may otherwise direct.  Until the Discharge of First Lien Obligations has occurred, if the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party shall, at any time, receive any proceeds of any such insurance policy or any such award or payment in contravention of this Agreement, it shall segregate and hold in trust and forthwith pay such proceeds over to the Designated First Lien Collateral Agent in accordance with the terms of Section 4.2.  In addition, if by virtue of being named as an additional insured or loss payee of any insurance policy covering any of the Collateral, the Second Lien Collateral Agent or any other Second Lien Secured Party shall have the right to adjust or settle any claim

 

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under any such insurance policy, then unless and until the Discharge of First Lien Obligations has occurred, the Second Lien Collateral Agent and any such Second Lien Secured Party shall follow the instructions of the Designated First Lien Collateral Agent, or of the Grantors under the First Lien Documents to the extent the First Lien Documents grant such Grantors the right to adjust or settle such claims, with respect to such adjustment or settlement.

 

5.3                               Amendments to First Lien Documents and Second Lien Documents.

 

(a)                                 Subject to Section 5.3(c), the First Lien Documents of any Series may be amended, supplemented or otherwise modified in accordance with their terms and the First Lien Debt of any Series may be Refinanced subject to Section 5.6 and 8.7, in each case, without notice to, or the consent of, the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party, all without affecting the lien subordination or other provisions of this Agreement; provided that any such amendment, supplement or modification or Refinancing is not inconsistent with the terms of this Agreement.

 

(b)                                 The Second Lien Documents may be amended, supplemented or otherwise modified in accordance with their terms, in each case, without notice to, or the consent of, any First Lien Representative, any First Lien Collateral Agent or any other First Lien Secured Party, all without affecting the lien subordination or other provisions of this Agreement, to the extent the terms and conditions of such amendment, supplement, modification meet any applicable requirements set forth in the First Lien Documents; provided that any such amendment, supplement or modification is not inconsistent with the terms of this Agreement, as certified by the Company in an Officer’s Certificate (as defined in the Indenture) delivered to the Second Lien Representative and the Second Lien Collateral Agent.

 

(c)                                  In the event any First Lien Collateral Agent or the applicable First Lien Secured Parties and the relevant Grantor enter into any amendment, waiver or consent in respect of any of the First Lien Collateral Documents for the purpose of adding to, or deleting from, or waiving or consenting to any departures from any provisions of, any First Lien Collateral Document or changing in any manner the rights of the applicable First Lien Collateral Agent, such First Lien Secured Parties, the Company or any other Grantor thereunder, then such amendment, waiver or consent shall apply automatically to any comparable provision of a Second Lien Collateral Document without the consent of the Second Lien Representative, Second Lien Collateral Agent or other Second Lien Secured Party and without any action by the Second Lien Representative, the Second Lien Collateral Agent, any other Second Lien Secured Party, the Company or any other Grantor, provided that:

 

(1)                                 no such amendment, waiver or consent shall have the effect of:

 

(A)                               removing assets subject to the Lien of the Second Lien Collateral Documents, except to the extent that a release of such Lien is permitted or required by Section 5.1 and provided that

 

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there is a corresponding release of the Liens securing the First Lien Obligations;

 

(B)                               imposing duties on, or adversely affecting the rights, protections and limitations of liability of, the Second Lien Collateral Agent or the Second Lien Representative without its prior written consent;

 

(C)                               permitting other Liens on the Collateral not permitted under the terms of the Second Lien Documents or Section 6 hereof; or

 

(D)                               being prejudicial to the interests of the Second Lien Secured Parties to a greater extent than the First Lien Secured Parties (other than by virtue of their relative priority and the rights and obligations hereunder); and

 

(2)                                 notice of such amendment, waiver or consent will be given to the Second Lien Collateral Agent by the applicable First Lien Collateral Agent no later than 30 days after its effectiveness, provided that the failure to give such notice will not affect the effectiveness and validity thereof nor create any liability of the applicable First Lien Collateral Agent.

 

5.4                               Confirmation of Subordination in Second Lien Collateral Documents.  The Company agrees that each Second Lien Collateral Document shall include the following language (or language to similar effect approved by the Designated First Lien Collateral Agent):

 

“Notwithstanding anything herein to the contrary, the lien and security interest granted to the Collateral Agent pursuant to this Agreement and the exercise of any right or remedy by the Collateral Agent hereunder are subject to the provisions of the Second Lien Intercreditor Agreement, dated as of May 13, 2013 (as amended, restated, supplemented or otherwise modified from time to time, the “Second Lien Intercreditor Agreement”), among ION Geophysical Corporation, the Grantors from time to time party thereto, China Merchants Bank Co., Ltd., New York Branch, as First Lien Representative (as defined therein), China Merchants Bank Co., Ltd., New York Branch, as First Lien Collateral Agent (as defined therein), Wilmington Trust, National Association, as Second Lien Representative (as defined therein), U.S. Bank National Association, as Second Lien Collateral Agent (as defined therein) and certain other persons party or that may become party thereto from time to time.  In the event of any conflict between the terms of the Second Lien Intercreditor Agreement and this Agreement, the terms of the Second Lien Intercreditor Agreement shall govern and control.”

 

5.5                               Gratuitous Bailee/Agent for Perfection.

 

(a)                                 Each First Lien Collateral Agent agrees to hold that part of the Collateral that is in its possession or control (or in the possession or control of its agents or bailees) to the extent that possession or control thereof is taken to perfect a Lien thereon under the UCC (such Collateral being the “Pledged Collateral”) as gratuitous

 

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bailee for the Second Lien Collateral Agent (such bailment being intended, among other things, to satisfy the requirements of Sections 8-106(d)(3), 8-301(a)(2) and 9-313(c) of the UCC) and any assignee thereof solely for the purpose of perfecting the security interest granted under the First Lien Documents and the Second Lien Documents, respectively, subject to the terms and conditions of this Section 5.5.  Solely with respect to any deposit accounts under the control (within the meaning of Section 9-104 of the UCC) of any First Lien Collateral Agent, such First Lien Collateral Agent agrees to also hold control over such deposit accounts as gratuitous agent for the Second Lien Collateral Agent, subject to the terms and conditions of this Section 5.5.

 

(b)                                 No First Lien Collateral Agent shall have any obligation whatsoever to the other First Lien Secured Parties, the Second Lien Representative, the Second Lien Collateral Agent or the Second Lien Secured Parties to ensure that the Pledged Collateral is genuine or owned by any of the Grantors or to preserve rights or benefits of any Person except as expressly set forth in this Section 5.5.  The duties or responsibilities of any First Lien Collateral Agent under this Section 5.5 shall be limited solely to holding the Pledged Collateral as bailee (and with respect to deposit accounts, agent) in accordance with this Section 5.5 and delivering the Pledged Collateral upon a Discharge of First Lien Obligations as provided in paragraph (d) below.

 

(c)                                  No First Lien Collateral Agent or any other First Lien Secured Party shall have by reason of the First Lien Collateral Documents, the Second Lien Collateral Documents, this Agreement or any other document a fiduciary relationship in respect of the Second Lien Representative or any other Second Lien Secured Party and the Second Lien Representative, the Second Lien Collateral Agent and the Second Lien Secured Parties hereby waive and release the First Lien Collateral Agents and the other First Lien Secured Parties from all claims and liabilities arising pursuant to any First Lien Collateral Agent’s role under this Section 5.5 as gratuitous bailee and gratuitous agent with respect to the Pledged Collateral.  It is understood and agreed that the interests of the First Lien Collateral Agents and the other First Lien Secured Parties, on the one hand, and the Second Lien Representative, the Second Lien Collateral Agent and the other Second Lien Secured Parties on the other hand, may differ and the First Lien Collateral Agents and the other First Lien Secured Parties shall be fully entitled to act in their own interest without taking into account the interests of the Second Lien Representative, the Second Lien Collateral Agent or other Second Lien Secured Parties.

 

(d)                                 Upon the Discharge of First Lien Obligations, each First Lien Collateral Agent shall deliver the remaining Pledged Collateral in its possession (if any) together with any necessary endorsements (which endorsement shall be without recourse and without any representation or warranty), (x) unless the Discharge of Second Lien Obligations has not already occurred, to the Second Lien Collateral Agent, (y) if the Discharge of Second Lien Obligations has already occurred, to the Designated First Lien Collateral Agent to the extent Excess First Lien Obligations remain outstanding and (z), if there are no Excess First Lien Obligations, to the Company or to whomever may be lawfully entitled to receive the same.  Following the Discharge of First Lien Obligations, each First Lien Collateral Agent further agrees to take all other action reasonably requested by the Second Lien Collateral Agent at the expense of the Company in 

 

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connection with the Second Lien Collateral Agent obtaining a first-priority security interest in the Collateral.  After the Discharge of First Lien Obligations has occurred, upon the Discharge of Second Lien Obligations, the Second Lien Collateral Agent shall deliver the remaining Pledged Collateral in its possession (if any) together with any necessary endorsements (which endorsement shall be without recourse and without any representation or warranty), (x) if there are then any Excess First Lien Obligations, to the Designated First Lien Collateral Agent and (y) to the extent no Excess First Lien Obligations remain outstanding, to the Company or to whomever may be lawfully entitled to receive the same.

 

5.6                               When Discharge of Obligations Deemed to Not Have Occurred. If, at any time after the Discharge of First Lien Obligations has occurred, the Company thereafter enters into any Refinancing of any First Lien Document evidencing a First Lien Obligation which Refinancing is permitted hereunder, by the First Lien Documents and by the Second Lien Documents, then such Discharge of First Lien Obligations shall automatically be deemed not to have occurred for all purposes of this Agreement (other than with respect to any actions taken as a result of the occurrence of such first Discharge of First Lien Obligations), and, from and after the date on which the Replacement First Lien Representative and Replacement First Lien Collateral Agent in respect of such Refinancing each becomes a party to this Agreement in accordance with Section 8.7(b), the obligations under such Refinancing of the applicable First Lien Document shall automatically be treated as First Lien Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, and the Replacement First Lien Representative and the Replacement First Lien Collateral Agent under such new First Lien Documents shall be a First Lien Representative and First Lien Collateral Agent, respectively, for all purposes of this Agreement.

 

SECTION 6.                         Insolvency or Liquidation Proceedings.

 

6.1                               Finance and Sale Issues.

 

(a)                                 Until the Discharge of First Lien Obligations has occurred, if the Company or any other Grantor shall be subject to any Insolvency or Liquidation Proceeding and any First Lien Representative shall desire to permit the use of “Cash Collateral” (as such term is defined in Section 363(a) of the Bankruptcy Code), on which such First Lien Representative, such First Lien Collateral Agent or any other creditor has a Lien or to permit the Company or any other Grantor to obtain financing, whether from the First Lien Secured Parties or any other Person under Section 364 of the Bankruptcy Code or any similar Bankruptcy Law (“DIP Financing”), then the Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, will not object to such Cash Collateral use or DIP Financing, including any proposed orders for such Cash Collateral use and/or DIP Financing which are acceptable to any First Lien Representative) and to the extent the Liens securing the First Lien Obligations are discharged, subordinated to or pari passu with such DIP Financing, the Second Lien Collateral Agent will subordinate its Liens in the Collateral to the Liens securing such DIP Financing (and all Obligations relating thereto) and the Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, will not request 

 

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adequate protection or any other relief in connection therewith (except as expressly agreed by the Designated First Lien Representative or to the extent permitted by Section 6.3); provided that the aggregate principal amount of the DIP Financing, when taken together with any remaining First Lien Obligations, shall not exceed an amount equal to 115% of the aggregate principal amount of First Lien Obligations outstanding immediately prior to the commencement of such Insolvency or Liquidation Proceeding, and the Second Lien Representative and the other Second Lien Secured Parties retain the right to object to any ancillary agreements or arrangements regarding Cash Collateral use or the DIP Financing that are materially prejudicial to their interests.  No Second Lien Secured Party may provide DIP Financing to the Company or any other Grantor secured by Liens equal or senior in priority to the Liens securing any First Lien Obligations.  The Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties represented by it, agrees that it will not seek consultation rights in connection with, and it will not object to or oppose, a motion to sell, liquidate or otherwise dispose of Collateral under Section 363 of the Bankruptcy Code if the requisite First Lien Secured Parties have consented to such sale, liquidation or other disposition.  The Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties represented by it, further agrees that it will not directly or indirectly oppose or impede entry of any order in connection with such sale, liquidation or other disposition, including orders to retain professionals or set bid procedures in connection with such sale, liquidation or disposition, if the requisite First Lien Secured Parties have consented to (i) such retention of professionals and bid procedures in connection with such sale, liquidation or disposition of such assets and (ii) the sale, liquidation or disposition of such assets, in which event the Second Lien Secured Parties will be deemed to have consented to the sale or disposition of Collateral pursuant to Section 363(f) of the Bankruptcy Code and such motion does not impair the rights of the Second Lien Secured Parties under Section 363(k) of the Bankruptcy Code.

 

(b)                                 The Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Secured Party, agrees that in any Insolvency or Liquidation Proceeding, neither the Second Lien Collateral Agent nor any other Second Lien Secured Party shall propose, support or vote for any plan of reorganization or disclosure statement of the Company or any other Grantor unless such plan is accepted by the class of First Lien Secured Parties in accordance with Section 1126(c) of the Bankruptcy Code or otherwise provides for the payment in full in cash of all First Lien Obligations (including all post-petition interest, fees and expenses) on the effective date of such plan of reorganization.

 

(c)                                  So long as the Discharge of First Lien Obligations has not occurred, without the express written consent of the Designated First Lien Collateral Agent, neither Second Lien Collateral Agent nor any other Second Lien Secured Party shall (or shall join with or support any third party in opposing, objecting to or contesting, as the case may be), in any Insolvency or Liquidation Proceeding involving any Grantor, (i) oppose, object to or contest the determination of the extent of any Liens held by any of First Lien Secured Parties or the value of any claims of any such holder under Section 

 

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506(a) of the Bankruptcy Code or (ii) oppose the payment to the First Lien Secured Parties of interest, fees or expenses under Section 506(b) of the Bankruptcy Code.

 

(d)                                 Notwithstanding anything to the contrary contained herein, if in any Insolvency or Liquidation Proceeding a determination is made that any Lien encumbering any Collateral is not enforceable for any reason, then the Second Lien Collateral Agent for itself and on behalf of each other Second Lien Secured Party, agrees that, any distribution or recovery they may receive with respect to, or allocable to, the value of the assets constituting Collateral subject to an enforceable Lien in favor of the Second Lien Secured Parties or any proceeds thereof shall (for so long as the Discharge of First Lien Obligations has not occurred) be segregated and held in trust and forthwith paid over to the Designated First Lien Collateral Agent for the benefit of the First Lien Secured Parties in the same form as received without recourse, representation or warranty (other than a representation of the Second Lien Collateral Agent that it has not otherwise sold, assigned, transferred or pledged any right, title or interest in and to such distribution or recovery) but with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. Until the Discharge of First Lien Obligations occurs, the Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Secured Party, hereby appoints the Designated First Lien Collateral Agent, and any officer or agent of the Designated First Lien Collateral Agent, with full power of substitution, the attorney-in-fact of each Second Lien Secured Party for the limited purpose of carrying out the provisions of this Section 6.1(e) and taking any action and executing any instrument that the Designated First Lien Collateral Agent may deem necessary or advisable to accomplish the purposes of this Section 6.1(e), which appointment is irrevocable and coupled with an interest.

 

6.2                               Relief from the Automatic Stay.  Until the Discharge of First Lien Obligations has occurred, the Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties represented by it, agrees that none of them shall: (i) seek (or support any other Person seeking) relief from the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of the Collateral, without the prior written consent of the First Lien Representatives or (ii) oppose (or support any other Person in opposing) any request by any First Lien Representative or First Lien Collateral Agent for relief from such stay.

 

6.3                               Adequate Protection and Other Agreements.

 

(a)                                 The Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Secured Party, agrees that neither it nor any other Second Lien Secured Party will file or prosecute in any Insolvency or Liquidation Proceeding any motion for adequate protection (or any comparable request for relief) based upon their interest in the Collateral, nor object to, oppose or contest (or join with or support any third party objecting to, opposing or contesting):

 

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(1)                                 any request by any First Lien Representative, any First Lien Collateral Agent or other First Lien Secured Party for adequate protection under any Bankruptcy Law; or

 

(2)                                 any objection by any First Lien Representative, any First Lien Collateral Agent or other First Lien Secured Party to any motion, relief, action or proceeding based on such First Lien Representative, First Lien Collateral Agent or First Lien Secured Party claiming a lack of adequate protection.

 

(b)                                 Notwithstanding the foregoing, in any Insolvency or Liquidation Proceeding:

 

(1)                                 if the First Lien Secured Parties (or any subset thereof) are granted adequate protection in the form of additional collateral in connection with any DIP Financing or use of cash collateral under Section 363 or Section 364 of Title 11 of the United States Code or any similar Bankruptcy Law, then each Second Lien Representative, on behalf of itself and any applicable Second Lien Secured Party, (A) may seek or request adequate protection in the form of a replacement Lien on such additional collateral, which Lien is subordinated to the Liens securing the First Lien Debt and such DIP Financing (and all Obligations relating thereto) on the same basis as the Liens securing the Second Lien Debt are subordinated to the Liens securing First Lien Debt under this Agreement and (B) agrees that it will not seek or request, and will not accept, adequate protection in any other form, and

 

(2)                                 in the event any Second Lien Representative, on behalf of itself or any applicable Second Lien Secured Party, seeks or requests adequate protection and such adequate protection is granted in the form of additional collateral, then such Second Lien Representative, on behalf of itself or each such Second Lien Secured Party, agrees that the First Lien Representative shall also be granted a senior Lien on such additional collateral as security for the applicable First Lien Debt and any such DIP Financing and that any Lien on such additional collateral securing the Second Lien Debt shall be subordinated to the Liens on such collateral securing the First Lien Debt and any such DIP Financing (and all Obligations relating thereto) and any other Liens granted to the First Lien Secured Parties as adequate protection on the same basis as the other Liens securing the Second Lien Debt are subordinated to such Liens securing First Lien Debt under this Agreement.

 

(c)                                  The Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties represented by it, agrees that notice of a hearing to approve DIP Financing or use of Cash Collateral on an interim basis shall be adequate if delivered to such Second Lien Representative and Second Lien Collateral Agent at least two (2) Business Days in advance of such hearing and that notice of a hearing to approve DIP Financing or use of Cash Collateral on a final 

 

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basis shall be adequate if delivered to such Second Lien Representative and Second Lien Collateral Agent at least fifteen (15) days in advance of such hearing.

 

6.4                               No Waiver.  Subject to Section 6.7(b), nothing contained herein shall prohibit or in any way limit any First Lien Representative or any other First Lien Secured Party from objecting in any Insolvency or Liquidation Proceeding or otherwise to any action taken by the Second Lien Representative or any other Second Lien Secured Party, including the seeking by the Second Lien Representative or any other Second Lien Secured Party of adequate protection or the asserting by the Second Lien Representative or any other Second Lien Secured Party of any of its rights and remedies under the Second Lien Documents or otherwise.

 

6.5                               Avoidance Issues.  If any First Lien Secured Party is required in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of the Company or any other Grantor any amount paid, whether received as a payment from the proceeds of Collateral or other security, enforcement of set off rights, or otherwise, in respect of First Lien Obligations (a “Recovery”), then such First Lien Secured Party shall be entitled to a reinstatement of its First Lien Obligations with respect to all such recovered amounts on the date of such Recovery, and from and after the date of such reinstatement the Discharge of First Lien Obligations shall be deemed not to have occurred for all purposes hereunder.  If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement and to the extent the Cap Amount was decreased in connection with such payment of the First Lien Obligations, the Cap Amount shall be increased to such extent.

 

6.6                               Reorganization Securities.  If, in any Insolvency or Liquidation Proceeding, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed pursuant to a plan of reorganization, arrangement, compromise or liquidation or similar dispositive restructuring plan, both on account of First Lien Obligations and on account of Second Lien Obligations, then, to the extent the debt obligations distributed on account of the First Lien Obligations and on account of the Second Lien Obligations are secured by Liens upon the same property, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations.

 

6.7                               Post-Petition Interest.

 

(a)                                 None of the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party shall oppose or seek to challenge any claim by any First Lien Representative, any First Lien Collateral Agent or any other First Lien Secured Party for allowance in any Insolvency or Liquidation Proceeding of First Lien Obligations consisting of Post-Petition Interest to the extent of the value of the Lien of the First Lien Collateral Agents on behalf of the First Lien Secured Parties on the Collateral or any other First Lien Secured Party’s Lien, without regard to the existence of the Liens of the Second Lien Collateral Agent on behalf of the Second Lien Secured Parties on the Collateral.

 

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(b)                                 None of any First Lien Representative, First Lien Collateral Agent or any other First Lien Secured Party shall oppose or seek to challenge any claim by the Second Lien Representative, Second Lien Collateral Agent or any other Second Lien Secured Party for allowance in any Insolvency or Liquidation Proceeding of Second Lien Obligations consisting of Post-Petition Interest to the extent of the value of the Lien of the Second Lien Collateral Agent on behalf of the Second Lien Secured Parties on the Collateral (after taking into account the value of the First Lien Obligations).

 

6.8                               Waivers.  Until the Discharge of First Lien Obligations has occurred, the Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties represented by it:

 

(a)                                 waives the right to make an election under, and any claim it may hereafter have against any First Lien Secured Party arising out of the election of any First Lien Secured Party of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or out of any cash collateral or financing arrangement or out of any grant of a security interest in connection with the Collateral in any Insolvency or Liquidation Proceeding, and agrees not to object to, oppose, support any objection or take any other action to impede, the right of any First Lien Secured Party to make an election under Section 1111(b)(2) of the Bankruptcy Code, so long as such actions are not in express contravention of the terms of this Agreement; and

 

(b)                                 waives any right to serve and agrees that it will not serve on any official or ad hoc unsecured creditor committee or group of unsecured creditors in any Bankruptcy Case involving the Company or any of its Affiliates.

 

6.9                               Separate Grants of Security and Separate Classification.  The Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties represented by it, and each First Lien Representative and each First Lien Collateral Agent, for itself and on behalf of the First Lien Secured Parties represented by it, acknowledges and agrees that:

 

(a)                                 the grants of Liens pursuant to the First Lien Collateral Documents and the Second Lien Collateral Documents constitute two separate and distinct grants of Liens; and

 

(b)                                 because of, among other things, their differing rights in the Collateral, the Second Lien Obligations are fundamentally different from the First Lien Obligations and must be separately classified in any plan of reorganization proposed or adopted in an Insolvency or Liquidation Proceeding.

 

To further effectuate the intent of the parties as provided in the immediately preceding sentence, if it is held that the claims of the First Lien Secured Parties and the Second Lien Secured Parties in respect of the Collateral constitute only one secured claim (rather than separate classes of senior and junior secured claims), then each of the parties hereto hereby acknowledges and agrees that all distributions shall be made as if there were separate classes of senior and junior secured claims against the Grantors in respect of the Collateral (with the effect 

 

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being that, to the extent that the aggregate value of the Collateral is sufficient (for this purpose ignoring all claims held by the Second Lien Secured Parties), the First Lien Secured Parties shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing (or that would be owing if there were such separate classes of senior and junior secured claims) in respect of Post-Petition Interest, including any additional interest payable pursuant to the First Lien Documents, arising from or related to a default, which is disallowed as a claim in any Insolvency or Liquidation Proceeding) before any distribution is made in respect of the claims held by the Second Lien Secured Parties with respect to the Collateral, with the Second Lien Representative and the Second Lien Collateral Agent, for itself and on behalf of the Second Lien Secured Parties represented by it, hereby acknowledging and agreeing to turn over to the Designated First Lien Collateral Agent, for itself and on behalf of the First Lien Secured Parties, Collateral or proceeds of Collateral otherwise received or receivable by them to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the claim or recovery of the Second Lien Secured Parties.

 

6.10                        Effectiveness in Insolvency or Liquidation Proceedings.  The Parties acknowledge that this Agreement is a “subordination agreement” under section 510(a) of the Bankruptcy Code, which will be effective before, during and after the commencement of an Insolvency or Liquidation Proceeding. All references in this Agreement to any Grantor will include such Person as a debtor-in-possession and any receiver or trustee for such Person in an Insolvency or Liquidation Proceeding.

 

SECTION 7.                         Reliance; Waivers; Etc.

 

7.1                               Reliance.  Other than any reliance on the terms of this Agreement, each First Lien Representative and each First Lien Collateral Agent, on behalf of itself and the First Lien Secured Parties represented by it, acknowledges that it and such First Lien Secured Parties have, independently and without reliance on the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into each of the First Lien Documents and be bound by the terms of this Agreement and they will continue to make their own credit decision in taking or not taking any action under the First Lien Documents or this Agreement.  The Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, acknowledges that it and such Second Lien Secured Parties have, independently and without reliance on any First Lien Representative, any First Lien Collateral Agent or any other First Lien Secured Party, and based on documents and information deemed by them appropriate, made their own credit analysis and decision to enter into each of the Second Lien Documents and be bound by the terms of this Agreement and they will continue to make their own credit decision in taking or not taking any action under the Second Lien Documents or this Agreement.

 

7.2                               No Warranties or Liability.  Each First Lien Representative and each First Lien Collateral Agent, on behalf of itself and the First Lien Secured Parties represented by it, acknowledges and agrees that no Second Lien Representative or other Second Lien Secured Party has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the Second 

 

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Lien Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon.  Except as otherwise provided herein, the Second Lien Secured Parties will be entitled to manage and supervise their respective extensions of credit under the Second Lien Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate.  The Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, acknowledges and agrees that no First Lien Representative or other First Lien Secured Party has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the First Lien Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon.  Except as otherwise provided herein, the First Lien Secured Parties will be entitled to manage and supervise their respective loans and extensions of credit under the First Lien Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate.  The Second Lien Representative, the Second Lien Collateral Agent and the other Second Lien Secured Parties shall have no duty to the First Lien Representatives, the First Lien Collateral Agents or any of the other First Lien Secured Parties, and the First Lien Representatives and the other First Lien Secured Parties shall have no duty to the Second Lien Representative or any of the other Second Lien Secured Parties, to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of an event of default or default under any agreements with the Company or any other Grantor (including the First Lien Documents and the Second Lien Documents), regardless of any knowledge thereof which they may have or be charged with.

 

7.3                               No Waiver of Lien Priorities.

 

(a)                                 No right of the First Lien Secured Parties, the First Lien Representatives, the First Lien Collateral Agents or any of them to enforce any provision of this Agreement or any First Lien Document shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or any other Grantor or by any act or failure to act by any First Lien Secured Party, First Lien Representative or First Lien Collateral Agent, or by any noncompliance by any Person with the terms, provisions and covenants of this Agreement, any of the First Lien Documents or any of the Second Lien Documents, regardless of any knowledge thereof which any other First Lien Representative, First Lien Collateral Agent or any First Lien Secured Party, or any of them, may have or be otherwise charged with.

 

(b)                                 Without in any way limiting the generality of the foregoing paragraph (but subject to the rights of the Company and the other Grantors under the First Lien Documents and subject to the provisions of Section 1.1(a)), the First Lien Secured Parties, the First Lien Representatives, the First Lien Collateral Agents and any of them may, at any time and from time to time in accordance with the First Lien Documents and/or applicable law, without the consent of, or notice to, the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party, without incurring any liabilities to the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party and without impairing or releasing the Lien priorities and other benefits provided in this Agreement (even if any right of subrogation or other right or remedy of the Second Lien Representative, the 

 

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Second Lien Collateral Agent or any other Second Lien Secured Party is affected, impaired or extinguished thereby) do any one or more of the following:

 

(1)                                 change the manner, place or terms of payment or change or extend the time of payment of, or amend, renew, exchange, increase or alter, the terms of any of the First Lien Obligations or any Lien on any First Lien Collateral or guaranty of any of the First Lien Obligations or any liability of the Company or any other Grantor, or any liability incurred directly or indirectly in respect thereof (including any increase in or extension of the First Lien Obligations, without any restriction as to the tenor or terms of any such increase or extension) or otherwise amend, renew, exchange, extend, modify or supplement in any manner any Liens held by any First Lien Representative, any First Lien Collateral Agent or any of the other First Lien Secured Parties, the First Lien Obligations or any of the First Lien Documents;

 

(2)                                 sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any manner and in any order any part of the First Lien Collateral or any liability of the Company or any other Grantor to any of the First Lien Secured Parties, the First Lien Representatives or the First Lien Collateral Agents, or any liability incurred directly or indirectly in respect thereof;

 

(3)                                 settle or compromise any First Lien Obligation or any other liability of the Company or any other Grantor or any security therefor or any liability incurred directly or indirectly in respect thereof and apply any sums by whomsoever paid and however realized to any liability (including the First Lien Obligations) in any manner or order; and

 

(4)                                 exercise or delay in or refrain from exercising any right or remedy against the Company or any other Grantor or any other Person or any security, and elect any remedy and otherwise deal freely with the Company, any other Grantor or any First Lien Collateral and any security and any guarantor or any liability of the Company or any other Grantor to the First Lien Secured Parties or any liability incurred directly or indirectly in respect thereof.

 

(c)                                  Except as otherwise expressly provided herein, the Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, also agrees that the First Lien Secured Parties, the First Lien Representatives and the First Lien Collateral Agents shall have no liability to such Second Lien Representative, such Second Lien Collateral Agent or any such Second Lien Secured Parties, and such Second Lien Representative and such Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, hereby waives any claim against any First Lien Secured Party, any First Lien Representative or any First Lien Collateral Agent arising out of any and all actions which the First Lien Secured Parties, any First Lien Representative or any First Lien Collateral Agent may take or permit or omit to take with respect to:

 

(1)                                 the First Lien Documents (other than this Agreement);

 

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(2)                                 the collection of the First Lien Obligations; or

 

(3)                                 the foreclosure upon, or sale, liquidation or other disposition of, any First Lien Collateral.

 

The Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, agrees that the First Lien Secured Parties, the First Lien Representatives and the First Lien Collateral Agents have no duty to them in respect of the maintenance or preservation of the First Lien Collateral, the First Lien Obligations or otherwise.

 

(d)                                 Until the Discharge of First Lien Obligations, the Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshaling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to any First Lien Collateral or any other similar rights a junior secured creditor may have under applicable law.

 

7.4                               Obligations Unconditional.  All rights, interests, agreements and obligations of the First Lien Representatives, the First Lien Collateral Agents and the other First Lien Secured Parties and the Second Lien Representative, the Second Lien Collateral Agent and the other Second Lien Secured Parties, respectively, hereunder shall remain in full force and effect irrespective of:

 

(a)                                 any lack of validity or enforceability of any First Lien Documents or any Second Lien Documents;

 

(b)                                 except as otherwise expressly set forth in this Agreement, any change in the time, manner or place of payment of, or in any other terms of, all or any of the First Lien Obligations or Second Lien Obligations, or any amendment or waiver or other modification, including any increase in the amount thereof, whether by course of conduct or otherwise, of the terms of any First Lien Document or any Second Lien Document;

 

(c)                                  any exchange, voiding, avoidance or non-perfection of any security interest in any Collateral or any other collateral, or any amendment, waiver or other modification, whether in writing or by course of conduct or otherwise, of all or any of the First Lien Obligations or Second Lien Obligations or any guaranty thereof;

 

(d)                                 the commencement of any Insolvency or Liquidation Proceeding in respect of the Company or any other Grantor; or

 

(e)                                  any other circumstances which otherwise might constitute a defense available to, or a discharge of, the Company or any other Grantor in respect of any First Lien Representative, any First Lien Collateral Agent, the First Lien Obligations, any First Lien Secured Party, the Second Lien Representative, the Second Lien Collateral

 

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Agent, the Second Lien Obligations or any Second Lien Secured Party in respect of this Agreement.

 

SECTION 8.                         Miscellaneous.

 

8.1                               Integration/Conflicts.  This Agreement, the First Lien Documents and the Second Lien Documents represent the entire agreement of the Grantors, the First Lien Secured Parties and the Second Lien Secured Parties with respect to the subject matter hereof and thereof, and supercede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof.  There are no promises, undertakings, representations or warranties by the First Lien Secured Parties or the Second Lien Secured Parties relative to the subject matter hereof and thereof not expressly set forth or referred to herein or therein. In the event of any conflict between the provisions of this Agreement and the provisions of the First Lien Documents or the Second Lien Documents, the provisions of this Agreement shall govern and control.

 

8.2                               Effectiveness; Continuing Nature of this Agreement; Severability.  This Agreement shall become effective when executed and delivered by the parties hereto.  This is a continuing agreement of lien subordination and the First Lien Secured Parties may continue, at any time and without notice to the Second Lien Representative or any other Second Lien Secured Party, to extend credit and other financial accommodations and lend monies to or for the benefit of the Company or any Grantor constituting First Lien Obligations in reliance hereon.  The Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement.  The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  The parties hereto shall endeavor in good-faith negotiations to replace any invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to those of the invalid, illegal or unenforceable provisions.  All references to the Company or any other Grantor shall include the Company or such Grantor as debtor and debtor-in-possession and any receiver, trustee or similar person for the Company or any other Grantor (as the case may be) in any Insolvency or Liquidation Proceeding.  This Agreement shall terminate and be of no further force and effect:

 

(a)                                 with respect to any First Lien Representative and any First Lien Collateral Agent, the First Lien Secured Parties represented by it and their First Lien Obligations, on the date on which no First Lien Obligations of such First Lien Secured Parties are any longer secured by, or required to be secured by, any of the First Lien Collateral pursuant to the terms of the applicable First Lien Documents, subject to the rights of the First Lien Secured Parties under Section 6.5; and

 

(b)                                 with respect to the Second Lien Representative and the Second Lien Collateral Agent, the Second Lien Secured Parties represented by it and their

 

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Second Lien Obligations, on the date on which no Second Lien Obligations of such Second Lien Secured Parties are any longer secured by, or required to be secured by, any of the Second Lien Collateral pursuant to the terms of the applicable Second Lien Documents;

 

provided, however, that in each case, such termination shall not relieve any such party of its obligations incurred hereunder prior to the date of such termination.

 

8.3                               Amendments; Waivers(a).

 

(a)                                 No amendment, modification or waiver of any of the provisions of this Agreement shall be deemed to be made unless the same shall be in writing signed on behalf of each party hereto or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time.  Notwithstanding the foregoing, the Company and the other Grantors shall not have any right to consent to or approve any amendment, modification or waiver of any provision of this Agreement except to the extent their rights are directly and adversely affected.

 

(b)                                 Notwithstanding the foregoing, without the consent of any First Lien Secured Party or Second Lien Secured Party, any Representative and Collateral Agent may become a party hereto by execution and delivery of a Joinder Agreement in accordance with Section 8.7 of this Agreement and upon such execution and delivery, such Representative and Collateral Agent and the First Lien Secured Parties and First Lien Obligations or Additional First Lien Secured Parties or Additional First Lien Obligations of the Series for which such Representative and Collateral Agent is acting shall be subject to the terms hereof.

 

(c)                                  Notwithstanding the foregoing, without the consent of any other Representative, Collateral Agent or First Lien Secured Party, the First Lien Representative may effect amendments and modifications to this Agreement to the extent necessary to reflect any incurrence of any First Lien Obligations or Additional First Lien Obligations in compliance with this Agreement.

 

8.4                               Information Concerning Financial Condition of the Grantors and their Subsidiaries.  The First Lien Representatives, the First Lien Collateral Agents and the First Lien Secured Parties, on the one hand, and the Second Lien Representative, the Second Lien Collateral Agent and the Second Lien Secured Parties, on the other hand, shall each be responsible for keeping themselves informed of (a) the financial condition of the Grantors and their Subsidiaries and all endorsers and/or guarantors of the First Lien Obligations or the Second Lien Obligations and (b) all other circumstances bearing upon the risk of nonpayment of the First Lien Obligations or the Second Lien Obligations.  Except as set forth in Section 4.1(b), the First Lien Representatives, the First Lien Collateral Agents and the other First Lien Secured Parties shall have no duty to advise the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party of information known to it or them regarding such condition or any such circumstances or otherwise.  In the event the First Lien Representatives,

 

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the First Lien Collateral Agents or any of the other First Lien Secured Parties, in its or their sole discretion, undertakes at any time or from time to time to provide any such information to the Second Lien Representative, the Second Lien Collateral Agent or any other Second Lien Secured Party, it or they shall be under no obligation:

 

(a)                                 to make, and the First Lien Representatives, the First Lien Collateral Agents and the other First Lien Secured Parties shall not make, and shall be deemed not to have made, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of any such information so provided;

 

(b)                                 to provide any additional information or to provide any such information on any subsequent occasion;

 

(c)                                  to undertake any investigation; or

 

(d)                                 to disclose any information, which pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.

 

8.5                               Subrogation.  With respect to the value of any payments or distributions in cash, property or other assets that any of the Second Lien Representative, the Second Lien Collateral Agent or the other Second Lien Secured Parties pays over to any of the First Lien Representatives, the First Lien Collateral Agents or the other First Lien Secured Parties under the terms of this Agreement, such Second Lien Secured Parties, Second Lien Representative and Second Lien Collateral Agent shall be subrogated to the rights of such First Lien Representatives, First Lien Collateral Agents and First Lien Secured Parties; provided that the Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, hereby agrees not to assert or enforce any such rights of subrogation it may acquire as a result of any payment hereunder until the Discharge of First Lien Obligations has occurred.  The Company and the other Grantors each acknowledges and agrees that the value of any payments or distributions in cash, property or other assets received by the Second Lien Representative, Second Lien Collateral Agent or other Second Lien Secured Party that are paid over to any First Lien Representative, First Lien Collateral Agent or other First Lien Secured Party pursuant to this Agreement shall not reduce any of the Second Lien Obligations.

 

8.6                               Application of Payments.  All payments received by any First Lien Representative, First Lien Collateral Agent or other First Lien Secured Party may be applied, reversed and reapplied, in whole or in part, to such part of the First Lien Obligations provided for in the First Lien Documents.  The Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, agrees to any extension or postponement of the time of payment of the First Lien Obligations or any part thereof and to any other indulgence with respect thereto, to any substitution, exchange or release of any security which may at any time secure any part of the First Lien Obligations and to the addition or release of any other Person primarily or secondarily liable therefor.

 

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8.7                               Additional Debt Facilities.

 

(a)                                 To the extent, but only to the extent, permitted by the provisions of the First Lien Documents and the Second Lien Documents, the Company may (x) incur or issue and sell one or more series or classes of Indebtedness that the Company designates as Additional First Lien Debt or (y) incur Indebtedness under any Replacement First Lien Credit Agreement that is secured on an equal and ratable basis with the Liens securing the First Lien Obligations.

 

Any Indebtedness and other First Lien Obligations under any Replacement First Lien Credit Agreement may be secured by Liens on an equal and ratable basis, in each case under and pursuant to the First Lien Documents, if and subject to the condition that the Replacement First Lien Representative and Replacement First Lien Collateral Agent, acting on behalf of the holders of such First Lien Obligations, each becomes a party to this Agreement by satisfying the conditions set forth in clauses (1) through (3) of paragraph (b) of this Section 8.7.  Upon any Replacement First Lien Representative and Replacement First Lien Collateral Agent, as the case may be, so becoming a party hereto, all First Lien Obligations under any Replacement First Lien Credit Agreement shall also be entitled to be so secured by a senior Lien on the Collateral in accordance with the terms hereof and thereof.

 

Any such series or class of Additional First Lien Debt may be secured by a first-priority, superior Lien on the Collateral, in each case under and pursuant to the relevant First Lien Collateral Documents for such Series of Additional First Lien Debt, if and subject to the condition, unless such Indebtedness is part of an existing Series of Additional First Lien Debt represented by a First Lien Representative and First Lien Collateral Agent already party to this Agreement and the First Lien Pari Passu Intercreditor Agreement, the Additional First Lien Representative and Additional First Lien Collateral Agent of any such Additional First Lien Debt each becomes a party to this Agreement and the First Lien Pari Passu Intercreditor Agreement by satisfying the conditions set forth in clauses (1) through (3) of paragraph (b) of this Section 8.7.  Upon any Additional First Lien Representative so becoming a party hereto and becoming a party to the First Lien Pari Passu Intercreditor Agreement in accordance with the terms thereof, all Additional First Lien Obligations of such Series shall also be entitled to be so secured by a superior Lien on the Collateral in accordance with the terms hereof and thereof.

 

(b)                                 In order for an Additional First Lien Representative and an Additional First Lien Collateral Agent, or, in the case of a Replacement First Lien Credit Agreement, in order for the Replacement First Lien Representative and the Replacement First Lien Collateral Agent in respect thereof, to become a party to this Agreement:

 

(1)                                 such Additional First Lien Representative and such Additional First Lien Collateral Agent or such Replacement First Lien Representative and such Replacement First Lien Collateral Agent shall have executed and delivered to each other then-existing Representative a Joinder Agreement substantially in the form of Exhibit I hereto (if such Representative is

 

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an Additional First Lien Representative and such Collateral Agent is an Additional First Lien Collateral Agent) or Exhibit II hereto (in the case of a Replacement First Lien Credit Agreement) (with such changes as may be reasonably approved by the First Lien Representative and such Representative and such Collateral Agent) pursuant to which such (x) such Additional First Lien Representative becomes a Representative hereunder, such Additional First Lien Collateral Agent becomes a Collateral Agent hereunder and the related First Lien Secured Parties become subject hereto and bound hereby or (y) Replacement First Lien Representative becomes the First Lien Representative hereunder, such Replacement First Lien Credit Agreement becomes the First Lien Credit Agreement hereunder and such First Lien Obligations and holders of such First Lien Obligations become subject hereto and bound hereby;

 

(2)                                 the Company shall have delivered a Designation to each other then-existing Collateral Agent substantially in the form of Exhibit III hereto, pursuant to which a Responsible Officer of the Company shall (A) identify the Indebtedness to be designated as Additional First Lien Obligations or First Lien Obligations, as applicable, and the initial aggregate principal amount of such Indebtedness, (B) specify the name and address of the applicable Additional First Lien Representative and Additional First Lien Collateral Agent or the Replacement First Lien Representative and Replacement First Lien Collateral Agent, (C) certify that such Additional First Lien Debt or First Lien Obligations are permitted to be incurred, secured and guaranteed by each First Lien Document and Second Lien Document and that the conditions set forth in this Section 8.7 are satisfied with respect to such Additional First Lien Debt or First Lien Obligations, as applicable, and (D) in the case of a Replacement First Lien Credit Agreement, expressly state that such agreement giving rise to the new Indebtedness satisfies the requirements of a Replacement First Lien Credit Agreement and is designated as a Replacement First Lien Credit Agreement; and

 

(3)                                 the Company shall have delivered to each other Collateral Agent true and complete copies of each of the First Lien Documents relating to such Additional First Lien Debt, or the Replacement First Lien Credit Agreement, as applicable, certified as being true and correct by a Responsible Officer of the Company.

 

(c)                                  The Additional First Lien Documents relating to such Additional First Lien Obligations shall provide that each of the applicable Secured Parties with respect to such Additional First Lien Obligations will be subject to and bound by the provisions of this Agreement in its capacity as a holder of such Additional First Lien Obligations.

 

(d)                                 Upon the execution and delivery of a Joinder Agreement by an Additional First Lien Representative and an Additional First Lien Collateral Agent or the Replacement First Lien Representative and the Replacement First Lien Collateral Agent, in each case, in accordance with this Section 8.7, each other Representative and Collateral Agent shall acknowledge receipt thereof by countersigning a copy thereof and

 

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returning the same to such Additional First Lien Representative and such Additional First Lien Collateral Agent or the Replacement First Lien Representative and the Replacement First Lien Collateral Agent, as the case may be; provided that the failure of any Representative or Collateral Agent to so acknowledge or return the same shall not affect the status of such Additional First Lien Obligations as Additional First Lien Obligations, or a Replacement First Lien Credit Agreement if the other requirements of this Section 8.7 are complied with.

 

(e)                                  With respect to any incurrence, issuance or sale of Indebtedness after the date hereof under the Additional First Lien Documents of a Series of Additional First Lien Debt whose Representative and Collateral Agent is already each a party to this Agreement or First Lien Pari Passu Intercreditor Agreement, as applicable, the requirements of Section 8.7(b) shall not be applicable and such Indebtedness shall automatically constitute Additional First Lien Debt so long as (i) such Indebtedness is permitted to be incurred, secured and guaranteed by each First Lien Document and Second Lien Document and (ii) the provisions of paragraph (c) above have been complied with; provided, further, however that with respect to any such Indebtedness incurred, issued or sold pursuant to the terms of any Additional First Lien Documents of such existing Series of Additional First Lien Debt as such terms existed on the date the Representative and Collateral Agent for such Series of Additional First Lien Debt executed the Joinder Agreement, the requirements of clause (i) of this paragraph (e) shall be tested only as of (x) the date of execution of such Joinder Agreement, if pursuant to a commitment entered into at the time of such Joinder Agreement and (y) with respect to any later commitment or amendment to those terms to permit such Indebtedness, as of the date of such commitment and/or amendment.

 

8.8                               Submission to Jurisdiction; Certain Waivers.  Each of the Company, each other Grantor, and each Representative and each Collateral Agent, on behalf of itself and the applicable Secured Parties for whom it is acting, hereby irrevocably and unconditionally:

 

(a)                                 submits for itself and its property in any legal action or proceeding relating to this Agreement and the Collateral Documents (whether arising in contract, tort or otherwise) to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan, the courts of the United States for the Southern District of New York sitting in the Borough of Manhattan, and appellate courts from any thereof;

 

(b)                                 agrees that all claims in respect of any such action or proceeding shall be heard and determined in such New York state court or, to the fullest extent permitted by applicable law, in such federal court;

 

(c)                                  agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law and that nothing in this Agreement or any other First Lien Document shall affect any right that any Secured Party may otherwise have to bring any action or proceeding relating to this Agreement or any other First Lien Document or

 

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Second Lien Document against such Grantor or any of its assets in the courts of any jurisdiction;

 

(d)                                 waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Collateral Document in any court referred to in paragraph (a) of this Section 8.8 (and irrevocably waives to the fullest extent permitted by applicable law the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court);

 

(e)                                  consents to service of process in any such proceeding in any such court by registered or certified mail, return receipt requested, to the applicable party at its address provided in accordance with Section 8.10 (and agrees that nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law);

 

(f)                                   agrees that service as provided in paragraph (e) above is sufficient to confer personal jurisdiction over the applicable party in any such proceeding in any such court, and otherwise constitutes effective and binding service in every respect; and

 

(g)                                  waives, to the maximum extent not prohibited by law, any right it may have to claim or recover any special, exemplary, punitive or consequential damages.

 

8.9                               WAIVER OF JURY TRIAL.

 

EACH PARTY HERETO AND THE COMPANY AND THE OTHER GRANTORS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FIRST LIEN DOCUMENT OR SECOND LIEN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT, BREACH OF DUTY, COMMON LAW, STATUTE OR ANY OTHER THEORY). EACH PARTY HERETO AND THE COMPANY AND THE OTHER GRANTORS (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER FIRST LIEN DOCUMENTS AND SECOND LIEN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.  EACH PARTY HERETO AND THE COMPANY AND THE OTHER GRANTORS FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES IT JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

45

 

8.10                        Notices.  All notices to the Second Lien Secured Parties and the First Lien Secured Parties permitted or required under this Agreement shall be sent to the applicable Second Lien Representative and the applicable First Lien Representative, respectively.  Unless otherwise specifically provided herein, any notice hereunder shall be in writing and may be personally served or sent by facsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of facsimile, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed.  For the purposes hereof, the addresses of the parties hereto shall be as set forth below each party’s name on the signature pages hereto or in the Joinder Agreement pursuant to which it becomes a party hereto, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.

 

8.11                        Further Assurances.  Each First Lien Representative and each First Lien Collateral Agent, on behalf of itself and the First Lien Secured Parties represented by it, the Second Lien Representative and the Second Lien Collateral Agent, on behalf of itself and the Second Lien Secured Parties represented by it, and the Company and each other Grantor, agree that each of them shall take such further action and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as any First Lien Representative and First Lien Collateral Agent or the Second Lien Representative and Second Lien Collateral Agent may reasonably request to effectuate the terms of and the Lien priorities contemplated by this Agreement.

 

8.12                        Agency Capacities.  Except as expressly provided herein, CMB is acting in the capacity of First Lien Representative solely for the First Lien Secured Parties.  Except as expressly provided herein, each other Representative and Collateral Agent is acting in the capacity of Representative and Collateral Agent, respectively, solely for the Secured Parties under the First Lien Documents or Second Lien Documents for which it is the named Representative or Collateral Agent, as the case may be, in the applicable Joinder Agreement.

 

8.13                        GOVERNING LAW.  THIS AGREEMENT, AND ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW RULES THAT WOULD RESULT IN THE APPLICATION OF A DIFFERENT GOVERNING LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OR PRIORITY OF THE SECURITY INTERESTS).

 

8.14                        Binding on Successors and Assigns.  This Agreement shall be binding upon the First Lien Representatives, the First Lien Secured Parties, the other First Lien Secured Parties, the Second Lien Representative, the Second Lien Secured Parties, the other Second Lien Secured Parties, the Company and the other Grantors, and their respective successors and assigns.  If any of the First Lien Representatives, the First Lien Collateral Agents, the Second Lien Representative or the Second Lien Collateral Agent resigns or is replaced pursuant to the First Lien Documents or the Second Lien Documents, as applicable, its successor shall be

 

46

 

deemed to be a party to this Agreement and shall have all the rights of, and be subject to all the obligations of, this Agreement.  No provision of this Agreement will inure to the benefit of a trustee, debtor-in-possession, creditor trust or other representative of an estate or creditor of any Grantor, including where any such trustee, debtor-in-possession, creditor trust or other representative of an estate is the beneficiary of a Lien securing Collateral by virtue of the avoidance of such Lien in an Insolvency or Liquidation Proceeding.

 

8.15                        Section Headings.  Section headings and the Table of Contents used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

 

8.16                        Counterparts.  This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile or other electronic imaging means), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of an executed signature page of this Agreement by facsimile or other electronic transmission (e.g. “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart hereof.

 

8.17                        Authorization.  By its signature, each Person executing this Agreement, on behalf of such party or Grantor but not in his or her personal capacity as a signatory, represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement.

 

8.18                        No Third Party Beneficiaries/ Provisions Solely to Define Relative Rights.  This Agreement and the rights and benefits hereof shall inure to the benefit of each of the parties hereto and its respective successors and assigns and shall inure to the benefit of each of the First Lien Secured Parties and the Second Lien Secured Parties.  The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the First Lien Representatives, the First Lien Collateral Agents and the other First Lien Secured Parties on the one hand and the Second Lien Representative, the Second Lien Collateral Agent and the other Second Lien Secured Parties on the other hand.  Nothing herein shall be construed to limit the relative rights and obligations as among the First Lien Secured Parties or as among the Second Lien Secured Parties; and as among the First Lien Secured Parties, such rights and obligations are governed by, and any provisions herein regarding them are therefore subject to, the provisions of the First Lien Pari Passu Intercreditor Agreement.  Other than as set forth in Section 8.3, none of the Company, any other Grantor or any other creditor thereof shall have any rights hereunder and neither the Company nor any Grantor may rely on the terms hereof.  Nothing in this Agreement is intended to or shall impair the obligations of the Company or any other Grantor, which are absolute and unconditional, to pay the First Lien Obligations and the Second Lien Obligations as and when the same shall become due and payable in accordance with their terms.

 

8.19                        No Indirect Actions.  Unless otherwise expressly stated, if a party may not take an action under this Agreement, then it may not take that action indirectly, or support any other Person in taking that action directly or indirectly. “Taking an action indirectly” means taking an action that is not expressly prohibited for the party but is intended to have substantially the same effects as the prohibited action.

 

47

 

[Remainder of this page intentionally left blank]

 

48

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Lien Intercreditor Agreement as of the date first written above.

 

 

	
 
    	
CHINA   MERCHANTS BANK CO., LTD., NEW YORK BRANCH,
    
	
 
    	
as First Lien Representative and First Lien   Collateral Agent
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Edward W. Chin
    
	
 
    	
 
    	
Name:
    	
Edward W. Chin
    
	
 
    	
 
    	
Title:
    	
Chief Marketing Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrew Mao
    
	
 
    	
 
    	
Name:
    	
Andrew Mao
    
	
 
    	
 
    	
Title:
    	
Assistant General Manager
    
	
 
    	
 
    
	
 
    	
535   Madison Avenue 18th Floor
    
	
 
    	
New   York, New York 10022
    
	
 
    	
Attention:   Cynthia Fotheringham
    
	
 
    	
Phone:   (646) 843-6846
    
	
 
    	
Fax:   (212) 753-1319
    

 

[Signature Page - Intercreditor Agreement]

 

 

	
 
    	
WILMINGTON TRUST, NATIONAL   ASSOCIATION,
    
	
 
    	
as Second Lien Representative
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael G. Oller, Jr.
    
	
 
    	
 
    	
Name:
    	
Michael G. Oller, Jr.
    
	
 
    	
 
    	
Title:
    	
Assistant Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Rodney Square North
    
	
 
    	
1100 North Market Street
    
	
 
    	
Wilmington, Delaware 19890
    
	
 
    	
Attention: Corporate Markets and Agency Services
    
	
 
    	
Fax:  (302)   636-4145
    

 

[Signature Page - Intercreditor Agreement]

 

 

	
 
    	
U.S. BANK NATIONAL ASSOCIATION,
    
	
 
    	
as Second Lien Collateral Agent
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Shazia Flores
    
	
 
    	
 
    	
Name:
    	
Shazia Flores
    
	
 
    	
 
    	
Title:
    	
Assistant Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
U.S. Bank Corporate Trust Services
    
	
 
    	
5555 San Felipe, Suite 1150
    
	
 
    	
Houston, Texas 77056
    
	
 
    	
Attention:    Shazia Flores
    
	
 
    	
Phone:    (713) 235-9209
    
	
 
    	
Fax:  (713)   235-9213
    

 

[Signature Page - Intercreditor Agreement]

 

 

	
Acknowledged   and Agreed to by:
    	
 
    
	
 
    	
 
    
	
ION   GEOPHYSICAL CORPORATION
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   David L. Roland
    	
 
    
	
 
    	
Name:
    	
David   L. Roland
    	
 
    
	
 
    	
Title:
    	
Senior   Vice President and General Counsel
    	
 
    
	
 
    	
 
    	
 
    
	
2105   CityWest Blvd., Suite 400
    	
 
    
	
Houston,   Texas 77042-2839
    	
 
    
	
Attention:  Chief Financial Officer
    	
 
    
	
Phone:  (281) 781-1046
    	
 
    
	
Fax:   (281) 879-3674
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
GRANTORS:
    	
 
    
	
 
    	
 
    
	
GX   TECHNOLOGY CORPORATION
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   David L. Roland
    	
 
    
	
 
    	
Name:
    	
David   L. Roland
    	
 
    
	
 
    	
Title:
    	
Senior   Vice President
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
ION   EXPLORATION PRODUCTS (U.S.A.), INC.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   David L. Roland
    	
 
    
	
 
    	
Name:
    	
David   L. Roland
    	
 
    
	
 
    	
Title:
    	
Vice   President
    	
 
    
	
 
    	
 
    
	
2105   CityWest Blvd., Suite 400
    	
 
    
	
Houston,   Texas 77042-2839
    	
 
    
	
Attention:  Chief Financial Officer
    	
 
    
	
Phone:  (281) 781-1046
    	
 
    
	
Fax:   (281) 879-3674
    	
 
    

 

[Signature Page - Intercreditor Agreement]

 

 

	
I/O   MARINE SYSTEMS, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   David L. Roland
    	
 
    
	
 
    	
Name:   David L. Roland
    	
 
    
	
 
    	
Title:   Vice President
    	
 
    
	
 
    	
 
    
	
5200   Toler Street
    	
 
    
	
Harahan,   Louisiana 70123
    	
 
    
	
Attention:  Chief Financial Officer
    	
 
    
	
Phone:  (281) 781-1046
    	
 
    
	
Fax:   (281) 879-3674
    	
 
    

 

[Signature Page - Intercreditor Agreement]

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