Document:

Exhibit 10.1

 

Execution Version

 

 

PURCHASE AND SALE AGREEMENT

 

By and between

 

SPX CORPORATION

 

and

 

ROBERT BOSCH GMBH

 

 

Dated as of January 23, 2012

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I Sale of the   Service Solutions Business; Assumption of Liabilities; Working Capital   Adjustment
    	
1
    
	
 
    	
 
    	
 
    
	
1.1.
    	
Certain Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
1.2.
    	
Sale of the Service Solutions Business
    	
2
    
	
 
    	
 
    	
 
    
	
1.3.
    	
Closing Deliveries; Pre-Closing Deliveries
    	
5
    
	
 
    	
 
    	
 
    
	
1.4.
    	
Closing
    	
7
    
	
 
    	
 
    	
 
    
	
1.5.
    	
Closing Date Statements of the Service Solutions Business
    	
7
    
	
 
    	
 
    	
 
    
	
1.6.
    	
Final Adjustments
    	
8
    
	
 
    	
 
    	
 
    
	
1.7.
    	
French Works Council Process
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE II Representations   and Warranties of SPX
    	
14
    
	
 
    	
 
    	
 
    
	
2.1.
    	
Corporate Authority and Approval
    	
14
    
	
 
    	
 
    	
 
    
	
2.2.
    	
Organization and Good Standing
    	
15
    
	
 
    	
 
    	
 
    
	
2.3.
    	
Capitalization
    	
15
    
	
 
    	
 
    	
 
    
	
2.4.
    	
SS Operating Company Interests; Launch Shares; Acquired   Assets
    	
16
    
	
 
    	
 
    	
 
    
	
2.5.
    	
Subsidiaries
    	
16
    
	
 
    	
 
    	
 
    
	
2.6.
    	
Governmental Approvals
    	
16
    
	
 
    	
 
    	
 
    
	
2.7.
    	
No Conflicts
    	
17
    
	
 
    	
 
    	
 
    
	
2.8.
    	
Compliance with Laws; Permits
    	
17
    
	
 
    	
 
    	
 
    
	
2.9.
    	
Financial Statements
    	
17
    
	
 
    	
 
    	
 
    
	
2.10.
    	
Absence of Certain Changes or Events
    	
18
    
	
 
    	
 
    	
 
    
	
2.11.
    	
Title to Assets
    	
19
    
	
 
    	
 
    	
 
    
	
2.12.
    	
Intellectual Property
    	
19
    
	
 
    	
 
    	
 
    
	
2.13.
    	
Environmental Matters
    	
19
    
	
 
    	
 
    	
 
    
	
2.14.
    	
Material Contracts
    	
20
    
	
 
    	
 
    	
 
    
	
2.15.
    	
Litigation
    	
21
    
	
 
    	
 
    	
 
    
	
2.16.
    	
Insurance
    	
21
    
	
 
    	
 
    	
 
    
	
2.17.
    	
Employee Benefit Plans
    	
21
    
	
 
    	
 
    	
 
    
	
2.18.
    	
Fees
    	
22
    
	
 
    	
 
    	
 
    
	
2.19.
    	
Assets of the Business
    	
22
    

 

 

	
2.20.
    	
Real Estate
    	
22
    
	
 
    	
 
    	
 
    
	
2.21.
    	
Labor Matters
    	
23
    
	
 
    	
 
    	
 
    
	
2.22.
    	
Relationships with Customers and Distributors
    	
24
    
	
 
    	
 
    	
 
    
	
2.23.
    	
Tax Matters
    	
24
    
	
 
    	
 
    	
 
    
	
2.24.
    	
Disclaimer
    	
26
    
	
 
    	
 
    	
 
    
	
ARTICLE III Representations   and Warranties of Purchaser
    	
27
    
	
 
    	
 
    	
 
    
	
3.1.
    	
Organization and Good Standing
    	
27
    
	
 
    	
 
    	
 
    
	
3.2.
    	
Corporate Authority and Approval
    	
27
    
	
 
    	
 
    	
 
    
	
3.3.
    	
Governmental Approvals
    	
27
    
	
 
    	
 
    	
 
    
	
3.4.
    	
No Conflicts
    	
28
    
	
 
    	
 
    	
 
    
	
3.5.
    	
Funds Available
    	
28
    
	
 
    	
 
    	
 
    
	
3.6.
    	
Litigation
    	
28
    
	
 
    	
 
    	
 
    
	
3.7.
    	
Fees
    	
28
    
	
 
    	
 
    	
 
    
	
3.8.
    	
Purchase for Investment; Receipt of Information
    	
28
    
	
 
    	
 
    	
 
    
	
3.9.
    	
Investigation
    	
28
    
	
 
    	
 
    	
 
    
	
3.10.
    	
Disclaimer
    	
29
    
	
 
    	
 
    	
 
    
	
ARTICLE IV Covenants of SPX
    	
29
    
	
 
    	
 
    	
 
    
	
4.1.
    	
Conduct of Business
    	
29
    
	
 
    	
 
    	
 
    
	
4.2.
    	
Access
    	
31
    
	
 
    	
 
    	
 
    
	
4.3.
    	
No Shop
    	
32
    
	
 
    	
 
    	
 
    
	
4.4.
    	
Intercompany Accounts, Loan Documents, Etc.
    	
32
    
	
 
    	
 
    	
 
    
	
4.5.
    	
Non-Competition; Non-Solicitation
    	
35
    
	
 
    	
 
    	
 
    
	
4.6.
    	
Insurance Claims
    	
36
    
	
 
    	
 
    	
 
    
	
4.7.
    	
China Agreements
    	
37
    
	
 
    	
 
    	
 
    
	
4.8.
    	
Further Assurances
    	
37
    
	
 
    	
 
    	
 
    
	
ARTICLE V Covenants of   Purchaser
    	
37
    
	
 
    	
 
    	
 
    
	
5.1.
    	
Preservation of Books and Records
    	
37
    
	
 
    	
 
    	
 
    
	
5.2.
    	
Performance Bonds and Guarantees
    	
38
    
	
 
    	
 
    	
 
    
	
5.3.
    	
CERCLA Waiver
    	
38
    
	
 
    	
 
    	
 
    
	
5.4.
    	
Further Assurances
    	
38
    
	
 
    	
 
    	
 
    
	
ARTICLE VI Mutual Covenants
    	
39
    

 

 

	
6.1.
    	
Cooperation
    	
39
    
	
 
    	
 
    	
 
    
	
6.2.
    	
Publicity
    	
40
    
	
 
    	
 
    	
 
    
	
6.3.
    	
Use of Name
    	
41
    
	
 
    	
 
    	
 
    
	
6.4.
    	
Taxes
    	
41
    
	
 
    	
 
    	
 
    
	
6.5.
    	
Worker’s Compensation Protocol
    	
45
    
	
 
    	
 
    	
 
    
	
6.6.
    	
Transition Services Agreement
    	
45
    
	
 
    	
 
    	
 
    
	
6.7.
    	
Cross-License
    	
46
    
	
 
    	
 
    	
 
    
	
ARTICLE VII Conditions to   Purchaser’s Obligations
    	
46
    
	
 
    	
 
    	
 
    
	
7.1.
    	
Covenants of SPX
    	
46
    
	
 
    	
 
    	
 
    
	
7.2.
    	
Representations and Warranties of SPX
    	
46
    
	
 
    	
 
    	
 
    
	
7.3.
    	
SPX’s Certificate
    	
47
    
	
 
    	
 
    	
 
    
	
7.4.
    	
HSR Approvals
    	
47
    
	
 
    	
 
    	
 
    
	
7.5.
    	
Other Governmental Approvals
    	
47
    
	
 
    	
 
    	
 
    
	
7.6.
    	
No Order
    	
47
    
	
 
    	
 
    	
 
    
	
7.7.
    	
Third Party Consents
    	
47
    
	
 
    	
 
    	
 
    
	
7.8.
    	
Labor Compliance
    	
47
    
	
 
    	
 
    	
 
    
	
7.9.
    	
No Material Adverse Effect
    	
47
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII Conditions to   SPX’s Obligations
    	
47
    
	
 
    	
 
    	
 
    
	
8.1.
    	
Covenants of Purchaser
    	
47
    
	
 
    	
 
    	
 
    
	
8.2.
    	
Representations and Warranties of Purchaser
    	
48
    
	
 
    	
 
    	
 
    
	
8.3.
    	
Purchaser’s Certificate
    	
48
    
	
 
    	
 
    	
 
    
	
8.4.
    	
HSR Approvals
    	
48
    
	
 
    	
 
    	
 
    
	
8.5.
    	
Other Governmental Approvals
    	
48
    
	
 
    	
 
    	
 
    
	
8.6.
    	
No Order
    	
48
    
	
 
    	
 
    	
 
    
	
ARTICLE IX Employment   Matters
    	
48
    
	
 
    	
 
    	
 
    
	
9.1.
    	
Post-Closing Benefits and Compensation
    	
48
    
	
 
    	
 
    	
 
    
	
9.2.
    	
Severance
    	
48
    
	
 
    	
 
    	
 
    
	
9.3.
    	
Service Credit
    	
49
    
	
 
    	
 
    	
 
    
	
9.4.
    	
Vacation
    	
49
    
	
 
    	
 
    	
 
    
	
9.5.
    	
Collective Bargaining Agreements
    	
49
    
	
 
    	
 
    	
 
    
	
9.6.
    	
Flexible Spending Accounts
    	
49
    
	
 
    	
 
    	
 
    
	
9.7.
    	
401(k) Plan
    	
50
    

 

 

	
9.8.
    	
Section 75 Liability
    	
50
    
	
 
    	
 
    	
 
    
	
9.9.
    	
No Third Party Beneficiaries
    	
50
    
	
 
    	
 
    	
 
    
	
ARTICLE X Termination
    	
50
    
	
 
    	
 
    	
 
    
	
10.1.
    	
Termination
    	
50
    
	
 
    	
 
    	
 
    
	
10.2.
    	
Purchaser Termination Fee
    	
51
    
	
 
    	
 
    	
 
    
	
10.3.
    	
Effect on Obligations
    	
52
    
	
 
    	
 
    	
 
    
	
ARTICLE XI Indemnification
    	
52
    
	
 
    	
 
    	
 
    
	
11.1.
    	
Indemnification
    	
52
    
	
 
    	
 
    	
 
    
	
11.2.
    	
Procedures for Claims.
    	
56
    
	
 
    	
 
    	
 
    
	
11.3.
    	
Tax Indemnification.
    	
57
    
	
 
    	
 
    	
 
    
	
ARTICLE XII Miscellaneous
    	
59
    
	
 
    	
 
    	
 
    
	
12.1.
    	
Expenses
    	
59
    
	
 
    	
 
    	
 
    
	
12.2.
    	
Transfer Taxes
    	
59
    
	
 
    	
 
    	
 
    
	
12.3.
    	
Survival of Representations and Warranties
    	
59
    
	
 
    	
 
    	
 
    
	
12.4.
    	
Exclusive Agreement; No Third-Party Beneficiaries
    	
60
    
	
 
    	
 
    	
 
    
	
12.5.
    	
Disclosure
    	
60
    
	
 
    	
 
    	
 
    
	
12.6.
    	
Deliveries to Purchaser; Disclaimer
    	
60
    
	
 
    	
 
    	
 
    
	
12.7.
    	
Consents
    	
61
    
	
 
    	
 
    	
 
    
	
12.8.
    	
Governing Law, Etc
    	
61
    
	
 
    	
 
    	
 
    
	
12.9.
    	
Successors and Assigns
    	
61
    
	
 
    	
 
    	
 
    
	
12.10.
    	
Severability
    	
62
    
	
 
    	
 
    	
 
    
	
12.11.
    	
Specific Performance
    	
62
    
	
 
    	
 
    	
 
    
	
12.12.
    	
Notices
    	
62
    
	
 
    	
 
    	
 
    
	
12.13.
    	
Counterparts
    	
63
    
	
 
    	
 
    	
 
    
	
12.14.
    	
Interpretation
    	
63
    
	
 
    	
 
    	
 
    
	
12.15.
    	
No Strict Construction
    	
64
    
	
 
    	
 
    	
 
    
	
12.16.
    	
Definitions
    	
64
    
	
 
    	
 
    	
 
    
	
12.17.
    	
Amendment
    	
72
    
	
 
    	
 
    	
 
    
	
12.18.
    	
Extension; Waiver
    	
72
    
	
 
    	
 
    	
 
    
	
12.19.
    	
Prevailing Party
    	
72
    

 

 

Exhibits

 

Exhibit 1 — Excluded Assets

 

Exhibit 2 — Certain Indebtedness

 

Exhibit 3 — Retained Real Properties

 

Exhibit 4 — Allocation of Purchase Price

 

Exhibit 5 — Working Capital Procedures

 

Exhibit 6 — Form of French Agreement

 

Exhibit 7 — China Agreements

 

Exhibit 8— Governmental Approvals

 

Exhibit 9 — Third Party Consents

 

Exhibit 10 — Agreed Amount and Agreed Reference Working Capital

 

Exhibit 11 — Burdensome Condition

 

Exhibit 12 —Purchaser Termination Fee

 

Exhibit 13 — Reference Working Capital

 

Exhibit 14 — Service Solutions Insurance Policies

 

 

DEFINITIONS

 

	
Term
    	
 
    	
Section
    
	
2012   CapEx Budget
    	
 
    	
Section 4.1(b)(v)
    
	
Acceptance   Notice
    	
 
    	
Section 1.7(c)
    
	
Acquired   Assets
    	
 
    	
Section 1.2(a)
    
	
Additional   Excess
    	
 
    	
Section 1.6(a)
    
	
Agreement
    	
 
    	
Preamble
    
	
Assumed   Liabilities
    	
 
    	
Section 1.2(c)
    
	
Assumption   Documents
    	
 
    	
Section 1.2(c)
    
	
Books   and Records
    	
 
    	
Section 5.1(a)
    
	
Cash   Purchase Price
    	
 
    	
Section 1.2(b)
    
	
CERCLA
    	
 
    	
Section 5.3
    
	
China   Interests
    	
 
    	
Section 1.2(a)
    
	
Closing
    	
 
    	
Section 1.4(a)
    
	
Closing   Date
    	
 
    	
Section 1.4(a)
    
	
Closing   Date Intragroup Payables
    	
 
    	
Section 4.4(d)
    
	
Closing   Date Intragroup Payables Amount
    	
 
    	
Section 4.4(d)
    
	
Closing   Date Intragroup Receivables
    	
 
    	
Section 4.4(b)
    
	
Closing   Date Intragroup Receivables Amount
    	
 
    	
Section 4.4(b)
    
	
Closing   Date Payment Amount
    	
 
    	
Section 1.3(c)
    
	
Closing   Date Statement of Working Capital
    	
 
    	
Section 1.5(a)
    
	
Closing   Date Statements
    	
 
    	
Section 1.5(a)
    
	
Closing   Date Working Capital
    	
 
    	
Exhibit 5
    
	
Closing Excess
    	
 
    	
Section 1.6(a)
    
	
Closing Shortfall
    	
 
    	
Section 1.6(a)
    
	
Code
    	
 
    	
Section 2.17(b)
    
	
Collective   Bargaining Agreement
    	
 
    	
Section 2.21(a)
    
	
Competing   Business
    	
 
    	
Section 4.5(a)
    
	
Completion   of the Works Council Process
    	
 
    	
Section 1.7(b)
    
	
Confidentiality   Agreement
    	
 
    	
Section 4.2
    
	
Continuing   Non-Union Employees
    	
 
    	
Section 9.1
    
	
Cost-Effective   Manner
    	
 
    	
Section 11.1(f)
    
	
Damages
    	
 
    	
Section 11.1(a)
    
	
Deductible
    	
 
    	
Section 11.1(f)
    
	
Disclosure   Schedules
    	
 
    	
Article II
    
	
Divestiture   Action
    	
 
    	
Section 6.1(b)
    
	
DOJ
    	
 
    	
Section 6.1(c)
    
	
Effective   Date
    	
 
    	
Section 1.4(a)
    
	
Estimated   Closing Date Cash
    	
 
    	
Section 1.3(e)
    
	
Estimated   Closing Date Indebtedness
    	
 
    	
Section 1.3(e)
    
	
Estimated Closing Date Intragroup Payables   Amount
    	
 
    	
Section 1.3(e)
    
	
Estimated Closing Date Intragroup Receivables   Amount
    	
 
    	
Section 1.3(e)
    
	
Estimated   Closing Date Working Capital
    	
 
    	
Section 1.3(e)
    
	
Estimated Excess
    	
 
    	
Section 1.3(c)
    
	
Estimated Shortfall
    	
 
    	
Section 1.3(c)
    

 

 

	
Excluded Liabilities
    	
 
    	
Section 1.2(d)
    
	
Extra   Overpayment
    	
 
    	
Section 1.6(a)
    
	
Final Closing Date Cash
    	
 
    	
Section 1.6(b)
    
	
Final Closing Date Indebtedness
    	
 
    	
Section 1.6(c)
    
	
Final   Closing Date Intragroup Payables Amount
    	
 
    	
Section 1.6(e)
    
	
Final   Closing Date Intragroup Receivables Amount
    	
 
    	
Section 1.6(d)
    
	
Final Closing Date Statements
    	
 
    	
Section 1.5(c)
    
	
Final Closing Date Working Capital
    	
 
    	
Section 1.5(c)
    
	
Final Working Capital Statement
    	
 
    	
Section 1.5(c)
    
	
Financial Statements
    	
 
    	
Section 2.9
    
	
French Agreement
    	
 
    	
Section 1.7(b)
    
	
French Closing
    	
 
    	
Section 1.7(d)
    
	
French Purchase Price
    	
 
    	
Section 1.7(b)
    
	
FTC
    	
 
    	
Section 6.1(c)
    
	
GAAP
    	
 
    	
Section 2.9
    
	
German Pension Commitments
    	
 
    	
Section 2.21(c)
    
	
Governmental Approval
    	
 
    	
Section 2.6
    
	
Guarantees
    	
 
    	
Section 5.2(a)
    
	
HSR Act
    	
 
    	
Section 6.1(b)
    
	
Indemnified Party
    	
 
    	
Section 11.1(c)
    
	
Indemnifying Party
    	
 
    	
Section 11.2(a)
    
	
Initial Termination Date
    	
 
    	
Section 10.1(b)
    
	
Insurance   Policies
    	
 
    	
Section 2.16
    
	
Launch
    	
 
    	
Section 1.2(a)
    
	
Launch Shares
    	
 
    	
Section 1.2(a)
    
	
Leased Real Property
    	
 
    	
Section 2.20
    
	
Local   Transfer Agreements
    	
 
    	
Section 1.3(d)
    
	
Loss   Amount
    	
 
    	
Section 4.4(f)
    
	
Material   Contract
    	
 
    	
Section 2.14
    
	
Members   of the Service Solutions Group
    	
 
    	
Section 1.1(e)
    
	
Members   of the SPX Group
    	
 
    	
Section 1.1(f)
    
	
Non-Competition   Period
    	
 
    	
Section 4.5(a)
    
	
Non-Solicitation   Period
    	
 
    	
Section 4.5(b)
    
	
Notice   of Objection
    	
 
    	
Section 1.5(b)
    
	
Offer
    	
 
    	
Section 1.7(b)
    
	
Offer   Period
    	
 
    	
Section 1.7(b)
    
	
Other   Claim
    	
 
    	
Section 11.2(c)
    
	
Other   Claim Notice
    	
 
    	
Section 11.2(c)
    
	
Other   SPX Sellers
    	
 
    	
Section 1.1(b)
    
	
Owned   Real Property
    	
 
    	
Section 2.20
    
	
Permits
    	
 
    	
Section 2.8(b)
    
	
Profit   Amount
    	
 
    	
Section 4.4(f)
    
	
Purchase   Price
    	
 
    	
Section 1.2(b)
    
	
Purchaser
    	
 
    	
Preamble
    
	
Purchaser   Benefit Plan
    	
 
    	
Section 9.3
    
	
Purchaser   Indemnified Parties
    	
 
    	
Section 11.1(a)
    

 

 

	
Purchaser   Material Adverse Effect
    	
 
    	
Section 3.1
    
	
Real   Property
    	
 
    	
Section 2.20
    
	
Real   Property Leases
    	
 
    	
Section 2.20
    
	
Rejection   Notice
    	
 
    	
Section 1.7(c)
    
	
Representatives
    	
 
    	
Section 4.2
    
	
Retained   Real Properties
    	
 
    	
Section 1.2(d)
    
	
Section 1.4(b) Notice
    	
 
    	
Section 1.4(b)
    
	
Section 6.4(a) Deliverable
    	
 
    	
Section 6.4(a)
    
	
Service   Solutions Business
    	
 
    	
Recitals
    
	
Service   Solutions Companies
    	
 
    	
Article II
    
	
Shortfall   Overpayment
    	
 
    	
Section 1.6(a)
    
	
Shortfall   Underpayment
    	
 
    	
Section 1.6(a)
    
	
SPX
    	
 
    	
Preamble
    
	
SPX   Asset Sellers
    	
 
    	
Section 1.1(a)
    
	
SPX   Indemnified Parties
    	
 
    	
Section 11.1(b)
    
	
SPX   India
    	
 
    	
Section 1.1(a)
    
	
SPX   Holding
    	
 
    	
Section 4.4(b)
    
	
SPX   Sellers
    	
 
    	
Section 1.1(c)
    
	
SPX   South Korea
    	
 
    	
Section 1.1(a)
    
	
SPX   Transfer Documents
    	
 
    	
Section 1.2(a)
    
	
Specified   Rate
    	
 
    	
Section 1.3(c)
    
	
SS   Operating Companies
    	
 
    	
Section 1.1(d)
    
	
SS   Operating Company Interests
    	
 
    	
Section 1.2(b)
    
	
SS   Australia
    	
 
    	
Section 1.1(d)
    
	
SS   Brazil
    	
 
    	
Section 1.1(d)
    
	
SS   China
    	
 
    	
Section 1.1(d)
    
	
SS   France
    	
 
    	
Section 1.1(d)
    
	
SS   Germany
    	
 
    	
Section 1.1(d)
    
	
SS   Germany Financial Statements
    	
 
    	
Section 4.4(f)
    
	
SS   Italy
    	
 
    	
Section 1.1(d)
    
	
SS   Japan
    	
 
    	
Section 1.1(d)
    
	
SS   Mexico
    	
 
    	
Section 1.1(d)
    
	
SS   Switzerland
    	
 
    	
Section 1.1(d)
    
	
SS   UK
    	
 
    	
Section 1.1(d)
    
	
SS   US
    	
 
    	
Section 1.1(d)
    
	
Straddle   Periods
    	
 
    	
Section 6.4(i)
    
	
Straddle   Tax Returns
    	
 
    	
Section 6.4(a)
    
	
Surviving   Provisions
    	
 
    	
Section 10.3
    
	
Swing   Excess
    	
 
    	
Section 1.6(a)
    
	
Swing   Shortfall
    	
 
    	
Section 1.6(a)
    
	
Tax   Contest
    	
 
    	
Section 11.3(c)
    
	
Tax   Controversy
    	
 
    	
Section 11.3(c)
    
	
Termination   Date
    	
 
    	
Section 10.1(b)
    
	
Third   Party Claim
    	
 
    	
Section 11.2(a)
    
	
Third   Party Claim Notice
    	
 
    	
Section 11.2(a)
    
	
Third   Party Consent
    	
 
    	
Section 12.7
    

 

 

	
Transition   Services Agreement
    	
 
    	
Section 6.6
    
	
Unpaid   Taxes Shortfall
    	
 
    	
Section 6.4(b)
    
	
Valid   Claim Notice
    	
 
    	
Section 11.2(c)
    
	
Valid   Other Claim Notice
    	
 
    	
Section 11.2(c)
    
	
Valid   Third Party Claim Notice
    	
 
    	
Section 11.2(a)
    
	
Voluntary   Action
    	
 
    	
Section 11.1(f)
    
	
Withheld   Asset Closing Date Payment Amount
    	
 
    	
Section 1.7(d)
    
	
Withheld   Assets
    	
 
    	
Section 1.4(b)
    
	
Withheld   Assets Closing
    	
 
    	
Section 1.7(d)
    
	
Works   Council Process
    	
 
    	
Recitals
    

 

List of Schedules

 

Schedule 2.2 — Organization and Good Standing

Schedule 2.3 — Capitalization

Schedule 2.5 — Subsidiaries

Schedule 2.6 — Governmental Approvals

Schedule 2.8 — Compliance with Laws; Permits

Schedule 2.9 — Financial Statements

Schedule 2.10 — Absence of Certain Changes or Events

Schedule 2.11 — Title to Assets

Schedule 2.13 — Environmental Matters

Schedule 2.14 — Material Contracts

Schedule 2.15 — Litigation

Schedule 2.16 — Insurance

Schedule 2.17 — Employee Benefit Plans

Schedule 2.19 — Assets of the Business

Schedule 2.20 — Real Estate

Schedule 2.21 — Labor Matters

Schedule 2.22 — Relationships with Customers and Distributors

Schedule 2.23 — Tax Matters

Schedule 4.1 — Conduct of the Business

Schedule 4.4(a) — Intercompany Accounts

Schedule 12.16-A - Restructuring

Schedule 12.16-B — SPX Knowledge Parties

 

Schedules will be provided to the Securities and Exchange Commission upon request

 

 

PURCHASE AND SALE AGREEMENT

 

This PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of January 23, 2012, is entered into by and between SPX Corporation, a Delaware corporation (“SPX”) and Robert Bosch GmbH, a corporation organized under the laws of Germany (“Purchaser”).

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, SPX directly and indirectly through certain of its wholly owned subsidiaries is engaged in the business of (a) providing vehicle repair and maintenance solutions, including diagnostic products, services and dealer equipment, technical information, tools and equipment, daily sales and air conditioning and fluids to automotive OEMs, OEM dealers and the aftermarket, and (b) tungsten carbide machining, ceramic machining and other hard exotic material machined to specifications (the “Service Solutions Business”);

 

WHEREAS, SPX desires to sell to Purchaser, and Purchaser desires to acquire from SPX, the Service Solutions Business;

 

WHEREAS, SS France is an indirect Subsidiary of SPX and a Member of the Service Solutions Group;

 

WHEREAS, under the French Labor Code, the works council will need to be informed and consulted (such process of informing and consulting, the “Works Council Process”) prior to the execution of any binding agreement to transfer the French Interests; and pending the completion of the Works Council Process, Purchaser desires to make an irrevocable offer to acquire the French Interests pursuant to the terms and conditions set forth herein, which offer shall be accepted or rejected by SPX within three Business Days following the completion of the Works Council Process; and

 

WHEREAS, all requisite approvals of the respective boards of SPX and Purchaser of the transactions contemplated hereby have been obtained;

 

NOW, THEREFORE, in consideration of the premises and of the respective representations, warranties, covenants and agreements contained herein, the parties hereto hereby agree as follows:

 

ARTICLE I

 

Sale of the Service Solutions Business;
 Assumption of Liabilities; Working Capital Adjustment

 

1.1.                            Certain Definitions.

 

As used below:

 

(a)                                 SPX Korea Co. Ltd., a corporation organized under the laws of South Korea and an indirect wholly owned Subsidiary of SPX (“SPX South Korea”), and SPX India Private Limited, a private limited company organized under the laws of India and an indirect

 

 

wholly owned Subsidiary of SPX (“SPX India”), are referred to herein individually as a “SPX Asset Seller” and collectively as the “SPX Asset Sellers.”

 

(b)                                 Pinehurst Holding Company, a corporation organized under the laws of the Cayman Islands and a direct wholly owned subsidiary of SPX, Seminole Holding Company, a corporation organized under the laws of the Cayman Islands and a direct wholly owned subsidiary of SPX, Kiawah Holding Company, a corporation organized under the laws of the Cayman Islands and a direct wholly owned subsidiary of SPX, Medinah Holding Company, a corporation organized under the laws of the Cayman Islands and an indirect wholly owned subsidiary of SPX, SPX Flow Technology Japan Inc., a corporation organized under the laws of Japan and an indirect wholly owned subsidiary of SPX, SPX Netherlands BV, a private limited company organized under the laws of the Netherlands and an indirect wholly owned subsidiary of SPX, SPX Flow Technology Hong Kong Limited, a private limited company organized under the laws of Hong Kong and an indirect wholly owned subsidiary of SPX, Kayex China Holdings, Inc. a Delaware corporation and a direct wholly owned subsidiary of SPX, and the SPX Asset Sellers are referred to herein individually as an “Other SPX Seller” and collectively as the “Other SPX Sellers.”

 

(c)                                  SPX and the Other SPX Sellers are referred to herein individually as a “SPX Seller” and collectively as the “SPX Sellers.”

 

(d)                                 SPX Transportation & Industrial Solutions (Suzhou) Co. Ltd., a private limited company organized under the laws of China (“SS China”), SPX de Mexico S.A. de C.V., a company formed under the laws of Mexico (“SS Mexico”), SPX Australia Pty. Limited, a proprietary company limited by shares organized under the laws of Australia (“SS Australia”), Service Solutions Brasil Desenvolvimento de Technologia Ltda., a Brazil sociedade limitada organized under the laws of Brazil (“SS Brazil”), SPX Service Solutions Germany GmbH, a company formed under the laws of Germany (“SS Germany”), SPX Service Solutions Japan Ltd., a corporation organized under the laws of Japan (“SS Japan”), Service Solutions U.S. LLC, a limited liability company organized under the laws of Delaware (“SS US”), SPX (Schweiz) A.G., a public limited company organized under the laws of Switzerland (“SS Switzerland”), SPX Service Solutions France Sarl, a société á responsabilité limitée organized under the laws of France (“SS France”), SPX Italia S.r.l., a limited liability company organized under the laws of Italy (“SS Italy”) and SPX United Kingdom Limited., a company organized under the laws of the United Kingdom (“SS UK”), are collectively referred to herein as the “SS Operating Companies.”

 

(e)                                  The SS Operating Companies and all direct and indirect Subsidiaries of the SS Operating Companies (except for SPX Pension Trust Company Limited) are referred to herein individually as a “Member of the Service Solutions Group” and collectively as the “Members of the Service Solutions Group.”

 

(f)                                   SPX and its Affiliates (including the Other SPX Sellers but excluding the Members of the Service Solutions Group) are referred to herein individually as a “Member of the SPX Group” and collectively as the “Members of the SPX Group.”

 

(g)                                  Certain other capitalized terms used herein are defined in Section 12.16.

 

1.2.                            Sale of the Service Solutions Business.  (a)  In accordance with the terms and upon the conditions of this Agreement, at the Closing, by execution and delivery of, as

 

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applicable, stock powers or bills of sale or other instruments of transfer and assignment (the “SPX Transfer Documents”) SPX shall (or, if applicable, shall cause the applicable Other SPX Seller to) convey, assign, transfer and deliver to Purchaser (or its Designated Affiliate):

 

(i)                                     all of the issued and outstanding Equity Interests of SS Mexico (free and clear of all Encumbrances);

 

(ii)                                  all of the issued and outstanding Equity Interests of SS US (free and clear of all Encumbrances);

 

(iii)                               all of the issued and outstanding Equity Interests of SS China (the “China Interests”) (free and clear of all Encumbrances);

 

(iv)                              all of the issued and outstanding Equity Interests of SS Australia (free and clear of all Encumbrances);

 

(v)                                 all of the issued and outstanding Equity Interests of SS Brazil (free and clear of all Encumbrances);

 

(vi)                              all of the issued and outstanding Equity Interests of SS Germany (free and clear of all Encumbrances);

 

(vii)                           all of the issued and outstanding Equity Interests of SS Japan (free and clear of all Encumbrances);

 

(viii)                        all of the issued and outstanding Equity Interests of SS Switzerland (free and clear of all Encumbrances);

 

(ix)                              to the extent that an Acceptance Notice has been delivered, all of the issued and outstanding French Interests (free and clear of all Encumbrances);

 

(x)                                 all of the issued and outstanding Equity Interests of SS Italy (free and clear of all Encumbrances);

 

(xi)                              all of the issued and outstanding Equity Interests of SS UK (free and clear of all Encumbrances);

 

(xii)                           all of the shares owned by the applicable SPX Seller (the “Launch Shares”) in Launch Tech Company Limited, a joint stock limited company established and existing under the laws of the Peoples Republic of China (“Launch”) (free and clear of all Encumbrances); and

 

(xiii)                        all of the assets, properties and rights owned by each of the SPX Asset Sellers and relating exclusively to the Service Solutions Business, other than those set forth in Exhibit 1 (collectively, the “Acquired Assets”).

 

(b)                                 The aggregate purchase price for all of the issued and outstanding Equity Interests of the SS Operating Companies other than the Statutory Interests (collectively, the “SS Operating Company Interests”), the Launch Shares and the Acquired Assets (the “Purchase Price”) shall be equal to (i) $1,150,000,000 (the “Cash Purchase Price”), plus (ii) the amount (if any) by which the Final Closing Date Working Capital exceeds the Reference Working Capital

 

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by more than $7,500,000, minus (iii) the amount (if any) by which Final Closing Date Working Capital is less than the Reference Working Capital by more than $7,500,000, plus (iv) the amount of Final Closing Date Cash, minus (v) the amount of Final Closing Date Indebtedness, plus the assumption of the Assumed Liabilities (other than the Assumed Liabilities of any Member of the Service Solutions Group), plus (vi) the Final Closing Date Intragroup Receivables Amount, minus (vii) the Final Closing Date Intragroup Payables Amount.  The Purchase Price shall be allocated among SPX and the Other SPX Sellers in accordance with Section 1.2(e).

 

(c)                                  At the Closing, Purchaser (or its Designated Affiliate) shall, by execution and delivery of instruments of assumption (the “Assumption Documents”), assume the Assumed Liabilities of SPX South Korea and SPX India.  Pursuant to the terms of Article XI, following the Closing, Purchaser shall indemnify the Members of the SPX Group against the Assumed Liabilities (including any attempt, whether or not meritorious, by any third party to impose responsibility on any Member of the SPX Group for any Assumed Liabilities).  For purposes of this Agreement, the term “Assumed Liabilities” means all Liabilities arising out of or relating to the Service Solutions Business, other than the Excluded Liabilities.

 

(d)                                 Notwithstanding anything in this Agreement to the contrary (but subject to clauses (i) and (ii) of the last sentence of this Section 1.2(d)), it is hereby acknowledged and agreed that Purchaser shall not be obligated to pay, perform or otherwise be liable for or discharge any of the following Liabilities of the Members of the SPX Group or (where applicable) of Members of the Service Solutions Group:  (i) any Liabilities to the extent arising out of or relating to any business other than the Service Solutions Business, (ii) any Indebtedness of the Members of the Service Solutions Group or of the Members of the SPX Group incurred and not paid in full prior to the Closing, other than Indebtedness set forth on Exhibit 2, (iii) any Tax Liabilities, (iv) any Section 75 Liability, (v) any Pre-Closing Benefit Plan Liabilities, (vi) any Liabilities in respect of the SPX US Pension Plans and SPX UK Pension Plan, (vii) any Liabilities arising out of or relating to retention agreements entered into by SPX or any of its Affiliates prior to the Closing with key employees of the Service Solutions Business, (viii) any Liabilities arising under Environmental Law relating to any real property formerly owned, leased or operated by the Service Solutions Business, (ix) any Liabilities relating to the real properties listed on Exhibit 3 (the “Retained Real Properties”) (it being understood that any Liability arising under Environmental Law relating to any real property currently owned, leased or operated by the Service Solutions Companies other than the Retained Real Properties shall not be considered Excluded Liabilities), and (x) any Liabilities (other than Liabilities arising under Environmental Law) relating to Discontinued Operations.  The foregoing Liabilities are referred to herein collectively as the “Excluded Liabilities.”  Pursuant to the terms of Article XI, following the Closing SPX shall indemnify Purchaser and its Affiliates (including the Members of the Service Solutions Group) against the Excluded Liabilities (including any attempt, whether or not meritorious, by any third party to impose responsibility on Purchaser or any of its Affiliates for any Excluded Liabilities), (i) except to the extent (and then only in the amount that) such Excluded Liabilities are reflected in any of the Final Closing Date Statements and (ii) with respect to non-Income Taxes, except as set forth in Article XI.

 

(e)                                  The parties agree that the Purchase Price shall be allocated among the Acquired Assets, the SS Operating Company Interests and the Launch Shares as set forth on Exhibit 4. To the extent Purchaser so requests, the parties agree to negotiate in good faith after the Closing with respect to the allocation among the assets of SS US of the portion of the Purchase Price allocated to SS US (including any adjustments thereto under Section 1.6 or

 

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otherwise).  SPX and its Affiliates and Purchaser and its Affiliates shall (i) file all Tax Returns (including the Internal Revenue Service Forms 8594 (or any successor form) that shall be filed with the parties’ federal income tax returns for the taxable year that includes the Closing Date, amended returns and claims for refunds) consistent with the allocations set forth in this Section 1.2(e) and (ii) take no position contrary thereto or inconsistent therewith (including in any Tax Contest or otherwise).  Not later than 30 days prior to the filing of their respective Forms 8594 relating to this transaction, each party shall deliver to the other party a copy of its Form 8594.

 

1.3.                            Closing Deliveries; Pre-Closing Deliveries.

 

(a)                                 At the Closing, SPX shall deliver, or cause to be delivered, to Purchaser (or its Designated Affiliate) the following:

 

(i)                                     instruments of transfer evidencing the transfer of the SS Operating Company Interests to Purchaser (its Designated Affiliate);

 

(ii)                                  instruments of transfer evidencing the transfer of the Launch Shares to Purchaser (or its Designated Affiliate);

 

(iii)                               a certificate completed pursuant to Treasury Regulations Section 1.1445—2(b) stating that SPX is not a foreign person within the meaning of Section 1445(f)(3) of the Code;

 

(iv)                              the other SPX Transfer Documents, duly executed by the appropriate transferor;

 

(v)                                 the Assumption Documents, duly executed by SPX;

 

(vi)                              releases from each guaranty, if any, given by any Member of the Service Solutions Group in respect of any obligation under the SPX Credit Agreement;

 

(vii)                           written resignations, dated as of the Closing Date, of the directors and officers of the Members of the Services Solutions Group requested by Purchaser in writing at least 20 days prior to the Closing Date;

 

(viii)                        documentary evidence that (A) SS Germany has implemented a short financial year ending at the Closing and obtained approval from the tax authority and (B) the PLTA has been terminated by a termination agreement with effect as of the Closing;

 

(ix)                              if applicable, a transfer agreement regarding the transfer of all Closing Date Intragroup Receivables to Purchaser as set forth in Section 4.4(b) duly executed by all relevant Members of the SPX Group; and

 

(x)                                 if applicable, a transfer and assumption agreement regarding the transfer of all Closing Date Intragroup Payables to Purchaser as set forth in Section 4.4(d) duly executed by all relevant Members of the SPX Group and approved by all relevant Members of the Service Solutions Group.

 

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(b)                                 At the Closing, Purchaser (or its Designated Affiliate) shall deliver to SPX the following:

 

(i)                                     the Assumption Documents, duly executed by Purchaser (or its Designated Affiliate); and

 

(ii)                                  if applicable, a transfer agreement regarding the transfer of all Closing Date Intragroup Receivables to Purchaser as set forth in Section 4.4(b) duly executed by Purchaser; and

 

(iii)                               if applicable, a transfer and assumption agreement regarding the transfer of all Closing Date Intragroup Payables to Purchaser as set forth in Section 4.4(d) duly executed by Purchaser.

 

(c)                                  At the Closing, Purchaser will pay (on behalf of Purchaser and its Designated Affiliates) to SPX (on behalf of SPX and the Other SPX Sellers), or as designated by SPX, an amount equal to (i) the Cash Purchase Price, plus (ii)  the amount (if any) by which the Estimated Closing Date Working Capital exceeds the Permitted Excess Amount (the “Estimated Excess”), minus (iii)  the amount (if any) by which Estimated Closing Date Working Capital is less than the Permitted Deficiency Amount (the “Estimated Shortfall”), plus (iv) the amount of Estimated Closing Date Cash, minus (v) the amount of Estimated Closing Date Indebtedness, plus (vi) the Estimated Closing Date Intragroup Receivables Amount (if any), minus (vii) the Estimated Closing Date Intragroup Payables Amount (if any) (the sum of items (i) through (vii) being referred to as the “Closing Date Payment Amount”).  Payment of the Closing Date Payment Amount shall be in U.S. dollars by wire transfer of immediately available funds to one or more bank accounts specified by SPX. Purchaser shall make the payment no later than 12:00 p.m., New York City time, on the Closing Date, and if payment of the Closing Date Payment Amount is made later than 12:00 p.m. New York City time on the Closing Date, Purchaser shall pay, in the manner set forth above, interest on the Closing Date Payment Amount at an annual rate equal to the prime lending rate prevailing at such time, as published in the Wall Street Journal (the “Specified Rate”) from and including the Closing Date to but not including the next Business Day following the Closing Date.

 

(d)                                 At or prior to the Closing, to the extent such agreements are (i) required for purposes of compliance with applicable Laws in the jurisdictions of incorporation of the SS Operating Companies or the SPX Asset Sellers, or (ii) agreed by the parties to be advisable in view of customary practice in such jurisdictions, SPX will cause one or more of the SPX Sellers, and Purchaser will or will cause its relevant Affiliates, to enter into a sale and transfer agreement or a transfer agreement (each, a “Local Transfer Agreement”) for purposes of documenting, implementing and/or giving effect to the transactions contemplated in this Agreement, so long as the Local Transfer Agreement does not expand the liabilities or obligations or diminish the rights of the SPX Sellers from those provided for herein.  Each Local Transfer Agreement is intended to be consistent with the terms of this Agreement.  In the event of any inconsistency between the terms of this Agreement and the terms of any Local Transfer Agreement, the terms of this Agreement shall govern unless the relevant term of this Agreement is not in compliance with applicable Law.

 

(e)                                  Not less than five Business Days prior to the Closing Date, SPX shall prepare and deliver to Purchaser statements setting forth good faith estimates of (i) the Closing Date Working Capital (the “Estimated Closing Date Working Capital”), (ii) the Closing Date

 

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Cash (the “Estimated Closing Date Cash”), (iii) the Closing Date Indebtedness (the “Estimated Closing Date Indebtedness”), (iv) the Closing Date Intragroup Receivables Amount (the “Estimated Closing Date Intragroup Receivables Amount”), and (v) the Closing Date Intragroup Payables Amount (the “Estimated Closing Date Intragroup Payables Amount”).  The estimates referred to in the preceding sentence shall be used for purposes of determining the Closing Date Payment Amount for purposes of Section 1.3(c), and as the basis for calculation of adjustment payments to be made following the Closing pursuant to Section 1.5.

 

1.4.                            Closing.  The closing of the transactions contemplated by Article I (the “Closing”) shall be held at the offices of Fried, Frank, Harris, Shriver & Jacobson LLP, One New York Plaza, New York, New York 10004, at 9:00 a.m., New York City time, on the first Business Day of the month immediately following the Effective Date or at such other place, time or date as Purchaser and SPX may agree (the “Closing Date”).  “Effective Date” subject to this Section 1.4, means the third Business Day immediately following the day on which the last of the conditions set forth in Articles VII and VIII (other than those conditions that by their nature are to be satisfied at the Closing) are satisfied or waived in accordance with this Agreement.

 

1.5.                            Closing Date Statements of the Service Solutions Business.

 

(a)                                 Not more than 90 days after the Closing Date, Purchaser shall furnish to SPX the following, accompanied by a schedule setting forth the relevant calculations:

 

(i)                                     a combined statement of the Working Capital of the Service Solutions Business (the “Closing Date Statement of Working Capital”);

 

(ii)                                  a statement of Closing Date Cash;

 

(iii)                               a statement of Closing Date Indebtedness;

 

(iv)                              a statement of the Closing Date Intragroup Receivables Amount; and

 

(v)                                 a statement of the Closing Date Intragroup Payables Amount (the items referred to in the foregoing clauses (i) through (v) collectively, the “Closing Date Statements”).

 

(b)                                 The Closing Date Statements shall each be prepared as of the close of business on the day immediately preceding the Closing Date on a basis consistent with the methods, policies, practices, procedures, assumptions, conventions and adjustments set forth on Exhibit 5.

 

(c)                                  Unless SPX notifies Purchaser in writing within 60 days after Purchaser’s delivery of the Closing Date Statements of any objection to the calculation of the Closing Date Statements (the “Notice of Objection”), the Closing Date Statements shall be final and binding on the parties.  SPX may object to any Closing Date Statement only on the grounds that it was not prepared in accordance with the last paragraph of Section 1.5(a).  Any Notice of Objection shall specify in reasonable detail the basis for the objections set forth therein. During such 60-day period, SPX and Purchaser and their respective Affiliates shall make available for review by the other their respective books, records, work papers and other documents and information relating to the Closing Date Statements as may be reasonably requested by Purchaser or SPX.

 

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(d)                                 If SPX provides the Notice of Objection to Purchaser within such 60-day period, Purchaser and SPX shall attempt in good faith to resolve SPX’s objections during the 30-day period following Purchaser’s receipt of the Notice of Objection.  If Purchaser and SPX are unable to resolve all such objections within such 30-day period, the matters remaining in dispute may be submitted for resolution to the Independent Accountant by either Purchaser or SPX.  Any item not so submitted shall be deemed to be agreed to by all parties and shall be final and binding upon the parties.  If any dispute is submitted to the Independent Accountant, each party shall furnish to the Independent Accountant such work papers and other documents and information relating to the disputed issues as the Independent Accountant may request and are available to that party and each party shall be afforded the opportunity to present to the Independent Accountant material relating to the determination and to discuss the determination with the Independent Accountant.  The Independent Accountant shall act as an expert to determine, based solely on the presentations by Purchaser and SPX, and not by independent review, only those issues still in dispute.  In resolving any disputed item, the Independent Accountant (x) shall be bound by the provisions of this Section 1.5 and (y) may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party.  The determination of the Independent Accountant with respect to those items in dispute, which shall be made within 60 days of the submission of the dispute to the Independent Accountant or as soon as practicable thereafter, shall be set forth in a written statement delivered to Purchaser and SPX, and the applicable Closing Date Statement(s), adjusted to reflect such determination, as well as the determinations of Purchaser and SPX with respect to those items accepted by SPX or otherwise resolved between Purchaser and SPX, shall become the final Closing Date Statements (the “Final Closing Date Statements”) and shall be final and binding upon all parties hereto, and the Working Capital derived from the Closing Date Statement of Working Capital included in the Final Closing Date Statements (the “Final Working Capital Statement”) shall be the final Closing Date Working Capital (the “Final Closing Date Working Capital”) and shall be final and binding upon the parties hereto.  The scope of the Independent Accountant’s review of any dispute between Purchaser and SPX regarding the Closing Date Statements pursuant to this Section 1.5 shall be limited solely to the resolution of the objections to the Closing Date Statements that are set forth in the Notice of Objection, and the Independent Accountant shall have no authority over any other disagreement (including questions of Law or interpretation of contract).  The determination of the Independent Accountant shall constitute an arbitral award that is final, binding and non-appealable and upon which a judgment may be entered by a court having jurisdiction thereover.  The fees and expenses of the Independent Accountant shall be allocated between Purchaser, on the one hand, and SPX, on the other hand, in such manner that Purchaser shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction, the numerator of which is the aggregate dollar value of all disputed items that are resolved by the Independent Accountant in a manner further from the position submitted to the Independent Accountant by Purchaser and closer to the position submitted to the Independent Accountant by SPX, and the denominator of which is the total aggregate dollar value of the disputed items so submitted, and SPX shall be responsible for the remainder of such fees and expenses.

 

1.6.                            Final Adjustments.

 

(a)                                 Estimates used for purposes of payments at the Closing Date shall be reconciled with the final calculations in accordance with the provisions of this Section 1.6 and payment shall be made in accordance with Section 1.6(g).

 

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(b)                                 Adjustments with reference to the Final Closing Date Working Capital shall be made as follows:

 

(i)                                     if there was an Estimated Shortfall and the Final Closing Date Working Capital is less than Estimated Closing Date Working Capital (such deficiency, the “Shortfall Underpayment”), SPX shall pay to Purchaser the amount of the Shortfall Underpayment;

 

(ii)                                  if there was an Estimated Shortfall and the Final Closing Date Working Capital is less than the Permitted Deficiency Amount but greater than the Estimated Closing Date Working Capital (such excess, the “Shortfall Overpayment”), then Purchaser shall pay SPX the amount of the Shortfall Overpayment;

 

(iii)                               if there was an Estimated Shortfall, but the Final Closing Date Working Capital neither exceeds nor is less than Reference Working Capital by more than $7.5 million, Purchaser shall pay SPX the amount of the Estimated Shortfall;

 

(iv)                              if there was an Estimated Shortfall and the Final Closing Date Working Capital is greater than the Permitted Excess Amount (such excess, the “Swing Excess”), Purchaser shall pay to SPX an amount equal to the sum of (x) the amount of the Swing Excess, plus (y) the amount of the Estimated Shortfall;

 

(v)                                 if there was an Estimated Excess and the Final Closing Date Working Capital is greater than Estimated Closing Date Working Capital (such excess, the “Additional Excess”), Purchaser shall pay to SPX the amount of the Additional Excess;

 

(vi)                              if there was an Estimated Excess and the Final Closing Date Working Capital is greater than the Permitted Excess Amount but less than the Estimated Closing Date Working Capital (such deficiency, the “Extra Overpayment”), then SPX shall pay Purchaser the amount of the Extra Overpayment;

 

(vii)                           if there was an Estimated Excess, but the Final Closing Date Working Capital neither exceeds nor is less than Reference Working Capital by more than $7.5 million, SPX shall pay to Purchaser the amount of the Estimated Excess;

 

(viii)                        if there was an Estimated Excess and the Final Closing Date Working Capital is less than Reference Working Capital by more than the Permitted Deficiency Amount (the “Swing Shortfall”) SPX shall pay to Purchaser an amount equal to the sum of (x) the amount of the Swing Shortfall, plus (y) the amount of the Estimated Excess; and

 

(ix)                              if there was neither an Estimated Shortfall nor an Estimated Excess: then (x) if the Final Closing Date Working Capital is greater than the Permitted Excess Amount (such dollar amount is referred to herein as the “Closing Excess”), Purchaser shall pay to SPX the amount of the Closing Excess, and (y) if the Final Closing Date Working Capital is less than the Permitted

 

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Deficiency Amount (such dollar amount is referred to herein as the “Closing Shortfall”), SPX shall pay to Purchaser the amount of the Closing Shortfall.

 

(c)                                  If the amount of the Closing Date Cash as finally determined pursuant to Section 1.5 (the “Final Closing Date Cash”) is greater than the Estimated Closing Date Cash, Purchaser shall pay to SPX an amount equal to the difference and if the Final Closing Date Cash is less than the Estimated Closing Date Cash, SPX shall pay to Purchaser an amount equal to the difference.

 

(d)                                 If the amount of Closing Date Indebtedness as finally determined pursuant to Section 1.5 (the “Final Closing Date Indebtedness”) is greater than Estimated Closing Date Indebtedness, SPX shall pay to Purchaser an amount equal to the difference and if the Final Closing Date Indebtedness is less than the Estimated Closing Date Indebtedness, Purchaser shall pay to SPX an amount equal to the difference.

 

(e)                                  If the final Closing Date Intragroup Receivables Amount as finally determined pursuant to Section 1.5 (the “Final Closing Date Intragroup Receivables Amount”) is greater than the Estimated Closing Date Intragroup Receivables Amount, Purchaser shall pay to SPX an amount equal to the difference and if the Final Closing Date Intragroup Receivables Amount is less than the Estimated Closing Date Intragroup Receivables Amount, SPX shall pay to Purchaser an amount equal to the difference.

 

(f)                                   If the final Closing Date Intragroup Payables Amount as finally determined pursuant to Section 1.5 (the “Final Closing Date Intragroup Payables Amount”) is greater than the Estimated Closing Date Intragroup Payables Amount, SPX shall pay to Purchaser an amount equal to the difference and if the Final Closing Date Intragroup Payables Amount is less than the Estimated Closing Date Intragroup Payables Amount, Purchaser shall pay to SPX an amount equal to the difference.

 

(g)                                  Any payment owing by Purchaser to SPX pursuant to this Section 1.6 shall be netted against any payment owing by SPX to Purchaser pursuant to this Section 1.6. Any payments under this Section 1.6 shall be made within three Business Days after the Closing Statements have all become final pursuant to Section 1.5 by wire transfer of immediately available funds to accounts specified in writing by the applicable party, with interest thereon from and including the Closing Date to but not including the date of payment at an annual rate equal to the Specified Rate.

 

1.7.                            Multiple Closings.

 

(a)                                 Notwithstanding the provisions of Section 1.4 and subject to applicable Laws, if, at any time, all of the conditions to Closing set forth in Article VII and Article VIII (other than those conditions that by their nature are to be satisfied at the Closing) have been satisfied or waived, except for the requirement to have received any Governmental Approval required to effect the transfer of ownership of any of the Acquired Assets, the China Interests or the Launch Shares (any of the foregoing, the “Withheld Assets”), then SPX or Purchaser may, by written notice to the other party at any time thereafter (the “Section 1.7 Notice”), elect to proceed with the Closing notwithstanding the absence of such Governmental Approval.  If a Section 1.7 Notice is delivered, then the Effective Date shall be the third Business Day following the date on which the Section 1.7 Notice is given.  At the Closing, all of the transactions contemplated by this Agreement shall be consummated except for the transfer of the Withheld Assets with respect

 

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to which the requisite Governmental Approval has not been received, and (i) the Cash Purchase Price to be paid pursuant to Section 1.3(c) shall be reduced by the Agreed Amount applicable to such Withheld Assets, (ii) the Estimated Closing Date Cash, the Estimated Closing Date Working Capital, the Estimated Closing Date Indebtedness, the Estimated Closing Date Intragroup Receivables Amount and the Estimated Closing Date Intragroup Payables Amount shall each, as applicable, exclude any estimates with respect to such Withheld Assets, (iii) the Reference Working Capital shall be reduced by the amount of the Agreed Reference Working Capital applicable to such Withheld Assets, and (iv) subject to the last sentence of Section 1.7(e), the Closing Date Statements to be delivered pursuant to Section 1.5 shall not include any amounts related to such Withheld Assets, but all other provisions of Section 1.5 and 1.6 apply.

 

(b)                                 Following the Closing and until the Termination Date, SPX and Purchaser shall continue to seek, in accordance with Section 6.1, all Governmental Approvals required for the transfer of the Withheld Assets to Purchaser and the provisions of Sections 4.1, 4.2, 4.3 and 4.4 shall remain applicable to the Withheld Assets until the applicable Withheld Asset Closing.  If by the Termination Date all Governmental Approvals required for the transfer of any of the Withheld Assets to Purchaser shall not have been obtained, then either SPX or Purchaser may terminate this Agreement with respect to any of the Withheld Assets not theretofore purchased with the same effect as set forth in paragraph (c) of this Section 1.7.

 

(c)                                  If at any time (whether prior to or after the Closing) any of the conditions set forth in Section 7.5, 7.6, 8.5 or 8.6 becomes incapable of being satisfied with respect to the transfer of the ownership of any of the Withheld Assets, then this Agreement shall be deemed amended to eliminate the provisions regarding the purchase and sale of such Withheld Assets, and, if the Closing has not yet occurred, then the Cash Purchase Price shall be reduced by the applicable Agreed Amount, the statements to be prepared and delivered pursuant to Sections 1.3(e) and 1.5 shall not include any amounts relating to such Withheld Assets, and the Reference Working Capital shall be reduced by the amount of the Agreed Reference Working Capital applicable to such Withheld Assets.  Notwithstanding anything herein to the contrary, if the Closing occurs without the transfer of any of the Withheld Assets, SPX’s continued ownership and operation of the Service Solutions Business conducted by SS China, SS Korea and/or SS India, and/or its continued ownership of the Launch Shares, as applicable, at any time after the Closing shall not constitute a violation of Section 4.5(a).

 

(d)                                 Within three Business Days after receipt of any required Governmental Approval required to effect the transfer of any Withheld Assets, SPX shall prepare and deliver to Purchaser the good faith estimates referred to in Section 1.3(e) but only with respect to such Withheld Assets, and within three Business Days thereafter, or on such other date as Purchaser and SPX may agree, the closing of the purchase and sale of such Withheld Assets (the “Withheld Assets Closing”) shall take place.  At the Withheld Assets Closing, SPX shall cause the transfer to Purchaser of the ownership of such Withheld Assets, and Purchaser shall pay to SPX the Withheld Asset Closing Date Payment Amount with respect to the Withheld Assets being transferred by wire transfer of immediately available U.S. dollars to the bank accounts designated by SPX.  The “Withheld Asset Closing Date Payment Amount” with respect to the Withheld Assets being transferred shall mean an amount equal to (i) the Agreed Amount applicable to such Withheld Assets, plus (ii) the amount (if any) by which the Estimated Closing Date Working Capital with respect to such Withheld Assets exceeds the Agreed Reference

 

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Working Capital applicable to such Withheld Assets, minus (iii) the amount (if any) by which the Estimated Closing Date Working Capital with respect to such Withheld Assets is less than the Agreed Reference Working Capital with respect to such Withheld Assets, plus (iv) the amount of Estimated Closing Date Cash (if any) with respect to such Withheld Assets, minus (v) the amount of any Estimated Closing Date Indebtedness (if any) with respect to such Withheld Assets, plus (vi) the Estimated Closing Date Intragroup Receivables Amount (if any) with respect to such Withheld Assets, minus (vii) the Estimated Closing Date Intragroup Payables Amount (if any) with respect to such Withheld Assets.

 

(e)                                  The estimates referred to in paragraph (d) of this Section 1.7 shall be prepared in accordance with Section 1.3(e) as if Section 1.3(e) applied solely to the Withheld Assets to be transferred.  The Withheld Asset Closing Date Payment Amount shall be reconciled and finalized in accordance with, and using the procedures set forth in, Sections 1.5 and 1.6 as if such provisions apply solely to the applicable Withheld Assets except that for the purpose of such calculations the Reference Working Capital shall be the Agreed Reference Working Capital applicable to such Withheld Assets and no portion of the Permitted Excess Amount or Permitted Deficiency Amount shall be allocated to such Withheld Assets.  Notwithstanding the foregoing, Purchaser and SPX may agree, depending on the timing of any Withheld Assets Closing relative to the timing of the preparation and delivery by Purchaser of the Closing Date Statements, that any Withheld Assets transferred prior to the delivery of the Closing Date Statements shall be included in the Closing Date Statements instead of being prepared and delivered separately.

 

(f)                                   Any payment owing by Purchaser to SPX pursuant to this Section 1.7 shall be netted against any payment owing by SPX to Purchaser pursuant to this Section 1.7. Any payments under this Section 1.7 shall be made within three Business Days after the Closing Statements with respect to the applicable Withheld Assets have all become final pursuant to Section 1.5 by wire transfer of immediately available funds to accounts specified in writing by the applicable party, with interest thereon from and including the date of the Withheld Assets Closing to but not including the date of payment at an annual rate equal to the Specified Rate.

 

1.8.                            French Works Council Process.

 

(a)                                 As promptly as practicable following the execution of this Agreement, SPX shall cause SS France to initiate the Works Council Process and will use, and will cause SS France to use, reasonable best efforts to take all actions necessary, proper or advisable to complete the Works Council Process as soon as practicable after the date hereof. Purchaser shall cooperate in good faith with all such efforts, including confirming (for itself and on behalf of its Affiliates) that it has no current plans to change the terms and conditions of employment of the employees of SS France (including the terms of such employees’ salaries, bonuses and other benefits) and, to the extent relevant to the Works Council Process and otherwise legally permitted, informing the employees of SS France of such current plans (and not to make any contradicting statements).  SPX shall keep Purchaser reasonably informed of the status of the information and consultation process with SS France’s works council. SPX shall procure that, to the extent practicable, SS France shall provide copies to Purchaser, in advance, of any proposed written correspondence, notices or other communications (including any supporting materials) to be made by SS France to its works council in connection with its information and consultation on the contemplated transaction, and shall consult with Purchaser in connection with such communications and consider in good faith any comments that Purchaser may make thereon. SPX shall use its reasonable endeavours to procure that SS France shall not without Purchaser’s

 

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prior written consent, such consent not to be unreasonably withheld or delayed, enter into any agreement or understanding with, or make any commitment to, the SS France works council that would bind SS France (or Purchaser) or impose any obligations on SS France or Purchaser.

 

(b)                                 Purchaser hereby offers (the “Offer”) to purchase, or cause one of its Affiliates to purchase, 100% of the French Interests on the terms and conditions set forth herein and in the agreement to be entered into among Purchaser, SPX and its designated Affiliates, substantially in the form attached hereto as Exhibit 6 (the “French Agreement”), for consideration equal to the French Purchase Price). The Offer shall remain open and irrevocable until, and shall expire upon, the earlier of (i) the termination of the Agreement pursuant to Article X, and (ii) the expiration of six months following the Closing Date, unless extended by mutual agreement of SPX and Purchaser (the “Offer Period”).  “Completion of the Works Council Process” shall be deemed to take effect upon the delivery by the works council of its opinion in respect of the transaction. In the event that the works council fails to provide an opinion after having been appropriately informed and consulted (which shall be determined jointly by SPX and Purchaser acting reasonably, having regard to French legal requirements and past practice), Completion of the Works Council Process will be deemed to take effect upon such date as SPX and Purchaser, acting reasonably and in good faith, determine jointly (on the basis, without limitation, of the minutes of the information and consultation meeting(s) with the works council), that no further information and consultation process is required with the works council in respect of the contemplated transaction.

 

(c)                                  SPX shall not be obligated to sell the French Interests. Within three Business Days following the completion of the Works Council Process, SPX shall deliver a written notice to Purchaser indicating its acceptance (an “Acceptance Notice”) or rejection (a “Rejection Notice”) of the Offer.  An Acceptance Notice, if delivered prior to Closing, shall be contingent on the consummation of the Closing. Upon receipt of an Acceptance Notice, Purchaser shall promptly execute and deliver the French Agreement.

 

(d)                                 If SPX delivers an Acceptance Notice prior to the Closing Date, the closing of the purchase and sale of the French Interests (the “French Closing”) shall occur concurrently with and as part of the Closing pursuant to the terms and conditions of this Agreement and the French Agreement.

 

(e)                                  If (x) SPX does not deliver an Acceptance Notice prior to the Closing Date, or (y) SPX delivers a Rejection Notice prior to the Closing Date,

 

(i)                                     at the Closing, (A) the Cash Purchase Price shall be reduced by the Agreed Amount applicable to SS France, (B) the Estimated Closing Date Cash, the Estimated Closing Date Working Capital, the Estimated Closing Date Indebtedness, the Estimated Closing Date Intragroup Receivables Amount and the Estimated Closing Date Intragroup Payables Amount shall each, as applicable, exclude any estimates with respect to SS France, and (C) the Reference Working Capital shall be reduced by the amount of the Agreed Reference Working Capital applicable to SS France;

 

(ii)                                  the provisions of Sections 4.1, 4.2, 4.3 and 4.4 shall remain applicable to SS France until the earlier of (A) the French Closing, and (B) the delivery of the Rejection Notice.

 

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(f)                                   If SPX delivers an Acceptance Notice after the Closing but prior to the expiration of the Offer Period,

 

(i)                                     the French Closing shall occur within five Business Days following the delivery of the Acceptance Notice by SPX or on such other date as Purchaser and SPX may agree, pursuant to the terms and conditions of this Agreement and the French Agreement;

 

(ii)                                  certain adjustment amounts shall be payable at and after the French Closing and shall be calculated in accordance with Sections 1.3(c), 1.3(e), 1.5 and 1.6 as if such provisions apply solely to SS France, except that for the purpose of such calculations the Reference Working Capital shall be the Agreed Reference Working Capital applicable to SS France.

 

(g)                                  Notwithstanding anything to the contrary, the conduct of the business of SS France (i) during the Offer Period, or (ii) (x) if SPX shall have delivered a Rejection Notice or (y) if the Offer Period shall have expired, during the period thereafter, shall not constitute a violation of Section 4.5(a).

 

(h)                                 If SPX delivers a Rejection Notice, if the Closing occurs, SPX shall be prohibited from selling the French Interests for 12 months after the date of the Rejection Notice.

 

(i)                                     If (x) SPX delivers a Rejection Notice or (y) the Offer expires without being accepted, if the Closing occurs, SPX and Purchaser shall negotiate in good faith appropriate and reasonable supply and services arrangements and cross-licensing agreements in order to allow SS France and the Service Solutions Business to continue the conduct of their respective businesses then conducted.

 

ARTICLE II

 

Representations and Warranties of SPX

 

SPX hereby represents and warrants to Purchaser, except as otherwise set forth in the disclosure schedules delivered by SPX to Purchaser concurrently herewith (the “Disclosure Schedules”), as follows (as used in this Agreement, the term “Service Solutions Companies” shall mean (i) the SPX Sellers but (in each case) only to the extent related to the Service Solutions Business and (ii) the Members of the Service Solutions Group, and the term “Service Solutions Company” means any one of the foregoing):

 

2.1.                            Corporate Authority and Approval.  Each of the SPX Sellers has all requisite corporate or other similar power, as the case may be, and authority to enter into, deliver and perform its obligations under, this Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Ancillary Agreements by each of the SPX Sellers party hereto and thereto, the performance by each of the SPX Sellers of its obligations hereunder and thereunder, and the consummation by each of the SPX Sellers of the transactions contemplated hereby and thereby, have been duly authorized by all requisite corporate or similar action on the part of each such Person.  No vote or approval of the stockholders of SPX is required for SPX to enter into, deliver or perform its obligations under this Agreement or the Ancillary Agreements.  This Agreement has been duly executed and delivered by each of the SPX Sellers party hereto and

 

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(assuming the valid authorization, execution, and delivery of this Agreement by Purchaser) constitutes a legal, valid and binding obligation of each of the SPX Sellers party hereto enforceable against such Person in accordance with its terms, except to the extent such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar Laws relating to or affecting creditors’ rights generally and to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).  The Ancillary Agreements will be duly executed and delivered by SPX and its Affiliates (including the Other SPX Sellers) which are party thereto and (assuming, if applicable, the valid authorization, execution, and delivery thereof by the other parties thereto) will constitute the legal, valid and binding obligations of SPX and such Affiliates which are a party thereto, enforceable against each such Person in accordance with their respective terms, except to the extent such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar Laws relating to or affecting creditors’ rights generally and to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

 

2.2.                            Organization and Good Standing.  Each of the Members of the Service Solutions Group is an entity duly organized, validly existing, and in good standing under the Laws of its jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease, and operate the properties and assets it currently owns or leases and to carry on its business as it is currently conducted.  Each of the Members of the Service Solutions Group is, in all material respects, duly licensed or qualified to do business as a foreign entity and is in good standing in all jurisdictions in which the character of the properties and assets now owned or leased by it or the nature of the business now conducted by it requires it to be so licensed, qualified or in good standing.  Prior to the Closing, SPX will have furnished or have made available to Purchaser a copy of the certificate of incorporation and by-laws (or other comparable organizational documents) and where applicable, up to date excerpts from the trade or companies’ register and up to date copies of the lists of shareholders of each of the Members of the Service Solutions Group. No insolvency or liquidation proceedings have been initiated against any Member of the Service Solutions Group, and to the knowledge of SPX, no insolvency or liquidation proceedings are threatened against any Member of the Service Solutions Group.

 

2.3.                            Capitalization.  The Disclosure Schedules set forth the authorized, issued and outstanding Equity Interests of each of the SS Operating Companies. All of the issued and outstanding Equity Interests of each SS Operating Company have been validly issued and are fully paid and nonassessable, and were not issued in violation of any preemptive or similar rights.  The Disclosure Schedules set forth a list of the record and beneficial owners of all of the outstanding Equity Interests of each SS Operating Company.  Except for the Equity Interests set forth in the Disclosure Schedules, there are no Equity Interests of any SS Operating Company outstanding and there are no Equity Interests outstanding convertible into, exchangeable for, or carrying the right to acquire, or any voting agreements with respect to, or any restrictions (other than restrictions under applicable securities laws) on transfers of, any Equity Interests of any SS Operating Company or any subscriptions, warrants, options, rights or other arrangements obligating any SS Operating Company to issue or acquire any of its Equity Interests.

 

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2.4.                            SS Operating Company Interests; Launch Shares; Acquired Assets.

 

(a)                                 Upon delivery to Purchaser at the Closing of executed instruments of transfer evidencing the transfers of the SS Operating Company Interests to Purchaser or an Affiliate of Purchaser, and receipt by SPX (on behalf of the SPX Sellers) of the portion of the Purchase Price payable in respect thereof, legal and valid title to the SS Operating Company Interests will pass to Purchaser or an Affiliate of Purchaser, free and clear of all Encumbrances (other than Encumbrances created by Purchaser).

 

(b)                                 Upon delivery to Purchaser at the Closing of certificates representing the Launch Shares, duly endorsed for transfer to Purchaser or an Affiliate of Purchaser or accompanied by duly executed stock powers in blank or other appropriate instrument of transfer, and receipt by SPX (on behalf of the SPX Sellers) of the portion of the Purchase Price payable in respect thereof, legal and valid title to the Launch Shares will pass to Purchaser or an Affiliate of Purchaser, free and clear of all Encumbrances (other than Encumbrances created by Purchaser).

 

(c)                                  Upon delivery to Purchaser at the Closing of executed bills of sale or other instruments of transfer and assignment in respect of the Acquired Assets and receipt by SPX (on behalf of the SPX Sellers) of the portion of the Purchase Price payable in respect thereof, legal and valid title to the Acquired Assets will pass to Purchaser, free and clear of all Encumbrances, other than Permitted Encumbrances (and other than Encumbrances created by Purchaser).

 

2.5.                            Subsidiaries.

 

(a)                                 The Disclosure Schedules set forth a list of the Subsidiaries (direct and indirect) of the respective SS Operating Companies as of the date hereof.  Other than the Subsidiaries of the SS Operating Companies so listed, the SS Operating Companies do not directly or indirectly own any Equity Interest of, or any Equity Interest convertible into, exchangeable for, or carrying the rights to acquire, any Equity Interests of, any corporation, partnership, joint venture or other business association or entity.

 

(b)                                 The Disclosure Schedules set forth the authorized, issued and outstanding Equity Interests of each of the Subsidiaries (direct and indirect) of the SS Operating Companies.  All of the issued and outstanding Equity Interests of each Subsidiary have been validly issued and are fully paid and nonassessable, were not issued in violation of any preemptive or similar rights and are held, of record and beneficially, by an SS Operating Company or a wholly owned Subsidiary of an SS Operating Company.  Except for the Equity Interests set forth in the Disclosure Schedules, there are no Equity Interests of any Subsidiary of an SS Operating Company outstanding and there are no securities outstanding convertible into, exchangeable for, or carrying the right to acquire, or any voting agreements with respect to, or any restrictions (other than restrictions under applicable securities laws) on transfers of, any Equity Interests of any Subsidiary of an SS Operating Company or any subscriptions, warrants, options, rights or other arrangements obligating any Subsidiary of an SS Operating Company to issue or acquire any of its Equity Interests.

 

2.6.                            Governmental Approvals.  No consent, approval, waiver or authorization of, or exemption by, or filing with, any Governmental Authority (each, a “Governmental Approval”) is required to be obtained by SPX or any of its Affiliates in connection with the execution, delivery and performance by SPX or any of its Affiliates of this Agreement or the Ancillary Agreements, or the taking by SPX or its Affiliates of any other action contemplated hereby or thereby, excluding, however, such Governmental Approvals which, if not obtained, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse

 

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Effect (it being understood that, in making the representations and warranties contained in this Section 2.6, SPX is relying on the information and documents furnished by Purchaser).  No representation or warranty is made herein regarding any such Governmental Approvals that may be required in respect of any Permits.

 

2.7.                            No Conflicts.  None of the execution and delivery by SPX or any of its Affiliates of this Agreement or any of the Ancillary Agreements, nor the performance by them of their respective obligations hereunder and thereunder, nor the consummation by any of them of the transactions contemplated hereby and thereby will in any material respect, with or without the giving of notice or the lapse of time, or both, subject to obtaining any Governmental Approvals referred to in Sections 2.6 and 3.3, (a) conflict with or violate any provision of the organizational documents of SPX or any of its Affiliates, (b) violate any Order or material Law applicable to SPX or any of its Affiliates or any of the properties or assets of the Service Solutions Business, or (c) conflict with or result in the breach of any agreement reflecting obligations of SPX or its Affiliates for Indebtedness, except (in the case of clause (c) only) for conflicts that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

2.8.                            Compliance with Laws; Permits.

 

(a)                                 Each of the Service Solutions Companies is in compliance in all material respects with all material Laws applicable to it, any of its properties or other assets or any of its businesses or operations.

 

(b)                                 Each of the Service Solutions Companies holds all licenses, franchises, registrations, permits, certificates, approvals and authorizations from Governmental Authorities necessary for the conduct of the Service Solutions Business as currently conducted by them, including the manufacture and sale of products (collectively, “Permits”), except where the failure to possess any such Permit would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Each of the Service Solutions Companies is in compliance with the terms of all Permits, except where the failure to comply would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  None of the Service Solutions Companies has received written notice in the last 12 months to the effect that a Governmental Authority was considering the amendment, termination, revocation or cancellation of any Permit which action would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

2.9.                            Financial Statements.  SPX has delivered to Purchaser the unaudited combined balance sheets of the Service Solutions Business as at December 31, 2009 and 2010 and September 30, 2011, and the unaudited combined statements of income of the Service Solutions Business for the fiscal years ended December 31, 2009 and 2010 and the nine-month period ended September 30, 2011 (collectively, the “Financial Statements”), a copy of each of which is included in the Disclosure Schedules.  The Financial Statements were prepared from and in accordance with the books and records of the Service Solutions Companies and present fairly in all material respects the combined financial position and combined results of operations of the Service Solutions Business as at the respective dates indicated and for the respective periods then ended in conformity with U.S. generally accepted accounting principles (“GAAP”), consistently applied. The combined statements of cash flows for the fiscal years ended December 31, 2009 and 2010 and the nine-month period ended September 30, 2011 included in the

 

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Disclosure Schedules have been prepared from and in accordance with the books and records of the Service Solutions Companies and from the Financial Statements for internal purposes.  The books and records of the Service Solutions Companies, in all material respects, (i) accurately reflect the transactions and accounts of the Service Solutions Business and (ii) have been and are being maintained in accordance with good business practices and applicable Laws.  Each Member of the Service Solutions Group that is required to have filed statutory accounts for its last fiscal year prior to the date hereof has done so or has obtained an extension of time to do so in compliance, in all material respects, with applicable Laws.  No Member of the Service Solutions Group engages in factoring or “reverse factoring” of any of its accounts receivable or accounts payable, as applicable.

 

2.10.                     Absence of Certain Changes or Events.  Since September 30, 2011 to the date of this Agreement, there have not been any changes, events, occurrences or state of facts that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Since September 30, 2011 to the date of this Agreement, (a) the Service Solutions Companies have carried on and operated the Service Solutions Business in the ordinary course of business in all material respects, and (b) none of the Service Solutions Companies has taken any of the following actions:

 

(a)                                 (1) incurred any Indebtedness, except in the ordinary course of business, and except for intercompany debt which will be repaid, contributed, settled or cancelled at or prior to the Closing; (2) merged or consolidated with, purchased substantially all or a material portion of the assets of, or otherwise acquired, any business or any Person; (3) incurred or created any Encumbrances (other than Permitted Encumbrances) on any of the Acquired Assets or assets of the Service Solutions Companies that will not be removed prior to the Closing; (4) sold, transferred, leased, licensed, pledged, mortgaged, encumbered or disposed of any material assets of any of the Service Solutions Business, other than (A) in the ordinary course of business or (B) dispositions of obsolete, excess or worthless assets;

 

(b)                                 (1) increased the wages or benefits payable to any of the Business Employees (including any such increase pursuant to any bonus, pension, profit sharing or other plan or commitment), except for increases in wages or benefits in the ordinary course of business; (2) entered into any employment agreement (other than the entry into an employment agreement in connection with the hiring or promotion of any employee entitled to receive pursuant to such agreement an annual salary of $200,000 or less (excluding any bonus, pension, profit sharing or other compensation)) or, except in the ordinary course of business, amended any employment, consulting, severance, change in control, compensation or similar agreement for the benefit or welfare of any Business Employees; or (3) adopted, entered into or amended any Benefit Plan applicable to any Business Employee, except in the ordinary course of business;

 

(c)                                  amended in any material respect, or waived any material right under, any Material Contract, except in the ordinary course of business, other than as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

 

(d)                                 (1) except as required under GAAP, made any material changes to any of its methods of accounting or financial accounting practices, policies or principles from those employed in the Financial Statements; or (2) made or revoked any material election relating to Taxes, or settled or compromised any material claim or Action relating to Taxes; or

 

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(e)                                  delayed the payment of accounts payable or accelerated the collection of receivables of the Service Solutions Business except in the ordinary course of business.

 

2.11.                     Title to Assets.  As of the Effective Date, the SPX Asset Sellers will have good and valid title to or a valid leasehold in all of the Acquired Assets which they are transferring to Purchaser pursuant to Section 1.2(a), and the Members of the Service Solutions Group will have good and valid title to or a valid leasehold in all of their respective assets and properties (whether real or personal, tangible or intangible), in each case free and clear of all Encumbrances other than Permitted Encumbrances.

 

2.12.                     Intellectual Property.

 

(a)                                 The Disclosure Schedules set forth a list, as of the date hereof, of all: (i) Owned Intellectual Property that is registered or for which an application to register is pending with a Governmental Authority, and (ii) all Licenses that call for payments by or to the Service Solutions Companies of more than $200,000 per year, other than Licenses for off-the-shelf or commercially available computer software, open-source software and click-wrap agreements.

 

(b)                                 The Service Solution Companies own, free and clear of all Encumbrances, other than Permitted Encumbrances, all rights, title and interest to the material Owned Intellectual Property, and have the right to use, pursuant to a valid and enforceable written license, all material Licensed Intellectual Property.  No invalidity of any Owned Intellectual Property that would reasonably be expected to have a Material Adverse Effect is, to SPX’s knowledge, threatened.  The Service Solutions Companies have taken all commercially reasonable actions consistent with industry standards to maintain and protect the Owned Intellectual Property.

 

(c)                                  There is no material Action pending against any of the Service Solutions Companies asserting the invalidity, misuse or unenforceability of any Owned Intellectual Property, (ii) no Service Solutions Company has received any written notice of any material claim by any Person against any Service Solution Company for infringement or misappropriation of the Intellectual Property of such Person (including any demand or request that any Service Solutions Company obtain a license for any such rights from any such Person), (iii) to the knowledge of SPX, the conduct, goods and services of the Service Solutions Business have not infringed, misappropriated or conflicted with and do not infringe, misappropriate or conflict with any material Intellectual Property of other Persons and (iv) to the knowledge of SPX, none of the material Owned Intellectual Property has been infringed, misappropriated or conflicted by other Persons and none is being infringed, misappropriated or is in conflict by other Persons.

 

(d)                                 Each employee, officer and consultant of the Service Solutions Business who has developed material Owned Intellectual Property has executed an agreement in favor of the Service Solutions Companies that provide for (i) the disclosure and assignment to the Service Solutions Companies of Intellectual Property developed by such employee, officer and consultant, as applicable, and (ii) the maintenance of the confidentiality of any information proprietary to the Service Solutions Business.

 

2.13.                     Environmental Matters.

 

(a)                                 (i) The Service Solutions Companies are in compliance in all material respects with all Environmental Laws that are material to their properties or operations; (ii) none

 

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of the Service Solutions Companies has (A) received any written notice that any such Service Solutions Company is a potentially responsible party in any material respect under CERCLA or any similar Environmental Law at any federal or state site, (B) been named in any Action alleging any material violation of, or material liability under, any Environmental Laws, or (C) been required to undertake any Remedial Action by any Governmental Authority or any other Person pursuant to any Environmental Law, in each case which matter has not been resolved or completed in all material respects.

 

(b)                                 Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) the Services Solutions Companies have obtained and currently maintain all Permits necessary under Environmental Laws for their operations, and (ii) there is no investigation known to SPX, nor any Action pending, or to the knowledge of SPX, threatened against the Service Solutions Companies or any Real Property to revoke such Permits.

 

(c)                                  SPX and Purchaser agree that (i) SPX is making no representations or warranties in this Agreement relating to the Retained Real Properties and (ii) the only representations and warranties of SPX made herein with respect to any matters arising under any Environmental Laws are those contained in this Section 2.13.

 

2.14.                     Material Contracts.  The Disclosure Schedules contain a list of all Contracts that exist as of the date hereof, other than Benefit Plans, to which any of the Service Solutions Companies is a party, and that fall within any of the following categories (each, a “Material Contract”):

 

(a)                                 each Contract that provides for the receipt or payment of more than $2,000,000 in any calendar year, including, without limitation, all such Contracts that are (i) Contracts for capital expenditures (including leases of personal property), (ii) distribution, dealer, customer, strategic partner or sales agency Contracts, (iii) guarantees of third party obligations, and (iv) Contracts for the purchase or sale of any assets, including products, materials, supplies, advertising, equipment or services (unless terminable by the Service Solutions Company upon no more than 30 days’ notice), but excluding purchase orders or other Contracts for the purchase of raw materials, components or supplies, and sales orders or other Contracts for the sale of finished goods, entered into in the ordinary course of business;

 

(b)                                 each Contract that purports to limit, curtail or restrict the kinds of businesses in which a Service Solutions Company may engage, the geographical area in which it may conduct its business, or the Persons with whom it can compete or to whom it can sell products or deliver services;

 

(c)                                  each loan or credit agreement, mortgage, indenture, note or other Contract or instrument evidencing Indebtedness of any Service Solutions Company or any Contract or instrument pursuant to which Indebtedness may be incurred or is guaranteed by any Service Solutions Company (other than the SPX Credit Agreement);

 

(d)                                 each joint research and development agreement involving expenditures by the Service Solutions Companies in excess of $1,000,000 in any calendar year;

 

(e)                                  each Contract which purports to require any Service Solutions Company to manufacture any products in any specified geographical area or purports to limit the rights of any Service Solutions Company to relocate manufacturing operations;

 

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(f)                                   each License (whether as licensor or licensee), royalty-bearing or similar agreement permitting the use of any Intellectual Property of the Service Solutions Business that provides for the receipt or payment of more than $200,000 in any calendar year;

 

(g)                                  each joint venture, partnership or similar agreement and each Contract providing for the formation of a joint venture, long-term alliance or partnership or involving an equity investment by any Service Solutions Company; and

 

(h)                                 each Real Property Lease providing for annual rental payments in excess of $500,000.

 

SPX has made available to Purchaser or its Representatives copies of all such Material Contracts.  Each Material Contract is a valid and binding obligation of the applicable Service Solutions Company and is enforceable against such entity in accordance with its terms, except to the extent such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar Laws relating to or affecting creditors’ rights generally and to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).  None of the Service Solutions Companies nor, to the knowledge of SPX, any other party is in default under or in breach of or is otherwise delinquent in performance under any Material Contract in any material respect, and no event has occurred that with notice or lapse of time, or both, would constitute such a default.  None of the Service Solutions Companies has received any written notice of termination or cancellation of any Material Contract.

 

2.15.                     Litigation.  There is no pending or, to SPX’s knowledge, threatened Action against, or, to SPX’s knowledge, Governmental Investigation of, any of the Service Solutions Companies (a) with respect to which there is a reasonable likelihood of a determination that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or (b) that seeks to enjoin or obtain damages in respect of the consummation of the transactions contemplated hereby.  None of the Service Solutions Companies is subject to any outstanding Orders that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

2.16.                     Insurance.  The Disclosure Schedules set forth a list, as of the date hereof, of all material casualty, general liability and other insurance policies maintained by or on behalf of any of the Service Solutions Companies (the “Insurance Policies”). Each of the Insurance Policies is in full force and effect and no written notice has been received by any of the Service Solutions Companies from any insurance carrier purporting to cancel or materially modify coverage under any of the Insurance Policies.  There are no pending material claims against the Insurance Policies by any of the Service Solutions Companies as to which the insurers have in writing denied liability.  Purchaser acknowledges that, except as set forth in the Disclosure Schedules, Purchaser and its Affiliates (including the Members of the Service Solutions Group) will not have the benefit of any of the Insurance Policies following the Closing.

 

2.17.                     Employee Benefit Plans.

 

(a)                                 The Disclosure Schedules contains a list, as of the date hereof, of all material Benefit Plans.  With respect to each material Benefit Plan, SPX has delivered or made available to Purchaser copies of the following documents (to the extent applicable): (i) all current 

 

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plan documents and benefit schedules; (ii) the most recent summary plan description, or, if no summary plan description exists, a written description of all material terms and conditions of such Benefit Plan; and (iii) the most recent determination letter from the Internal Revenue Service or similar approval from any other Governmental Authority.  SPX has also delivered or made available to Purchaser a copy of each Employment Agreement in effect on the date hereof.

 

(b)                                 Each Benefit Plan that is intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”), if any, (i) has received a favorable determination letter from the Internal Revenue Service and (ii) has been operated in compliance with ERISA and in accordance with the provisions of, and the rules and regulations covering, such Benefit Plan except where the failure to so comply would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  There are no pending Actions which have been asserted or instituted against the Benefit Plans, the plan sponsor or the plan administrator, or against any fiduciary of the Benefit Plans with respect to the operation of such plans (other than routine benefit claims), nor to the knowledge of SPX are any such Actions threatened, with respect to which there is a reasonable likelihood of a determination that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(c)                                  None of the Benefit Plans is a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.

 

(d)                                 All Benefit Plans that are subject to the Laws of any jurisdiction outside of the United States (i) have been maintained in accordance with all applicable requirements of such Laws except where a failure to be so maintained would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and (ii) if they are intended to qualify for special tax or social security treatment, meet all requirements for such treatment, except where a failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(e)                                  No payments, transfers or other benefits made or to be made to any Business Employee or Former Business Employee under any Benefit Plan or existing contract or arrangement with or covering such employee will give rise to the payment of any amount that would not be deductible pursuant to Section 280G of the Code.

 

2.18.                     Fees.  Except for the fees payable to Credit Suisse Securities (USA) LLC, which are the responsibility of SPX, none of the Service Solutions Companies has paid or become obligated to pay any fee or commission to any broker, finder or intermediary in connection with the transactions contemplated hereby.

 

2.19.                     Assets of the Business.  As of the Effective Date, the assets and properties held by the Members of the Service Solutions Group, together with the Acquired Assets and the Launch Shares, will constitute all of the material assets and properties that are used by SPX and its Affiliates exclusively in the conduct of the Service Solutions Business as currently conducted.  All such assets are in good condition and repair, ordinary wear and tear excepted, and are usable in the ordinary course of business, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

2.20.                     Real Estate.  The Disclosure Schedules set forth a list, as of the date hereof, of (i) all of the real property owned by any Service Solutions Company (the “Owned Real Property”) and (ii) all the leasehold interests in real property of the Service Solutions 

 

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Companies (the “Leased Real Property” and the leases where the annual lease payment exceeds $500,000 relating to such Leased Real Property, the “Real Property Leases,” and the Leased Real Property together with the Owned Real Property, the “Real Property”).  Each Service Solutions Company has title to, or a valid leasehold interest entitling it to the right to possession and use of all of the Real Property owned or leased by it free and clear of any Encumbrances other than Permitted Encumbrances.

 

2.21.                     Labor Matters.

 

(a)                                 The Disclosure Schedules list all collective bargaining agreements, union contracts, employee representation agreements, works council, and similar agreements or arrangements in effect on the date hereof that cover any Business Employee (each, a “Collective Bargaining Agreement”).  With respect to the Service Solutions Companies, (i) there is no material labor strike, dispute, slowdown, lockout or stoppage pending or, to SPX’s knowledge, threatened against any of the Service Solutions Companies, and none of the Service Solutions Companies has experienced any material labor strike, dispute, slowdown, lockout or stoppage since December 31, 2010; (ii) there is no material unfair labor practice charge or complaint against any of the Service Solutions Companies pending or, to the knowledge of SPX, threatened before the National Labor Relations Board or before any similar state or foreign agency; (iii) no Person has made any material claim or charge against any of the Service Solutions Companies under any Law relating to discrimination with respect to employees or employment practices or with respect to breaches of any such Law; and (iv) since December 31, 2010, there has been no material grievance, or arbitration involving any of the Service Solutions Companies arising out of any Collective Bargaining Agreement or other grievance procedure.

 

(b)                                 The Service Solutions Companies are in compliance with all the Collective Bargaining Agreements, individual employment agreements and Laws relating to the employment of labor, including all such Laws relating to wages, hours, holidays, the WARN Act and any similar state or local “mass layoff’ or “plant closing” Law, collective bargaining, pay equity, discrimination, civil rights, compulsory recruitment of disabled employees, social security and taxes, severance indemnities, definite/term contracts, consulting and sales agent agreements, safety and health, workers’ compensation, welfare, pension, union rights, duties and tasks, except for failures to comply that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(c)                                  With regard to the German Subsidiaries, the Disclosure Schedules list, as of the date hereof, all material agreements and other commitments, whether of an individual or collective nature, regarding pensions under which any of the German Subsidiaries has any obligations (together, the “German Pension Commitments”).  The German Subsidiaries have fulfilled in all material respects all obligations under or in connection with the German Pension Commitments when due. The German Subsidiaries have properly provided for all material financial liabilities under or in connection with the German Pension Commitments pertaining to periods prior to Closing as required by the German Pension Commitments and applicable Law. All pensions provided by the German Subsidiaries have been in all material respects adjusted regularly as required by section 16 German Company Pension Act (Betriebsrentengesetz) or the relevant contractual provisions.  The German Subsidiaries have duly paid all contributions to the Pension Guarantee Fund (Pensions-Sicherungs-Verein) when due except where the failure to do so would not result in a material liability to the German Subsidiaries.  The Disclosure Schedules list all pending litigation with current or former employees or managing directors (stating competent court, name of plaintiff/defendant and file number) to which any of the German 

 

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Subsidiaries or SS France is a party, with respect to which there is a reasonable likelihood of a determination that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Neither the German Subsidiaries nor SS France has granted commitments or concluded agreements with individual employees or managing directors which trigger material payments or other entitlements in connection with the consummation of the transactions contemplated in this Agreement.  There are no material customs (betriebliche Übungen) and general commitments (Gesamtzusagen) applicable for the employees of the German Subsidiaries or SS France. The German Subsidiaries have not concluded any material social plans (Sozialpläne) or social tariff agreements (Tarifsozialpläne) within the last five years.  The Disclosure Schedules list, as of the date hereof, all material agreements and commitments to which the German Subsidiaries are bound which either prohibit or restrict, in any material respect, their ability to terminate employees or to close down or relocate a site.

 

(d)                                 Other than the Service Solutions Group Employees, there are no Persons (including, without limitation, consultants, directors, sales agents, definite/term employees, temporary workers, etc.) who have, or may claim to have, any relationship with the Service Solutions Companies which qualifies such persons as employees and/or permanent employees of the Service Solutions Companies under applicable Law.

 

(e)                                  No verification notice relating to social security or social assistance contributions under applicable Italian Laws has been served and, to SPX’s knowledge, there are no grounds for inspections in connection with additional contributions due pursuant to any applicable Italian Laws.

 

(f)                                   Prior to the Effective Date, the Service Solutions Companies shall have complied, in all material respects, with all applicable material Laws and the Collective Bargaining Agreements relating to requirements to provide information to labor unions and perform consultation procedures that arise as a result of the sale of the Service Solutions Business and the other transactions contemplated by this Agreement (it being understood that in making the representations and warranties contained in this Section 2.21(f), SPX will be relying upon, among other things, certain information and documents as may be furnished by Purchaser and compliance by Purchaser with its obligations hereunder, including under Section 1.7.  In particular, with respect to SS France there shall be no breach of the representations and warranties contained in this Section 2.21(f) if Completion of the Works Council Process was determined jointly by SPX and Purchaser pursuant to Section 1.7(b).

 

2.22.                     Relationships with Customers and Distributors.  Within 180 days prior to the date of this Agreement, no customer or distributor of the Service Solutions Business that accounted for annual sales of the Service Solutions Business in excess of $1,000,000 during the current, or immediately preceding, fiscal year has terminated its overall relationship with the Service Solutions Business or materially reduced the aggregate value of services and/or products required by such customer or distributor from the Service Solutions Business.

 

2.23.                     Tax Matters.

 

(a)                                 All material Tax Returns required to be filed by each of the Service Solutions Companies have been timely filed (taking into account extensions of time to file).  All such Tax Returns were true, correct, and complete in all material respects, and all Taxes due and owing with respect to the Service Solutions Business have been paid (other than Taxes that are reserved for in the Financial Statements).

 

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(b)                                 There is no Tax audit or proceeding pending or, to SPX’s knowledge, threatened with respect to material Taxes of any of the Service Solutions Companies.  None of the Service Solutions Companies has received written notice of any material Tax deficiency.

 

(c)                                  The Service Solutions Companies have, or have caused to be, withheld, and have paid over, or have caused to have been paid over, to the appropriate taxing authorities, all material Taxes required by applicable Law to be so withheld and paid over by them, including in connection with any applicable acquisition of assets, stock, membership, or other equity interests.

 

(d)                                 No Service Solutions Company has participated in the last five years in any “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2).

 

(e)                                  The Disclosure Schedules set forth the classification for federal income tax purposes of each of the Members of the Service Solutions Group.  SS US has been classified as a disregarded entity for federal income tax purposes since its formation and it will continue to be treated as a disregarded entity for federal income tax purposes through the Closing.

 

(f)                                   No written claim has been made in the last five years by a Governmental Authority in a jurisdiction where any of the Service Solutions Companies does not file Tax Returns that it is or may be subject to taxation by that jurisdiction, nor to the knowledge of SPX, has SPX made any determination that it is reasonably certain that any of the Service Solutions Companies was required, at any time in the last five years, to file Tax Returns in a jurisdiction where it did not file Tax Returns and where it does not currently file Tax Returns.

 

(g)                                  SPX has delivered or made available to Purchaser correct and complete copies of (i) all material Income Tax Returns filed by each Member of the Service Solutions Group, and (ii) examination reports and statements of deficiencies assessed against or agreed to by any Member of the Service Solutions Group, in each case since December 31, 2008.

 

(h)                                 No Member of the Service Solutions Group has, nor has any of them had in the last five years, a “permanent establishment” in any country other than the country in which such company is legally formed.

 

(i)                                     No Member of the Service Solutions Group has waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to a material Tax assessment or deficiency, which waiver or extension remains in effect.

 

(j)                                    No Member of the Service Solutions Group is a party to, nor are any of them bound by, nor are any of the Acquired Assets or Assumed Liabilities, a Tax allocation or sharing agreement that will impose any liability on such Member subsequent to the Closing Date, other than an agreement the primary purpose of which does not relate to Taxes.

 

(k)                                 Each Service Solutions Company has provided Purchaser with copies of all Tax opinions relating to and in the audit files of such Service Solutions Company.

 

(l)                                     No rulings or closing agreements within the meaning of Section 7121 of the Code (or similar provisions of state, local or foreign Law) have been obtained or entered into with a Governmental Authority by any Member of the Service Solutions Group that will have any binding effect on such Member subsequent to the Closing Date.

 

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(m)                             Each Service Solutions Company is in material compliance with the material terms and conditions of any Tax exemption or other Tax reduction agreement or order of any Governmental Authority, and the consummation of the transactions contemplated by this Agreement would not reasonably be expected to have any adverse effect on the continued validity and effectiveness of any such Tax exemption or other Tax reduction agreement or order.

 

(n)                                 No Member of the Service Solutions Group has been, nor will any of them be, required to include any material item of income in, or exclude any material item of deduction from, taxable income for any Tax period (or portion thereof) ending after the Closing Date (i) pursuant to Section 481 of the Code (or any similar provision of state, local or foreign Tax Law) by reason of a change in accounting methods occurring prior to the transactions contemplated hereby, (ii) as a result of any installment sale or open transaction disposition made on or prior to the Closing Date, or (iii) as a result of any prepaid amount received on or prior to the Closing Date.

 

(o)                                 Each Service Solutions Company has complied in all material respects with all applicable unclaimed property laws and has no material Liability for Taxes attributable to unclaimed property.

 

(p)                                 Any Service Solutions Company that participated in the German fiscal unity regime (Organschaft) was legally permitted to do so and all necessary actions required for such participation were taken by such Company.  Except as otherwise provided in Section 4.4, no Member of the Service Solutions Group is or will be required to pay any amount to any Person or Governmental Authority after the Closing Date with respect to its participation in such Organschaft.

 

(q)                                 SS US will not be liable, as transferee, successor, or otherwise, for any Taxes owed by any Person that transferred assets (including any stock, membership, or other equity interests) to SS US.

 

(r)                                    No Member of the Service Solutions Group has been included in a Tax pool in Germany for VAT purposes with SPX or any of its Affiliates.

 

(s)                                   Notwithstanding anything in this Section 2.23 to the contrary, no representation or warranty is being made by SPX with respect to the amount or validity of any net operating losses of any Member of the Service Solutions Group.

 

2.24.                     Disclaimer.  Neither SPX nor any of its Affiliates or Representatives has made, or shall be deemed to have made, to Purchaser any representation or warranty other than those expressly made by SPX in this Article II.  Without limiting the generality of the foregoing, no representation or warranty has been made or is being made herein to Purchaser (a) as to merchantability, suitability or fitness for a particular purpose, or quality, with respect to any of the tangible assets being acquired hereunder (either directly or by virtue of the acquisition of the SS Operating Company Interests), or as to the condition or workmanship thereof or the absence of any defects therein, whether latent or patent (or any other representation or warranty referred to in section 2-312 of the uniform commercial code of any applicable jurisdiction), (b) with respect to any projections, estimates or budgets delivered to or made available to Purchaser or its Representatives, or (c) except as expressly made by SPX in this Article II, with respect to any other information or documents made available to Purchaser or its Representatives.

 

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ARTICLE III

 

Representations and Warranties of Purchaser

 

Purchaser hereby represents and warrants to SPX as follows:

 

3.1.                            Organization and Good Standing.  Purchaser is an entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease, and operate the properties and assets it currently owns or leases and to carry on its business as such business is currently conducted.  Purchaser is duly licensed or qualified to do business as a foreign entity and is in good standing in all jurisdictions in which the character of the properties and assets now owned or leased by it or the nature of the business now conducted by it requires it to be so licensed, qualified or in good standing, except, in each case, where the failure to be so licensed, qualified or in good standing would not reasonably be expected to, individually or in the aggregate, materially hinder, impair or delay the consummation of the transactions contemplated by this Agreement or the Ancillary Agreements or the performance by Purchaser of its obligations hereunder or thereunder (a “Purchaser Material Adverse Effect”).

 

3.2.                            Corporate Authority and Approval.  Purchaser has all requisite corporate or other similar power, as the case may be, and authority to enter into, deliver and perform its obligations under this Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Ancillary Agreements by Purchaser, the performance by Purchaser of its obligations hereunder and thereunder, and the consummation by Purchaser of the transactions contemplated hereby and thereby, have been duly authorized by the board of Purchaser and by any other requisite corporate or similar action on the part of Purchaser.  No vote or approval of the stockholders of Purchaser is required for Purchaser to enter into, deliver or perform its obligations under, this Agreement or the Ancillary Agreements.  This Agreement has been duly executed and delivered by Purchaser and (assuming the valid authorization, execution, and delivery of this Agreement by the SPX Sellers party hereto) constitutes a legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms, except to the extent such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar Laws relating to or affecting creditors’ rights generally and to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).  The Ancillary Agreements will be duly executed and delivered by Purchaser and (assuming, if applicable, the valid authorization, execution, and delivery thereof by the other parties thereto) will constitute the legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, except to the extent such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar Laws relating to or affecting creditors’ rights generally and to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law).

 

3.3.                            Governmental Approvals.  No Governmental Approval is required to be obtained by Purchaser or any of its Affiliates in connection with the execution, delivery and performance by Purchaser of this Agreement or the Ancillary Agreements, or the taking by Purchaser of any action contemplated hereby or thereby, excluding, however, Governmental 

 

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Approvals which, if not obtained, would not, individually or in the aggregate, reasonably be expected to have a Purchaser Material Adverse Effect (it being understood that, in making the representations and warranties contained in this Section 3.3, Purchaser is relying on the information and documents furnished by SPX).

 

3.4.                            No Conflicts.  None of the execution and delivery by Purchaser of this Agreement and the Ancillary Agreements, nor the performance by Purchaser of its obligations under this Agreement or any of the Ancillary Agreements, nor the consummation by Purchaser of the transactions contemplated hereby and thereby will, with or without the giving of notice or the lapse of time, or both, subject to obtaining any Governmental Approvals referred to in Sections 2.6 and 3.3, (a) conflict with or violate any provision of the charter or bylaws of Purchaser, (b) violate any Order or Law applicable to Purchaser, or (c) conflict with or result in the breach of any agreement reflecting obligations of Purchaser for Indebtedness, except in the case of clause (c) for violations, conflicts, breaches or defaults that, individually or in the aggregate, have not had, and would not reasonably be expected to have a Purchaser Material Adverse Effect.

 

3.5.                            Funds Available.  Purchaser has and will have at the Effective Date and on the Closing Date, sufficient funds to enable Purchaser to pay the Purchase Price and otherwise to consummate the transactions contemplated by this Agreement.

 

3.6.                            Litigation.  There is no Action pending or, to Purchaser’s knowledge, threatened against Purchaser (a) with respect to which there is a reasonable likelihood of a determination that would, individually or in the aggregate, reasonably be expected to have a Purchaser Material Adverse Effect or (b) that seeks to enjoin or obtain damages in respect of the consummation of the transactions contemplated hereby.

 

3.7.                            Fees.  Purchaser has no liability or obligation to pay any fee or commission to any broker, finder or intermediary in connection with the transactions contemplated hereby for which any Members of the SPX Group could become liable or obligated.

 

3.8.                            Purchase for Investment; Receipt of Information.  Purchaser will be acquiring the SS Operating Company Interests and the Launch Shares solely for its own account for investment and not with a view to the distribution thereof.  Purchaser and its Representatives have been given an opportunity to examine such instruments, documents, and other information relating to, and ask questions regarding and receive answers from, SPX and the other Service Solutions Companies and their Representatives as Purchaser has deemed necessary or advisable in order to make an informed decision relating to the acquisition of the SS Operating Company Interests and the Launch Shares and their suitability as an investment for Purchaser.  Purchaser is an “Accredited Investor” within the meaning of Rule 501(a) of Regulation D of the Securities Act of 1933, as amended.

 

3.9.                            Investigation.  Purchaser acknowledges that it is relying on its own independent investigation and analysis in entering into the transactions contemplated hereby. Purchaser is knowledgeable about the industries in which the Service Solutions Companies operate, is capable of evaluating the merits and risks of the transactions contemplated by this Agreement and is able to bear the substantial economic risk of such investment for an indefinite 

 

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period of time. Purchaser and its Representatives have been afforded full access to the Books and Records, facilities and personnel of the Service Solutions Companies for purposes of conducting a due diligence investigation and has conducted a full due diligence investigation of the Service Solutions Companies. Purchaser has no knowledge that the representations and warranties of SPX in this Agreement are not true and correct in all material respects or any knowledge of any material errors in, or material omissions from, the Disclosure Schedules.

 

3.10.                     Disclaimer.  Neither Purchaser nor any of its Affiliates or Representatives has made, or shall be deemed to have made, to SPX any representation or warranty other than those expressly made by Purchaser in this Article III.

 

ARTICLE IV

 

Covenants of SPX

 

SPX hereby covenants and agrees with Purchaser as follows:

 

4.1.                            Conduct of Business.

 

(a)                                 Except as may be permitted by this Agreement or as set forth in Schedule 4.1 of the Disclosure Schedules or as required by applicable Law or by any of the documents listed in the Disclosure Schedule, from the date hereof until the Closing, unless Purchaser may otherwise consent to in writing (which consent shall not be unreasonably withheld or delayed and shall be deemed given if no written objection is made within three days of receipt of a request for consent), SPX shall, in respect of the Service Solutions Business, and shall cause each of the other Service Solutions Companies to, (i) in all material respects conduct the Service Solutions Business in the ordinary course of business; (ii) use reasonable best efforts to comply in all material respects with all applicable Laws and the requirements of all Material Contracts and material Permits; and (iii) use reasonable best efforts to maintain and preserve intact in all material respects the business organization of the Service Solutions business and the goodwill of those having business relationships with it such that the Service Solutions Business will not be materially impaired.

 

(b)                                 Without limiting the generality of Section 4.1(a) and subject to applicable Law, except as may be permitted by this Agreement or as set forth in Schedule 4.1 of the Disclosure Schedules or by any of the documents listed in the Disclosure Schedules or as required by applicable Law, from the date of this Agreement until the Closing, SPX, in respect of the Service Solutions Business, shall not, and shall not permit any of the other Service Solutions Companies to, without the prior written consent of Purchaser (which consent will not be unreasonably withheld or delayed and shall be deemed given if no written objection is made within three days of receipt of a request for consent):

 

(i)                                     (1) incur any Indebtedness, except in the ordinary course of business, and except for intercompany debt which will be repaid, contributed, settled or cancelled at or prior to the Closing; (2) merge or consolidate with, purchase substantially all or a material portion of the assets of, or otherwise acquire any business or any Person; (3) incur or create any Encumbrances (other than Permitted Encumbrances) on any of the Acquired Assets or assets of any of the other Service Solutions Companies that are not removed prior to the Closing; (4) sell, transfer, lease, license, pledge, mortgage, encumber or dispose of any 

 

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material assets of the Service Solutions Business, other than (A) in the ordinary course of business or (B) dispositions of obsolete, excess or worthless assets; or (5) delay the payment of accounts payable, or sell, transfer and otherwise dispose of, or accelerate the collection of, receivables of the Service Solutions Business except in the ordinary course of business;

 

(ii)                                  (1) issue, deliver, sell, pledge or otherwise encumber any Equity Interests of any of the Members of the Service Solutions Group or issue or grant any subscriptions, options, calls or rights to acquire, warrants, convertible securities or other agreements or commitments to issue, or enter into any Contract obligating any of the Members of the Service Solutions Group to issue or transfer from treasury, any Equity Interests of any class or kind or Equity Interests convertible into any such Equity Interests; or (2) make any change to the certificate of incorporation or by-laws (or comparable organizational documents) of any of the Members of the Service Solutions Group;

 

(iii)                               (1) increase the wages or benefits payable to any of the Business Employees (including any such increase pursuant to any bonus, pension, profit sharing or other plan or commitment), except for increases in wages or benefits in the ordinary course of business; (2) enter into any employment agreement (other than the entry into an employment agreement in connection with the hiring or promotion of any employee entitled to receive pursuant to such agreement an annual salary of $200,000 or less (excluding any bonus, pension, profit sharing or other compensation)) or, except in the ordinary course of business, amend any employment, consulting, severance, change in control, compensation or similar agreement for the benefit or welfare of any Business Employees; or (3) adopt, enter into or amend any Benefit Plan to the extent applicable to any Business Employee, except in the ordinary course of business;

 

(iv)                              amend in any material respect, or waive any material right under, any Material Contract, except in the ordinary course of business;

 

(v)                                 make or commit to any capital expenditures that, in the aggregate, are in excess of the capital expenditure line item in the budget set forth in Schedule 4.1(b) of the Disclosure Schedules (the “2012 CapEx Budget”) by $1,000,000 for the fiscal year ending December 31, 2012;

 

(vi)                              enter into any settlement or release with respect to any material Action or claim on terms that would, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect after the Closing;

 

(vii)                           (1) except as required under GAAP, make any material changes to any of its methods of accounting or financial accounting practices, policies or principles from those employed in the Financial Statements; or (2) make or revoke any material election relating to Taxes, or settle or compromise any material claim or Action relating to Taxes or obtain or apply for any Tax ruling that would, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect after the Closing; and

 

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(viii)                        enter into any legally binding transaction, agreement or commitment with respect to any of the foregoing.

 

(c)                                  Without limiting the generality of Section 4.1(a), unless Purchaser may otherwise consent in writing (which consent shall not be unreasonably withheld or delayed and shall be deemed given if no written objection is made within three days of receipt of a request for consent),  SPX shall, during each fiscal quarter of 2012 commencing with the second quarter of 2012, make or commit to make capital expenditures, including in connection with capitalized product software, in accordance with the 2012 CapEx Budget, it being agreed that SPX shall be deemed to have satisfied its obligations hereunder if it spends or commits to spend (on a cumulative and aggregate basis) at least 90% of the amount set forth in the 2012 CapEx Budget (excluding for this purpose the amount of all capital expenditures attributable to implementation of the SAP enterprise resource planning software in the Service Solutions Business unless Purchaser requests, by written notice prior to the commencement of the applicable calendar quarter, that capital expenditures relating to SAP implementation be made during the applicable calendar quarter).

 

(d)                                 From the date of this Agreement until the Closing, SPX, in respect of the Service Solutions Business, shall not, and shall not permit any of the other Service Solutions Companies to, engage in any factoring or “reverse factoring” of any of its accounts receivable or accounts payable, as applicable, other than pursuant to those programs set forth in Section 2.9(c) of the Disclosure Schedules, each of which programs shall be conducted in the ordinary course of business, consistent with past practice.

 

4.2.                            Access.  Subject to applicable Laws relating to access to and the exchange of information, from the date hereof until the Closing SPX shall, and shall cause each of the other Service Solutions Companies to, afford to Purchaser and the directors, officers, employees, investment bankers, financial advisors, attorneys, accountants, agents and other representatives (collectively, “Representatives”) of Purchaser reasonable access, during normal business hours and on reasonable advance notice, to the properties and Books and Records of the Service Solutions Companies (such access not to materially disrupt or interfere with business operations); provided, however, that SPX and the other Service Solutions Companies shall not be obligated to provide access to or to disclose information where such access or disclosure would violate or prejudice the rights of customers of the Service Solutions Business, violate any Law, Order or term of any Contract, or adversely affect the ability of SPX or any other Service Solutions Company or any of their respective Affiliates to assert attorney-client or attorney work product privilege; and provided, further, in no event shall Purchaser be permitted to conduct any “Phase II” environmental site assessments of the environmental conditions of any Real Property.  The parties will use reasonable best efforts to make appropriate substitute disclosure arrangements in the event any of the restrictions of the first proviso of the preceding sentence apply.  Except for disclosures permitted by the terms of the letter agreement, dated October 14, 2011, between Purchaser and SPX (the “Confidentiality Agreement”), Purchaser shall hold information received from SPX or its Affiliates or their respective Representatives pursuant to this Section 4.2 in confidence in accordance with the terms of the Confidentiality Agreement.  Any disclosure whatsoever during such investigation to Purchaser or its Representatives shall not constitute an enlargement of or additional representations or warranties of SPX beyond those specifically set forth in this Agreement.

 

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4.3.                            No Shop.  From the date hereof until the Closing, SPX shall not, nor shall it authorize or permit any of its Affiliates or any Representative of SPX or its Affiliates to, directly or indirectly solicit, initiate, encourage or participate in any way (including by way of furnishing information or assistance) in any discussions or negotiations with any Person (other than Purchaser or an Affiliate of Purchaser) or enter into any Contract with any Person (other than Purchaser or an Affiliate of Purchaser) concerning any merger, consolidation, sale of any Equity Interests or similar transactions involving the sale of the Service Solutions Business.

 

4.4.                            Intercompany Accounts, Loan Documents, Etc.

 

(a)                                 At or prior to the Closing Date, except as set forth on Schedule 4.4(a) of the Disclosure Schedules, (i) all intercompany receivables or payables and loans then existing between any Members of the SPX Group, on the one hand, and any Members of the Service Solutions Group, on the other hand, shall be settled in the ordinary course of business or, in SPX’s discretion, by way of capital contribution, dividend or otherwise, and (ii) all Contracts between any Members of the SPX Group, on the one hand, and any Members of the Service Solutions Group, on the other hand, shall be terminated, in each of the preceding cases (i) and (ii) without any Liability, including Liability for Taxes, to any Member of the Service Solutions Group and in a manner so as not to cause any Member of the Service Solutions Group to become insolvent or have its capital reduced below legally required levels. The termination and settlement of the PLTA shall be exclusively governed by Section 4.4(f).

 

(b)                                 The aggregate balance, if any (after giving effect to all of the actions taken pursuant to Section 4.4(a)(i)), outstanding as of the close of business on the day immediately preceding the Closing Date, of all receivables owed to any Member of the SPX Group by any Member of the Service Solutions Group (including receivables owed to Bank Mendes Gans and under the SPX Zero Balance Account Plan) (collectively, the “Closing Date Intragroup Receivables”), excluding, for the avoidance of doubt, any receivables owed to SPX Holding, Inc. (“SPX Holding”) by SS Germany under the PLTA, shall be sold and transferred to Purchaser at the Closing against compensation payment to be made by Purchaser.  The total purchase price for the Closing Date Intragroup Receivables shall be equal to the sum of (1) the aggregate nominal amounts of all such receivables and claims and (2) interest accrued on such nominal amounts, if applicable (the “Closing Date Intragroup Receivables Amount”) and shall be due and payable at the Closing, such payment to be made as part of the Purchase Price as set forth in Section 1.2(b). For purposes of Sections 1.2(b), 1.3(c), 1.3(e) and 1.5(a), the Closing Date Intragroup Receivables Amount shall be treated as Closing Date Indebtedness.  Notwithstanding the foregoing, it is understood by the parties that Bank Mendes Gans is neither a Member of the SPX Group nor a Member of the Service Solutions Group and that receivables owed to Bank Mendas Gans by any Member of the Service Solutions Group shall not be sold to Purchaser at the Closing. In lieu thereof, the aggregate balance, if any (after giving effect to all of the actions taken pursuant to Section 4.4(a)(i)), outstanding as of the close of business on the day immediately preceding the  Closing Date, of any receivables owed by any Member of the Service Solutions Group to Bank Mendes Gans shall, for purposes of Sections 1.2(b), 1.3(c), 1.3(e) and 1.5(a), be treated as Closing Date Indebtedness.

 

(c)                                  The aggregate balance, if any, after giving effect to all of the actions taken pursuant to Section 4.4(a) and after combining the receivables and payables of both Chinese Subsidiaries and netting them against one another for purposes of these calculations, outstanding at the Closing of any amounts owed by the Chinese Subsidiaries to Bank of America including

 

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accrued but unpaid interest, if any, thereon, shall, for purposes of Sections 1.2(b), 1.3(c), 1.3(e) and 1.5(a), be treated as Closing Date Indebtedness.

 

(d)                                 The aggregate balance, if any (after giving effect to all of the actions taken pursuant to Section 4.4(a)(i)), outstanding as of the close of business on the day immediately preceding the Closing Date, of all payables owed by any Member of the SPX Group to any Member of the Service Solutions Group (including payables owed by Bank Mendes Gans and under the SPX Zero Balance Account Plan) (collectively the “Closing Date Intragroup Payables”), excluding, for the avoidance of doubt, any payables owed by SPX Holding to SS Germany under the PLTA, shall be assumed and transferred to Purchaser at the Closing against payment to be made by SPX. The total amount to be paid by SPX for the Closing Date Intragroup Payables shall be equal to the sum of (1) the aggregate nominal amounts of all such payables and claims and (2) interest accrued on such nominal amounts, if applicable (the “Closing Date Intragroup Payables Amount”) and shall be due and payable at the Closing, such payment to be made by way of a deduction from the Purchase Price as set forth in Section 1.2(b). For purposes of Sections 1.2(b), 1.3(c), 1.3(e) and 1.5(a), the Closing Date Intragroup Payables Amount shall be treated as Closing Date Cash.  Notwithstanding the foregoing, it is understood by the parties that Bank Mendes Gans is neither a Member of the SPX Group nor a Member of the Service Solutions Group and that payables owed by Bank Mendas Gans to any Member of the Service Solutions Group shall not be sold to Purchaser at the Closing. In lieu thereof, the aggregate balance, if any (after giving effect to all of the actions taken pursuant to Section 4.4(a)(i)), outstanding as of the close of business on the day immediately preceding the  Closing Date, of any payables owed by Bank Mendes Gans to any Member of the Service Solutions Group shall, for purposes of Sections 1.2(b), 1.3(c), 1.3(e) and 1.5(a), be treated as Closing Date Cash.

 

(e)                                  The aggregate balance, if any, after giving effect to all of the actions taken pursuant to Section 4.4(a) and after combining the receivables and payables of both Chinese Subsidiaries and netting them against one another for purposes of these calculations, outstanding at the Closing of any amounts owed to the Chinese Subsidiaries by Bank of America including accrued but unpaid interest, if any, thereon, shall, for purposes of Sections 1.2(b), 1.3(c), 1.3(e) and 1.5(a), be treated as Closing Date Cash.

 

(f)                                   With respect to the PLTA:

 

(i)                                     By the Closing Date, SPX shall cause all receivables or payables existing between SS Germany on the one hand and SPX Holding on the other hand under the PLTA relating to periods ending prior to the short financial year to be implemented as set forth in Section 4.4(f)(ii) to be paid or otherwise settled in the ordinary course of business and as required under the PLTA. In the event that for any reason a settlement could not be made, for purposes of Sections 1.2(b), 1.3(c), 1.3(e) and 1.5(a),

 

(A)                               any such receivables owed to SPX Holding by SS Germany under the PLTA relating to periods ending prior to the short financial year to be implemented as set forth in Section 4.4(f)(ii) which still may exist shall be treated as Closing Date Indebtedness and Purchaser shall cause SS Germany to transfer or otherwise settle such amounts to SPX Holding in return (Zug um Zug) for the settlement of any adjustment payments, as the case may be, owed to Purchaser by SPX according to Section 1.6; and

 

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(B)                               any such payables owed by SPX Holding to SS Germany under the PLTA relating to periods ending prior to the short financial year to be implemented as set forth in Section 4.4(f)(ii) which still may exist shall be treated as Closing Date Cash and SPX shall cause SPX Holding to transfer or otherwise settle such amount to SS Germany in return (Zug um Zug) for the settlement of any adjustment payments, as the case may be, owed to the SPX by Purchaser according to Section 1.6.

 

(ii)                                  By the Closing Date, SPX shall cause (A) SS Germany to implement a short financial year ending on the day immediately preceding the Closing Date, including obtaining all required approvals from the Tax authority and registrations with the commercial register, (B) SS Germany and SPX Holding to execute a termination agreement to terminate the PLTA as at the day immediately preceding the Closing Date and (C) SS Germany and SPX Holding to agree that profit transfer claims under the PLTA relating to periods prior to the Closing Date can be settled in lieu of performance (Leistung an Erfüllungs statt) by transferring claims of SS Germany or an Affiliate of SS Germany against SPX Holding or an Affiliate of SPX Holding, and that loss compensation claims under the PLTA relating to periods prior to Closing can be settled in lieu of performance (Leistung an Erfüllungs statt) by transferring claims of SPX Holding or an Affiliate of SPX Holding against SS Germany or an Affiliate of SS Germany to Purchaser.

 

(iii)                               Within 75 calendar days after the Closing Date, SPX shall, and Purchaser shall, cause SS Germany to provide reasonable assistance to SPX to, prepare and furnish to Purchaser financial statements of SS Germany as of the day immediately preceding the Closing Date and for the period then ended in accordance with German generally accepted accounting principles (Grundsätze ordnungsgemäßer Buchführung) as provided for in the German Commercial Code (the “SS Germany Financial Statements”).  The amount of the profit shown in the SS Germany Financial Statements, as the case may be, of SS Germany which is according to Sec. 301 Stock Corporation Act decisive for SPX Holding’s claims under the PLTA to receive SS Germany’s profits as of the Closing Date (Gewinnabführungsanspruch) shall be the “Profit Amount”.  The amount of the loss shown in the SS Germany Financial Statements which is according to Sec. 302 Stock Corporation Act decisive for SPX Holding’s obligation under the PLTA to cover SS Germany’s losses as of the Closing Date (Verlustausgleichsanspruch) shall be the “Loss Amount.”

 

(iv)                              Any dispute between SPX and Purchaser concerning the preparation of the SS Germany Financial Statements and the calculation of the Profit Amount or the Loss Amount, as applicable, shall be resolved accordingly pursuant to the same procedure as is set forth in Section 1.5 with reference to disputes concerning the Closing Date Statements.

 

(v)                                 Within ten days after the SS Germany Financial Statements (and the resulting Profit Amount or the Loss Amount) have been finally determined, Purchaser shall arrange for the approval of the SS Germany Financial Statements at a shareholders’ meeting of SS Germany. Within three days after such approval:

 

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(A)                               If the SS Germany Financial Statements result in a Profit Amount, then Purchaser shall cause SS Germany to transfer or otherwise settle such amount to SPX Holding in return (Zug um Zug) for the settlement of any adjustment payments, as the case may be, owed to Purchaser by SPX according to Section 1.6. For purposes of Sections 1.2(b), 1.3(c), 1.3(e) and 1.5(a) the Profit Amount shall be treated as Closing Date Indebtedness.

 

(B)                               If the SS Germany Financial Statements result in a Loss Amount, then SPX shall cause SPX Holding to transfer or otherwise settle such amount to SS Germany in return (Zug um Zug) for the settlement of any adjustment payments, as the case may be, owed to SPX by Purchaser according to Section 1.6. For purposes of Sections 1.2(b), 1.3(c), 1.3(e) and 1.5(a) the Loss Amount shall be treated as Closing Date Cash.

 

(vi)                              In the event that the PLTA shall not have been terminated in a legally effective manner with effect as of the Closing Date, the parties agree to put each other in such position as though the PLTA had been terminated with effect as of the Closing Date in a way that does not prejudice the factual execution of the PLTA during its entire existence as required for the validity of the tax pool.

 

(vii)                           The parties acknowledge that the PLTA shall be carried out for the years for which it has been in existence to the extent required to safeguard the validity of the income tax pools for these years. Should any additional payments for previous periods become due and payable which have not been taken into account as Closing Date Indebtedness or, as the case may be, Closing Date Cash, payments to be made by SS Germany shall reduce the Cash Purchase Price and payments to be made by SPX Holding shall increase the Cash Purchase Price accordingly.

 

(viii)                        All tax allocation agreements (Steuerumlageverträge) between SPX Holding and SS Germany shall be terminated at the Closing Date.

 

(g)                                  SPX shall use its reasonable best efforts to obtain at or before the Closing the written release and waiver from all appropriate Persons of (i) any guarantees granted by any of the Members of the Service Solutions Group in respect of any Indebtedness or other obligations of SPX and its Subsidiaries under the SPX Credit Agreement, and (ii) any and all Encumbrances on the Service Solutions Business, the SS Operating Company Interests, the Launch Shares or the Acquired Assets granted under the SPX Credit Agreement.

 

(h)                                 Purchaser understands and agrees that it will need to make its own arrangements with Bank Mendes Gans and Bank of America following the Closing.

 

4.5.                            Non-Competition; Non-Solicitation.

 

(a)                                 SPX agrees that, until the third anniversary of the Closing Date (the “Non-Competition Period”) SPX shall not, and shall cause each of its Subsidiaries not to, conduct or be engaged in or have a greater than 5% ownership interest in a business or Person that develops, manufactures, sells or distributes products or performs services in competition with the Service Solutions Business as such business is conducted as of the Closing Date (a

 

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“Competing Business”); provided, however, that the foregoing covenants shall not prohibit, or be interpreted as prohibiting, SPX and its Subsidiaries from (x) conducting their respective businesses (other than the Service Solutions Business) as conducted as of the Closing Date or (y) acquiring, owning and operating any Person which conducts a diversified business that includes a Competing Business if (A) in the calendar year prior to such acquisition, the consolidated revenues of such Person from its Competing Business did not constitute more than 15% of the total consolidated revenues of such Person, or (B) SPX within 18 months after such acquisition, commences a process to dispose of that portion of the business of such Person as constitutes a Competing Business; provided  further, that Purchaser acknowledges and agrees that the hydraulic tool business of SPX and its Subsidiaries is not a Competing Business.

 

(b)                                 SPX agrees that, until the second anniversary of the Closing Date (the “Non-Solicitation Period”), SPX shall not, and shall not permit any of its Subsidiaries to, hire or solicit any key employee of the Service Solutions Business or encourage any such employee to leave such employment, so long as he or she is employed by the Service Solutions Business; provided that the restrictions set forth in this Section 4.5(b)  shall not apply to any (i) general solicitation for employees or use of employment agencies or search firms not specifically directed by SPX or its Subsidiary at any such employees, or to the hiring as a result of such solicitation or use, or (ii) solicitation or hiring of any such employee following his or her termination of employment by the Service Solutions Business or (in the case of an employee whose employment was not terminated by the Service Solutions Business) following 180 days after his or her ceasing to be employed by the Service Solutions Business.

 

(c)                                  The parties hereto agree that, if any court of competent jurisdiction in a final nonappealable judgment determines that a specified time period, a specified geographical area, a specified business limitation or any other relevant feature of this Section 4.5 is unreasonable, arbitrary or against public policy, then a lesser time period, geographical area, business limitation or other relevant feature which is determined to be reasonable, not arbitrary and not against public policy may be enforced against the applicable party.

 

(d)                                 The provisions of this Section 4.5 shall cease to apply and the Non-Competition Period and Non-Solicitation Period shall terminate, (i) as to SPX, upon the occurrence of a Change of Control of SPX, and (ii) as to any Subsidiary of SPX, upon its ceasing to be a Subsidiary of SPX.

 

4.6.                            Insurance Claims.  To the extent there is a loss or casualty in respect of the Service Solutions Business between the date hereof and the Closing Date and there may exist any Insurance Policies owned by SPX that are not Service Solutions Insurance Policies but that may cover such loss or casualty,  SPX shall file, or cause to be filed, a claim for the amount of such loss or casualty under such Insurance Policies, and any proceeds received by SPX, net of any expenses incurred in collecting the proceeds and net of any retrospective premiums, deductibles or retentions, in respect of such claim shall be for the benefit of the Members of the Service Solutions Group and remitted by SPX to the applicable Member of the Service Solutions Group.  The right to enforce the foregoing sentence against SPX shall be the only rights Purchaser shall have with respect to any Insurance Policies owned by SPX, and Purchaser shall not, and shall cause its Affiliates, including the Members of the Service Solutions Group, not to, assert by way of claim, proceeding or otherwise, any right to any Insurance Policies or any benefit thereunder.  SPX shall retain all right, title and interest under all Insurance Policies that are not the Service Solutions Insurance Policies.

 

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4.7.                            China Agreements.  The parties agree that, at or prior to the Closing, SPX and Purchaser shall take the actions set forth in Exhibit 7.

 

4.8.                            Further Assurances.  At any time after the Closing Date, SPX shall, at Purchaser’s expense and without incurring any legal liability beyond that provided for in this Agreement, promptly execute, acknowledge and deliver any other assurances or documents reasonably requested by Purchaser and necessary for Purchaser to satisfy its obligations hereunder or obtain the benefits contemplated hereby.  In the event that, following the Closing, it is determined that any Member of the SPX Group held assets related exclusively to the Service Solutions Business at the Closing and such assets were not properly transferred to Purchaser or its designated Affiliate, then such assets, if still owned at the time by SPX or one of its Subsidiaries, shall be transferred to Purchaser or its designated Affiliate for nominal consideration as soon as practicable after the parties become aware of such ownership.

 

ARTICLE V

 

Covenants of Purchaser

 

Purchaser hereby covenants and agrees with SPX:

 

5.1.                            Preservation of Books and Records.

 

(a)                                 For a period of nine years from the Closing Date:

 

(i)                                     Purchaser shall not, and shall cause its Affiliates not to, dispose of or destroy any of the books and records of the Service Solutions Business relating to periods prior to the Closing Date (“Books and Records”) without first offering to turn over possession thereof to SPX by written notice to SPX at least 30 days prior to the proposed date of such disposition or destruction.

 

(ii)                                  Purchaser shall allow SPX and its Representatives access to all Books and Records on reasonable notice and at reasonable times at Purchaser’s principal place of business or at any location where any Books and Records are stored, and SPX shall have the right, at its own expense, to make copies of any Books and Records; provided, however, that any such access or copying shall be had or done in such a manner so as not to unduly interfere with the normal conduct of Purchaser’s business.

 

(iii)                               Purchaser shall make available to SPX upon written request (A) personnel of Purchaser and its Affiliates to assist SPX in locating and obtaining any Books and Records, and (B) any of such personnel whose assistance or participation is reasonably required by SPX or any of its Affiliates in anticipation of or preparation for, or for depositions or testimony in, existing or future Action or other matters in which SPX or any of its Affiliates is involved.  SPX shall reimburse Purchaser for the reasonable out-of-pocket expenses incurred by it in performing the covenants contained in this Section 5.1(a).

 

(b)                                 The period referred to in Section 5.1(a) shall be extended in the event that any Action or investigation has been commenced or is pending or threatened at the termination

 

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of such period and such extension shall continue until any such Action or investigation has been settled through judgment or otherwise or is no longer pending or threatened.

 

5.2.                            Performance Bonds and Guarantees.

 

(a)                                 Subject to Section 5.2(b), at the Closing, Purchaser shall deliver to SPX replacement (or, to the extent the beneficiary thereof will not permit replacement, back-up) performance bonds, surety bonds, bank guarantees, letters of credit and/or corporate guarantees (“Guarantees”), in an aggregate principal amount and with terms and from banks or other financial institutions or surety companies (or in the case of corporate guarantees, Purchaser or one of its Affiliates), in each case reasonably satisfactory to SPX, to replace (or, to the extent required, as described above, to collateralize) any Guarantees given by any Service Solutions Company in respect of the Service Solutions Business (in each case, or portions thereof) remaining outstanding on the Closing Date with respect to which any Member of the SPX Group will have any liability after the Closing.  Not later than 15 days prior to the Closing, SPX shall preliminarily advise Purchaser, and not later than five Business Days prior to the Closing, SPX shall advise Purchaser, in writing of the Guarantees to be replaced or collateralized pursuant to this Section 5.2.

 

(b)                                 To the extent any Guarantees required to be replaced or collateralized in accordance with Section 5.2(a) were not included in the written notice to Purchaser, Purchaser shall use its reasonable best efforts to replace or collateralize any such Guarantees as promptly as practicable following notification of the existence of any such Guarantees.

 

5.3.                            CERCLA Waiver.  Purchaser, on its own behalf and on behalf of its existing and future Affiliates, including each Member of the Services Solutions Group, hereby waives any right to seek contribution or other recovery from SPX or any of SPX’s Affiliates that Purchaser or any such Affiliate may now or in the future ever have under any Environmental Law, including, without limitation, 42 U.S.C. §§ 9607 and 9613(f) of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), and similar provisions under any other U.S. or foreign Environmental Law, as such Laws were in the past or are currently in effect, or may in the future be enacted or be in effect.  Purchaser, on its own behalf and on behalf of its existing and future Affiliates, including each Member of the Services Solutions Group, hereby further unconditionally releases SPX and SPX’s Affiliates from any and all claims, demands and causes of action that Purchaser or any such Affiliate may now or in the future ever have against SPX or any of SPX’s Affiliates for recovery under CERCLA or under any other U.S. or foreign Environmental Law as such Laws were in the past or are currently in effect, or may in the future be enacted or be in effect.

 

5.4.                            Further Assurances.  At any time after the Closing Date, Purchaser shall, at SPX’s expense and without incurring any legal liability beyond that provided for in this Agreement, promptly execute, acknowledge and deliver any other assurances or documents reasonably requested by SPX and necessary for SPX to satisfy its obligations hereunder or obtain the benefits contemplated hereby. In the event that, following the Closing, it is determined that any Member of the Service Solutions Group held assets at the Closing that were not related exclusively to the Service Solutions Business, then such assets, if still owned at the time by the Member of the Service Solutions Group, shall be transferred to SPX or its designated Affiliate for nominal consideration as soon as practicable after the parties become aware of such ownership.

 

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ARTICLE VI

 

Mutual Covenants

 

6.1.                            Cooperation.

 

(a)                                 From the date hereof until the Closing, Purchaser and SPX shall, and shall cause their respective Subsidiaries to, use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Law to consummate the transactions contemplated by this Agreement, including (i) preparing and filing as promptly as practicable with any Governmental Authority or other third party all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents and (ii) obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any Governmental Authority that are necessary, proper or advisable to consummate the transactions contemplated by this Agreement.

 

(b)                                 In furtherance of and not in limitation of the foregoing, each of Purchaser and SPX shall make an appropriate filing of a Notification and Report Form pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and any applicable filings under any foreign antitrust or competition Laws with respect to the transactions contemplated hereby as promptly as practicable and in any event, in the case of the filing under the HSR Act, within ten Business Days of the date hereof (and such initial filings from Purchaser and SPX shall request early termination of any applicable waiting period under the HSR Act or any antitrust or competition Laws). Purchaser shall make an appropriate filing with CADE in Brazil within 15 Business Days of the date hereof and an appropriate filing with the European Commission under Article 4 of the European Merger Regulation as promptly as practicable, such filing not to be withdrawn by Purchaser without the prior written consent of SPX.  Each of Purchaser and SPX agrees to supply as promptly as practicable any additional information and documentary material that may be requested pursuant to the HSR Act or any foreign antitrust or competition Law and to take all other actions necessary to cause the expiration or termination of the applicable waiting periods under the HSR Act or foreign antitrust or competition Laws as soon as practicable.  Notwithstanding anything herein to the contrary, Purchaser shall take any and all action reasonably necessary to avoid or eliminate each and every impediment or resolve any objection, if any, that may be asserted with respect to the transactions contemplated hereby under any antitrust or competition Law so as to enable the parties to close the transactions contemplated hereby as promptly as practicable, including but not limited to (i) proposing, negotiating, committing to and effecting, by consent decree, hold separate orders, or otherwise, the sale, license, divestiture or disposition of, any assets, categories of assets, properties, product lines, services or businesses of the Service Solutions Business or any Member of the Service Solutions Group or Purchaser or its Subsidiaries; (ii) otherwise taking or committing to take actions that after the Closing Date would limit Purchaser’s freedom of action with respect to, or its ability to retain, one or more of the assets, categories of assets, properties, product lines, services or businesses of the Service Solutions Business or any Member of the Service Solutions Group or Purchaser or its Subsidiaries, (iii) terminating existing relationships, contractual rights or obligations of any Member of the Service Solutions Group or Purchaser or its Subsidiaries; (iv) terminating any venture or other arrangement; (v) creating any relationship, contractual rights or obligations of the Service Solutions Business or any Member of the Service Solutions Group or Purchaser or its Subsidiaries; or (vi) effectuating any other change or restructuring of the Members of the Service Solutions Group or Purchaser or its Subsidiaries (and, in each case,

 

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to enter into agreements or stipulate to the entry of an Order or file appropriate applications with any Governmental Authority in connection with any of the foregoing and in the case of actions by or with respect to any Member of the Service Solutions Group or its businesses or assets, by consenting to such Action by any Member of the Service Solutions Group or Purchaser or its Subsidiaries, provided that any such Action may, at the discretion of SPX, be conditioned upon consummation of the transactions contemplated by this Agreement) (each, a “Divestiture Action”) to ensure that no Governmental Authority enters any Order or establishes any Law or takes any other action preliminarily or permanently restraining, enjoining or prohibiting the consummation of the transactions contemplated by this Agreement, and to ensure that no Governmental Authority fails to clear, authorize or otherwise approve the consummation of the transactions contemplated by this Agreement, and to do so prior to the Termination Date; provided, however, that in no event shall Purchaser be required to or agree to sell or divest any assets or operations of the Service Solutions Business that would result in a Burdensome Condition.  In the event that any Action is threatened or instituted challenging the transactions contemplated by this Agreement as violative of the HSR Act or other applicable Law, Purchaser shall take all action necessary, including but not limited to any Divestiture Action, to avoid or resolve such Action.  In the event that any permanent or preliminary injunction or other Order is entered or becomes reasonably foreseeable to be entered in any Action that would make consummation of the transactions contemplated hereby in accordance with the terms of this Agreement unlawful or that would restrain, enjoin or otherwise prevent or materially delay the consummation of the transactions contemplated by this Agreement, Purchaser shall take promptly any and all steps reasonably necessary to vacate, modify or suspend such injunction or other Order so as to permit such consummation prior to the Termination Date. In addition, Purchaser shall defend through litigation on the merits any claim asserted in court by any party in order to avoid entry of, or to have vacated, lifted, reversed, overturned or terminated, any Order (whether temporary, preliminary or permanent) that would restrain, prevent, or delay the Closing prior to the consummation of the transactions contemplated hereby, including by pursuing all available avenues of administrative and judicial appeal and all available legislative action.

 

(c)                                  Without limiting the generality of Sections 6.1(a) and 6.1(b), the parties agree, subject to applicable Laws, to (i) cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any Action initiated by a private party, (ii) promptly inform the other party of any communication received by such party from, or given by such party to, the Antitrust Division of the Department of Justice (the “DOJ”), the Federal Trade Commission (the “FTC”) or any other Governmental Authority and of any material communication received or given in connection with any Action by a private party, in each case regarding any of the transactions contemplated hereby and (iii) permit the other party to review any communication given by it to, and consult with each other in advance of any meeting or conference with, the DOJ, the FTC or any other Governmental Authority or, in connection with any Action by a private party, with any other Person, and to the extent appropriate or permitted by the DOJ, the FTC or other Governmental Authority or other Person, give the other party the opportunity to attend and participate in such meetings and conferences.

 

6.2.                            Publicity.  Neither SPX nor Purchaser shall issue any press release or public announcement concerning this Agreement, the Ancillary Agreements or the transactions contemplated hereby without obtaining the prior written approval of the other party hereto, which approval will not be unreasonably withheld or delayed, unless, in the sole judgment of SPX or Purchaser, disclosure is otherwise required by applicable Law or by the applicable rules of any stock exchange on which SPX or Purchaser lists securities, provided that, if disclosure is

 

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required by applicable Law or stock exchange rules, the party intending to make such release shall use its reasonable best efforts consistent with such applicable Law to consult with the other party in advance of release with respect to the text thereof.

 

6.3.                            Use of Name.

 

(a)                                 Except as specifically set forth herein, following the Closing Purchaser shall not, and shall cause the Members of the Service Solutions Group not to, operate the Service Solutions Business utilizing, based on or taking advantage of the name of SPX or the name of any other Member of the SPX Group; provided, however, that the Members of the Service Solutions Group may use packaging, advertising, sales and promotional materials on hand or on order at the Closing Date and bearing the corporate name or consumer information telephone number of any of the Members of the SPX Group in connection with the marketing and sale of products of the Service Solutions Business until the date that is the first anniversary of the Closing Date, or such shorter period if limited by the requirements of any Law or if new product labeling and/or packaging is printed within such nine month time period.  Purchaser and the Members of the Service Solutions Group shall maintain quality standards for products of the Service Solutions Business at least equal to those maintained by the Members of the SPX Group on the Closing Date for so long as any of Purchaser or the Members of the Service Solutions Group continues to use any packaging, advertising, sales or promotional materials bearing the corporate name or consumer information telephone number of any of the Members of the SPX Group, and shall indemnify the Members of the SPX Group from all Damages incurred or suffered by any of them by reason of the use by the Members of the Service Solutions Group of the SPX name or otherwise availing themselves of the rights granted in this Section 6.3.  Notwithstanding anything to the contrary herein, promptly after the Closing Date, Purchaser shall cause each of its Affiliates to make all filings with the appropriate Governmental Authorities to effectuate said name changes.

 

(b)                                 Within 60 days after the Closing, SPX shall cause each Member of the SPX Group to cease to use the names “Service Solutions” or any derivatives thereof.

 

6.4.                            Taxes.

 

(a)                                 SPX shall prepare, or shall cause to be prepared, and Purchaser shall file, or cause to be filed, all Pre-Closing Tax Returns with respect to Income Taxes for SS US, SS Germany, SS Australia, SS Japan and SS UK that are required to be filed after the Closing Date.  SPX shall provide a draft of each such Tax Return to Purchaser for its review and comment, in the case of annual filings (including short period taxable year filings), at least 30 days prior to the date on which such Tax Return is to be filed (but in no event earlier than five days after the Closing Date).  SPX shall consider in good faith all reasonable comments of Purchaser to each such Tax Return, provided that such comments are consistent with Section 6.4(d).  In the event that the parties cannot agree on the content of any such Tax Return, after good faith negotiation, by the due date (taking into account extensions) of such Tax Return, Purchaser shall file or cause to be filed such Tax Return in a manner consistent with Section 6.4(d).  Purchaser shall prepare and file, or cause to be prepared and filed, all other Pre-Closing Tax Returns and Tax Returns for the Members of the Service Solutions Group for Straddle Periods (“Straddle Tax Returns”).  Purchaser shall also prepare or cause to be prepared a Pre-Closing Straddle Schedule (corresponding to each Straddle Tax Return prepared pursuant to this Section 6.4(a)), and shall permit SPX to review and comment on such Pre-Closing Straddle Schedule.  Each Pre-Closing Straddle Schedule shall be prepared consistent with the allocation provisions of Section 6.4(i).  If

 

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SPX or Purchaser, as applicable, disputes in whole or in part any Pre-Closing Tax Return, Straddle Tax Return and/or Pre-Closing Straddle Schedule provided to it pursuant to this Section 6.4(a) (each, a “Section 6.4(a) Deliverable”), then within 15 days after SPX’s or Purchaser’s receipt of such Section 6.4(a) Deliverable, as applicable, such recipient shall provide written notice to the other party of such dispute, setting forth in reasonable detail the particular items of any such dispute. In the event that such notice is not provided within such 15 day period, SPX or Purchaser, as applicable, shall be deemed to have accepted in full such Section 6.4(a) Deliverable as provided by the other party, and such Section 6.4(a) Deliverable shall be final, binding and conclusive for purposes of Section 6.4(b).  If such notice is provided within such 15 day period, all items on the applicable Section 6.4(a) Deliverable (other than those items set forth therein as being in dispute) shall be final, binding and conclusive for purposes of Section 6.4(b).  In the event such notice is timely provided, SPX and Purchaser shall use reasonable best efforts for a period of 30 days (or such longer period as they may mutually agree) to resolve any disputed items. Any such items that are no longer in dispute between SPX and Purchaser at the end of such period shall be final, binding and conclusive in the manner such items are resolved for purposes of Section 6.4(b).  If, at the end of such period, SPX and Purchaser are unable to resolve any disputed items, then such disputed items shall be referred to the Independent Accountant.  The resolution by the Independent Accountant of any dispute pursuant to this Section 6.4(a) shall be final and binding on the parties for purposes of Section 6.4(b).  In resolving such dispute the Independent Accountant shall not make any resolution, unless otherwise agreed to by the parties, which is inconsistent with Section 6.4(d).  Upon the resolution of such dispute, if the Independent Accountant determines that changes to any Tax Return that has been filed should be made, Purchaser shall file (to the extent permitted by applicable Law) an amended Tax Return and any refunds received by the applicable Member of the Service Solutions Group with respect to such amended Tax Return shall be allocated to the parties that paid such overpayments of Tax in proportion to their respective overpayments of Tax on the originally filed Tax Return.

 

(b)                                 Purchaser shall pay or cause to be paid all unpaid Taxes shown as due and owing by the applicable Member of the Service Solutions Group on the Pre-Closing Tax Returns and Straddle Tax Returns filed pursuant to Section 6.4(a).  If (i) the amount of Pre-Closing Taxes shown as due and owing on any Pre-Closing Tax Return or (ii) the amount of Pre-Closing Taxes shown as due and owing on any Pre-Closing Straddle Schedule exceeds the accrual for such Taxes reflected as a liability in the Closing Date Working Capital (net of any prior payments made of Taxes that were chargeable against such accruals) (such excess amount with respect to any such Tax Return, an “Unpaid Taxes Shortfall”), then, no later than five Business Days after the filing of the relevant Tax Return, SPX shall promptly pay to Purchaser an amount equal to the applicable Unpaid Taxes Shortfall. If (i) the amount of Pre-Closing Taxes shown as due and owing on any Pre-Closing Tax Return or (ii) the amount of Pre-Closing Taxes shown as due and owing on any Pre-Closing Straddle Schedule is less than the applicable accrual for such Taxes reflected as a liability in the Closing Date Working Capital (net of any prior payments made of Taxes that were chargeable against such accruals), then, no later than five Business Days after the filing of the relevant Tax Return, Purchaser shall promptly pay to SPX an amount equal to such excess.  If, at the time of filing of the applicable Tax Return, there remain items that are being disputed pursuant to Section 6.4(a), then an amount equal to the amount of the applicable Unpaid Taxes Shortfall or excess in dispute shall not be paid by SPX or Purchaser, respectively, to the other party at such time, but within ten Business Days following resolution of the dispute in accordance with Section 6.4(a), an amount equal to the applicable remaining Unpaid Taxes Shortfall or excess, as finally determined, shall be paid by SPX or Purchaser, as the case may be, to the other party.  Solely for purposes of Section 6.4(b) hereof, the terms “Pre-Closing Tax

 

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Return” and “Straddle Tax Return” shall also include a Tax Assessment Notice, the payment of the Tax covered by such Tax Assessment Notice shall be treated as the filing of a Tax Return, and any Pre-Closing Straddle Schedule with respect to any such Tax Assessment Notice shall be determined in accordance with Section 6.4(i).  Furthermore, any property Taxes imposed on the Acquired Assets for a taxable period beginning on or before and ending after the Closing Date shall be allocated between Purchaser and SPX in a manner similar to that set forth in Section 6.4(i)(ii).

 

(c)                                  SPX shall be entitled to retain, or receive prompt payment from Purchaser of an amount equal to (as applicable), (i) any Income Tax refunds of any Member of the Service Solutions Group for Pre-Closing Tax Periods (including refunds arising by reason of amended returns filed after the Closing Date) that are received by Purchaser, its Affiliates, or any Member of the SPX Group or (ii) any credits against Taxes in lieu of refunds described in clause (i) of this sentence (plus any interest thereon received with respect thereto from the applicable taxing authority).  Purchaser shall be entitled to the benefit of any other refund or credit of Taxes (plus any interest thereon received with respect thereto from the applicable taxing authority) relating to the Members of the Service Solutions Group.  Purchaser shall also be entitled to retain any Tax refunds to the extent (x) Purchaser identifies a potential claim for refund that is communicated to SPX, (y) SPX declines to pursue such refund claim, and (z) SPX consents in writing, in its sole discretion, to Purchaser filing such claim for refund.

 

(d)                                 All Pre-Closing Tax Returns and the applicable portion of each Straddle Tax Return relating to taxable periods (or portions thereof) ending on the Closing Date with respect to a Member of the Services Solutions Group shall be prepared pursuant to this Section 6.4 consistent with the most recent prior practice of such Member, except as required by applicable Law or where there is no prior practice with respect to an applicable Tax item.

 

(e)                                  Any dispute among the parties involving Taxes arising under this Agreement shall be resolved as follows: (i) the parties will in good faith attempt to negotiate a prompt resolution of the dispute; (ii) if the parties are unable to negotiate a resolution of the dispute within 30 days (or such longer period as they may mutually agree), the dispute will be submitted to the Independent Accountant; (iii) the Independent Accountant shall resolve the dispute, in a fair and equitable manner and in accordance with applicable Tax Law and the provisions of this Agreement, within 30 days after the parties have submitted the dispute to the Independent Accountant, whose decision shall be final, conclusive and binding on the parties, absent fraud or manifest error; (iv) any payment to be made as a result of the resolution of a dispute shall be made, and any other action taken as a result of the resolution of a dispute shall be taken, on or before the fifth Business Day following the date on which the dispute is resolved (except that if the resolution requires the filing of an amended Tax Return, such amended Tax Return shall be filed within 30 Business Days following the date on which the dispute is resolved); and (v) the fees and expenses of the Independent Accountant shall be allocated between Purchaser, on the one hand, and SPX, on the other hand, in such manner that Purchaser shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction, the numerator of which is the aggregate dollar value of all disputed items that are resolved by the Independent Accountant in a manner further from the position submitted to the Independent Accountant by Purchaser and closer to the position submitted to the Independent Accountant by SPX, and the denominator of which is the total aggregate dollar value of the disputed items so submitted, and SPX shall be responsible for the remainder of such fees and expenses.

 

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(f)

 

(i)                                     Purchaser and SPX agree to reasonably cooperate with respect to any opportunity identified by either Purchaser or SPX to reduce any Tax imposed on the Service Solutions Business, whether arising before or after the Closing.  Such reasonable cooperation shall not require either party to incur any expense (other than a de minimis expense), or in its sole judgment suffer any  Tax cost or other adverse actual or potential effect, as a result of such cooperation.  Purchaser and SPX further agree to use their reasonable best efforts to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed with respect to the transactions contemplated hereby.

 

(ii)                                  30 days prior to the Closing, Purchaser will provide to SPX a schedule reflecting a listing of Tax Returns that may be required to be filed with respect to such Members of the Service Solutions Group as Purchaser shall determine.  SPX will review such schedule, and return such schedule to Purchaser, at or prior to Closing, indicating thereon (by checking yes or no), to the best of SPX’s knowledge and based on SPX’s prior practice, the material Tax Returns that are reflected on such schedule that are required to be filed by such Members of the Service Solutions Group.

 

(iii)                               Purchaser and the SPX Sellers shall cooperate fully with each other, as and to the extent reasonably requested by the other party, in connection with the filing of any Tax Returns and any Tax Contest, including the provision of transfer pricing data.  Purchaser and the SPX Sellers agree (A) to retain all books and records with respect to Tax matters pertinent to the Service Solutions Business or any of the Acquired Assets relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Purchaser or any of the SPX Sellers, any extensions of the statute of limitations) of the respective taxable periods, to abide by all record retention agreements entered into with any Governmental Authority, and to provide records and information which are reasonably relevant to any such Tax Contest and make employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, (B) to give the other parties hereto reasonable written notice prior to transferring, destroying, or discarding any such books and records and, if any of the other parties so requests, Purchaser or the SPX Sellers, as the case may be, shall allow such other party to take possession of such books and records, and (C) to provide reasonable access to each party’s outside legal and accounting advisors with respect to any such Tax proceedings.  The obligations contained in this paragraph (f) shall be in addition to and not in lieu of the obligations contained in Section 5.1.

 

(g)                                  Purchaser covenants that without obtaining the prior written consent of SPX it will not, and will not cause or permit any Member of the Service Solutions Group or any  other Affiliate of Purchaser, to (i) take any action on the Closing Date other than in the ordinary course of business or as specifically contemplated by this Agreement that could reasonably be expected to give rise to any Tax Liability of SPX or any Member of the Service Solutions Group or any indemnification obligation of SPX, (ii) make an election under Section 338(g) of the Code

 

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with respect to the transactions contemplated hereby other than as provided in Section 6.4(h) or (iii) unless required to do so by an applicable taxing authority, amend any Pre-Closing Tax Return or Straddle Tax Return of any Member of the Service Solutions Group.

 

(h)                                 Purchaser shall make a valid timely election under Section 338(g) of the Code with respect to its acquisition pursuant to this Agreement of SS UK and each of its Subsidiaries that is treated as a corporation for federal income tax purposes at the time of the Closing. Purchaser shall provide a copy of such election to SPX no later than ten days following the filing of such election.

 

(i)                                     In the case of any taxable period of a Member of the Service Solutions Group that begins on or before and ends after the Closing Date (a “Straddle Period”):

 

(i)                                     Any gross receipts, Income Taxes, sales or similar Taxes that are payable with respect to a Straddle Period shall be allocated between the Pre-Closing Tax Period and the portion of such taxable period beginning after the Closing on the basis of a deemed closing at the end of the Closing Date of the books and records of the applicable Member.

 

(ii)                                  In the case of any Taxes (other than gross receipts, Income Taxes, or similar Taxes) that are payable with respect to a Straddle Period, the portion of such Taxes allocable to the applicable Pre-Closing Tax Period shall be equal to the product of all such Taxes multiplied by a fraction the numerator of which is the number of days in the Straddle Period from the commencement of the Straddle Period through and including the Closing Date and the denominator of which is the number of days in the entire Straddle Period; provided, however, that appropriate adjustments shall be made to reflect specific events that can be identified and specifically allocated as (i) occurring on or prior to the Closing Date (in which case SPX shall be responsible for any Taxes related thereto and Purchaser shall be entitled to reimbursement for such Taxes or (ii) occurring after the Closing Date (in which case, Purchaser shall be responsible for any Taxes related thereto).

 

6.5.                            Worker’s Compensation Protocol.  Prior to Closing, the parties will establish a written protocol addressing matters relating to the processing, management, defense and payment of workers compensation claims that are included in the Assumed Liabilities.

 

6.6.                            Transition Services Agreement.  Promptly following the date hereof, SPX and Purchaser will negotiate in good faith the terms of a Transition Services Agreement to be entered into by the appropriate Members of the SPX Group and the appropriate Members of the Service Solutions Group at or prior to the Closing, which (i) will require the appropriate Members of the SPX Group and the appropriate Members of the Service Solutions Group to provide to each other the transition services as set forth therein for the time periods set forth therein and (ii) will contain pricing terms for such services that are mutually acceptable to SPX and Purchaser or are otherwise determined as set forth herein (the “Transition Services Agreement”).  In the event SPX and Purchaser are unable to agree on any provision of the Transition Services Agreement within 45 days from the date hereof (or such later date as SPX and Purchaser may agree), the dispute may be submitted by either SPX or Purchaser for arbitration to be held in Charlotte, North Carolina.  The arbitration shall be held in accordance

 

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with the Commercial Arbitration Rules of the American Arbitration Association, and the determination of the arbitrator shall be final and binding upon SPX and Purchaser and shall not be appealable.  SPX and Purchaser agree that any dispute concerning the charge for services to be provided under the Transition Services Agreement will be handled as an expedited arbitration under the Commercial Rules of the American Arbitration Association.  The fees and expenses of the arbitrator shall be allocated between SPX, on the one hand, and Purchaser, on the other hand, in such manner that Purchaser shall be responsible for that portion of the fees and expenses equal to such fees and expenses multiplied by a fraction, the numerator of which is the aggregate dollar value of all disputed items that are resolved by the arbitrator in a manner further from the position submitted to the arbitrator by Purchaser and closer to the position submitted to the arbitrator by SPX, and the denominator of which is the total aggregate dollar value of the disputed items so submitted, and SPX shall be responsible for the remainder of such fees and expenses. It is agreed that execution and delivery of a Transition Services Agreement by the parties shall not be a condition to the Closing, and the sole remedy of the parties hereto shall be to compel arbitration of the disputed issues as set forth in this Section 6.6.

 

6.7.                            Cross-License.  Promptly following the date hereof, SPX and Purchaser shall negotiate in good faith appropriate and reasonable supply and services arrangements and royalty free cross-licensing agreements in order to allow SPX Hydraulic Technologies and the Service Solutions Business to continue the conduct of their respective businesses as currently conducted and to permit the continued use by each such entity of Intellectual Property owned by the other entity in the manner and to the extent used by such entity as of the Closing.

 

ARTICLE VII

 

Conditions to Purchaser’s Obligations

 

The obligations of Purchaser to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction (or waiver, where permissible) at or prior to the Closing Date of all of the following conditions:

 

7.1.                            Covenants of SPX.  SPX shall have complied in all material respects with its agreements and covenants contained herein to be complied with on or prior to the Closing Date.

 

7.2.                            Representations and Warranties of SPX.  The representations and warranties of SPX set forth in Article II hereof which are modified by Material Adverse Effect shall be true and correct as of the Effective Date as though made as of the Effective Date (except for representations and warranties which address matters only as of a specific date, which representations and warranties shall continue as of the Effective Date to be true and correct as of such specific date).  The representations and warranties of SPX contained in Article II hereof which are not modified by Material Adverse Effect shall be true and correct as of the Effective Date as though made as of the Effective Date (except for representations and warranties which address matters only as of a specific date, which representations and warranties shall continue as of the Effective Date to be true and correct as of such specific date), except to the extent that the failure to be so true and correct would not reasonably be expected to have a Material Adverse Effect.

 

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7.3.                            SPX’s Certificate.  Purchaser shall have received a certificate of SPX, executed by a Vice President of SPX, dated as of the Effective Date, certifying as to the fulfillment of the conditions set forth in Sections 7.1 and 7.2 hereof.

 

7.4.                            HSR Approvals.  The waiting period (and any extensions thereof) applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or been terminated.

 

7.5.                            Other Governmental Approvals.  All Governmental Approvals set forth in Exhibit 8 shall have been obtained.

 

7.6.                            No Order.  There shall not be any Order in effect (other than an Order that relates exclusively to SPX South Korea, SPX India, SS China or the Launch Shares) that restrains, enjoins, prevents, prohibits or makes illegal the consummation of the transactions contemplated hereby.

 

7.7.                            Third Party Consents.  The approvals, consents and waivers that are listed on Exhibit 9 shall have been received, and executed counterparts thereof shall have been delivered to Purchaser at or prior to the Closing.

 

7.8.                            Labor Compliance.  Except for any non-compliance which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, the Service Solutions Companies shall have complied with all applicable Laws and Collective Bargaining Agreements relating to requirements to provide information to labor unions and perform consultation procedures that arise as a result of the sale of the Service Solutions Business and the other transactions contemplated by this Agreement (it being understood that in complying with this Section 7.8, SPX will be relying on, among other things, certain information and documents as may be furnished by Purchaser and on compliance by Purchaser of its obligations hereunder, including Section 1.7). In particular, with respect to SS France the condition  contained in this Section 7.8 shall be deemed satisfied if Completion of the Works Council Process was determined jointly by SPX and Purchaser pursuant to Section 1.7(b).

 

7.9.                            No Material Adverse Effect.  From the date of this Agreement, there shall not have occurred and be continuing through the Effective Date any Material Adverse Effect.

 

ARTICLE VIII

 

Conditions to SPX’s Obligations

 

The obligation of SPX to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction (or waiver, where permissible) at or prior to the Closing Date of all of the following conditions:

 

8.1.                            Covenants of Purchaser.  Purchaser shall have complied in all material respects with its agreements and covenants contained herein to be complied with on or prior to the Closing Date.

 

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8.2.                            Representations and Warranties of Purchaser.  The representations and warranties of Purchaser set forth in Article III hereof which are modified by Purchaser Material Adverse Effect shall be true and correct as of the Effective Date as though made as of the Effective Date (except for representations and warranties which address matters only as of a specific date, which representations and warranties shall continue as of the Effective Date to be true and correct as of such specific date).  The representations and warranties of Purchaser contained in Article III hereof which are not modified by Purchaser Material Adverse Effect shall be true and correct as of the Effective Date as though made as of the Effective Date (except for representations and warranties which address matters only as of a specific date, which representations and warranties shall continue as of the Effective Date to be true and correct as of such specific date), except to the extent that the failure to be so true and correct would not reasonably be expected to have a Purchaser Material Adverse Effect.

 

8.3.                            Purchaser’s Certificate.  SPX shall have received a certificate of Purchaser, executed by a Vice President of Purchaser, dated as of the Effective Date, certifying as to the fulfillment of the conditions set forth in Sections 8.1 and 8.2 hereof.

 

8.4.                            HSR Approvals.  The waiting period (and any extensions thereof) applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or been earlier terminated.

 

8.5.                            Other Governmental Approvals.  All Governmental Approvals set forth in Exhibit 8 shall have been obtained.

 

8.6.                            No Order.  There shall not be any Order in effect (other than an Order that relates exclusively to SPX South Korea, SPX India, SS China or the Launch Shares) that restrains, enjoins, prevents, prohibits or makes illegal the consummation of the transactions contemplated hereby.

 

ARTICLE IX

 

Employment Matters

 

9.1.                            Post-Closing Benefits and Compensation.  Purchaser shall offer employment to all Business Employees who are not Service Solutions Group Employees, effective as of the Closing Date. For a period of at least one year following the Closing Date, Purchaser shall provide each non-union Business Employee who continues to be employed by either a Member of the Services Solutions Group, Purchaser or any of their respective Affiliates  after the Closing Date (the “Continuing Non-Union Employees”) (a) base salary or wages, as applicable, and bonus opportunities that are no less favorable than were provided to them immediately prior to the Closing and (b) employee benefits that are comparable in the aggregate to those provided to them immediately prior to the Closing.  Notwithstanding the foregoing, Purchaser shall not be obligated to continue to employ any Business Employee for any specific period of time following the Closing Date, subject to applicable Law.

 

9.2.                            Severance.  Without limiting the scope of Section 9.1, for a period of at least one year following the Closing Date, Purchaser shall provide severance to Business Employees who are eligible under the SPX Separation Allowance Plan under the circumstances

 

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and at the levels set forth in the SPX Separation Allowance Plan, provided that no provision of the plan providing SPX and its domestic Subsidiaries with discretion to determine whether to pay severance or to reduce the amount of severance payable shall apply.

 

9.3.                            Service Credit.  For purposes of participation of Continuing Non-Union Employees in benefit plans of Purchaser or any of its Affiliates (including Members of the Service Solutions Group after the Closing) (each, a “Purchaser Benefit Plan”), each Continuing Non-Union Employee shall be credited with all years of service for which such Continuing Non-Union Employee was credited before the Closing Date under any comparable Benefit Plan (which credit shall apply for all purposes other than benefit accrual under any defined benefit pension plan), except to the extent such credit would result in a duplication of benefits for the same period of service.  In addition, and without limiting the generality of the foregoing: (a) each Continuing Non-Union Employee shall be immediately eligible to participate, without any waiting time, in Purchaser Benefit Plans to the extent that coverage under such plans replaces coverage under comparable Benefit Plans in which such Continuing Non-Union Employee participated, and (b) for purposes of each Purchaser Benefit Plan providing medical, dental, pharmaceutical and/or vision benefits to any Continuing Non-Union Employees, Purchaser shall cause all pre-existing condition exclusions and actively-at-work requirements of such Purchaser Benefit Plan to be waived for such Continuing Non-Union Employee and his or her covered dependents, and Purchaser shall cause any eligible expenses incurred by such Continuing Non-Union Employee and his or her covered dependents during the portion of the plan year of the Benefit Plan ending on the date such  Continuing Non-Union Employee’s participation in the corresponding Purchaser Benefit Plan begins to be taken into account under such Purchaser Benefit Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such Continuing Non-Union Employee  and his or her covered dependents for the applicable plan year under Purchaser Benefit Plan as if such amounts had been paid in accordance with such Purchaser Benefit Plan.

 

9.4.                            Vacation.  Purchaser shall (a) credit each of the Continuing Non-Union Employees  with an amount of paid vacation and sick leave days following the Closing Date equal to the amount of vacation time and sick leave days each such Continuing Non-Union Employee  has accrued but not yet used as of the Closing Date under SPX’s or its Affiliates’ vacation and sick leave policies as in effect immediately prior to the Closing Date, and (b) allow each of the  Continuing Non-Union Employees to use such accrued vacation and sick leave days at such times as each would have been allowed under SPX’s or its Affiliates’ vacation and sick leave policies as in effect immediately prior to the Closing Date.

 

9.5.                            Collective Bargaining Agreements.  Following the Closing, Purchaser shall cause the applicable Member of the Service Solutions Group or its applicable Affiliate to honor the terms and conditions of the Collective Bargaining Agreements, including, without limitation, terms and conditions relating to the compensation and benefits of Business Employees covered by such agreement.

 

9.6.                            Flexible Spending Accounts.  This Section 9.6 shall not apply if Continuing Non-Union Employees will be eligible to participate in Purchaser’s high deductible health plan with health savings account contributions.  As soon as practicable following the Closing and in accordance with Revenue Ruling 2002-32, SPX shall cause a portion of its flexible spending arrangements under its Code Section 125 cafeteria plan applicable to Business

 

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Employees who are eligible under the cafeteria plan to be segregated into a separate component, and shall transfer all account balances and salary reduction elections for such Business Employees to a flexible spending arrangement of Purchaser, which Purchaser shall use reasonable best efforts to cause to be maintained for the duration of the plan year in which the Closing Date occurs.

 

9.7.                            401(k) Plan.  As soon as practicable following the Closing, Purchaser shall establish a defined contribution pension plan qualified under Section 401(k) of the Code that permits, or shall amend the terms of its existing such plan to permit, direct rollover of accounts of Business Employees who are eligible under the SPX 401(k) Plan, including direct rollover of outstanding loans associated with such accounts, to such plan. From the date hereof, Purchaser and SPX shall, and shall cause their respective Subsidiaries to, use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable Law to effectuate the foregoing.

 

9.8.                            Section 75 Liability.

 

(a)                                 SPX shall, subject to Section 9.8(b), settle any claims by the Trustee in respect of any Section 75 Liability before, on or as soon as reasonably practicable after the Closing Date.  For the purpose of settling any Section 75 Liability, SPX may cause one or more of the Participating Employers to make such payment or payments to the Trustee as it sees fit and/or may cause one or more of the Participating Employers to enter into a Cessation Arrangement.

 

(b)                                 Purchaser shall provide or cause the provision of such assistance to SPX or the relevant Participating Employers as may be necessary or desirable to give effect to any Cessation Arrangement agreed by or on behalf of SPX with the Trustee.  Any reasonable costs incurred by Purchaser or any of its Affiliates in providing such assistance shall be reimbursed by or on behalf of SPX promptly on demand by Purchaser and upon delivery by Purchaser of reasonable documentation to substantiate such costs.

 

9.9.                            No Third Party Beneficiaries.  The provisions of this Article IX are for the sole benefit of the parties to this Agreement and nothing herein, expressed or implied, is intended or shall be construed to (a) constitute an amendment to any of the compensation and benefits plans maintained for or provided to Business Employees prior to or following the Closing or (b) confer upon or give to any Person, other than the parties to this Agreement and their respective permitted successors and assigns, any legal or equitable or other rights or remedies with respect to the matters provided for in this Article IX under or by reason of any provision of this Agreement.

 

ARTICLE X

 

Termination

 

10.1.                     Termination.  This Agreement may be terminated prior to the Effective Date:

 

(a)                                 by the mutual written consent of SPX and Purchaser;

 

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(b)           by either Purchaser, on the one hand, or SPX, on the other hand, if the Effective Date shall not have occurred on or before July 31, 2012 (the “Initial Termination Date”; the Initial Termination Date as extended from time as set forth below, the “Termination Date”), provided, that, (i) if at any time prior to the Initial Termination Date (A) the DOJ or the FTC makes a request for additional information or documentary materials from either or both of SPX or Purchaser authorized by Section 7A(e) of the Clayton Act (commonly referred to as a “second request”) or (B) the European Commission opens a “Phase II” investigation pursuant to Article 6(1)(c) of the European Merger Regulation or refers the transactions contemplated by this Agreement in whole or in part to one or more national Governmental Authorities in the European Union pursuant to Article 9 of the European Merger Regulation or reaches a decision pursuant to Article 6(2) of the European Merger Regulation which prevents the Closing on or before July 31, 2012, then (x) Purchaser may, by written notice from time to time, extend the Termination Date but not beyond the earlier of November 30, 2012 and the fourth Business Day following the date on which the conditions set forth in Sections 7.4, 7.5, 8.4 and 8.5 shall have been satisfied; and (y) SPX may, by written notice from time to time, extend the Termination Date, but not beyond the later of January 31, 2013 or 10 calendar months following submission of an appropriate filing to the European Commission pursuant to Article 4 of the European Merger Regulation in respect of the transactions contemplated by this Agreement, or if earlier, the fourth Business Day following the date on which the conditions set forth in Sections 7.4, 7.5, 8.4 and 8.5 shall have been satisfied; and provided, further, that the right to terminate this Agreement under this Section 10.1(b) (and the right of either SPX or Purchaser to extend the Termination Date) shall not be available to a party if such party’s breach of a covenant or agreement contained herein has been the cause of or resulted in the failure of the Effective Date to occur on or before the Termination Date;

 

(c)           by Purchaser, upon five days prior written notice to SPX, if any of the conditions to the Closing set forth in Article VII, other than the condition set forth in Section 7.7, and other than any condition which relates exclusively to SPX India and/or SPX South Korea and/or SS China and/or the Launch Shares, shall have become incapable of fulfillment and shall not have been waived in writing by Purchaser; provided that Purchaser is not then in breach of its covenants and agreements contained herein;

 

(d)           by SPX, upon five days prior written notice to Purchaser, if any of the conditions to the Closing set forth in Article VIII, other than any condition which relates exclusively to SPX India, SPX South Korea, SS China and/or the Launch Shares, shall have become incapable of fulfillment and shall not have been waived in writing by SPX; provided that SPX is not then in breach of its covenants and agreements contained herein; or

 

(e)           by either Purchaser or SPX, upon written notice to the other, if there shall be in effect a final, non-appealable Order of a Governmental Authority of competent jurisdiction prohibiting the consummation of the transactions contemplated hereby, other than any Order which relates exclusively to SPX India, SPX South Korea, SS China and/or the Launch Shares.

 

10.2.       Purchaser Termination Fee.

 

(a)           In the event that (i) this Agreement is terminated by either Purchaser or SPX (x) pursuant to Section 10.1(e), but only in connection with an Order with respect to the antitrust or competition Laws, or (y) pursuant to Section 10.1(b) and, at the time of such termination, any Material Antitrust Condition shall not have been satisfied, (ii) the issuance of such Order or the failure of any Material Antitrust Condition to be satisfied (as applicable) was

 

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not caused by a breach of Section 6.1 by SPX, and (iii) all other conditions to the obligations of Purchaser to consummate the transactions contemplated by this Agreement set forth in Article VII have been satisfied or waived (or, in the case of those conditions that by their terms are to be satisfied at the Closing, would be capable of being satisfied if the Closing were to occur), then Purchaser shall pay to SPX or SPX’s designee, by wire transfer of immediately available funds to an account or accounts designated in writing by SPX, the Purchaser Termination Fee within two Business Days of termination.

 

(b)           Any Purchaser Termination Fee payable pursuant to Section 10.2(a), shall be paid as liquidated damages (and not as a penalty), it being agreed by the parties that the actual damages to SPX in such event are impractical to ascertain and the amount of Purchaser Termination Fee is a reasonable estimate thereof.  For the avoidance of doubt, if paid, the Purchaser Termination Fee shall be the sole and exclusive remedy available pursuant to this Agreement in respect of a termination of this Agreement in the circumstances specified in Section 10.2(a).

 

(c)           The parties acknowledge that the agreements contained in this Section 10.2 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, neither Purchaser nor SPX would have entered into this Agreement; accordingly, if Purchaser fails to promptly pay the Purchaser Termination Fee, then Purchaser shall, in accordance with Section 12.19, pay SPX’s reasonable costs and expenses of enforcing this Section 10.2, together with interest on the Purchaser Termination Fee at the Specified Rate from the date the Purchaser Termination Fee was required to have been paid until the date actually received by SPX.

 

10.3.       Effect on Obligations.  The penultimate sentence of Section 4.2, Section 6.2, Section 10.2, this Section 10.3, Article XII and the Confidentiality Agreement (collectively, the “Surviving Provisions”) shall survive any termination of this Agreement pursuant to Section 10.1.  Termination of this Agreement pursuant to Section 10.1 shall terminate all other rights and obligations of the parties hereunder and none of the parties shall have any liability hereunder other than pursuant to the Surviving Provisions; provided that no such termination or any other provision hereunder shall relieve any party from any liability for damages resulting from any breach of any covenant or agreement contained herein prior to such termination.

 

ARTICLE XI

 

Indemnification

 

11.1.       Indemnification.

 

(a)           If the Closing shall occur, SPX shall indemnify Purchaser, each Member of the Service Solutions Group and their respective Affiliates and Representatives (the “Purchaser Indemnified Parties”) and hold each such Person harmless from and against any losses, claims (whether or not meritorious), damages, liabilities, settlement amounts, penalties, costs and expenses, including reasonable attorneys’ fees and disbursements, court costs and other out-of-pocket expenses but not including internal management, administrative or overhead costs that the Indemnified Party may incur in connection with the administration, supervision or performance of actions required in response to a claim (collectively, “Damages”), that are incurred or suffered by any of them:

 

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(i)            by reason of the breach or inaccuracy of the representations or warranties set forth in Article II;

 

(ii)           by reason of any breach of SPX’s covenants hereunder (x) contained in Section 4.1 hereof or (y) to be performed after the Closing; or

 

(iii)          in respect of the Excluded Liabilities (including any attempt, whether or not meritorious, by any third party to impose responsibility on any of the Purchaser Indemnified Parties for any Excluded Liabilities); provided, that no indemnification shall be provided for any claim of less than $250,000 with respect to Taxes arising out of or relating to the Service Solutions Business that is not a claim for Income Taxes.

 

(b)           If the Closing shall occur, Purchaser shall indemnify each Member of the SPX Group and their respective Affiliates and Representatives (the “SPX Indemnified Parties”) and hold each of them harmless from and against all Damages that are incurred or suffered by any of them:

 

(i)            by reason of the breach or inaccuracy of the representations or warranties set forth in Article III;

 

(ii)           by reason of any breach of Purchaser’s covenants hereunder to be performed after the Closing;

 

(iii)          in respect of the Assumed Liabilities (including any attempt, whether or not meritorious, by any third party to impose responsibility on any of the SPX Indemnified Parties for any Assumed Liabilities); or

 

(iv)          in respect of any claim of less than $250,000 with respect to Taxes arising out of or relating to the Service Solutions Business that is not a claim for Income Taxes.

 

(c)           The Purchaser Indemnified Parties or the SPX Indemnified Parties (each, in such capacity, an “Indemnified Party”) shall not be entitled to any recovery unless a claim for indemnification is made in accordance with Section 11.2, so as to constitute a Valid Claim Notice.

 

(d)           Any claim for indemnification under this Article XI shall be limited to actual and direct Damages, and in no event shall any Indemnifying Party have any liability to any Indemnified Party for consequential, indirect or punitive Damages; provided, however, that such limitation shall not be construed to limit an Indemnified Party’s ability to recover under this Agreement any such Damages forming part of a Third Party Claim.

 

(e)           For the avoidance of doubt, for purposes of calculating the amount of any Damages under Section 11.1(a)(i) arising from any breaches of representations and warranties of SPX, other than with respect to the first sentence of Section 2.10, all qualifications as to materiality or Material Adverse Effect shall be disregarded.

 

(f)            SPX’s indemnification obligations under Section 11.1(a) shall be subject to the following limitations:

 

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(i)            With respect to indemnification under Sections 11.1(a)(i), such obligation arising from a breach or inaccuracy of a representation or warranty shall terminate upon the expiration of the applicable survival period related to such representation or warranty set forth in Section 12.3 hereof, other than with respect to any claim for indemnification with respect to which a Valid Third Party Claim Notice or a Valid Other Claim Notice has been delivered prior to the expiration of such applicable survival period, in which event such obligation to indemnify shall survive until such claim has been finally resolved;

 

(ii)           There shall be no obligation to indemnify under Section 11.1(a)(i) unless the aggregate of all Damages for which SPX, but for this Section 11.1(f)(ii), would be liable exceeds on a cumulative basis an amount equal to $10,000,000 (the “Deductible”), and then only to the extent of such excess; provided that such limitation shall not apply to any breach of representations and warranties set forth in Section 2.23;

 

(iii)          There shall be no obligation to indemnify under Section 11.1(a)(i) for any claim where the Damages relating thereto are less than $250,000 (it being understood that such claims shall not be included or aggregated for purposes of calculating the Deductible) provided that such limitation shall not apply to any breach of representations and warranties set forth in Section 2.23 in respect of Income Taxes or to any breach of the representations and warranties set forth in Sections 2.1, 2.3, 2.4, 2.5 or 2.18, but shall apply to any breach of the representations and warranties set forth in Section 2.23 in respect of Taxes other than Income Taxes;

 

(iv)          There shall be no obligation to indemnify under Section 11.1(a)(i) for any amount that, when aggregated with all other amounts payable as a result of indemnification under Section 11.1(a) would be in excess of $187,500,000; provided, that such limitation shall not apply to any breach of the representations and warranties set forth in Sections 2.1, 2.3, 2.4, 2.5, 2.18 or 2.23;

 

(v)           In calculating any amounts payable by SPX pursuant to this Article XI in respect of any Damages incurred by a Purchaser Indemnified Party, SPX shall receive credit for (and the amount of Damages subject to indemnification pursuant to this Article XI shall be reduced by) (x) the amount of any reduction in current assets or increase in current liabilities reflected in the calculation of Final Closing Date Working Capital applicable to or resulting from such Damages, and (y) the amount of any reduction in current assets or increase in current liabilities sought by Purchaser to be reflected in the calculation of Final Closing Date Working Capital applicable to or resulting from such Damages but which were not so reflected by reason of SPX’s dispute of such reflection and the resolution of such dispute (including by agreement between SPX and Purchaser) in favor of SPX pursuant to Section 1.5.

 

(vi)          For purposes of Section 11.1(a), all Damages shall be reduced by (x) the amount of any insurance proceeds payable to Purchaser or any Purchaser Indemnified Party with respect to such Damages, (y) any indemnity, contribution or other similar payment payable to Purchaser or any Purchaser Indemnified Party with respect to such Damages, and (z) any Tax benefits available to Purchaser or

 

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any Purchaser Indemnified Party that are attributable to such Damages. If a Purchaser Indemnified Party receives proceeds from third parties, including insurance proceeds, in connection with Damages for which it has received indemnification hereunder, such Purchaser Indemnified Party shall promptly refund to the Indemnifying Party the amount of such proceeds when received, up to the amount of indemnification received hereunder.

 

(vii)         SPX shall have no obligation to indemnify any Purchaser Indemnified Party under Section 11.1 of this Agreement with respect to Damages arising under or relating to any Environmental Law to the extent such Damages are incurred as a result of any voluntary (A) intrusive investigation, sampling or testing by any Purchaser Indemnified Party, or (B) disclosure, report or other communication from or on behalf of any Purchaser Indemnified Party to any third party (each a “Voluntary Action”), in each case except where such intrusive investigation, sampling, testing, disclosure, report or other communication is (x) required by Environmental Law, or (y) a necessary immediate response to an emergency or threat to human health (it being understood that any intrusive investigation, sampling, testing, disclosure, report or other communication from or on behalf of any Purchaser Indemnified Party to any third party which is required by Environmental Law or is a necessary immediate response to an emergency or threat to human health is not a Voluntary Action). For the avoidance of doubt, SPX shall have no obligation to indemnify any Purchaser Indemnified Party with respect to Damages arising under or relating to any Environmental Law resulting from any construction or renovation activities performed by or on behalf of any Purchaser Indemnified Party on, at or under any of the Real Properties.

 

(viii)        All Remedial Action subject to indemnification by SPX under Section 11.1 shall be conducted in a Cost-Effective Manner.  “Cost-Effective Manner” shall mean the lowest cost measures permitted by Environmental Law and Governmental Authorities with appropriate jurisdiction with respect to any applicable Remedial Action, including non-residential or industrial cleanup standards, alternate cleanup standards, and engineering and institutional controls (including environmental easements and deed restrictions), provided that such measures, standards or controls do not unreasonably interfere with such Purchaser Indemnified Party’s ability to conduct the Service Solutions Business in substantially the manner conducted as of the Closing. With respect to any Remedial Action controlled by any Purchaser Indemnified Party subject to indemnification by SPX under Section 11.1, SPX shall have no indemnification obligation with respect to such Remedial Action to the extent such Purchaser Indemnified Party fails to conduct such Remedial Action in a Cost-Effective Manner.

 

(g)           All indemnity payments made pursuant to this Article XI or otherwise shall be treated for all Tax purposes as an adjustment to the Purchase Price, except as otherwise required by applicable Law.

 

(h)           In no event shall any Indemnified Party be entitled to double recovery hereunder.  In particular, in the event that any circumstances constitute a breach of more than one representation, warranty, covenant or agreement on the part of the Indemnifying Party, the

 

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Indemnified Parties shall only be entitled to be indemnified once in respect of such circumstances.

 

11.2.       Procedures for Claims.

 

(a)           In order for an Indemnified Party to be entitled to any indemnification provided for under this Article XI in respect of, arising out of or involving a claim made by any third party against the Indemnified Party (a “Third Party Claim”), the Indemnified Party must notify SPX or Purchaser, as applicable (each, in such capacity, the “Indemnifying Party”) in writing of the Third Party Claim (a “Third Party Claim Notice”) promptly following receipt by such Indemnified Party of written notice of the Third Party Claim, which notification, to be a valid Third Party Claim Notice, with the effect set forth in Section 11.1(a) or 11.1(b) (as applicable) (a “Valid Third Party Claim Notice”), must be accompanied by a copy of the written notice of the third party claimant to the Indemnified Party asserting the Third Party Claim; provided, that the failure to promptly provide such Third Party Claim Notice or to promptly provide a copy of the written notice of the third party claimant shall not waive any rights of the Indemnified Party, except to the extent that the rights of the Indemnifying Party are actually prejudiced thereby.  The Indemnified Party shall deliver to the Indemnifying Party copies of all other notices and documents (including court papers) received by the Indemnified Party relating to the Third Party Claim.

 

(b)           The Indemnifying Party shall have the right to defend and to direct the defense, and shall have the obligation at the request of the Indemnified Party to defend and direct the defense, against any such Third Party Claim (including to conduct any Action or settlement negotiations) with counsel of its own choosing, unless there is a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense of such Third Party Claim.  Prior to the time the Indemnified Party is notified by the Indemnifying Party as to whether the Indemnifying Party will assume the defense of a Third Party Claim, the Indemnified Party shall take all actions reasonably necessary to timely preserve the collective rights of the parties with respect to such Third Party Claim, including responding timely to legal process.  If the Indemnifying Party shall decline to assume the defense of a Third Party Claim (or shall fail to confirm to the Indemnified Party that it will defend such Third Party Claim) within 30 days after the giving by the Indemnified Party to the Indemnifying Party of a Valid Third Party Claim Notice with respect to the Third Party Claim, or in the case of a conflict of interest, the Indemnified Party shall defend against the Third Party Claim and the Indemnifying Party shall be liable to the Indemnified Party for all reasonable fees and expenses incurred by the Indemnified Party in the defense of the Third Party Claim, including without limitation the reasonable fees and expenses of counsel employed by the Indemnified Party, if and to the extent that the Indemnifying Party is responsible to indemnify for such Third Party Claim.  Regardless of which party assumes the defense of a Third Party Claim, the parties agree to cooperate with one another in connection therewith.  Such cooperation shall include providing records and information that are relevant to such Third Party Claim, and making employees and officers available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder and to act as a witness or respond to legal process.  Whether or not the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Indemnifying Party’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).  The Indemnifying Party shall not consent to a settlement of, or the entry of any judgment arising from, any such Third Party Claim without the Indemnified Party’s prior written consent (which consent shall not be unreasonably withheld, conditioned or

 

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delayed) unless such settlement or judgment (a) relates solely to monetary damages for which the Indemnifying Party shall be responsible and (b) includes as an unconditional term thereof the release of the Indemnified Party from all liability with respect to such Third Party Claim, in which event no such consent shall be required.

 

(c)           In order for an Indemnified Party to be entitled to any indemnification provided for under this Article XI in respect of a claim that does not involve a Third Party Claim being asserted against such Indemnified Party (an “Other Claim”), the Indemnified Party shall promptly notify the Indemnifying Party in writing of such Other Claim (the “Other Claim Notice”), which notification, to be a valid Other Claim Notice, with the effect set forth in Section 11.1 (a “Valid Other Claim Notice” and, together with a Valid Third Party Claim Notice, a “Valid Claim Notice”), shall certify that the Indemnified Party has in good faith already sustained some (though not necessarily all) Damages with respect to such claim.  The failure by any Indemnified Party to notify the Indemnifying Party promptly shall not waive any rights of the Indemnified Party, except to the extent that the rights of the Indemnifying Party are actually prejudiced thereby.  The foregoing notwithstanding, any Other Claim arising from the breach of any of the representations or warranties set forth in Section 2.13 shall be subject to the rights of the Indemnifying Party to defend and to direct the defense of such Other Claim in accordance with Section 11.2(b).

 

(d)           The party that has assumed the control or defense of any Third Party Claim or Other Claim arising from the breach of any of the representations or warranties set forth in Section 2.13 shall (a) provide the other party with the right to participate in any meetings or negotiations with any Governmental Authorities or other third parties and reasonable advance notice of any such meetings or negotiations, (b) provide the other party with the right to review in advance and provide comments on any draft or final documents proposed to be submitted to Governmental Authorities or other third parties, and (c) keep the other party reasonably informed with respect to such Third Party Claim or Other Claim, including providing copies of all documents provided to, or received from, any Governmental Authority or any other third party in connection with such Third Party Claim or Other Claim. The Purchaser Indemnified Parties and SPX covenant and agree to maintain the confidence of all drafts and comments provided by the other party.

 

(e)           This Section 11.2 shall not apply to Tax Contests, which shall be subject to Sections 11.3(b) and (c).

 

11.3.       Tax Indemnification.(a)    From and after the Closing, SPX shall indemnify Purchaser or, at the request of Purchaser, the Purchaser Indemnified Parties against, and hold them harmless, from any Damages (calculated after taking into account any payment of Income Taxes by SPX pursuant to Section 6.4(b)) by reason of any Income Taxes imposed on the Service Solutions Business or any Member of the Service Solutions Group with respect to any Pre-Closing Tax Period.  The obligation of SPX to indemnify Purchaser for such Income Taxes shall be without regard to whether there was any breach of any representation or warranty under Article II with respect to such Income Tax or any disclosures that may have been made with respect to Article II or otherwise.  For purposes of this Section 11.3, all Damages shall be reduced by the correlative amount (based on the tax rates in effect at the time for those future periods), if any, by which any Tax of the Purchaser Indemnified Parties is actually reduced for periods ending after the Closing Date as a result of such Damages.  For purposes of this Section 11.3, any Income Tax imposed on a Member of the Service Solutions Group for a Post-Closing Tax Period shall be treated as an Income Tax imposed with respect to a Pre-Closing Tax Period

 

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if such Income Tax (i) is the direct result of the application of Section 481 of the Code (or any similar provision of state, local, or foreign Tax Law) by reason of a change in accounting method employed prior to the Closing and (ii) is calculated with reference to the taxable income of such  Member of the Service Solutions Group for a Pre-Closing Tax Period.  The parties’ obligations under this Section 11.3 shall survive the Closing and shall continue until 60 days after the expiration of the statute of limitations applicable to the relevant Taxes.

 

(b)           Promptly, but in any event within 20 days, after Purchaser becomes aware of the existence of a Tax issue that may give rise to an indemnification claim under this Article XI (a “Tax Controversy”) by any Purchaser Indemnified Party against SPX, Purchaser shall notify SPX of the Tax issue and thereafter shall promptly forward to SPX copies of the relevant portion of any notice or other document received from any Governmental Authority and communications with any Governmental Authority relating to such Tax Controversy; provided, however, that a failure to give such notice will not affect such Purchaser Indemnified Party’s rights to indemnification under this Article XI, except to the extent that SPX is actually prejudiced thereby.

 

(c)           Notwithstanding anything to the contrary contained in this Agreement, SPX shall have the ability to elect to solely control and make all decisions regarding interests in any Tax audit, hearing, proposed adjustment, arbitration, deficiency, assessment, suit, dispute, claim or other administrative or judicial proceeding (a “Tax Contest”) relating to Income Taxes imposed on SS US, SS Germany, SS Australia, SS Japan or SS UK, in each case, for any taxable period ending on or before the Closing Date, including selection of counsel and selection of a forum for such contest, provided, however, that (i) Purchaser and SPX shall cooperate in the conduct of any such Tax Contest, (ii) Purchaser shall have the right (but not the obligation) to participate in (but not control) such Tax Contest, (iii) SPX shall keep Purchaser informed of all developments with respect to such Tax Contest on a timely basis, (iv) SPX shall not enter into any agreement with the relevant taxing authority pertaining to such Tax Contest without the written consent of Purchaser, which consent shall not unreasonably be withheld, conditioned or delayed, and (v) Purchaser may, without the written consent of SPX, enter into such an agreement proposed by the relevant taxing authority, provided that Purchaser shall have agreed in writing to accept responsibility and liability for the payment of the applicable Income Taxes and to forego any indemnification or other claim under this Agreement with respect to such Income Taxes.  Purchaser shall control the conduct and resolution of any Tax Contest relating to (x) non-Income Taxes of any Member of the Service Solutions Group, (y)  Income Taxes for any taxable period ending on or before the Closing Date with respect to Members of the Service Solutions Group other than SS US, SS Germany, SS Australia, SS Japan and SS UK, and (z) Income Taxes with respect to a Straddle Period, provided, however, that (A) Purchaser and SPX shall cooperate in the conduct of each such Tax Contest, (B) SPX shall have the right (but not the obligation) to participate in (but not control) such Tax Contest, (C) Purchaser shall keep SPX informed of all developments with respect to such Tax Contest on a timely basis, (D) Purchaser shall not enter into any agreement with the relevant taxing authority pertaining to such Tax Contest without the written consent of SPX, which consent shall not unreasonably be withheld, conditioned or delayed, and (E) Purchaser may, without the written consent of SPX, enter into such an agreement, provided that Purchaser shall have agreed in writing to accept responsibility and liability for the payment of the applicable Taxes and to forego any indemnification or other claim under this Agreement with respect to such Taxes.  In the event of any Tax Contest related to Taxes for which Purchaser has an indemnification obligation pursuant to Section 11.1(b)(iv), SPX shall (i) take commercially reasonable steps to defend any claim in excess of $25,000 related to such Taxes if there is a mutually reasonable expectation of prevailing, (ii) keep

 

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Purchaser informed of all developments with respect to such Tax Contest on a timely basis, and (iii) consider in good faith any comments of Purchaser with respect to the defense or settlement of such Tax Contest. Each party shall bear its own costs incurred in participating in any proceeding relating to any Tax Contest.  Purchaser and SPX shall execute and deliver, or cause to be executed and delivered, such powers of attorney and other documents as may be necessary or appropriate to give effect to the foregoing.

 

(d)           To the extent any provision of this Section 11.3 is in conflict with any other provision in this Agreement, the provisions of this Section 11.3 shall govern.

 

ARTICLE XII

 

Miscellaneous

 

12.1.       Expenses.  Except as otherwise provided in this Agreement, each of SPX, on the one hand, and Purchaser on the other hand, shall pay all costs and expenses incurred by such party in connection with this Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby, including without limiting the generality of the foregoing, fees and expenses of its Representatives.  Purchaser shall pay any filing fees under the HSR Act or under any foreign antitrust or competition Law.  Purchaser shall pay the costs and expenses associated with effecting the transfer or sale of the Acquired Assets, including without limitation the costs of recordation of title to any Intellectual Property and intangible property.

 

12.2.       Transfer Taxes.  Purchaser and SPX shall each be responsible for fifty percent (50%) of any transfer, documentary, sales, use, recording, stamp, registration and other such Taxes and fees (including any penalties and interest) of any nature whatsoever imposed by any foreign, federal, state, local or other taxing body as a result of the consummation of the transactions contemplated by this Agreement, provided, however, that SPX shall be solely responsible for any such Taxes resulting from any asset or stock transfers or restructuring undertaken by SPX prior to the Closing unless such transfers or restructuring occurred at the direct request of, or were consented to in writing by, Purchaser, in which case SPX and Purchaser shall each be responsible for 50% of such Taxes.  Purchaser and SPX (whichever is primarily responsible under applicable Law) will, at such party’s own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, and the applicable non-filing party shall reasonably cooperate with respect thereto.

 

12.3.       Survival of Representations and Warranties.  The representations and warranties contained herein or in any certificate or other writing delivered pursuant hereto shall survive the Closing until the later of (a) April 30, 2013 and (b) the date that is the 13 month anniversary of the Closing Date, except that (i) the representations and warranties set forth in Section 2.1, Section 2.3, Section 2.4, Section 2.5, Section 2.18, Section 3.2 and Section 3.7 shall survive indefinitely, (ii) the representations and warranties set forth in Section 2.13 shall survive until the second anniversary of the Closing Date, and (iii) the representations and warranties set forth in Section 2.23 shall survive until the date that is six months after the expiration of the applicable statute of limitations.  All of the covenants and agreements set forth in this Agreement that are to be performed prior to the Closing shall not survive the Closing, except that the covenants set forth in Section 4.1 shall survive the Closing for a period of six months.  All of the

 

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covenants and agreements set forth in this Agreement that are to be performed after the Closing shall survive the Closing in accordance with their terms.

 

12.4.       Exclusive Agreement; No Third-Party Beneficiaries.  This Agreement (including the Disclosure Schedules and all Exhibits hereto), the Ancillary Agreements and the Confidentiality Agreement constitute the sole understanding of the parties with respect to the subject matter hereof and thereof, and supersede all previous written, oral or implied understandings among them with respect to such matters.  Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, express or implied, is intended to confer on any Person other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement; provided that the Purchaser Indemnified Parties and the SPX Indemnified Parties shall be third party beneficiaries of Article XI.

 

12.5.       Disclosure.  The disclosure of any matter in any Section of this Agreement shall be deemed to be a disclosure with regard to any other Section to which the relevance of the disclosure is reasonably apparent on its face.  No reference to or disclosure of any item or other matter in the Disclosure Schedules shall be construed as an admission or indication that such item or other matter is material (nor shall it establish a standard of materiality for any purpose whatsoever) or that such item or other matter is required to be referred to or disclosed in the Disclosure Schedules.  The information set forth in the Disclosure Schedules is disclosed solely for the purposes of this Agreement, and no information set forth therein shall be deemed to be an admission by any party hereto to any third party of any matter whatsoever, including any violation of Law or breach of any Contract.  Nothing in the Disclosure Schedules is intended to broaden the scope of any representation or warranty contained in this Agreement or create any covenant or agreement.  Matters reflected in the Disclosure Schedules are not necessarily limited to matters required by the Agreement to be reflected in the Disclosure Schedules.  Such additional matters are set forth for informational purposes and do not necessarily include other matters of a similar nature.

 

12.6.       Deliveries to Purchaser; Disclaimer.  Purchaser acknowledges and agrees that all documents or other items included in the electronic dataroom or otherwise delivered prior to the date hereof to Purchaser or its Representatives will be deemed to be delivered to Purchaser for all purposes hereunder; provided, however, for the avoidance of doubt, the parties acknowledge and agree that the documents included in the electronic dataroom or otherwise delivered prior to the date hereof to Purchaser or its Representatives will not be deemed to be disclosed for purposes of the Disclosure Schedules. Purchaser acknowledges and agrees that none of the Members of the SPX Group or any of their respective Representatives has made any representation or warranty, express or implied, as to the Service Solutions Business or as to the accuracy or completeness of any information regarding the Service Solutions Business delivered or made available to Purchaser or its Representatives, including in the electronic data room or in management presentations, except for the representations and warranties expressly set forth in Article II, and none of the Members of the SPX Group or any of their respective past, present or future direct or indirect Representatives will have or be subject to any Liability, including any indemnification obligation, whether in contract or in tort, to Purchaser or any other Person with respect to any such information.

 

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12.7.       Consents.  Purchaser acknowledges that certain consents of non-governmental third parties (“Third Party Consents”) may have been required as a result of the Restructurings, and certain Third Party Consents may be required as a result of the consummation of the transactions contemplated hereby, from parties to Contracts to which a Service Solutions Company is party (including the Material Contracts set forth on the Disclosure Schedules), and such Third Party Consents have not been obtained. Purchaser acknowledges and agrees that SPX and its Affiliates shall have no Liability whatsoever to Purchaser or any of its Affiliates (including the Members of the Service Solutions Group) (and none of them shall be entitled to assert any claims) arising out of or relating to the failure to obtain any Third Party Consents that may have been required in connection with the Restructurings or that may be required in connection with the transactions contemplated by this Agreement, including by reason of any default, acceleration or termination of any such Contract as a result thereof.  Purchaser further agrees that no representation, warranty, covenant or agreement of SPX contained herein shall be breached or deemed breached and no condition of Purchaser (other than with respect to those Third Party Consents referred to in Section 7.7) shall be deemed not to be satisfied as a result of the failure to obtain any Third Party Consent, including as a result of any such default, acceleration or termination or as a result of any Action commenced or threatened by or on behalf of any Person arising out of or relating to the failure to obtain any Third Party Consent or any such default, acceleration or termination.

 

12.8.       Governing Law, Etc.  This Agreement shall be construed in accordance with and governed by the Laws of the State of Delaware applicable to agreements made and to be performed wholly within such jurisdiction.  Each of the parties hereto hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of Delaware and of the United States of America in each case located in New Castle County for any Action arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any Action relating thereto except in such courts), and further agrees that service of any process, summons, notice or document by U.S. registered mail to its address set forth in Section 12.12 shall be effective service of process for any Action brought against it in any such court.  Each of the parties hereto hereby irrevocably and unconditionally waives any objection to the laying of venue of any Action arising out of this Agreement or the transactions contemplated hereby in the courts of the State of Delaware or the United States of America in each case located in New Castle County and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action brought in any such court has been brought in an inconvenient forum.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

12.9.       Successors and Assigns.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties hereto.  Purchaser may not assign this Agreement or any of its rights hereunder without the prior written consent of SPX; provided, however, that Purchaser may assign, in its sole discretion, any or all of its rights, interests and obligations under this Agreement, including its right to purchase the SS Operating Company Interests, the Launch Shares or any of the Acquired Assets, to one or more direct or indirect wholly owned Subsidiaries of Purchaser so long as the representations

 

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and warranties made by Purchaser herein are equally true of each such assignee and so long as such assignment does not (i) adversely affect the ability of Purchaser to consummate the transactions contemplated hereby or delay the Closing or (ii) have any adverse tax consequences to any of the SPX Sellers.  Any such assignment shall not relieve Purchaser from any of its obligations under this Agreement and in the event of any such assignment, Purchaser shall nonetheless continue to be primarily liable for all of the obligations hereunder. Each such assignee shall execute a counterpart of this Agreement agreeing to be bound by the provisions hereof as “Purchaser.”

 

12.10.     Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner so that the transactions contemplated hereby are fulfilled to the greatest extent possible.

 

12.11.     Specific Performance.  Each of the parties hereto acknowledges and agrees that the other parties would be damaged irreparably, and in a manner for which monetary damages would not be an adequate remedy, in the event any of the provisions of this Agreement is not performed in accordance with its specific terms or otherwise are breached.   Accordingly, the parties agree that, in addition to any other remedies, each party shall be entitled to enforce the terms of this Agreement by a decree of specific performance without the necessity of proving the inadequacy of money damages as a remedy.  Each party hereby waives any requirement for the securing or posting of any bond in connection with such remedy.  Each party further agrees that the only permitted objection that it may raise in response to any action for equitable relief is that it contests the existence of a breach or threatened breach of this Agreement.

 

12.12.     Notices.  Any notice, request, instruction or other document to be given hereunder by any party hereto to any other party shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by electronic facsimile transmission (with a read receipt confirmation), cable, telegram, telex or other standard forms of written telecommunications, by overnight courier or by registered or certified mail, postage prepaid:

 

(a)           If to SPX or the Other SPX Sellers, to:

 

SPX Corporation
 13840 Ballantyne Corporate Place- Suite 350

Charlotte, NC 28277

Attention:  General Counsel

Telecopy:  704-752-7412

with a copy to:

 

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Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, New York  10004

Attention:   Aviva Diamant

Tiffany Pollard

Telecopy:  212-859-4000

 

(b)           If to Purchaser, to:

 

Robert Bosch GmbH

Postfach 10 60 50
 70049 Stuttgart, Germany

Attention:  General Counsel
 Telecopy:  +49(0)711 811-6760

with a copy to:

 

Dorsey & Whitney LLP

51 West 52nd Street

New York, New York 10019

Attention:   Brian McGunigle

Christopher J. Bellini

Telecopy:  212-953-7201

 

or at such other address for a party as shall be specified by like notice.

 

12.13.     Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same agreement.

 

12.14.     Interpretation.  When a reference is made in this Agreement to Articles, Sections or Exhibits, such reference is to an Article or a Section of, or an Exhibit to, this Agreement, unless otherwise indicated.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be understood to be followed by the words “without limitation.”  Whenever the words “herein,” “hereof,” “hereto,” or “hereunder” are used in this Agreement, they shall be deemed to refer to this Agreement as a whole and not to any specific Section of this Agreement.  The specification of any dollar amount or the inclusion of any item in the representations and warranties contained in this Agreement or the Disclosure Schedules or Exhibits is not intended to imply that the amounts, or higher or lower amounts, or the items so included, or other items, are or are not required to be disclosed (including, without limitation, whether such amounts or items are required to be disclosed as material or threatened) or are within or outside of the ordinary course of business, and no party will use the fact of the setting of the amounts or the fact of the inclusion of any item in this Agreement or the Disclosure Schedules or Exhibits in any dispute or controversy between the parties as to whether any obligation, item or matter not described or included in this Agreement or in any Disclosure Schedule or Exhibit is or is not required to be disclosed (including whether the amount or items are required to be disclosed as material or threatened) or is within or outside of the ordinary course of business for purposes of this Agreement.

 

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12.15.     No Strict Construction.  The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any Person.

 

12.16.     Definitions.

 

“Action” means any administrative, regulatory, judicial or other formal proceeding by or before any Governmental Authority or arbitrator.

 

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person.  The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the ability to elect the members of the board of directors or other governing body of a Person, and the terms “controlled” and “controlling” have correlative meanings.  The Members of the Service Solutions Group shall be deemed for purposes of this Agreement to be Affiliates of SPX prior to the Closing and Affiliates of Purchaser from and after the Closing.

 

“Agreed Amount” means, with respect to each of the Korea Acquired Assets, the India Acquired Assets, China Interests, the Launch Shares, and French Interests, the amount set forth under the caption “Agreed Amount” opposite the description of such assets or the entity’s name on Exhibit 10.

 

“Agreed Reference Working Capital” means, with respect to the Korea Acquired Assets, the India Acquired Assets, SS China, and SS France, the amount set forth under the caption “Agreed Reference Working Capital” set forth opposite the description of such assets or the entity’s name on Exhibit 10.

 

“Ancillary Agreements” means, collectively, the Assumption Documents, the Transition Services Agreement and any and all other agreements to be executed by SPX or any of its Affiliates and Purchaser or any of its Affiliates in connection with consummating the transactions contemplated by this Agreement.

 

“Benefit Plan” means each employee benefit plan (as defined in Section 3(3) of ERISA) and each bonus, stock option, stock purchase, other equity-based profit sharing, savings, disability, incentive, deferred compensation, retirement, severance, employment, retention, or other employee benefit plans or programs, maintained or contributed to or required to be contributed to, by SPX or any of its Affiliates anywhere in the world for the benefit of Business Employees or Former Business Employees or under which SPX or any of its Affiliates has any liability with respect to any such individual, in each case, other than plans required to be maintained or contributed to by applicable Law.

 

“Burdensome Condition” means the actions described on Exhibit 11.

 

“Business Day” means a day on which national banks are open for business in New York, New York and in Germany.

 

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“Business Employees” means (i) the Service Solutions Group Employees and (ii) any other employees of SPX or any of its Affiliates who are employed exclusively in connection with, or provide services exclusively to, the Service Solutions Business.

 

“Cessation Arrangement” means a withdrawal arrangement or a scheme apportionment arrangement as defined for the purposes of the Occupational Pension Schemes (Employer Debt) Regulations 2005 that are applicable in England and Wales.

 

“Change of Control” means “Change of Control” as defined in the SPX Credit Agreement.

 

“Chinese Subsidiaries” means SS China and Autoboss Tech Inc.

 

“Closing Date Cash” means the aggregate amount of any cash and cash equivalents of any Member of the Service Solutions Group existing as of close of business on the day immediately preceding the Closing Date; provided that, the aggregate amount of all checks written, and electronic payments made, on behalf of the Service Solutions Business  but which have not cleared as of the close of business on the Closing Date shall be considered Closing Date Cash. Closing Date Cash shall not include any collateralized (or similarly restricted) cash or trapped cash held by any Member of the Service Solutions Group. For purposes of the foregoing, “trapped cash” shall mean any cash and cash equivalents in excess of the sum of (a) all cash reasonably required for the operations of each Member of the Service Solutions Group that has trapped cash for a period not in excess of ten Business Days following the Closing plus (b) $4,000,000 in the aggregate for all such Members of the Service Solutions Group, that cannot be transferred freely by the applicable entities within five Business Days of the Closing Date due to legal or regulatory restrictions under applicable Law.

 

“Closing Date Indebtedness” means the aggregate amount outstanding as of the close of business on the day immediately preceding the Closing Date (or, in the case of Unfunded Pension Liabilities, as of 11:59 pm on December 31, 2011) of any Indebtedness of a Member of the Service Solutions Group or of a Member of the SPX Group which is not paid in full or released at or prior to the Closing and is assumed (by agreement or operation of Law) by Purchaser or remains an obligation of a Member of the Service Solutions Group following the Closing.

 

“Contract” means any loan or credit agreement, debenture, note, bond, mortgage, indenture, deed of trust, license, lease, commitment, guarantee, undertaking, letter of intent, written or legally binding oral contract.

 

“Designated Affiliate” means any Affiliate of Purchaser to which Purchaser has assigned any of its purchase rights hereunder pursuant to and in compliance with the provisions of Section 12.9.

 

“Discontinued Operations” means any discontinued or terminated operations or business of the Service Solutions Business, but shall not include any discontinued product, product line or service so long as it is a product, product line or service that was used in or provided by the Service Solutions Business as described in the first Recital to this Agreement. By way of example, a diagnostic product for vehicle repair that is no longer produced because it has been superseded by a new or different product shall not be deemed to be a “Discontinued Operation.”

 

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“Employment Agreement” means a written Contract or offer letter of SPX or any of its Affiliates (including Members of the Service Solutions Group) with or addressed to any Business Employee or Former Business Employee pursuant to which SPX or any of its Affiliates (including Members of the Service Solutions Group) has any actual or contingent liability or obligation to provide compensation in consideration for past, present or future services in excess of US $200,000 annually, excluding any such Contract or letter which permits termination of employment upon not more than 180 days notice.

 

“Encumbrances” means security interests, liens, claims, charges, mortgages, pledges, easements, rights-of-way, rights of first refusal or other title retention agreements, or other encumbrances of any kind.

 

“Environmental Laws” means all Laws relating to the environment, protection of natural resources, the presence, management or Release of, or exposure to, Hazardous Materials, or to human health and safety, including CERCLA, the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. § 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as each has been amended and the regulations promulgated pursuant thereto and all analogous Laws.

 

“Equity Interests” of any Person means the shares of capital stock, limited liability company interests, partnership interests or other equity interests of such Person.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Former Business Employee” means an individual who ceases to be a Business Employee at any time prior to the Closing but only in respect of his or her employment in the Service Solutions Business.

 

“French Interests” means all of the Equity Interests of SS France other than any Statutory Interests.

 

“French Purchase Price” means the Agreed Amount applicable to French Interests.

 

“German Subsidiaries” means SS Germany and Matra-Werke GmbH.

 

“Governmental Authority” means any court or tribunal in any jurisdiction (domestic or foreign) or any governmental or regulatory body, agency, department, commission, board, bureau or similar authority or instrumentality (domestic or foreign).

 

“Governmental Investigation” means an investigation by a Governmental Authority for the purpose of imposing criminal sanctions or civil penalties, fines or injunctions on any Member of the Service Solutions Group.

 

“Hazardous Materials” means any material, substance or waste that is regulated, classified, or otherwise characterized under or pursuant to any Environmental Law as “hazardous,” “toxic,” “pollutant,” “contaminant,” “radioactive,” “dangerous” or words of similar

 

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meaning or effect, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, mold, urea formaldehyde insulation, chlorofluorocarbons and all other ozone-depleting substances.

 

“Income Taxes”  means all federal, state, local and foreign (a) Taxes that are based on or measured by income (or that include as one of their alternative bases a Tax based on or measured by income), and (b) franchise Taxes.

 

“Indebtedness” of any Person means, without duplication, except and to the extent such Indebtedness is reflected in the Final Closing Date Statements, (a) the principal of and premium (if any) in respect of (i) indebtedness of such Person for money borrowed and (ii) indebtedness evidenced by lines of credit, notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (b) all obligations of such Person issued or assumed as the deferred purchase price of property or services, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable and other accrued current liabilities arising in the ordinary course of business); (c) all obligations of such Person under leases required to be capitalized  in accordance with GAAP; (d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction to the extent drawn upon; (e) Unfunded Pension Liabilities; (f) restructuring costs (provisioned or unpaid); (g) any bonus entitlements relating to periods prior to Closing unless paid or to be paid directly by a Member of the SPX Group; and (h) all obligations of the type referred to in clauses (a) through (g) of any Persons for the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including guarantees of such obligations; provided, however, that notwithstanding the foregoing, Indebtedness of any Service Solutions Company shall be deemed to exclude any intercompany indebtedness (x) between any Member of the SPX Group, on the one hand, and any Member of the Service Solutions Group, on the other hand, and (y) between any Member of the Service Solutions Group and any other Member of the Service Solutions Group.

 

“Independent Accountant” means a nationally recognized independent public accounting firm that currently does not audit and has not audited within the past two years SPX or Purchaser, or any of their respective Affiliates, as shall be agreed upon by SPX and Purchaser or, if an agreement cannot be reached within 15 days of the expiration of the 30-day period set forth in the second sentence of Section 1.5(c), as shall be selected by the American Arbitration Association upon the request of either SPX or Purchaser.

 

“India Acquired Assets” means the Acquired Assets to be transferred by SPX India pursuant to Section 1.2(a)(xiii).

 

“Intellectual Property” means all (a) patents and patent applications, rights in patent disclosures, rights in inventions (whether or not patentable or reduced to practice), and rights in improvements thereto together with all reissues, continuations, continuations in part, divisions, revisions, extensions and/or reexaminations thereof, (b) trademarks, service marks, trade dress, trade names, logos, corporate names, domain names and all other source identifiers (whether registered or unregistered), and all registrations and applications for registration thereof (including, but not limited to, all translations, adaptations, derivations and combinations of the foregoing), together with all of the goodwill associated therewith, (c) copyrights, mask works, and all registrations and applications for registration thereof and all associated moral rights, (d) rights of privacy and publicity, (e) computer software (including, but not limited to, source code,

 

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object code, libraries, instructions and flow charts), data, databases and documentation therefor, (f) trade secrets and other confidential information (including ideas, formulas, compositions, know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, financial and marketing plans and customer and supplier lists and information), (g) ancillary rights and sui generis rights (e.g., database rights) existing under applicable copyright laws, and (h) all other intellectual property and proprietary rights.

 

“Korea Acquired Assets” means the Acquired Assets to be transferred by SPX South Korea pursuant to Section 1.2(a)(xiii).

 

“Law” means any law, statute, common law, rule, code, executive order, ordinance, regulation, or published administrative ruling or judgment of any Governmental Authority.

 

“Liabilities” means any and all debts, liabilities, commitments and obligations, whether or not fixed, contingent or absolute, matured or unmatured, direct or indirect, liquidated or unliquidated, accrued or unaccrued, statutory, contractual or other known or unknown, asserted or unasserted, whether or not required by GAAP to be reflected in financial statements or disclosed in the notes thereto.

 

“Licensed Intellectual Property” means all Intellectual Property that is licensed exclusively for use in the Service Solutions Business.

 

“Licenses” means (a) all licenses of Intellectual Property and Software to the Service Solutions Companies from any third party, and (b) all licenses of Intellectual Property and Software by the Service Solutions Companies to any third party, in each case that is licensed for use exclusively in the Service Solutions Business.

 

“Material Adverse Effect” means any change, event, occurrence or state of facts which would reasonably be expected to be materially adverse to the business, properties, assets, results of operations or financial condition of the Service Solutions Business, taken as a whole, but excluding (a) any effect resulting from or relating to general political or economic conditions, general financial and capital market conditions (including interest rates) or general effects on any of the industries in which the Service Solutions Business is engaged, or, in each case, any changes therein (including as a result of (i) an outbreak or escalation of hostilities involving the United States or any other country or the declaration by the United States or any other country of a national emergency or war, or (ii) the occurrence of any other calamity or crisis (including any act of terrorism) or any change in financial, political or economic conditions in the United States or elsewhere), (b) any effect resulting from or relating to any changes in Law, GAAP or any authoritative interpretations thereof, (c) any effect resulting from or relating to changes in the industry in which the Service Solutions Companies operate and not related exclusively to the Service Solutions Companies, (d) any effect arising out of or attributable to the public announcement or the becoming public of the transactions contemplated by this Agreement (including any action or inaction by the Service Solutions Companies’ customers, distributors, employees, supplier or competitors, whether by reason of the identity of Purchaser or otherwise), (e) any effect arising out of or attributable to any action taken or failed to be taken by SPX or any of its Affiliates at the written request of Purchaser or that is required by this Agreement and any adverse change in customer, distributor, employee, supplier, financing source or similar relationship resulting therefrom, (f) any effect arising out of or attributable to a failure to meet

 

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SPX’s internal forecasts or projections (it being understood that the reasons or circumstances giving rise to such failure may be taken into account in making the determination of whether a Material Adverse Effect has occurred or would reasonably be expected to occur), or (g) any effect arising out of or attributable to any failure of Purchaser (whether or not rightful) to give any consent requested pursuant to Section 4.1; provided, however, that any effect referred to in clauses (a), (b) or (c) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur to the extent, that such effect has a disproportionate effect on the Service Solutions Business compared to other participants in the industries in which the Service Solutions Business operates.

 

“Material Antitrust Condition” means any of the conditions set forth in any of Sections 7.4, 7.5, 7.6, 8.4, 8.5 or 8.6 to the extent it relates to antitrust or competition Laws, other than those of India or South Korea or China.

 

“Order” means any judgment, decision, consent decree, injunction, ruling or order of any Governmental Authority that is binding on any Person or its property under any applicable Law.

 

“Owned Intellectual Property” means all Intellectual Property and Software owned by (i) any Member of the Service Solutions Group or (ii) any other Service Solutions Company, in each case as used exclusively in the Service Solutions Business.

 

“Participating Employers” means the employers participating in the SPX UK Pension Plan as of the Closing Date.

 

“Permitted Deficiency Amount” means an amount which is $7.5 million less than Reference Working Capital.

 

“Permitted Encumbrances” means (a) statutory Encumbrances arising by operation of Law with respect to a Liability incurred in the ordinary course of business and which is not delinquent; (b) Encumbrances and other imperfections of title that do not materially detract from the value or materially impair the use of the property subject thereto or make such property unmarketable; (c) Encumbrances for Taxes not yet subject to penalties for nonpayment or which are being contested in good faith by appropriate proceedings; (d) mechanics’, materialmens’, carriers’, workmens’, warehousemens’, repairmens’, landlords’ or other like Encumbrances that are not delinquent; and (e) Encumbrances which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

“Permitted Excess Amount” means an amount which is $7.5 million greater than Reference Working Capital.

 

“Person” means any individual, corporation, partnership, association, trust, limited liability company or other entity or organization or a Governmental Authority.

 

“PLTA” means that certain profit and loss transfer agreement, dated November 19, 2002, as amended on July 26, 2010, between SPX Holding and SS Germany.

 

“Pre-Closing Benefit Plan Liabilities” means all obligations and liabilities under Benefit Plans maintained by SPX or any of its Affiliates (other than Members of the Service Solutions Group) for claims incurred prior to the Closing Date with respect to the Business Employees, which in the case of claims for medical and dental benefits shall be deemed to be

 

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incurred when the medical or dental service is rendered or when the medical or dental expense is incurred.

 

“Pre-Closing Straddle Schedule” means (a) with respect to a corresponding Straddle Tax Return, a computation of Tax liability for the portion of the applicable Straddle Period ending on the Closing Date, and (b) with respect to Income Taxes, a computation of Income Tax liability for the portion of the applicable Straddle Period ending on the Closing Date assuming the same items of income, gain, loss, and deduction and the same elections and other treatment as on the corresponding Straddle Tax Return, but taking into account only those items attributable to the portion of such Straddle Period through the Closing Date based on the provisions of Section 11.3(b).

 

“Pre-Closing Taxes” means all Taxes of any Member of the Service Solutions Group for any Pre-Closing Tax Period (including the portion of a Straddle Period ending on the Closing Date).

 

“Pre-Closing Tax Period” means any taxable period ending on or prior to the Closing Date and the portion of any Straddle Period ending on the Closing Date.

 

“Pre-Closing Tax Return” means any Tax Return of a Member of the Service Solutions Group with respect to a taxable period ending on or before the Closing Date.

 

“Purchaser Termination Fee” means the amount set forth on Exhibit 12.

 

“Reference Working Capital” means the amount set forth on Exhibit 13, which amount has been calculated on a basis consistent with Section 1.5.

 

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migrating into or through the environment.

 

“Remedial Action” means the investigation and/or remediation of contamination caused by or arising from the generation, use, handling, treatment, storage, transportation, disposal, discharge or Release of Hazardous Materials.

 

“Restructurings” means (a) the transfer by SPX of the assets and liabilities of the Service Solutions Business held by SPX to SS US pursuant to the Contribution Agreement dated December 19, 2011 and (b) the other transfers by SPX and/or one or more of its Subsidiaries set forth on Schedule 12.16-A of the Disclosure Schedules.

 

“Section 75 Liability” means any Liability with respect to the SPX UK Pension Plan arising under Section 75 or 75A of the United Kingdom Pensions Act 1995 or under Sections 43 to 51 of the United Kingdom Pensions Act 2004.

 

“Service Solutions Group Employees” means individuals who are, immediately before the Closing, employees of any Member of the Service Solutions Group, including those who are absent due to vacation, holiday, disability or approved leave of absence.

 

“Service Solutions Insurance Policies” means the local insurance policies set forth on Exhibit 14.

 

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“Software” means all computer software (including all related documentation and all rights to computer programs under section 69 b German Copyright Act (“vermögensrechtliche Befugnisse”) which are (a) material to the operation of any Service Solutions Business, or (b) manufactured, distributed, sold, licensed or marketed by any of the Service Solutions Companies.

 

“SPX 401k Plan” means the SPX Retirement Savings and Stock Ownership Plan.

 

“SPX Credit Agreement” means the Credit Agreement, dated as of June 30, 2011, and as amended by the First Amendment dated as of October 5, 2011 (as further amended, supplemented or otherwise modified from time to time) among SPX, certain subsidiary borrowers party thereto and the lenders thereto.

 

“SPX’s knowledge,” “known to SPX” or “to the knowledge of SPX” or words of similar import shall mean the actual knowledge on the date hereof, without independent investigation, of the individuals set forth on Schedule 12.16-B of the Disclosure Schedules.

 

“SPX Separation Allowance Plan” means Amended and Restated SPX Separation Allowance Plan, dated December 17, 2008.

 

“SPX UK Pension Plan” means that certain SPX UK Pension Plan governed by the Rules effective as of August 1, 2008, as amended.

 

“SPX US Pension Plans” means the SPX Individual Account Retirement Plan and the Pension Plan for Bargaining Unit Employees of SPX.

 

“SPX Zero Balance Account Plan” means, collectively, the loans from Members of the SPX Group to Members of the Service Solutions Group to fund presentments to zero balance accounts of Members of the Service Solutions Group and loans by Members of the Service Solutions Group to Members of the SPX Group arising from sweeping amounts collected in zero balance operating accounts of the Members of the Service Solutions Group.

 

“Statutory Interests” means the Equity Interests held by any statutory shareholders in foreign jurisdictions.

 

“Subsidiaries” means, with respect to a Person, any corporation or other form of legal entity of which more than 50% of the outstanding voting Equity Interests are directly or indirectly owned by such Person.

 

“Tax Assessment Notice” means a Tax assessment notice received by a Member of the Services Solutions Group from a taxing authority, (i) where such Tax assessment notice is generated under applicable Law in lieu of filing of a Tax Return, (ii) is in respect of Pre-Closing Taxes for a taxable period ending on or after December 31, 2011,  and (iii) which assessment is received in the case of Pre-Closing Taxes no later than nine months following the Closing Date, and in the case of Taxes for a Straddle Period, no later than nine months following the end of such Straddle Period.

 

“Taxes” means federal, state, local and foreign income, profits, franchise, gross receipts, environmental, capital stock, severance, stamp, payroll, sales, employment, unemployment, disability, social security (including any charges, fees, fines, or penalties imposed under any labor or employment laws of Mexico), use, property, withholding, excise,

 

71

 

production, value added, occupancy, unclaimed property, customs duties and other taxes, duties or similar tax assessments of any nature whatsoever,  together with all interest, inflation adjustments, premiums, fines and penalties attributable thereto.

 

“Tax Return” means any return, report, declaration, or information statement (including any schedule thereto) required to be filed with a taxing authority in connection with any Taxes.

 

“Trustee” means the current trustee of the SPX UK Pension Plan.

 

“Unfunded Pension Liabilities” means the actuarial present value, calculated in accordance with GAAP as of December 31, 2011, of the unfunded pension obligations in respect of Business Employees located in France, Germany and Mexico, using actuarial assumptions and methods consistent with such assumptions and methods used in connection with the most recent valuation of such unfunded pension obligations for financial accounting purposes.  Any such liabilities that are calculated in local currency shall be converted to U.S. Dollars at the applicable exchange rate as published in the Wall Street Journal on the fifth Business Day preceding the Closing Date.

 

“WARN Act” means the Worker Adjustment and Retraining Notification Act, as amended.

 

“Working Capital of the Service Solutions Business” has the meaning assigned thereto in Exhibit 5.

 

12.17.              Amendment.  This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties.

 

12.18.              Extension; Waiver.  At any time the parties may extend the time for the performance of any of the obligations or other acts of the other party, waive any inaccuracies in the representations and warranties contained in this Agreement and waive compliance with any of the agreements or conditions contained in this Agreement.  Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument signed on behalf of such party.  The waiver by any party hereto of a breach of any provision hereunder shall not operate to be construed as a waiver of any prior or subsequent breach of the same or any other provision hereunder.

 

12.19.              Prevailing Party.  If any Action is commenced by any party hereto to enforce its rights under this Agreement against any other party hereto, all fees, costs and expenses, including, without limitation, reasonable attorney’s fees and court costs, incurred by the prevailing party in such Action shall be reimbursed by the losing party.

 

72

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

 

	
 
    	
SPX   CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
KEVIN   LILLY
    
	
 
    	
 
    	
Name:   Kevin L. Lilly
    
	
 
    	
 
    	
Title:   Senior Vice President, Secretary and General Counsel
    

 

[Signature Page to the Purchase and Sale Agreement]

 

 

	
 
    	
Robert   Bosch GmbH
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
DR.   MICHAEL KLEMM
    
	
 
    	
 
    	
Name:   Dr. Michael Klemm
    
	
 
    	
 
    	
Title:   AA/EC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
OLIVER   FREI
    
	
 
    	
 
    	
Name:   Oliver Frei
    
	
 
    	
 
    	
Title:   AA-DG/FC
    

 

[Signature Page to the Purchase and Sale Agreement]

 

 

Exhibit 1

 

·                                                                  Excluded Assets

 

See Schedule 2.19 of the Disclosure Schedules.

 

 

Exhibit 2

 

Certain Indebtedness

 

1.              Deferred purchase price of property, all conditional sale obligations and all obligations of under title retention agreements (for the avoidance of doubt, the foregoing shall not include trade accounts payable and other accrued current liabilities arising in the ordinary course of business)

 

2.              Obligations under capitalized leases

 

3.              Unfunded Pension Liabilities

 

4.              Restructuring costs (provisioned or unpaid)

 

5.              Bonus entitlements relating to periods prior to Closing (unless paid or to be paid directly by a Member of the SPX Group)

 

 

Exhibit 3

 

Retained Real Property

 

1.              1525 Fairlane Circle, Suite 200, Allen Park, MI 48101

 

2.              2300 Park Drive, Owatonna, MN 55060

 

 

·                                                                  Exhibit 4

 

Allocation of Purchase Price

 

	
Entity
    	
 
    	
Purchase Price
   Allocation
    	
 
    
	
SS US
    	
 
    	
45.00
    	
%
    
	
SS Germany
    	
 
    	
20.90
    	
%
    
	
SS UK
    	
 
    	
14.79
    	
%
    
	
SS Italy
    	
 
    	
2.13
    	
%
    
	
SS France
    	
 
    	
0.22
    	
%
    
	
SS Australia
    	
 
    	
1.96
    	
%
    
	
SS China
    	
 
    	
9.03
    	
%
    
	
SS Brazil
    	
 
    	
3.59
    	
%
    
	
SPX South Korea
    	
 
    	
0.17
    	
%
    
	
SS Mexico
    	
 
    	
0.33
    	
%
    
	
SPX India
    	
 
    	
0.16
    	
%
    
	
SPX Iberica SA
    	
 
    	
0.09
    	
%
    
	
SS Japan
    	
 
    	
0.43
    	
%
    
	
SS Switzerland
    	
 
    	
0.00
    	
%
    
	
The Launch Shares
    	
 
    	
1.20
    	
%
    
	
Total
    	
 
    	
100
    	
%
    

 

 

Exhibit 5

 

·                                                                            Closing Date Statements

 

a)                                         Basis of Preparation:  The Closing Date Statements of the Service Solutions Business shall be prepared based on the operations of the Service Solutions Business and shall reflect the underlying activity of such operations.  In instances where the Service Solutions Business is operated within legal entities that include other operations of SPX or its Affiliates that are not part of the Service Solutions Business, the Closing Date Statements shall reflect only the operations and activity of the Service Solutions Business included in the shared operations.  In instances where a legal entity is comprised solely of the Service Solutions Business, the Closing Date Statements shall reflect the entire operations of the legal entity.  Outlined below is a summary of the legal entities comprising the Service Solutions Business:

 

·                     SPX Transportation & Industrial Solutions (Suzhou) Co. Ltd.

·                     AUTOBOSS Tech Inc.

·                     SPX Iberica SA

·                     SPX de Mexico SA de CV

·                     SPX Australia Pty. Ltd.

·                     Service Solutions BrasilDesenvolvimento de Technologia Ltda.

·                     SPX Service Solutions Germany GmbH

·                     MATRA-WERKE GmbH

·                     SPX Service Solutions Japan Ltd.

·                     Service Solutions U.S. LLC

·                     SS Great Lakes LLC

·                     SPX (Schweiz) A.G.

·                     SPX Service Solutions France Sarl

·                     SPX Italia S.r.l.

·                     SPX United Kingdom Limited

·                     Deca S.r.l.

·                     VL Churchill Limited

·                     Spore Holdings Limited

·                     Valley Forge (UK) Limited

·                     LAGTA Limited

·                     Lagta Group Training Limited

·                     SPX India Private Limited (Shared Operations)

·                     SPX Korea Co. Ltd. (Shared Operations)

 

(b)                                     “Closing Date Working Capital” shall mean all of the balance sheet items listed under the caption “Working Capital” in Schedule I attached hereto.

 

c)                                          The Closing Date Statements shall be prepared using the same accounting methods, policies, practices and procedures, with consistent classifications, judgments and

 

 

estimation methodology, as were used in preparing the balance sheet included in the September 30, 2011 Financial Statements (the “September 30 Balance Sheet”), and shall not take into account any changes in circumstances or events occurring after the close of business on the day immediately preceding the Closing Date.

 

d)                                         In preparing the Closing Date Working Capital, the respective amounts included in the Closing Date Working Capital for any reserve (including, but not limited to, any accounts receivable reserve, inventory reserve, warranty reserve or litigation reserve) and for any asset valuation allowance, whether or not specified in this sentence, the amount of which was determined on the September 30 Balance Sheet by subjective estimates shall be equal to the same amount (including the absence of a reserve or zero) included in respect of such item on the September 30 Balance Sheet, except to reflect changes in circumstances or events (including charges to reserves to reflect costs incurred or payments made by or on behalf of the Service Solutions Business) occurring between September 30, 2011 and the Closing Date.

 

(e)                                      For purposes of the Closing Date Working Capital, (i) inventory shall be valued at the lower of cost or market (on a First in-First Out basis)  using the same accounting methods, policies, practices and procedures, with consistent classifications, judgments and estimation methodology, as were used in preparing the September 30 Balance Sheet and (ii) any write down of inventory associated with the Pegisys aftermarket product line, in an amount of up to $3,200,000, shall not be reflected on the Closing Date Working Capital.

 

(f)                                       Schedule I to this Exhibit 5 reflects how certain balance sheet items should be classified (e.g., as Closing Date Working Capital, Closing Date Cash or Closing Date Indebtedness or not assigned).

 

 

Exhibit 6

 

Form of French Agreement

 

 

FORM OF FRENCH AGREEMENT

 

This Agreement, dated [      ], by and among SPX Corporation, a Delaware corporation (“SPX”), SPX Netherlands BV, a [private limited company] organized under the laws of the Netherlands and an indirect wholly owned Subsidiary of SPX (“SPX Netherlands”, together with SPX, the “SPX Sellers”) and [PURCHASER], a [    ] organized under the laws of [    ] (“Purchaser”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Master Agreement (as defined below).

 

WHEREAS, SPX and Purchaser entered into that certain Purchase and Sale Agreement (the “Master Agreement”), dated [      ], 2012, pursuant to which SPX will sell to Purchaser, and Purchaser will acquire from SPX, the Service Solutions Business;

 

WHEREAS, as contemplated under Section 1.8(a) of the Master Agreement, SS France has initiated and completed the Works Council Process in connection with the potential transfer of the French Interests to Purchaser;

 

WHEREAS, SPX has delivered an Acceptance Notice pursuant to the Master Agreement.

 

NOW, THEREFORE, in consideration of the premises and of the respective representations, warranties and agreements contained herein, the parties hereby agree as follows:

 

1.     Purchase and Sale. At the French Closing, the SPX Sellers shall convey, assign, transfer and deliver to Purchaser or its designated Affiliates, free and clear of all Encumbrances, and Purchaser or its designated Affiliates shall acquire from the SPX Sellers, 100% of the French Interests, subject to the terms and conditions of the Master Agreement.

 

2.     Representations, Covenants and Indemnities. All representations, warranties, covenants and indemnities contained in the Master Agreement shall apply to the French Interests and SS France, as applicable, and SS France shall be considered a part of the Service Solutions Business and a Member of the Service Solutions Group for all purposes.

 

3.     Timing of French Closing. If the Acceptance Notice has been delivered prior to the Closing Date, the French Closing shall occur in accordance with Section 1.8(d) of the Master Agreement.  If the Acceptance Notice has been delivered after the Closing but prior to the expiration of the Offer Period, the French Closing shall occur in accordance with Section 1.8(f) of the Master Agreement.

 

4.     Governing Law. This Agreement shall be construed in accordance with and governed by the Laws of the State of Delaware applicable to agreements made and to be performed wholly within such jurisdiction.

 

 

5.     Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same agreement.

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

 

 

	
 
    	
[SPX Corporation]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
[SPX Netherlands BV]
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
[PURCHASER]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

Exhibit 7

 

China Agreements

 

1. SPX will assign to Purchaser the Cooperation Agreement, dated July 26, 2010, by and between SPX Corporation and Launch Tech Company Limited.

 

2. SPX will assign to Purchaser the Shareholders Agreement, dated September 30, 2010, by and among Shenzhen Langqu Technology Development Company Limited, Shenzhen De Shi Yu Investment Company Limited, Liu Xin, Liu Jun, Liu Yong and SPX Corporation.

 

i

 

Exhibit 8

 

Governmental Approvals

 

Approval from the European Commission under the European Merger Regulation and/or, in the event that the transactions contemplated by this Agreement are referred in whole or in part to one or more national Governmental Authorities in the European Union pursuant to Article 9 of the European Merger Regulation, approval from such National Authorities.

 

ii

 

Exhibit 9

 

Third Party Consents

 

Receipt of approval, consent and/or waiver from six of the eight counterparties listed below.

 

1.              Daimler Trucks North America LLC

 

2.              Bayerische Motoren Werke AG

 

3.              General Motors Holdings LLC

 

4.              Ford Motor Company

 

5.              Volkswagen AG

 

6.              Honda Motor Co., Ltd.

 

7.              Fiat S.p.A.

 

8.              Renault SAS.

 

iii

 

Exhibit 10

 

Agreed Amount

 

	
Entity/Assets
    	
 
    	
Agreed Amount
    	
 
    	
Agreed Reference
   Working Capital
    	
 
    
	
SS France
    	
 
    	
$
    	
2,530,000
    	
 
    	
$
    	
2,566,000
    	
 
    
	
SS China
    	
 
    	
$
    	
103,845,000
    	
 
    	
$
    	
5,743,000
    	
 
    
	
SPX South Korea
    	
 
    	
$
    	
1,955,000
    	
 
    	
$
    	
970,000
    	
 
    
	
SPX India
    	
 
    	
$
    	
1,840,000
    	
 
    	
$
    	
197,000
    	
 
    
	
The Launch Shares
    	
 
    	
$
    	
13,800,000
    	
 
    	
N/A
    	
 
    

 

*For the avoidance of doubt, the “Agreed Reference Working Capital” for the rest of the world is $164,524,000.

 

iv

 

Exhibit 11

 

Burdensome Condition

 

The sale or divestiture of all or substantially all of the assets or operations dedicated exclusively to the Robinair business.

 

v

 

Exhibit 12

 

Purchaser Termination Fee

 

$43,750,000

 

vi

 

Exhibit 13

 

Reference Working Capital

 

$174,000,000

 

vii

 

Exhibit 14

 

Service Solutions Insurance Policies

 

	
Coverage
    	
 
    	
Policy Number
    	
 
    	
Carriers
    	
 
    
	
General & Products Liability: Engineering Analysis Associates
    	
 
    	
HGL0027284
    	
 
    	
Guilford Insurance   Company
    	
 
    
	
Flood : Owatonna, MN
    	
 
    	
AB00012759
    	
 
    	
American Bankers   Ins. Co. of Florida
    	
 
    
	
Business Travel: SPARTA Australia Pty. Limited
    	
 
    	
ABTVL000335VIC
    	
 
    	
ACE Insurance Ltd.
    	
 
    
	
Auto Liability: SPARTA Australia Pty. Limited
    	
 
    	
42VER0338MVA
    	
 
    	
QBE Insurance   (Australia) Ltd.
    	
 
    
	
Auto Liability: SPARTA Service Solutions Germany GmbH
    	
 
    	
FN 48494
    	
 
    	
Zurich
    	
 
    
	
Group Accident: SPARTA Italia S.r.l.
    	
 
    	
010602728S
    	
 
    	
ACE Insurance S.A.
    	
 
    
	
Group Personal Accident — Occupational: SPARTA Italia S.r.l.
    	
 
    	
273617932
    	
 
    	
Generali
    	
 
    
	
Group Life: SPARTA Italia S.r.l.
    	
 
    	
780
    	
 
    	
Cassa Previline —   Axa - Cattolica
    	
 
    
	
Automobile Compulsory Liability: SPARTA Italia S.r.l.
    	
 
    	
Various
    	
 
    	
Royal &   Sunalliance Assicurazioni
    	
 
    
	
Group Personal Accident — Non Occupational: SPARTA Italia S.r.l.
    	
 
    	
273617934
    	
 
    	
Cassa Previline   Assitance - Generali
    	
 
    
	
Directors & Officers: SPARTA Italia S.r.l.
    	
 
    	
82147347
    	
 
    	
Chubb Insurance Co.
    	
 
    
	
Employee Benefits Group Accident — Germany-Matra Werke
    	
 
    	
53GEA04191
    	
 
    	
Ace Insurance
    	
 
    
	
EDP Equipment Valley Forge - Germany
    	
 
    	
90008636648
    	
 
    	
Wurttembergische und   Badische Versicherung
    	
 
    
	
Auto Italy
    	
 
    	
various
    	
 
    	
Royal & Sunalliance   Assicurazioni
    	
 
    

 

viiiRAX_EX 10.1_05.01.12

EXECUTION VERSION

$200,000,000
REVOLVING CREDIT AGREEMENT
dated as of
September 26, 2011
among
RACKSPACE HOSTING, INC.,
as Borrower,

The Lenders Party Hereto,

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent,

BARCLAYS BANK plc,
as Syndication Agent

and

REGIONS BANK
and
WELLS FARGO BANK, N.A.,
as Co-Documentation Agents

* * * * * 

J.P. MORGAN SECURITIES LLC,
as Sole Bookrunner and Lead Arranger

Andrews Kurth LLP
Counsel to the Administrative Agent

TABLE OF CONTENTS

	
				
	 
	 
	Page
	

	ARTICLE I DEFINITIONS
	1
	

	Section 1.01
	Defined Terms
	1
	

	Section 1.02
	Classification of Loans and Borrowings
	17
	

	Section 1.03
	Terms Generally
	17
	

	Section 1.04
	Accounting Terms; GAAP
	18
	

	 
	 
	 

	ARTICLE II THE CREDITS
	18
	

	Section 2.01
	Commitments
	18
	

	Section 2.02
	Revolving Loans and Borrowings
	19
	

	Section 2.03
	Requests for Revolving Borrowings
	19
	

	Section 2.04
	Swingline Loans
	20
	

	Section 2.05
	Letters of Credit
	21
	

	Section 2.06
	Funding of Borrowings
	25
	

	Section 2.07
	Interest Elections
	26
	

	Section 2.08
	Termination and Reduction of Commitments
	27
	

	Section 2.09
	Repayment of Loans; Evidence of Debt
	28
	

	Section 2.10
	Prepayment of Loans
	28
	

	Section 2.11
	Fees
	29
	

	Section 2.12
	Interest
	30
	

	Section 2.13
	Alternate Rate of Interest
	31
	

	Section 2.14
	Increased Costs
	31
	

	Section 2.15
	Break Funding Payments
	32
	

	Section 2.16
	Taxes
	33
	

	Section 2.17
	Payments Generally; Pro Rata Treatment; Sharing of Set-offs
	34
	

	Section 2.18
	Mitigation Obligations; Replacement of Lenders
	36
	

	Section 2.19
	Increase in the Commitments
	37
	

	Section 2.20
	Defaulting Lenders
	38
	

	 
	 
	 

	ARTICLE III REPRESENTATIONS AND WARRANTIES
	40
	

	Section 3.01
	Organization; Powers
	40
	

	Section 3.02
	Authorization; Enforceability
	40
	

	Section 3.03
	Governmental Approvals; No Conflicts
	40
	

	Section 3.04
	Financial Condition; No Material Adverse Change
	41
	

	Section 3.05
	Properties
	41
	

	Section 3.06
	Litigation and Environmental Matters
	41
	

	Section 3.07
	Compliance with Laws and Agreements
	41
	

	Section 3.08
	Investment and Holding Company Status
	42
	

	Section 3.09
	Taxes
	42
	

	Section 3.10
	ERISA
	42
	

	Section 3.11
	Disclosure
	42
	

-i-

	
				
	Section 3.12
	Subsidiaries
	42
	

	Section 3.13
	Margin Stock
	43
	

	 
	 
	 

	 
	 
	 

	Section 3.14
	Use of Proceeds
	43
	

	Section 3.15
	Solvency
	43
	

	Section 3.16
	Intellectual Property
	43
	

	 
	 
	 

	ARTICLE IV CONDITIONS
	44
	

	Section 4.01
	Effective Date
	44
	

	Section 4.02
	Each Credit Event
	45
	

	 
	 
	 

	ARTICLE V AFFIRMATIVE COVENANTS
	46
	

	Section 5.01
	Financial Statements and Other Information
	46
	

	Section 5.02
	Notices of Material Events
	47
	

	Section 5.03
	Existence; Conduct of Business
	48
	

	Section 5.04
	Payment of Obligations
	48
	

	Section 5.05
	Maintenance of Properties
	48
	

	Section 5.06
	Books and Records; Inspection Rights
	48
	

	Section 5.07
	Compliance with Laws
	48
	

	Section 5.08
	Use of Proceeds and Letters of Credit
	49
	

	Section 5.09
	Insurance
	49
	

	Section 5.10
	Required Guarantors; Additional Subsidiaries
	49
	

	 
	 
	 

	ARTICLE VI NEGATIVE COVENANTS
	49
	

	Section 6.01
	Indebtedness Covenant
	50
	

	Section 6.02
	Lien Covenant
	51
	

	Section 6.03
	Limitation on Fundamental Changes; Lines of Business
	52
	

	Section 6.04
	Restrictions on Investments, Loans, Advances, Guarantees and Acquisitions
	53
	

	Section 6.05
	Limitation on Asset Sales
	53
	

	Section 6.06
	Swap Agreements
	54
	

	Section 6.07
	Limitations on Restricted Payments, Prepayments of Subordinated Indebtedness and Modifications of Subordinated Indebtedness
	54
	

	Section 6.08
	Restrictions on Transactions with Affiliates
	56
	

	Section 6.09
	Restrictions on Restrictive Agreements
	56
	

	Section 6.10
	Financial Covenants
	56
	

	Section 6.11
	Fiscal Year
	57
	

	 
	 
	 

	ARTICLE VII EVENTS OF DEFAULT
	57
	

	 
	 
	 

	ARTICLE VIII THE ADMINISTRATIVE AGENT
	59
	

	 
	 
	 

	ARTICLE IX MISCELLAENOUS
	61
	

	Section 9.01
	Notices
	61
	

	Section 9.02
	Waivers; Amendments; Release of Guarantors
	62
	

-ii-

	
				
	Section 9.03
	Expenses; Indemnity; Damage Waiver
	63
	

	Section 9.04
	Successors and Assigns
	64
	

	Section 9.05
	Survival
	67
	

	Section 9.06
	Counterparts; Integration; Effectiveness
	68
	

	Section 9.07
	Severability
	68
	

	Section 9.08
	Right of Setoff
	68
	

	Section 9.09
	Governing Law; Jurisdiction; Consent to Service of Process
	68
	

	Section 9.10
	WAIVER OF JURY TRIAL
	69
	

	Section 9.11
	Headings
	69
	

	Section 9.12
	Confidentiality
	69
	

	Section 9.13
	Interest Rate Limitation
	70
	

	Section 9.14
	USA Patriot Act
	71
	

	Section 9.15
	FINAL AGREEMENT OF THE PARTIES
	71
	

-iii-

	
		
	EXHIBITS:
	 

	 
	 

	Exhibit 1.01A
	Form of Commitment Increase Agreement

	Exhibit 1.01B
	Form of Guarantee Agreement

	Exhibit 1.01C
	Form of New Lender Agreement

	Exhibit 1.01D
	Form of Note

	Exhibit 2.03
	Form of Borrowing Request

	Exhibit 2.07
	Form of Interest Election Request

	Exhibit 5.01
	Form of Compliance Certificate

	Exhibit 9.04
	Form of Assignment and Assumption

	 
	 

	SCHEDULES:
	 

	 
	 

	Schedule 2.01
	Commitments

	Schedule 2.05(k)
	Existing Letter of Credit

	Schedule 3.06
	Disclosed Matters

	Schedule 3.12
	List of Subsidiaries

	Schedule 3.16
	Intellectual Property

	Schedule 6.01(b)
	Existing Indebtedness

	Schedule 6.02(b)
	Existing Liens

	Schedule 6.04(b)
	Existing Investments

	Schedule 6.09
	Restrictive Agreements

-iv-

THIS REVOLVING CREDIT AGREEMENT (this “Agreement”), dated as of September 26, 2011, is entered into among Rackspace Hosting, Inc., a Delaware corporation, the Lenders party hereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Barclays Bank plc, as Syndication Agent, and Regions Bank and Wells Fargo Bank, N.A., as Co-Documentation Agents.
The parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01  Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:
“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.
“Adjusted LIBO Rate” means, for any day, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
“Adjusted One Month LIBO Rate” means an interest rate per annum equal to the sum of (i) 1.00% per annum plus (ii) the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day).
“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder.
“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“Alternate Base Rate” means, for any day, a rate per annum equal to the highest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1% and (c) the Adjusted One Month LIBO Rate.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted One Month LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, Federal Funds Effective Rate or Adjusted One Month LIBO Rate, respectively.
“Applicable Margin” means, for any day, with respect to any ABR Loan or Eurodollar Revolving Loan, or with respect to the unused fees payable hereunder, the Applicable Margin per annum set forth below under the caption “ABR Spread”, “Eurodollar Spread” or “Unused Fee Rate”, as the case may be, based upon the Leverage Ratio for the most recently ended trailing four quarter period with respect to which the Borrower is required to have delivered the financial statements pursuant to Section 5.01 hereof (as such Leverage Ratio is reflected in the Compliance Certificate delivered under Section 5.01(c) by the Borrower in connection with such financial statements):

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	CATEGORY
	LEVERAGE RATIO:
	ABR SPREAD
	EURODOLLAR SPREAD
	UNUSED RATE FEE

	I
	≥ 2.25 to 1.0
	1.00%
	2.00%
	0.40%

	II
	≥ 1.50 to 1.0 but < 2.25 to 1.0
	0.75%
	1.75%
	0.35%

	III
	≥ 0.75 to 1.0 but < 1.50 to 1.0
	0.50%
	1.50%
	0.30%

	IV
	< 0.75 to 1.0
	0.25%
	1.25%
	0.25%

For purposes of the foregoing, each change in the Applicable Margin resulting from a change in the Leverage Ratio shall be effective during the period commencing on and including the date of delivery to the Administrative Agent of such financial statements and Compliance Certificate indicating such change and ending on the date immediately preceding the effective date of the next such change; provided that the Leverage Ratio shall be deemed to be in Category I at any time (a) that an Event of Default has occurred and is continuing or (b) if the Borrower fails to deliver the financial statements required to be delivered by it pursuant to Section 5.01(a) or Section 5.01(b), during the period from the expiration of the time for delivery thereof until such financial statements are delivered; provided further that the Leverage Ratio shall be deemed to be in Category IV for the period from the Effective Date through the date that the financial statements and Compliance Certificate are delivered for the fiscal quarter ending September 30, 2011.  In the event that any financial statement delivered pursuant to Section 5.01(a) or Section 5.01(b), as applicable, is shown to be inaccurate when delivered (regardless of whether the Commitments are in effect when such inaccuracy is discovered, but subject to the proviso below) and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any such period (an “Applicable Period”) than the Applicable Margin applied for such Applicable Period, and only in such case, then the Borrower shall immediately (i) deliver to the Administrative Agent corrected financial statements for such Applicable Period, (ii) determine the Applicable Margin for such Applicable Period based upon the corrected financial statements and (iii) immediately pay to the Administrative Agent the accrued additional interest owing as a result of such increased Applicable Margin for such Applicable Period; provided that the Borrower shall not have an obligation to comply with the foregoing provisions with respect to any amounts due pursuant to this paragraph in the event the Administrative Agent makes demand therefor after the date that is 180 days after the date on which each of the following shall have occurred: (i) the Commitments have expired or been terminated, (ii) the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full, (iii) all Letters of Credit shall have expired or terminated and (iv) all LC Disbursements shall have been reimbursed.  This provision is in addition to the rights of the Administrative Agent and the Lenders with respect to Section 2.12(c) and their other respective rights under this Agreement and shall not limit the right of the Administrative Agent to declare an Event of Default.  
“Applicable Percentage” means, with respect to any Lender, the percentage of the total Commitments represented by such Lender's Commitment; provided that in the case of Section 2.20 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the percentage of the total Commitments (disregarding any Defaulting Lender's Commitment) represented by such Lender's Commitment.  If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments and to any Lender's status as a Defaulting Lender at the time of determination.
“Assignment and Assumption” means an assignment and assumption entered into by a 

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Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit 9.04 or any other form approved by the Administrative Agent.
“Availability Period” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.
“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof; provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of the courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.
“Board” means the Board of Governors of the Federal Reserve System of the United States of America.
“Borrower” means Rackspace Hosting, Inc., a Delaware corporation.
“Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect or (b) a Swingline Loan.
“Borrowing Request” means a request by the Borrower for a Revolving Borrowing substantially in the form of Exhibit 2.03.
“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in Houston, Texas are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
“Change in Control” means (a) any Person or group (within the meaning of Rule 13d-5 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 as in effect on the date hereof) shall become the beneficial owner (as defined in Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 as in effect on the date hereof) of issued and outstanding Equity Interests of the Borrower representing more than 35% of the aggregate voting power in elections for directors of the Borrower on a fully diluted basis; or (b) a majority of the members of the board of directors of the Borrower shall cease to be either (i) Persons who were members of the board of directors on the Effective Date or (ii) Persons who became members of such board of directors after the 

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Effective Date and whose election or nomination was approved by a vote or consent of the majority of the members of the board of directors that are either described in clause (i) above or who were elected under this clause (ii).
“Change in Law” means the occurrence, after the Effective Date (or with respect to any Lender, if later, the date on which such Lender becomes a Lender), of any of the following: (a) the adoption or taking into effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) of any Governmental Authority; provided, however, that notwithstanding anything herein to the contrary, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued and all requests, rules, regulations, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority) or any Governmental Authority with respect to the implementation of the Basel III Accord shall be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Commitment” means, with respect to each Lender, the commitment of such Lender to make Loans, including the acquisition of participations in Letters of Credit and Swingline Loans hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08, (b) increased from time to time pursuant to Section 2.19 and (c) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.  The initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable.  The initial aggregate amount of the Lenders' Commitments is $200,000,000.
“Commitment Increase Agreement” means a Commitment Increase Agreement entered into by a Lender in accordance with Section 2.19 and accepted by the Administrative Agent in the form of Exhibit 1.01A or any other form approved by the Administrative Agent.
“Compliance Certificate” has the meaning set forth in Section 5.01. 
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.
“Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender's Revolving Loans and its LC Exposure and Swingline Exposure at such time.
“Credit Party” means the Administrative Agent, the Issuing Bank, the Swingline Lender or any other Lender.
“Default” means any event or condition that constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
“Defaulting Lender” means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its 

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participations in Letters of Credit or Swingline Loans or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender's good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender's good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swingline Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party's receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of a Bankruptcy Event.
“Disclosed Matters” means the actions, suits and proceedings set forth in Part A of Schedule 3.06 and the environmental matters disclosed in Part B of Schedule 3.06.
“dollars” or “$” refers to lawful money of the United States of America.
“Domestic Subsidiary” means any Subsidiary that is not a Foreign Subsidiary.
“EBITDA” means, for any period, without duplication, Net Income plus, the following to the extent deducted in calculating such Net Income: (a) Interest Expense for such period, (b) the provision for Federal, state, local and foreign taxes payable during such period, (c) depreciation and amortization expense (plus any non-cash goodwill or other intangible asset impairment charges) and (d) non-cash expenses related to equity compensation.
“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).
“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to public health and safety matters.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan or Multiemployer Plan (other than an event for which the 30 day notice period is waived); (b) the existence with respect to any Plan of any unpaid “minimum required contribution” (as defined in Section 430 of the Code or Section 303 of ERISA), whether or not waived, or with respect to any Multiemployer Plan, any “accumulated funding deficiency” (as defined in Section 431 of the Code or Section 304 of ERISA), whether or not waived, and without regard to an extension of any amortization  period (as described in Section 431(d) of the Code or Section 304(d) of ERISA); (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan or Multiemployer Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan or Multiemployer Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or Multiemployer Plan or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.  
“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
“Event of Default” has the meaning assigned to such term in ARTICLE VII.
“Excluded Domestic Subsidiary” means (i) any Domestic Subsidiary that is wholly owned directly by one or more Foreign Subsidiaries and (ii) up to three additional Domestic Subsidiaries at any time existing that are formed for the purpose of real property acquisitions and the combined assets of which shall not exceed $250,000 in cash at any time.  
“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income, franchise or other imposed taxes on (or measured by) its income, taxable margin, receipts or capital by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.18(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure to comply with Section 2.16(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to 

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receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16(a), and (d) any withholding tax imposed by FATCA.
“Existing Letter of Credit” means the letter of credit described on Schedule 2.05(k).
“FATCA” means Sections 1471 through 1474 of the Code (and any amendment or successor sections thereto) and any regulations or official interpretations thereof.
“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
“Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Borrower.
“First-Tier Foreign Subsidiary” means a Foreign Subsidiary that is owned directly by the Borrower or a Domestic Subsidiary that is a Guarantor or by the Borrower and a Domestic Subsidiary that is a Guarantor.
“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located.  For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Subsidiary” means any Subsidiary organized under the laws of a jurisdiction other than the United States or any of its territories or possessions or any political subdivision thereof.  For the avoidance of doubt, the Commonwealth of Puerto Rico is not a territory, possession or political subdivision of the United States.
“GAAP” means, except as provided in Section 1.04, generally accepted accounting principles as in effect from time to time in the United States of America, applied in a manner consistent with that used in preparing the financial statements of the Borrower.
“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of 

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guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.
“Guarantee Agreement” means the Guarantee of the Guarantors, substantially in the form of Exhibit 1.01B hereto, guarantying the Obligations and all other Indebtedness of the Borrower to the Administrative Agent and the Lenders in respect of any hedging obligations, any overdrafts or treasury, depository, cash management, or similar services.  
“Guarantors” means all Domestic Subsidiaries of the Borrower that Guarantee the Obligations in accordance with Section 5.10, in each case unless and until released in accordance with the Loan Documents.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“IFRS” means the international financial reporting standard which are in effect from time to time and as adopted by the International Accounting Standards Board from time to time and applied on a consistent basis.
“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. 
“Indemnified Taxes” means Taxes other than Excluded Taxes and Other Taxes.
“Indemnitee” has the meaning set forth in Section 9.03.
“Information” has the meaning set forth in Section 9.12.
“Intellectual Property” has the meaning set forth in Section 3.16.
“Interest Coverage Ratio” means, on the last day of each fiscal quarter, the ratio of EBITDA to Interest Expense, in each case, for the immediately preceding four full fiscal quarters for which financial statements are available, after giving pro forma effect to any acquisitions or dispositions occurring during such period as if such acquisition or disposition took place on the first day of such period.

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“Interest Election Request” means a request by the Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.07.
“Interest Expense” means, for any period, for the Borrower and the Subsidiaries on a consolidated basis, the sum of all interest paid or payable (including the portion of rents payable under Capital Leases allocable to interest) plus all original issue discounts and other interest expense associated with Indebtedness amortized or required to be amortized in accordance with GAAP.
“Interest Payment Date” means (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period, and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.
“Interest Period” means, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
“Investment” has the meaning set forth in Section 6.04.
“Issuing Bank” means JPMorgan Chase Bank, N.A., in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i).  The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.  With respect to the Existing Letter of Credit, Comerica Bank shall be an Issuing Bank.
“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit.
“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.
“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.  Unless the context otherwise requires, the term “Lenders” includes the Swingline Lender.
“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

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“Leverage Ratio” means, on the last day of each fiscal quarter, the ratio of (a) Total Debt to (b) EBITDA for the immediately preceding four full fiscal quarters for which financial statements are available, after giving pro forma effect to any acquisitions or dispositions occurring during such period as if such acquisition or disposition occurred on the first day of such period. 
“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Reuters Screen LIBOR1 Page (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate rounded upwards, if necessary, to the next 1/100 of 1% at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.
“Loan Documents” means this Agreement, the Notes, the Guarantee Agreement, the Pledge Agreement and any other documents executed in connection herewith or therewith.
“Loan Parties” means the Borrower and the Guarantors.
“Loans” means the Revolving Loans and the Swingline Loans.
“Material Adverse Effect” means any event, development or circumstance that has had or could reasonably be expected to have a material adverse effect on (a) the business, assets, property or condition (financial or otherwise) of the Borrower and the Subsidiaries taken as a whole or (b) the validity of the Loan Documents or the rights and remedies of the Administrative Agent and the Lenders thereunder.
“Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and the Subsidiaries in an aggregate principal amount exceeding $15,000,000.  For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Swap Agreement were terminated at such time.
“Maturity Date” means the fifth anniversary of the Effective Date.
“Moody's” means Moody's Investors Service, Inc.
“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of 

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ERISA.
“Net Income” means, for any period, for the Borrower and the Subsidiaries on a consolidated basis, the net income or loss of the Borrower and the Subsidiaries for such period determined in accordance with GAAP.
“New Lender” has the meaning set forth in Section 2.19.
“New Lender Agreement” means a New Lender Agreement entered into by a New Lender in accordance with Section 2.19 and accepted by the Administrative Agent in the form of Exhibit 1.01C or any other form approved by the Administrative Agent.
“Note” means the promissory notes substantially in the form of Exhibit 1.01D executed by the Borrower to the order of a Lender, partially evidencing the Obligations.
“Obligations” means all of the Borrower's obligations and duties under this Agreement and each of the other Loan Documents to which it is a party.
“Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.
“Participant” has the meaning set forth in Section 9.04.
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.
“Permitted Acquisition” means any acquisition (by merger or otherwise) by the Borrower or a Subsidiary of all or substantially all the assets of, or all the Equity Interests in, a Person or division or line of business of a Person, if (a) immediately after giving effect thereto, no Default has occurred and is continuing or would result therefrom, (b) the business of such acquired Person, or such acquired business, is reasonably related to the business of the Borrower or a Subsidiary on the Effective Date, (c) at the time of such acquisition the Pro Forma Leverage Test is satisfied and (d) in the case of any acquisition in which the aggregate cash consideration paid by the Borrower and the Subsidiaries exceeds $25,000,000 (or the equivalent amount in a foreign currency), the Borrower has delivered to the Administrative Agent an officer's certificate certifying that the requirement set forth in clause (c) above has been satisfied and that liquidity (unrestricted cash and Permitted Investments plus unused Commitments), calculated on a pro forma basis after giving effect to such acquisition, is at least $100,000,000, together with all financial information reasonably requested by the Administrative Agent relating to the Person or assets acquired and reasonably detailed calculations demonstrating satisfaction of the Leverage Ratio and liquidity requirements set forth above.
“Permitted Encumbrances” means:
(a)Liens imposed by law for taxes and other governmental charges that are not yet delinquent or are being contested in good faith, with adequate reserves, and the failure of such contest could not reasonably be expected to result in a Material Adverse Effect;

(b)carriers', warehousemen's, mechanics', materialmen's, repairmen's, landlord's and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in good faith, with adequate reserves and the 

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failure of such contest could not reasonably be expected to result in a Material Adverse Effect;

(c)pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance and other social security laws or regulations;

(d)deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business or in connection with Permitted Acquisitions;

(e)judgment Liens in respect of judgments that do not constitute an Event of Default; 

(f)Liens of financial institutions on account or deposits maintained therein to the extent arising by the operation of law or within the documentation establishing said account to the extent same secure charges, fees and expenses owing or potentially owing to said institution; and

(g)easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.
“Permitted Investments” means:
(a)direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America or Canada (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America or Canada);

(b)investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, a rating of A2 or better by S&P, P2 or better by Moody's, or R1 “mid” or better by The Dominion Bond Rating Service; 

(c)investments in certificates of deposit, banker's acceptances and demand and time deposits (including eurodollar deposits) maturing within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, (i) any Lender or any domestic office, or foreign branch or other Affiliate of a Lender, (ii) any domestic office of any commercial bank organized under the laws of the United States of America or Canada or any State or Province thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000 and (iii) any commercial bank or similar entity organized under the laws of the jurisdiction in which a Foreign Subsidiary maintains an office or engages in business if, in the case of deposits under this clause (c)(iii), such deposits are made in the ordinary course of business for cash management purposes;

(d)fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (c) above; and

(e)money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P or Aaa by Moody's and (iii) have portfolio assets of at least $5,000,000,000. 

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“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Pro Forma Financial Tests” means, collectively, the Pro Forma Interest Coverage Test and the Pro Forma Leverage Test.
“Pro Forma Interest Coverage Ratio” means, on any date of determination, the ratio of EBITDA to Interest Expense, in each case, for the immediately preceding four full fiscal quarters for which financial statements are available, after giving pro forma effect to any acquisitions or dispositions or incurrence or repayments of Indebtedness occurring from the start of such period through the date of determination and the event for which the Pro Forma Interest Coverage Ratio is being calculated, as if such acquisition or disposition, incurrence or repayment of Indebtedness or such event took place on the first day of such period.
“Pro Forma Interest Coverage Test” means, on any date of determination, that the Pro Forma Interest Coverage Ratio is not less than 3.00 to 1.00.
“Pro Forma Leverage Ratio” means, on any date of determination, the ratio of (a) Total Debt to (b) EBITDA for the immediately preceding four full fiscal quarters for which financial statements are available, after giving pro forma effect to (x) any acquisitions or dispositions occurring from the start of such period through the date of determination and (y) any acquisition for which the Pro Forma Leverage Ratio is being calculated, as if each such acquisition or disposition took place on the first day of such period.  For purposes of the Pro Forma Leverage Ratio, any contemplated Indebtedness in connection with which the Pro Forma Leverage Ratio is being calculated shall be included in Total Debt.
 “Pro Forma Leverage Test” means, on any date of determination, (i) for purposes of Permitted Acquisitions, that the Pro Forma Leverage Ratio is not greater than 2.50 to 1.00 and (ii) for all other purposes, that the Pro Forma Leverage Ratio is not greater than 3.00 to 1.00.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Pledge Agreement” means the Pledge Agreement covering 65% of the Equity Interests in each First-Tier Foreign Subsidiary listed therein, in form and substance reasonably satisfactory to the Administrative Agent.
“Prime Rate” means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank, N.A., as its prime rate in effect at its principal office in Houston, Texas; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.
“Register” has the meaning set forth in Section 9.04.
“Related Parties” means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates.
“Required Lenders” means, at any time, Lenders holding more than 50% of the sum of the total Commitments (or, if the Commitments have terminated or expired, the Credit Exposures) at such 

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time, as adjusted pursuant to Section 2.20.
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests.
“Revolving Borrowing” means a Borrowing made pursuant to Section 2.02.
“Revolving Loan” means a Loan made pursuant to Section 2.02.
“S&P” means Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc.
“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
“Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity with respect to which both (1) the accounts of such entity would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, and (2) either (a) Equity Interests representing more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests of such entity are, as of such date, owned, controlled or held, or (b)  such entity is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.  Unless otherwise indicated, “Subsidiary” shall mean a Subsidiary of the Borrower.
“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a Swap Agreement.
“Swingline Exposure” means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time.  The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total  Swingline Exposure at such time.
“Swingline Lender” means JPMorgan Chase Bank, N.A., in its capacity as lender of Swingline Loans hereunder.

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“Swingline Loan” means a Loan made pursuant to Section 2.04.
“Tangible Assets” means, on any date for the Borrower or any Subsidiary, total assets minus the sum of (i) intangible assets and (ii) goodwill, in each case as determined in accordance with GAAP based on the financial statements most recently delivered pursuant to Section 5.01(a) or (b), as applicable.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.
“Total Required Assets” means, on any date for the Loan Parties, the Tangible Assets of the Borrower on a consolidated basis minus (a) Tangible Assets of Subsidiaries that are not Guarantors, (b) restricted cash of the Loan Parties and (c) the book value of the Capital Lease Obligations of the Loan Parties.  
“Total Debt” means the consolidated total Indebtedness of the Borrower and the Subsidiaries.
“Transactions” means the execution, delivery and performance by the Borrower of this Agreement, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.
“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.02  Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., a “Eurodollar Loan”).  Borrowings also may be classified and referred to by Type (e.g., a “Eurodollar Borrowing”).
Section 1.03  Terms Generally.   The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (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, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (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 Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, 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 1.04  Accounting Terms; GAAP.   Except as otherwise expressly provided herein, 

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all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with GAAP in a manner consistent with that used in preparing the financial statements of the Borrower.  If at any time any change in GAAP (including the adoption of IFRS) would affect the computation of any financial ratio or requirement set forth herein, and the Borrower, the Administrative Agent or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP without giving effect to such change therein and the Borrower shall provide to the Administrative Agent and the Lenders reconciliation statements showing the difference in such calculation together with the delivery of quarterly and annual financial statements required hereunder.  For purposes of determining compliance with any provision of this Agreement, the determination of whether a lease is to be treated as an operating lease or capital lease shall be made without giving effect to any change in accounting for leases pursuant to GAAP resulting from the implementation of proposed Accounting Standards Update (ASU) Leases (Topic 840) issued August 17, 2010, or any successor proposal.  Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.
ARTICLE II
The Credits
Section 2.01  Commitments.  Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Borrower from time to time during the Availability Period in an aggregate principal amount at any time outstanding that will not result in (a) such Lender's Credit Exposure exceeding such Lender's Commitment or (b) the sum of the total Credit Exposures exceeding the total Commitments.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.
Section 2.02  Revolving Loans and Borrowings.  
(a)Each Revolving Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments.  The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required.

(b)Subject to Section 2.13, each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith; provided that any Borrowing made on the Effective Date must be made as an ABR Borrowing, unless the Borrower shall have notified the Administrative Agent in writing not later than 10:00 a.m., Houston time, three (3) Business Days before the Effective Date of its election for the initial Borrowing to be a Eurodollar 

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Borrowing.  Each Swingline Loan shall be an ABR Loan.  Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Revolving Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Revolving Loan in accordance with the terms of this Agreement.

(c)At the commencement of each Interest Period for any Eurodollar Revolving Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000.  At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $5,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e).  Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $1,000,000.  Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of five (5) Eurodollar Revolving Borrowings outstanding.

(d)Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Revolving Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

Section 2.03  Requests for Revolving Borrowings.  To request a Revolving Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 10:00 a.m., Houston time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., Houston time, on the date of the proposed Borrowing; provided that any such notice of an ABR Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e) may be given not later than 10:00 a.m., Houston time, on the date of the proposed Borrowing.  Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by telecopy or email to the Administrative Agent of a written Borrowing Request.  Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

(i)the aggregate amount of the requested Borrowing;

(ii)the date of such Borrowing, which shall be a Business Day;

(iii)whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(iv)in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

(v)the location and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06.

If no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month's duration.  Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing.

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Section 2.04  Swingline Loans.  
(a)Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower from time to time during the Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $25,000,000 or (ii) the sum of the total Credit Exposures exceeding the total Commitments; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans.

(b)To request a Swingline Loan, the Borrower shall notify the Administrative Agent of such request by telephone (confirmed by telecopy or email), not later than 3:00 p.m., Houston time, on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan.  The Administrative Agent will promptly advise the Swingline Lender of any such notice received from the Borrower.  The Swingline Lender shall make each Swingline Loan available to the Borrower by means of a credit to the general deposit account of the Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the Issuing Bank) by 4:00 p.m., Houston time, on the requested date of such Swingline Loan.

(c)The Swingline Lender may by written notice given to the Administrative Agent not later than 10:00 a.m., Houston time, on any Business Day require the Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding.  Such notice shall specify the aggregate amount of Swingline Loans in which Lenders will participate.  Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Lender, specifying in such notice such Lender's Applicable Percentage of such Swingline Loan or Loans.  Each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender's Applicable Percentage of such Swingline Loan or Loans.  Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders.  The Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender.  Any amounts received by the Swingline Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the Borrower for any reason.  The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.  

Section 2.05  Letters of Credit.

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(a)General.  Subject to the terms and conditions set forth herein, the Borrower may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

(b)Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit; provided that (a) in the event of any conflict between such application and this Agreement, this Agreement shall control, and (b) any grant of a Lien contained in such application shall be ineffective so long as this Agreement remains in place.  A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $50,000,000 and (ii) the total Credit Exposures shall not exceed the total Commitments.

(c)Expiration Date.  Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Maturity Date; provided, however, that any Letter of Credit may provide for the renewal thereof for additional periods not in excess of one-year each (which shall in no event extend beyond the date referred to in clause (ii) above).

(d)Participations.  By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender's Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any reason.  Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

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(e)Reimbursement.  If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, Houston time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., Houston time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, Houston time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., Houston time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided that, if such LC Disbursement is not less than $100,000, the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or Section 2.04 that such payment be financed with an ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the Borrower's obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan.  If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender's Applicable Percentage thereof.  Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders.  Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear.  Any payment made by a Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f)Obligations Absolute.  The Borrower's obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower's obligations hereunder.  Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by (a) the Issuing Bank's failure to exercise care 

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when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof or (b) the Issuing Bank's gross negligence or willful misconduct.  The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g)Disbursement Procedures.  The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed electronically or by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement.

(h)Interim Interest.  If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.12(c) shall apply.  Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

(i)Replacement of the Issuing Bank.  The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.  The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.11(b).  From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require.  After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

(j)Cash Collateralization.  If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Lenders holding at least fifty percent (50%) of the Commitments (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure representing greater than 25% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an 

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amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand, notice of acceleration, notice of intent to accelerate or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of ARTICLE VII.  Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the Obligations.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account.  Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent consistent with the Administrative Agent's usual practices and at the Borrower's risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure representing greater than 25% of the total LC Exposure), be applied to satisfy other Obligations.  If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived.

(k)Existing Letter of Credit.  The Existing Letter of Credit will be considered a Letter of Credit under this Credit Agreement for all purposes.

Section 2.06  Funding of Borrowings.
  
(a)Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 2:00 p.m., Houston time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that Swingline Loans shall be made as provided in Section 2.04.  The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in Houston and designated by the Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the Issuing Bank.
(b)Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to such Borrowing (without any obligation to pay any break funding payment under Section 2.15 in connection with such payment).  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in such Borrowing.  If the Borrower pays such amount to the Administrative Agent, it shall not relieve the defaulting Lender of its legal responsibility for its default.

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Section 2.07  Interest Elections.
  
(a)Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.  This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

(b)To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election.  Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by telecopy or email to the Administrative Agent of a written Interest Election Request signed by the Borrower in the form of the Interest Election Request attached hereto as Exhibit 2.07.

(c)Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i)the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

(ii)the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii)whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv)if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month's duration.
(d)Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing.

(e)If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted 

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to an ABR Borrowing.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

Section 2.08  Termination and Reduction of Commitments.
  
(a)Unless previously terminated, the Commitments shall terminate on the Maturity Date.

(b)The Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.10, the Credit Exposure would exceed the total Commitments.

(c)The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section shall be irrevocable.  Any termination or reduction of the Commitments shall be permanent.  Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

Section 2.09  Repayment of Loans; Evidence of Debt.
  
(a)The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the then‐unpaid principal amount of each Revolving Loan on the Maturity Date and (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the Maturity Date; provided that on each date that a Revolving Borrowing is made, the Borrower shall repay all Swingline Loans then outstanding.

(b)Each Lender shall maintain in accordance with its usual practice a record evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c)The Administrative Agent shall maintain records in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof.

(d)The entries made in the records maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

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(e)Any Lender may request that Loans made by it be evidenced by a Note.  In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns).  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

Section 2.10  Prepayment of Loans.
  
(a)The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section, in each case without premium or penalty other than as specified in Section 2.15.

(b)The Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed in writing) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., Houston time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., Houston time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon, Houston time, on the date of prepayment.  Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid.  Promptly following receipt of any such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02 (other than prepayments required under paragraph (c)).  Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.12.

(c)If at any time the total Credit Exposures exceed the Total Commitments, the Borrower shall (i) prepay Revolving Borrowings in an aggregate principal amount equal to such excess, and (ii) if any excess remains after prepaying all of the Revolving Borrowings as a result of LC Exposure, pay to the Administrative Agent on behalf of the Lender an amount equal to such excess to be held as cash collateral as provided in Section 2.05(j).

Section 2.11  Fees.
  
(a)The Borrower agrees to pay to the Administrative Agent for the account of each Lender an unused fee, which shall accrue at the Unused Fee Rate described in the definition of “Applicable Margin” on the daily unutilized amount of the Commitment of such Lender during the period from and including the Effective Date to but excluding the date on which such Commitment terminates.  Accrued unused fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the Effective Date.  All unused fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  For the purposes of calculating the unused Commitment of each Lender, LC Exposure shall count as usage, but Swingline Loans made by the Swingline Lender shall not count as usage unless and until the Lenders have acquired participations therein as contemplated by Section 2.04(c).

(b)The Borrower agrees to pay (i) to the Administrative Agent for the account of 

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each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Margin used to determine the interest rate applicable to Eurodollar Revolving Loans on the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender's Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank's standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable in arrears on the third Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand.  Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand.  All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c)The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

(d)All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of unused fees and participation fees, to the Lenders.  Fees paid shall not be refundable under any circumstances.

Section 2.12  Interest.  

(a)The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Margin.

(b)The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin.

(c)Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2.0% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2.0% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

(d)Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Revolving Loan prior 

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to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(e)All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

Section 2.13  Alternate Rate of Interest.  If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(i)the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; or

(ii)the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective, and (ii) any request for a new Eurodollar Borrowing shall be made as an ABR Borrowing.

Section 2.14  Increased Costs.  
(a)If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or

(ii)impose on any Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, on an after‐tax basis for such additional costs incurred or reduction suffered.

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(b)If any Lender or the Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company on an after‐tax basis for any such reduction suffered.

(c)A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

(d)Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than two hundred seventy (270) days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Bank's intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

Section 2.15  Break Funding Payments.  In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.18, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event.  Such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the Eurodollar market.  A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

Section 2.16  Taxes.  

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(a)Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b)In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)The Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

(d)As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e)Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate.

(f)If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or other amounts as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.16, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.16 with respect to the Taxes or other amounts giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority.  This Section shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower 

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or any other Person.

(g)In the case of a Lender that would be subject to withholding tax imposed by FATCA on payments made on the account of any obligation of the Borrower hereunder if such Lender fails to comply with the applicable requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall provide such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Administrative Agent or the Borrower as may be necessary for the Borrower to comply with its obligations under FATCA, to determine that such Lender has complied with such Lender's obligations under FATCA or to determine the amount to deduct and withhold from any such payments.

Section 2.17  Payments Generally; Pro Rata Treatment; Sharing of Set-offs
  
(a)The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.14, Section 2.15 or Section 2.16, or otherwise) prior to 12:00 noon, Houston time, on the date when due, in immediately available funds, without set off or counterclaim.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at its offices at 712 Main Street, Houston, Texas, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Section 2.14, Section 2.15 or Section 2.16 and Section 9.03 shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments hereunder shall be made in dollars.

(b)If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c)If any Lender shall, by exercising any right of set off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered,  such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant 

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to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(d)Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

(e)If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), Section 2.05(d), Section 2.05(e), Section 2.06(b), Section 2.17(d), or Section 9.03(c) then the Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender and for the benefit of the Administrative Agent, the Swingline Lender or the Issuing Bank to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid, and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender under such Sections; in the case of each of (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

Section 2.18  Mitigation Obligations; Replacement of Lenders.
  
(a)If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or Section 2.16, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b)If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, or if any Lender becomes a Defaulting Lender, or any Lender refuses to consent to an amendment, modification or waiver of this Agreement that requires consent of 100% of Lenders pursuant to Section 9.02 hereof, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse 

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(in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) if the proposed assignee is not at such time a Lender, the Borrower shall have received the prior written consent of the Administrative Agent (and, if a Commitment is being assigned, the Issuing Bank), which consent shall not unreasonably be withheld, delayed or conditioned, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments in the future.  A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

Section 2.19  Increase in the Commitments.  

(a)If no Default shall have occurred and be continuing, the Borrower may at any time during the Availability Period request one or more increases of the Commitments by notice to the Administrative Agent in writing of the amount of such proposed increase (such notice, a “Commitment Increase Notice”); provided, however, that (i) the Commitment of any Lender may not be increased without such Lender's consent, (ii) the minimum amount of any such increase shall be $10,000,000 and (iii) the aggregate amount of the Lenders' Commitments, after giving effect to any such increase, shall not exceed $400,000,000.

(b)Following any Commitment Increase Notice, the Borrower may, in its sole discretion, but with the consent of the Administrative Agent as to any Person that is not at such time a Lender (which consent shall not be unreasonably withheld, delayed or conditioned), offer to any existing Lender or to one or more additional banks or financial institutions the opportunity to participate in all or a portion of the increased Commitments pursuant to paragraph (c) or (d) below, as applicable, by notifying the Administrative Agent.  Promptly and in any event within five (5) Business Days after receipt of notice from the Borrower of its desire to offer such unsubscribed commitments to certain existing Lenders, to the additional banks or financial institutions identified therein or to such existing Lenders, additional banks or financial institutions as may be identified by the Administrative Agent and approved by the Borrower, the Administrative Agent shall notify such proposed lenders of the opportunity to participate in all or a portion of such unsubscribed portion of the increased Commitments.

(c)Any additional bank or financial institution that the Borrower selects to offer participation in the increased Commitments shall notify the Administrative Agent of its agreement to participate in the increased Commitments within five (5) Business Days of the date the Administrative Agent's notice described in (b) above is sent and shall execute and deliver to the Administrative Agent a New Lender Agreement setting forth its Commitment, and upon the effectiveness of such New Lender Agreement such bank or financial institution (a “New Lender”) shall become a Lender for all purposes and to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement, and the signature pages hereof shall be deemed to be amended to add the name of such New Lender and Schedule 2.01 and the definition of Commitment in Section 1.01 hereof shall be deemed amended to increase the aggregate Commitments of the Lenders by the Commitment of such New Lender, provided that the Commitment of any New Lender shall be an amount not less than $10,000,000.  Each New Lender Agreement shall be irrevocable and shall be effective upon notice thereof by the Administrative Agent at the same time as that of all other New Lenders or increasing Lenders.

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(d)Any Lender that accepts an offer to it by the Borrower to increase its Commitment pursuant to this Section 2.19 shall, in each case, execute a Commitment Increase Agreement with the Borrower and the Administrative Agent, whereupon such Lender shall be bound by and entitled to the benefits of this Agreement with respect to the full amount of its Commitment as so increased, and Schedule 2.01 and the definition of Commitment in Section 1.01 hereof shall be deemed to be amended to reflect such increase.  Any Commitment Increase Agreement shall be irrevocable and shall be effective upon notice thereof by the Administrative Agent at the same time as that of all other New Lenders and increasing Lenders.

(e)The effectiveness of any New Lender Agreement or Commitment Increase Agreement shall be contingent upon receipt by the Administrative Agent of corporate resolutions of the Borrower authorizing such increase.  Once a New Lender Agreement or Commitment Increase Agreement becomes effective, the Administrative Agent shall reflect the increases in the Commitments effected by such agreements by appropriate entries in the Register.

(f)If any bank or financial institution becomes a New Lender pursuant to Section 2.19(c) or any Lender's Commitment is increased pursuant to Section 2.19(d), additional Loans made on or after the effectiveness thereof (the “Re-Allocation Date”) shall be made pro rata based on their respective Commitments in effect on or after such Re-Allocation Date (except to the extent that any such pro rata borrowings would result in any Lender making an aggregate principal amount of Loans in excess of its Commitment, in which case such excess amount will be allocated to, and made by, such New Lender and/or Lenders with such increased Commitments to the extent of, and pro rata based on, their respective Commitments), and continuations of Loans outstanding on such Re-Allocation Date shall be effected by repayment of such Loans on the last day of the Interest Period applicable thereto or, in the case of ABR Loan, on the date of such increase, and the making of new Loans of the same Type pro rata based on the respective Commitments in effect on and after such Re-Allocation Date.

(g)If on any Re-Allocation Date there is an unpaid principal amount of  Eurodollar Loans, such Eurodollar Loans shall remain outstanding with the respective holders thereof until the expiration of their respective Interest Periods (unless the Borrower elects to prepay any thereof in accordance with the applicable provisions of this Agreement), and interest on and repayments of such Eurodollar Loans will be paid thereon to the respective Lenders holding such Eurodollar Loans pro rata based on the respective principal amounts thereof outstanding.

(h)Upon the effectiveness of any Commitment Increase Agreement, Schedule 2.01 and other pertinent sections hereof shall be automatically and proportionately modified to reflect the increased Commitment, the exact figures to be agreed between the Borrower and the Administrative Agent, and all references to the Commitments shall be deemed amended mutatis mutandis.

Section 2.20  Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a)fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.11(a);

(b)the Commitment and Credit Exposure of such Defaulting Lender shall not be included in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02), provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which 

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affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender, unless the effect of same is to eliminate the Defaulting Lender's Commitment (which shall require only the consent of the Lenders that are not Defaulting Lenders);

(c)if any Swingline Exposure or LC Exposure exists at the time a Lender becomes a Defaulting Lender then:

(i)all or any part of such Swingline Exposure and LC Exposure shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent (x) the sum of all non-Defaulting Lenders' Credit Exposures plus such Defaulting Lender's Swingline Exposure and LC Exposure does not exceed the total of all non-Defaulting Lenders' Commitments and (y) the conditions set forth in Section 4.02 are satisfied at such time; 

(ii)if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent (x) first, prepay such Swingline Exposure and (y) second, cash collateralize such Defaulting Lender's LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.05(j) for so long as such LC Exposure is outstanding; 

(iii)if the Borrower cash collateralizes any portion of such Defaulting Lender's LC Exposure pursuant to Section 2.20(c), the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.11(b) with respect to such Defaulting Lender's LC Exposure during the period such Defaulting Lender's LC Exposure is cash collateralized;

(iv)if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to Section 2.20(c), then the fees payable to the Lenders pursuant to Section 2.11(a) and Section 2.11(b) shall be adjusted in accordance with such non-Defaulting Lenders' Applicable Percentages; and 

(v)if any Defaulting Lender's LC Exposure is neither cash collateralized nor reallocated pursuant to Section 2.20(c), then, without prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder, all facility fees that otherwise would have been payable to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender's Commitment that was utilized by such LC Exposure) and letter of credit fees payable under Section 2.11(b) with respect to such Defaulting Lender's LC Exposure shall be payable to the Issuing Bank until such LC Exposure is cash collateralized and/or reallocated; and

(d)so long as any Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is reasonably satisfied that the related exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.20(c), and participating interests in any such newly issued or increased Letter of Credit or newly made Swingline Loan shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.20(c)(i) (and Defaulting Lenders shall not participate therein).

In the event that the Administrative Agent, the Borrower, the Issuing Bank and the Swingline Lender each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and LC Exposure of the Lenders 

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shall be readjusted to reflect the inclusion of such Lender's Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swingline Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
Section 3.01  Organization; Powers.  Each of the Borrower and the Subsidiaries is duly organized and validly existing under the laws of the jurisdiction of its organization and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, has all requisite power and authority to carry on its business as now conducted, and is qualified to do business in, and is in good standing in, its jurisdiction of organization and every jurisdiction where such qualification is required.
Section 3.02  Authorization; Enforceability.  The Transactions are within the Borrower's corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action.  This Agreement has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
Section 3.03  Governmental Approvals; No Conflicts.  The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect and (ii) such as may be required pursuant to the Pledge Agreement, (b) will not violate (i) any applicable law or regulation, (ii) the charter, by-laws or other organizational documents of the Borrower or any Subsidiary or (iii) any order of any Governmental Authority, (c) will not result in a default under any indenture, agreement or other instrument binding upon the Borrower or any Subsidiary or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any Subsidiary, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any Subsidiary except in each case under clauses (a), (b)(i), (c) or (d), as could not reasonably be expected to result in a Material Adverse Effect.
Section 3.04  Financial Condition; No Material Adverse Change.  
(a)The Borrower has heretofore furnished to the Lenders its consolidated balance sheet and statements of income, stockholders equity and cash flows as of and for the fiscal year ended December 31, 2010, reported on by KPMG LLP, independent public accountants.  Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP.

(b)As of the Effective Date, since December 31, 2010, there has been no material adverse change in the business, assets, operations or condition, financial or otherwise, of the Borrower and the Subsidiaries, taken as a whole.

Section 3.05  Properties.  Each of the Borrower and the Subsidiaries has good title to, 

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or valid leasehold interests in, all its real and personal property material to its business, except for defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes in such a way that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

Section 3.06  Litigation and Environmental Matters.
  
(a)There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary (i) that could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters in Part A of Schedule 3.06) or (ii) that involve this Agreement or the Transactions.

(b)Except with respect to Disclosed Matters in Part B of Schedule 3.06 and any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any Subsidiary (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any reasonable basis for any Environmental Liability.

(c)Since the Effective Date, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

Section 3.07  Compliance with Laws and Agreements.  Each of the Borrower and the Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  No Default has occurred and is continuing.

Section 3.08  Investment and Holding Company Status.  Neither the Borrower nor any Subsidiary is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

Section 3.09  Taxes.  Each of the Borrower and the Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to file such returns and reports or pay such Taxes could not reasonably be expected to result in a Material Adverse Effect.

Section 3.10  ERISA.  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.

Section 3.11  Disclosure.  The Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any Subsidiary is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  None of the reports, financial statements, certificates or other information furnished by 

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or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, (i) with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time and (ii) with respect to financial statements, the Borrower represents only that such financial statements present fairly, in all material respects, the financial position and results of operation and cash flows of the Borrower and the Subsidiaries as of such dates and for such periods in accordance with GAAP. 

Section 3.12  Subsidiaries.  Schedule 3.12 sets forth the name of, and the ownership interest of the Borrower and any Subsidiary in, each Subsidiary (other than the Domestic Subsidiaries described in clause (ii) of the definition of “Excluded Domestic Subsidiary) and identifies which are Foreign Subsidiaries, First-Tier Foreign Subsidiaries and Guarantors as of the Effective Date.  Other than as contemplated by the Pledge Agreement, the shares of capital stock or other ownership interests of each Subsidiary are owned by the Borrower, directly or indirectly, free and clear of all Liens. 

Section 3.13  Margin Stock.  Neither the Borrower nor any Subsidiary is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock (as defined in Registration U of the Board).  The proceeds of the Loans and the Letters of Credit will not be used in a way that will result in any of the Loans or the Letters of Credit under this Agreement being in violation of Regulation U or Regulation X of the Board. 

Section 3.14  Use of Proceeds.  The proceeds of the Loans shall be used to repay existing Indebtedness, for working capital and for general corporate purposes (including, without limitation, Permitted Acquisitions) of, in each case, the Borrower and the Subsidiaries.  The Borrower represents and warrants to the Lenders and the Administrative Agent that all Loans will be for business, commercial, investment or other similar purpose and not primarily for personal, family, household or agricultural use, as such terms are used in the Texas Finance Code. 

Section 3.15  Solvency.  Immediately following the making of each Loan on the Effective Date and after giving effect to the application of the proceeds of each such Loan, (a) the fair market value of the assets of each Loan Party (individually and on a consolidated basis) will exceed its debts and liabilities; (b) the present fair saleable value of the property of each Loan Party (individually and on a consolidated basis) will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities; (c) each Loan Party (individually and on a consolidated basis) will be able to pay its debts and liabilities as they become absolute and mature; and (d) each Loan Party (individually and on a consolidated basis the Borrower and the Subsidiaries) will not have unreasonably small capital with which to conduct its business as such business is now conducted and is proposed to be conducted following the Effective Date.

Section 3.16  Intellectual Property.  

(a)Each of the Borrower and the Subsidiaries owns, or is licensed to use, all patents, patent applications, trademarks (whether registered or not), trademark applications, trade names, service marks, and copyrights owned by the Borrower or any Subsidiary (the “Intellectual Property”) material to its business.  As of the Effective Date, (i) except as could not reasonably be expected to have a Material Adverse Effect, none of the Intellectual Property has been declared invalid or is the subject of a pending or, to the knowledge of the Borrower or any Subsidiary, threatened action for cancellation or a declaration of invalidity, and there is no pending judicial proceeding involving any claim, and neither the Borrower 

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nor any Subsidiary has received any written notice or claim, of any infringement, misuse or misappropriation by the Borrower or any Subsidiary of any trademark, trade name, copyright, license or similar intellectual property right owned by any third party, except as described in Schedule 3.16 and (ii) there is no pending judicial proceeding involving any claim, and neither the Borrower nor any Subsidiary has received any written notice or claim, of any infringement, misuse or misappropriation by the Borrower or any Subsidiary of any patent owned by any third party, except as described in Schedule 3.16.  

(b)To the knowledge of the Borrower and the Subsidiaries, except as set forth in Schedule 3.16, the conduct by the Borrower and the Subsidiaries of their respective businesses as presently conducted does not conflict with, infringe on, or otherwise violate any copyright, trade secret, or patent rights of any Person except where such conflict, infringement or violation could not reasonably be expected to have a Material Adverse Effect.

ARTICLE IV

Conditions

Section 4.01  Effective Date.  The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which the Administrative Agent (or its counsel) shall have received from each Loan Party, in form and substance satisfactory to it:

(a)a counterpart of this Agreement signed by the Borrower;

(b)a Note for each Lender requesting a Note;

(c)the executed Guarantee Agreement from each Domestic Subsidiary that is not an Excluded Domestic Subsidiary;

(d)the executed Pledge Agreement from the Borrower and each Domestic Subsidiary (other than an Excluded Domestic Subsidiary) owning Equity Interests in a First-Tier Foreign Subsidiary; 

(e)favorable written opinions (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Akin Gump Strauss Hauer & Feld LLP, counsel for the Loan Parties and covering such matters relating to the Loan Parties, this Agreement or the Transactions as the Required Lenders shall reasonably request.  The Borrower hereby requests such counsel to deliver such opinion;

(f)such documents and certificates as the Administrative Agent may reasonably request relating to the organization, existence and good standing of the Loan Parties, the authorization of the Transactions and any other legal matters relating to the Loan Parties, this Agreement or the Transactions, all in form and substance satisfactory to the Administrative Agent;

(g)a certificate, dated the Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in paragraphs (i) and (ii) of Section 4.02;

(h)(i) satisfactory audited consolidated balance sheet and related statements of operations, stockholders' equity and cash flows of the Borrower for the two most recent fiscal years ended 

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prior to the Effective Date as to which such financial statements are available and (ii) satisfactory unaudited consolidated balance sheet and related statements of operations, stockholders' equity and cash flows of the Borrower for each quarterly period ended subsequent to the date of the latest financial statements delivered pursuant to clause (i) of this Section 4.01(h) as to which such financial statements are available;

(i)certificates representing 65% of the Equity Interests of the First-Tier Foreign Subsidiaries, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof;

(j)a Borrowing Request;

(k)projections for the Borrower and the Subsidiaries for fiscal year 2011 prepared by the Borrower in form and substance reasonably satisfactory to the Administrative Agent;

(l)evidence satisfactory to the Administrative Agent that all governmental and third party approvals necessary in connection with the Transactions and the continuing operations of the Borrower and the Subsidiaries have been obtained and are in full force and effect;

(m)evidence satisfactory to the Administrative Agent that all Indebtedness under that certain Amended and Restated Revolving Credit Agreement dated August 31, 2007, among the Borrower, the lenders party thereto and Comerica Bank, as administrative agent, has been paid in full, all commitments thereunder have been terminated and all liens related thereto have been released and terminated;

(n)evidence of liability and hazard insurance for each Loan Party in such amounts and on such terms as are standard and customary in the industry in which said entities conduct their operations;

(o)all information regarding the Borrower and the Subsidiaries that it is required to collect pursuant to the USA Patriot Act;

(p)all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out of pocket expenses required to be reimbursed or paid by the Borrower hereunder; and

(q)such other documents or items as the Administrative Agent may reasonably request.

Section 4.02  Each Credit Event.  The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

(i)The representations and warranties of the Borrower set forth in this Agreement shall be true and correct on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable (except that any representation or warranty which by its terms is made as of an earlier date shall be true and correct as of such earlier date).

(ii)At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, (i) no Default shall have occurred and be continuing and (ii) there shall have been no events that have, or could 

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reasonably be expected to cause, a Material Adverse Effect since the date of the last such issuance or Borrowing.

(iii)The Borrower shall have delivered a Borrowing Request to the Administrative Agent in accordance with Section 2.03.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (i) and (ii) of this Section.

ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:
Section 5.01  Financial Statements and Other Information.  The Borrower will furnish to the Administrative Agent:
(a)within 90 days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by KPMG LLP or other independent public accountants of recognized national standing (without a “going concern” explanatory paragraph or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and the Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

(b)within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, its consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and the Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;

(c)concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.10 (in the form of the compliance certificate attached hereto as Exhibit 5.01 (a “Compliance Certificate”)) and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

(d)promptly after the same become publicly available, copies of all periodic and 

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other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, as the case may be; and

(e)promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.

Reports or financial information required to be delivered pursuant to Sections 5.01(a), 5.01(b) or 5.01(d) (to the extent any such financial statements, reports, proxy statements or other materials are included in materials otherwise filed with the Securities and Exchange Commission) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto, on the Borrower's website on the Internet or (ii) on which such documents are posted on the Borrower's behalf on an Internet or intranet site website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third party website or whether sponsored by the Administrative Agent); provided that, in each case, (a) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests the Borrower to furnish such paper copies until written notice to cease delivering such paper copies is given by the Administrative Agent or such Lender and (b) the Borrower shall, or shall cause a third party to, notify the Administrative Agent and each Lender (by email) of the posting of any such documents.  Notwithstanding anything to the contrary contained herein, in every instance the Borrower shall be required to provide paper copies of the Compliance Certificate required by Section 5.01(c) to the Administrative Agent.  Except for such Compliance Certificates, the Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above and in any event shall have no responsibility to monitor compliance by the Borrower with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining copies of such documents.
Section 5.02  Notices of Material Events.  The Borrower will furnish to the Administrative Agent prompt written notice of the following:
(i)the occurrence of any Default;

(ii)the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect;

(iii)the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; and

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

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
Section 5.03  Existence; Conduct of Business.  The Borrower will, and will cause each Subsidiary to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business unless the failure to do so could not reasonably be expected to have a Material Adverse 

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Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.
Section 5.04  Payment of Obligations.  Other than contractual obligations relating to Indebtedness, the Borrower will, and will cause each Subsidiary to, comply with its contractual obligations, including payment of its obligations, including Tax liabilities, with respect to which the failure of such compliance could result in a Material Adverse Effect, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to comply pending such contest could not reasonably be expected to result in a Material Adverse Effect.
Section 5.05  Maintenance of Properties.  The Borrower will, and will cause each Subsidiary to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted.
Section 5.06  Books and Records; Inspection Rights.  The Borrower will, and will cause each Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities.  The Borrower will, and will cause each Subsidiary to, permit any representatives designated by the Administrative Agent and, if a Default is then continuing, any Lender, upon reasonable prior notice and in compliance with the Borrower's security policy, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.  Notwithstanding Section 9.03, if no Default is then continuing or is discovered during such inspection, the Administrative Agent and the Lenders shall bear all costs and expenses associated with (i) any inspections in excess of one per calendar year and (ii) any inspections of properties outside of the 48 contiguous states of the United States.
Section 5.07  Compliance with Laws.  The Borrower will, and will cause each Subsidiary to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, including, without limitation, Environmental Laws, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
Section 5.08  Use of Proceeds and Letters of Credit.  The proceeds of the Loans shall be used to repay existing Indebtedness, for working capital and for general corporate purposes (including, without limitation, Permitted Acquisitions) of, in each case, the Borrower and the Subsidiaries.  No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.  Letters of Credit will be issued only to support the general corporate purposes of the Borrower and the Subsidiaries. 
Section 5.09  Insurance.  The Borrower will, and will cause each Subsidiary to, maintain, with financially sound and reputable insurance companies, insurance in such amounts (with no greater risk retention) and against such risks as are customary among companies of established reputation engaged in the same or similar businesses and operating in the same or similar locations. The Borrower will furnish to the Lenders, upon request of the Administrative Agent, information in reasonable detail as to the insurance so maintained. 
Section 5.10  Required Guarantors; Additional Subsidiaries.  
(a)Subject to Section 5.10(b), the Borrower at all times shall cause all Domestic Subsidiaries other than Excluded Domestic Subsidiaries to be Guarantors.

(b)If any Domestic Subsidiary (other than an Excluded Domestic Subsidiary) is formed or acquired after the Effective Date, or if any Excluded Domestic Subsidiary ceases to be an Excluded Domestic Subsidiary, the Borrower will, within ten (10) Business Days, notify the Administrative 

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Agent and the Lenders thereof and promptly but in no event later than twenty (20) Business Days after such event cause such Subsidiary to execute a Guarantee Agreement.  

(c)If any First-Tier Foreign Subsidiary is formed or acquired, or any Foreign Subsidiary becomes a First-Tier Foreign Subsidiary, after the Effective Date, the Borrower will, or will cause the applicable Domestic Subsidiary owning the Equity Interests in such Foreign Subsidiary, to execute a Pledge Agreement covering 65% of the Equity Interests in such First-Tier Foreign Subsidiary and deliver or cause to be delivered to the Administrative Agent certificates representing 65% of the Equity Interests in such First-Tier Foreign Subsidiary together with an undated stock power for such certificates executed in blank by a duly authorized officer of the Borrower or such Domestic Subsidiary, as applicable.

ARTICLE VI

Negative Covenants

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that: 
Section 6.01  Indebtedness Covenant.  The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:
(a)Indebtedness created under the Loan Documents;

(b)Indebtedness existing on the Effective Date and set forth on Schedule 6.01(b) hereto and amendments, extensions, renewals, refinancing, refundings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof;

(c)Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any other Subsidiary; provided, in the case of Indebtedness of any Foreign Subsidiary to any Loan Party, that no Default exists at the time, or is created as a result of, the incurrence of such Indebtedness;

(d)Indebtedness incurred to finance the acquisition, construction or improvement of any assets by a Loan Party, excluding Capital Lease Obligations, and any Indebtedness assumed in connection with the acquisition of any such assets by a Loan Party or secured by a Lien on any such asset prior to the acquisition thereof, and amendments, extensions, renewals, refinancings, refundings and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) no Default exists at the time, or is created as a result of, the incurrence of such Indebtedness, (ii) at the time of such incurrence, the Pro Forma Financial Tests are satisfied and (iii) at the time of such incurrence, such Indebtedness, together with Indebtedness permitted under Section 6.01(e), does not exceed the greater of (x) ten percent (10%) of Tangible Assets of the Borrower and the Subsidiaries on a consolidated basis and (y) $50,000,000;

(e)Indebtedness of any Subsidiary in existence (but not incurred or created in connection with an acquisition) on the date on which such Subsidiary is acquired by the Borrower or a Subsidiary pursuant to a Permitted Acquisition, and amendments, extensions, renewals, refinancings, refundings and replacements of such Indebtedness that do not increase the outstanding principal amount thereof, provided that (i) neither the Borrower nor any of the Subsidiaries existing before giving effect to 

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such acquisition has any obligation with respect to such Indebtedness, (ii) none of the properties of the Borrower or any of the Subsidiaries existing before giving effect to such acquisition is bound with respect to such Indebtedness and (iii) at the time of such incurrence, such Indebtedness, together with Indebtedness permitted under Section 6.01(d), does not exceed the greater of (x) ten percent (10%) of Tangible Assets of the Borrower and the Subsidiaries on a consolidated basis and (y) $50,000,000;

(f)Capital Lease Obligations; provided that (i) no Default exists at the time, or is created as a result of, the incurrence of such Indebtedness and (ii) at the time of such incurrence, the Pro Forma Financial Tests are satisfied;

(g)Indebtedness of the Borrower or any Subsidiary in respect of the financing of insurance premiums with providers of such insurance or their Affiliates in the ordinary course of business; 

(h)Indebtedness arising from or representing deferred compensation to employees, directors and consultants of the Borrower or any Subsidiary incurred in the ordinary course of business; and 

(i)Unsecured Indebtedness of any Loan Party or First-Tier Foreign Subsidiary not permitted by any other clause of this Section 6.01; provided that (i) no Default exists at the time, or is created as a result of, the incurrence of such Indebtedness and (ii) at the time of such incurrence, the Pro Forma Financial Tests are satisfied.

Section 6.02  Lien Covenant.  The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it except:

(a)Permitted Encumbrances; 

(b)Any Lien on any property or asset of the Borrower or any Subsidiary existing on the Effective Date and set forth on Schedule 6.02(b); provided that (i) such Lien shall not apply to any other property or asset of the Borrower or any Subsidiary (other than additions, accessions and improvements to such property or asset and proceeds covered by the original grant thereof) and (ii) such Lien shall secure only those obligations that it secures on the Effective Date and amendments, extensions, renewals, refinancings, refundings and replacements thereof as permitted under Section 6.01(b);

(c)Any Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any property or asset of any Person that becomes a Subsidiary after the Effective Date prior to the time such Person becomes a Subsidiary and securing Indebtedness permitted under Section 6.01(d) or (e); provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of the Borrower or any Subsidiary (other than additions, accessions and improvements to such property or asset and proceeds covered by the original grant thereof) and (iii) such Lien shall secure only those obligations that it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be, and amendments, extensions, renewals, refinancings, refundings and replacements thereof as permitted under Section 6.01(d) and (e); 

(d)Liens on assets acquired, constructed or improved by the Borrower or any Subsidiary; provided that (i) such Liens secure permitted Indebtedness pursuant to Section 6.01(d) or (f), (ii) such Liens and the Indebtedness secured thereby (other than amendments, extensions, renewals, refinancings, refundings and replacements thereof as permitted under Section 6.01(d) and (f)) are incurred 

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prior to or within 90 days (or such longer period if necessary solely to obtain any permits or licenses required in connection with such acquisition, construction or improvement) after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets and (iv) such Liens shall not apply to any other property or assets of the Borrower or any Subsidiary (other than additions, accessions and improvements to such property or asset and proceeds covered by the original grant thereof);

(e)Liens arising in the ordinary course of business to secure obligations other than Indebtedness that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect; 

(f)Liens that secure Indebtedness permitted under Section 6.01(g); 

(g)Liens described in clause (c) of the definition of “Liens” that are incurred in connection with Investments permitted under Section 6.04(i); and

(h)Liens in favor of the Administrative Agent under the Pledge Agreement.

Section 6.03  Limitation on Fundamental Changes; Lines of Business.  

(a)The Borrower will not, and will not permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or a series of transactions) all or substantially all of its assets, or, in the case of any Loan Party or any First Tier Foreign Subsidiary, liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing:

(i)any Subsidiary may merge into or consolidate with the Borrower in a transaction in which the Borrower is the surviving corporation or sell, transfer, lease or otherwise dispose of all or substantially all of its assets to the Borrower; 

(ii)any Subsidiary may merge into or consolidate with or sell, transfer, lease or otherwise dispose of all or substantially all of its assets to any other Subsidiary in a transaction in which the surviving entity is a Subsidiary; 

(iii)any Subsidiary may merge with or into or consolidate with any other Person in a Permitted Acquisition; 

(iv)any Guarantor may liquidate or dissolve if its sole shareholders are Loan Parties and the assets of such Guarantor are transferred to one or more Loan Parties; 

(v)any First Tier Foreign Subsidiary may liquidate or dissolve if (i) its sole shareholders are Loan Parties, (ii) the assets of such Guarantor are transferred to a Loan Party and (iii) the Borrower, or the applicable Domestic Subsidiary owning the Equity Interests in such Foreign Subsidiary, complies with Section 5.10(c); and

(vi)any Subsidiary may merge or consolidate, or sell, transfer, lease or otherwise dispose of all or substantially all of its assets if such transaction is permitted under Section 6.05(f).

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(b)The Borrower will not, and will not permit any of its Subsidiaries to, engage to any material extent in any business other than businesses of the types conducted by the Borrower and its Subsidiaries on the Effective Date and businesses reasonably related thereto.

Section 6.04  Restrictions on Investments, Loans, Advances, Guarantees and Acquisitions.  The Borrower will not, and will not permit any Subsidiary to, purchase, hold or acquire (including pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger) any Equity Interest, evidences of Indebtedness or securities (including any option, warrant or other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to, guarantee any obligations of, or make or permit to exist any other investment (each, an “Investment”) in, any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions) any assets of any other Person constituting a business unit, except:

(a)Permitted Investments;

(b)Investments existing on the Effective Date and set forth on Schedule 6.04(b);

(c)Investments by the Borrower or any Subsidiary in the Borrower or any Subsidiary; provided, in the case of Investments by any Loan Party in a Foreign Subsidiary, that no Default exists at the time of, or is created as a result of, such Investment; 

(d)Guarantees constituting permitted Indebtedness under Section 6.01;

(e)Permitted Acquisitions;

(f)Extensions of trade credit in the ordinary course of business;

(g)Loans and advances to employees of the Borrower or any Subsidiary in the ordinary course of business (including for travel and entertainment expenses) in an outstanding aggregate amount not to exceed $5,000,000 at any time; 

(h)Investments by the Borrower or any Subsidiary received in connection with the bankruptcy or reorganization of or settlement of, delinquent accounts and disputes with or judgments against, customers and suppliers, in each case in the ordinary course of business; and

(i)Investments not permitted by any other clause of this Section; provided that no Investment shall be made pursuant to this clause (i) that, together with all other Investments made pursuant to this clause (i) after the Effective Date, would exceed $25,000,000 in the aggregate at any time outstanding (in each case valued at the time such Investment is made). 

Section 6.05  Limitation on Asset Sales.  The Borrower will not, and will not permit any Subsidiary to, sell, transfer, lease or otherwise dispose of (each, a “disposition”) any asset, including any Equity Interest, owned by it, and including any assignment or sale of any income or revenues (including accounts receivable) or rights in respect thereof, nor will the Borrower permit any of the Subsidiaries to issue any additional Equity Interest in such Subsidiary, except:

(a)dispositions of inventory and used or surplus equipment in the ordinary course of business;

(b)dispositions and issuances to the Borrower or any Subsidiary;

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(c)dispositions in connection with sale-leaseback transactions with third parties on an arm's-length basis; 

(d)the issuance and sale of directors' qualifying shares and shares as required by applicable law to be held by a Person other than the Borrower or a Subsidiary; 

(e)dispositions of Permitted Investments; and

(f)dispositions of assets (other than accounts receivable or inventory) not otherwise permitted by any other clause of this Section so long as, after giving effect to any such disposition, the Borrower is in compliance with Section 6.10(c).

Section 6.06  Swap Agreements.  The Borrower will not, and will not permit any Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks (including foreign exchange risks) to which the Borrower or any Subsidiary has actual exposure, and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or any Subsidiary.

Section 6.07  Limitations on Restricted Payments, Prepayments of Subordinated Indebtedness and Modifications of Subordinated Indebtedness.

(a)The Borrower will not, and will not permit any Subsidiary to, declare or make, or agree to make during the term hereof, directly or indirectly, any Restricted Payment to any Person other than a Loan Party unless the following conditions are satisfied: (i) no Default shall have occurred and be continuing or result from or, with respect to agreements to make Restricted Payments, reasonably be expected to result from, the making of such Restricted Payment and (ii) the Pro Forma Financial Tests are satisfied.  Notwithstanding the preceding sentence, (A) a Subsidiary that is not a Guarantor may declare and make and may agree to make Restricted Payments to any other Subsidiary that is not a Guarantor, (B) the Borrower and its Subsidiaries may declare and make and may agree to make the following Restricted Payments: (1) non-cash dividends, distributions and other payments in the form of, by conversion into, in exchange for, or out of the proceeds of the substantially concurrent sale of, Equity Interests and (2) the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interest held by any current or former employee, director or consultant of the Borrower or a Subsidiary (or any permitted transferee of the foregoing) pursuant to any management equity subscription agreement, stock option agreement, stock plan or similar agreement or upon the exercise of any option, warrant, purchase right or other Equity Interest issued pursuant thereto, and (C) the Borrower and its Subsidiaries may agree to make a Restricted Payment if it is a condition precedent to such Restricted Payment that the Borrower terminate this Agreement and satisfy all Obligations.

(b)The Borrower will not, nor will it permit any Subsidiary to, make or agree to make, directly or indirectly, any payment (whether in cash, securities or other property) in respect of principal of or interest on any Indebtedness that is subordinated in right of payment to the Obligations, including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of such subordinated Indebtedness, except:

(i)regularly scheduled and other mandatory interest and principal payments on or after the due date therefor in respect of any such Indebtedness;

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(ii)refinancings, renewals, refundings and replacements of such subordinated Indebtedness if any such new Indebtedness is (i) permitted under Section 6.01 and (ii) is subordinated in right of payment to the Obligations at least to the same extent in all material respects as the Indebtedness being refinanced, renewed, refunded or replaced;

(iii)the payment of secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness to the extent such sale or transfer is permitted hereunder;

(iv)the payment of Indebtedness of any Person acquired by the Borrower or any Subsidiary that exists on the date of such acquisition; provided that such Person becomes a Subsidiary as a result of such acquisition; 

(v)payments by the Borrower in the form of, by conversion into, in exchange for, or out of the concurrent sale of, Equity Interests; 

(vi)payments to the Borrower or a Subsidiary in respect of intercompany Indebtedness; 

(vii)any agreement to make a payment in respect of principal or interest on such subordinated Indebtedness if it is a condition precedent to such payment that the Borrower terminate this Agreement and satisfy all Obligations; and 

(viii)other prepayments of Indebtedness by the Borrower or any Subsidiary not permitted by any other clause of this Section 6.07; provided that no Default exists at the time after giving effect to such prepayment, and the Borrower has at least $100,000,000 of total liquidity, including (A) unrestricted cash, (B) Permitted Investments and (C) unused Commitments as of such date.

(c)The Borrower will not, and will not permit any Subsidiary to, amend, supplement or otherwise modify the terms of any Indebtedness that is subordinated in right of payment to the Obligations to (i) accelerate the time of any scheduled or other mandatory payments in respect thereof, (ii) impair or reduce the subordination thereof, (iii) grant any collateral to secure such Indebtedness or (iv) increase the principal amount of, or interest on, such Indebtedness.

Section 6.08  Restrictions on Transactions with Affiliates.  The Borrower will not, and will not permit any Subsidiary to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions in the ordinary course of business at prices and on terms and conditions not materially less favorable to the Borrower or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, (b) transactions between or among the Borrower and the Subsidiaries not involving any other Affiliate of the Borrower to the extent such transactions are otherwise permitted hereunder, (c) any employment, consulting or similar agreement or other compensation agreement entered into by the Borrower or any Subsidiary in the ordinary course of business, (d) Investments in Affiliates permitted under Section 6.04(i) and (e) sales of Equity Interests in the Borrower to Affiliates of the Borrower and the granting of registration and other customary rights in connection therewith.

Section 6.09  Restrictions on Restrictive Agreements.  The Borrower will not, and will not permit any Subsidiary to, directly or indirectly, enter into, incur or permit to exist any agreement or 

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other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its properties or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to guarantee Indebtedness of the Borrower or any other Subsidiary that are, in each case in this clause (b), more restrictive than that which exists as of the Effective Date; provided that (i) the foregoing shall not apply to restrictions and conditions imposed by law or by any Loan Document, (ii) the foregoing shall not apply to restrictions and conditions existing on the Effective Date identified on Schedule 6.09 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or commitment if, after giving effect thereto, the restrictions or conditions would be materially more restrictive, individually or in the aggregate, than those existing on the Effective Date), (iii) the foregoing shall not apply to customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary or other assets pending such sale, provided such restrictions and conditions apply only to the Subsidiary or other asset that is to be sold and such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed by any agreement relating to secured obligations permitted by this Agreement; provided that such restrictions or conditions apply only to the property or assets securing such obligations and (v) the foregoing shall not apply to (A) leases, licenses and other agreements entered into in the ordinary course of business (other than for Indebtedness); provided that such restrictions or conditions apply only to the property or assets that are the subject of such leases, licenses or other agreements, and (B) provisions in corporate charters, bylaws, stockholders agreements, partnership agreements, limited liability company agreements and similar agreements entered into in connection with Investments in less than wholly-owned Subsidiaries permitted by Section 6.04 and negotiated in good faith and not with the purpose of avoiding the restrictions of this Section.

Section 6.10  Financial Covenants.  
(a)The Borrower will not permit the Leverage Ratio as of the last day of each fiscal quarter to be greater than 3.00 to 1.00.

(b)The Borrower will not permit the Interest Coverage Ratio as of the last day of each fiscal quarter to be less than 3.00 to 1.00.

(c)The Borrower will not permit the Total Required Assets at any time to be less than the sum of the total Credit Exposures at such time plus $100,000,000.  

Section 6.11  Fiscal Year.  The Borrower shall not change its fiscal year without the consent of the Administrative Agent.

ARTICLE VII

Events of Default

If any of the following events (“Events of Default”) shall occur:
(a)the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b)the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement, when and as the same shall become due and payable, and such failure shall continue unremedied for a period 

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of three Business Days;

(c)any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with this Agreement or any amendment or modification hereof or waiver hereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any amendment or modification hereof or waiver hereunder, shall prove to have been incorrect when made or deemed made;

(d)the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, Section 5.03 (with respect to the Borrower's existence) or Section 5.08, Section 5.10 or in ARTICLE VI;

(e)the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Article), and such failure shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender);

(f)the Borrower or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable after giving effect to any applicable grace period;

(g)any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

(h)an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Subsidiary or its debts, or of a substantial part of its assets, under any  Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

(i)(A) the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, or (v) make a general assignment for the benefit of creditors or (B) the board of directors (or similar governing body) of the Borrower or any Subsidiary shall adopt a resolution authorizing the Borrower or any Subsidiary to take any of the foregoing actions described in clause (i)(A);

(j)the Borrower or any Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

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(k)one or more judgments for the payment of money in an aggregate amount in excess of $15,000,000 shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment;

(l)an ERISA Event shall have occurred that when taken together with all other ERISA Events that have occurred or are continuing, could reasonably be expected to result in a Material Adverse Effect; or

(m)a Change in Control shall occur;

then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times:  (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest, notice of acceleration, notice of intent to accelerate or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (h) or (i) of this Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest, notice of acceleration, notice of intent to accelerate or other notice of any kind, all of which are hereby waived by the Borrower, and (iii) take such other steps to collect the Loans and protect the interest of the Lenders as shall be allowed by law or in equity.

ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except those expressly set forth herein.  Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise 

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any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of the Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in ARTICLE IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.  Upon any such resignation, the Required Lenders shall have the right, with, if no Default is then continuing, the consent of the Borrower (not to be unreasonably withheld, delayed or conditioned), to appoint a successor.  If no successor shall have been so appointed by the Required Lenders (and, if applicable, consented to by the Borrower) and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent which shall be a bank with an office in Houston, Texas, or an Affiliate of any such bank.  Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrower to a successor Administrative Agent shall 

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be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the Administrative Agent's resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
Section 9.01  Notices.  
(a)Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy or electronic mail, as follows:  
(i)if to the Borrower, to it at 9725 Datapoint Drive, Suite 100, San Antonio, Texas 78229, Attention of Alan Schoenbaum, General Counsel (Phone No. (210) 447-4721; Telecopy No. (210) 447-4031; E-Mail Address aschoenb@rackspace.com);

(ii)if to the Administrative Agent, Issuing Bank or Swingline Lender, to JPMorgan Chase Bank, Loan and Agency Services Group, 10 South Dearborn, 19th Floor, Chicago, Illinois 60603-2003, Attention Yuvette Owens (Phone No. (312) 385-7021; Telecopy No. (888) 303-9732; E-Mail Address jpm.agency.servicing.1@jpmchase.com), and a copy to JPMorgan Chase Bank, 1020 NE Loop 410, Floor 1, San Antonio, Texas 78209, Attention Jennifer N. Wilkinson (Phone No. (210) 829-6170; Telecopy No. (210) 829-6109; E-Mail Address jennifer.n.wilkinson@chase.com); and 

(iii)if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

(b)Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to ARTICLE II unless otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

(c)Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.  All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have 

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been given on the date of receipt.

Section 9.02  Waivers; Amendments; Release of Guarantors.
 
(a)No failure or delay by the Administrative Agent, the Issuing Bank or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.

(b)Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase  the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender adversely affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.17(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) release any Guarantor or release all or substantially all of the collateral for the Loans without the consent of each Lender (other than Defaulting Lenders), (vi) change any provisions of Section 2.20 or the definition of “Defaulting Lender” without the consent of each Lender, or (vii) change any of the provisions of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the  written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Issuing Bank or the Swingline Lender hereunder without the prior written consent of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be.

(c)Notwithstanding any contrary position in this Agreement or any other Loan Document, if (a) a Guarantor is no longer a Subsidiary and (b) at the time such Guarantor became a non-Subsidiary, no Event of Default then existed, then such Guarantor shall be automatically released from its obligations under the Guarantee Agreement to which it is a party, without need for any formal action by the Administrative Agent or any Lender; and the Administrative Agent will confirm such release by a notice to the Borrower upon receipt of a request therefor.  

Section 9.03  Expenses; Indemnity; Damage Waiver.
  
(a)The Borrower shall pay (i) all reasonable out of pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, 

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the preparation and administration of this Agreement or any amendments, modifications or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b)The Borrower shall indemnify the Administrative Agent, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee but, with respect to the expenses, fees, charges and disbursements described in subparagraphs (a)(i) and (a)(ii) of this Section, only to the extent reasonable, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any Subsidiary, or any Environmental Liability related in any way to the Borrower or any Subsidiary, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

(c)To the extent that the Borrower fails to pay any amount required to be paid by it to (i) the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Issuing Bank or the Swingline Lender, as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Issuing Bank or the Swingline Lender in its capacity as such, and (ii) the Administrative Agent under paragraph (a) or (b) of this Section, each Lender severally agrees to pay its pro-rata share of such amount to the Administrative Agent.

(d)To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

(e)All amounts due under this Section shall be payable promptly after written demand therefor.

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(f)The indemnification and reimbursement provisions contained herein with respect to fees of counsel shall be limited to one counsel for all Indemnitees, unless a conflict of interest exists among Indemnitees in which case each Indemnitee affected by such conflict of interest shall have separate counsel, the fees of which shall be reimbursed by the Borrower (except to the extent resulting from the gross negligence or willful misconduct of an Indemnitee.

WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED HEREUNDER SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS AND DAMAGES ARISING OUT OF OR RESULTING FROM THE ORDINARY, SOLE AND CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section 9.04  Successors and Assigns.  
(a)The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)(i)  Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld, delayed or conditioned) of:

(A)the Borrower, provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender or, if an Event of Default has occurred and is continuing, any other assignee, provided further that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five Business Days after having received written notice thereof; 

(B)the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment to an assignee that is a Lender or an Affiliate of a Lender; and

(C)the Issuing Bank and Swingline Lender.

(ii)      Assignments shall be subject to the following additional conditions:

(A)except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender's Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment 

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(determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $10,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default under clause (a), (b), (h) or (i) of ARTICLE VII has occurred and is continuing;

(B)each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement;  

(C)the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and

(D)the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement other than Section 9.12 (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 2.14, Section 2.15, Section 2.16 and Section 9.03; provided that such release shall not affect any legal responsibility for such Lender's actions and failures to act occurring before the effective date of such Assignment and Assumption).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(iv)  The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(vi)  Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant 

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to Section 2.04(c), Section 2.05(d), Section 2.05(e), Section 2.06(b), Section 2.17(d), or Section 9.03(c), the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.
(c)(i)  Any Lender may, without the consent of the Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender's obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (C) the Borrower, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (D) by its acceptance of such participation, such Participant shall be deemed to have consented to be bound by Section 9.12.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant.  Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Section 2.14, Section 2.15 and Section 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.17(c) as though it were a Lender.

(ii)  A Participant shall not be entitled to receive any greater payment under Section 2.14 or Section 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's express prior written consent and knowledge of the increased costs or Taxes associated with such Participant's participation.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.16(e) as though it were a Lender.

(d)Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

Section 9.05  Survival.  All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments  delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall 

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continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.  The provisions of Section 2.14, Section 2.15, Section 2.16, Section 9.03, Section 9.12 and ARTICLE VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

Section 9.06  Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which may be delivered by electronic or telecopy transmission and each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  The Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  This Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 9.07  Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 9.08  Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, but excluding deposits held in a fiduciary capacity for a third party) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured; provided that any Lender or Affiliate thereof exercising rights under this Section shall use commercially reasonable efforts to notify the Borrower promptly after exercising such rights; provided, further that the failure to give such notice shall not affect such exercise of rights or any other rights of the Lenders and their Affiliates under this Section.  The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

Section 9.09  Governing Law; Jurisdiction; Consent to Service of Process.  
(a)This Agreement shall be construed in accordance with and governed by the law of the State of Texas.

(b)The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the District Courts of the State of Texas sitting in Houston, Harris County, Texas and of the United States District Court of the Southern District of Texas, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and 

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unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Texas State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.

(c)Each party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

Section 9.10  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY 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 THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY 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 BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 9.11  Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

Section 9.12  Confidentiality.  Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (ii) any pledgee referred to in Section 9.04(d), or (iii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, the Issuing Bank or any 

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Lender on a nonconfidential basis from a source other than the Borrower.  For the purposes of this Section, “Information” means all information received from the Borrower or any of its Related Parties relating to the Borrower, the Subsidiaries or their business, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower; provided that, in the case of information received from the Borrower after the Effective Date, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Section 9.13  Interest Rate Limitation.  Notwithstanding anything herein to the contrary, in no event whatsoever shall the amount contracted for, charged, paid or otherwise agreed to be paid to or received by the Agent or any Lender for the use, forbearance or detention of money under this Agreement or any other Loan Document or otherwise exceed the maximum non‐usurious rate pursuant to applicable law (the “Maximum Rate”), and if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the Maximum Rate, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.  Anything in this Agreement or any other Loan Document to the contrary notwithstanding, the Borrower shall not be required to pay unearned interest and shall never be required to pay interest at a rate in excess of the Maximum Rate, and if the effective rate of interest which would otherwise be payable under this Agreement and the other Loan Documents would exceed the Maximum Rate, or if the Administrative Agent or any Lender shall receive any unearned interest or shall receive monies that are deemed to constitute interest which would increase the effective rate of interest payable by the Borrower under this Agreement or any other Loan Document to a rate in excess of the Maximum Rate, then (a) the amount of interest which would otherwise be payable by the Borrower under this Agreement or any other Loan Document shall be reduced to the amount allowed under applicable law, and (b) any unearned interest paid by the Borrower or any interest paid by the Borrower in excess of the Maximum Rate shall be credited on the principal of the Loans (or, if the principal amount shall have been paid in full, refunded to the Borrower).  It is further agreed that, without limitation of the foregoing, all calculations of the rate of interest contracted for, charged or received by any Lender under this Agreement or any other Loan Document, are made for the purpose of determining whether such rate exceeds the Maximum Rate, and shall be made by amortizing, prorating and spreading in equal parts during the period of the full stated term of the Loans evidenced by said Notes all interest at any time contracted for, charged or received by such  Lender in connection therewith.   

Section 9.14  USA Patriot Act.  Each Lender that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act.

Section 9.15  FINAL AGREEMENT OF THE PARTIES.  THIS WRITTEN AGREEMENT (INCLUDING THE EXHIBITS AND SCHEDULES HERETO) AND THE OTHER LOAN DOCUMENTS CONSTITUTE A “LOAN AGREEMENT” AS DEFINED IN SECTION 26.02

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(a) OF THE TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF.  Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement.  Other than Section 9.03, nothing in this Agreement, expressed or implied, is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Agreement.

[END OF TEXT]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.
BORROWER:                      RACKSPACE HOSTING, INC.

By:  /s/ Alan Schoenbaum                             
       Alan Schoenbaum
Senior Vice President, General Counsel and Secretary

ADMINISTRATIVE AGENT,     JPMORGAN CHASE BANK, N.A.
ISSUING BANK, SWINGLINE    
LENDER AND LENDER:    By:   /s/ Jennifer N. Wilkinson
Jennifer N. Wilkinson
Senior Vice President

SYNDICATION AGENT AND     BARCLAYS BANK plc
LENDER    
By:       /s/ Mark Thompson   
Name:  Mark Thompson        
Title:    Authorized Signatory 
 

CO-DOCUMENTATION AGENT    REGIONS BANK
AND LENDER:    
By:       /s/ Donna Day          
Name:  Donna Day                
Title:    Senior Vice President
 

CO-DOCUMENTATION AGENT    WELLS FARGO BANK, N.A.
AND LENDER:    
By:       /s/ Terry L. Witte       
Name:  Terry L. Witte            
Title:    Senior Vice President
 

LENDER:    BANK OF AMERICA, N.A.
    
By:       /s/ Sugeet Manchanda Madan 
Name:  Sugeet Manchanda Madan      
Title:    Director                                   
 

LENDER:    THE FROST NATIONAL BANK
    
By:       /s/ Suzanne Peterson                      
Name:  Suzanne Peterson                           
Title:    Market President - Alamo Heights 
 

LENDER:    COMERICA BANK
    
By:       /s/ Tim J. Klitch                
Name:  Tim J. Klitch                     
Title:    Senior Vice President        
 

EXHIBIT 1.01A
COMMITMENT INCREASE AGREEMENT
This Commitment Increase Agreement (this “Agreement”), dated as of [________________], 201__, is among Rackspace Hosting, Inc. (the “Borrower”), JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent (the “Agent”) under the Credit Agreement described below, and [_____________] (the “Increasing Lender”).  Capitalized terms used herein without definition have the meanings assigned to such terms in the Credit Agreement.
PRELIMINARY STATEMENTS
A.    Pursuant to Section 2.19 of the Revolving Credit Agreement dated as of September 23, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among the Borrower, the Lenders from time to time party thereto, and the Agent, the Borrower has the right, subject to the terms and conditions thereof, to effectuate from time to time an increase in the total Commitments under the Credit Agreement by agreeing with a Lender to increase that Lender's Commitment.
B.    The Borrower has given notice to the Agent of its intention to increase the total Commitments pursuant to such Section 2.19 by increasing the Commitment of the Increasing Lender from $________ to $_________, (Amount of increase must be at least $10,000,000.).
Accordingly, the parties hereto agree as follows:
SECTION 1.    Increase of Commitment.  Pursuant to Section 2.19 of the Credit Agreement, the Commitment of the Increasing Lender is hereby increased from $_____________ to _____________. (Amount of increase must be at least $10,000,000.)
SECTION 2.    Increasing Lender Credit Decision.  The Increasing Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 5.01 of the Credit Agreement and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and to agree to the various matters set forth herein.  The Increasing Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement.
SECTION 3.    Representation and Warranties of the Borrower.  The Borrower represents and warrants as follows:
(a)    The execution, delivery and performance by the Borrower of this Agreement are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action on the part of the Borrower and do not contravene (i) the Borrower's articles of incorporation or by-laws or (ii) any indenture, agreement or other instrument binding on the Borrower, except in the case of clause (ii), as could not reasonably be expected to result in a Material Adverse Effect.
(b)    No authorization, consent or approval of any Governmental Authority is required for the valid execution, delivery and performance by the Borrower of this Agreement.
(c)    This Agreement constitutes a valid and binding agreement of the Borrower, enforceable against the Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and equitable principles of general applicability.
(d)    The aggregate amount of the Commitments under the Credit Agreement, including any increases pursuant to Section 2.19 thereof, does not exceed $400,000,000.
(e)    No Default has occurred and is continuing.

SECTION 4.    Representations and Warranties of the Guarantors.  Each Guarantor represents and warrants as follows:
(a)    The execution, delivery and performance by it of this Agreement are within its corporate or organizational powers, have been duly authorized by all necessary corporate action and do not contravene (i) its articles of incorporation or by-laws or certificate of formation or operating agreement or limited partnership agreement, as applicable, or (ii) any indenture, agreement or other instrument binding on such Guarantor, except in the case of clause (ii), as could not reasonably be expected to result in a Material Adverse Effect.
(b)    No authorization, consent or approval of any Governmental Authority is required for the valid execution, delivery and performance by such Guarantor of this Agreement.
(c)    This Agreement constitutes its valid and binding agreement, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and equitable principles of general applicability.
(d)    No Default has occurred and is continuing.
SECTION 5.    Expenses.  The Borrower agrees to pay on demand all reasonable costs and expenses of the Agent in connection with the preparation, negotiation, execution and delivery of this Agreement, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent with respect thereto.
SECTION 6.     Effectiveness.  This Agreement shall become effective upon the receipt by the Agent of the following:
(a)    counterparts of this Agreement executed by the Borrower, the Agent and the Increasing Lender; and
(b)    a certified copy of corporate resolutions of the Borrower authorizing the increase in the Commitments.
SECTION 7.    Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas.
SECTION 8.    Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which may be delivered in original or facsimile form and when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunder duly authorized, as of the date first above written.
BORROWER:

RACKSPACE HOSTING, INC.
By:        
Name:        
Title:        

GUARANTORS:

[NAMES OF GUARANTORS]

By:        
Name:        
Title:        

AGENT:

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

By:        
Name:        
Title:        

INCREASING LENDER:

[NAME OF INCREASING LENDER]

By:        
Name:        
Title:        

EXHIBIT 1.01B
FORM OF 
GUARANTEE AGREEMENT

THIS GUARANTEE AGREEMENT (this “Guarantee”) dated as of September 23, 2011, made by each of the undersigned Subsidiaries of the Borrower (as defined below) (each, a “Guarantor,” and collectively, the “Guarantors”), in favor of JPMorgan Chase Bank, N.A. as Administrative Agent (the “Agent”) for the benefit of the Lenders pursuant to that certain Revolving Credit Agreement dated as of even date herewith (as amended, modified and supplemented from time to time, the “Credit Agreement”), by and among the Borrower, the Agent and the Lenders.
W I T N E S S E T H
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make Loans and other extensions of credit to Rackspace Hosting, Inc., a Delaware corporation (the “Borrower”) in a manner and upon the terms and conditions set forth therein;
WHEREAS, in accordance with the Credit Agreement, the Agent requires that the Guarantors execute a guarantee agreement guaranteeing the obligations of the Borrower under the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and agreements herein and in order to induce the Lenders to make the Loans and other extensions of credit pursuant to the Credit Agreement, the Guarantors hereby agree as follows:
Section 1.    Definitions.  Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned thereto in the Credit Agreement.  
Section 2.    Guarantee of Payment.  Each Guarantor (not merely as a surety or guarantor of collection) hereby jointly, severally, unconditionally and irrevocably, guarantees the punctual payment and performance when due, whether at stated maturity, as an installment, by prepayment or by demand, acceleration or otherwise, of all Obligations of the Borrower heretofore or hereafter existing.  If any or all of the Obligations become due and payable under the Credit Agreement, the Guarantors jointly and severally and unconditionally promise to pay such Obligations, on demand, together with any and all expenses (including reasonable counsel fees and expenses), which may be incurred by the Agent in collecting any of the Obligations and in connection with the protection, defense and enforcement of any rights under the Credit Agreement or under any other Loan Document (the “Expenses”).  The Guarantors guarantee that the Obligations shall be paid strictly in accordance with the terms of the Credit Agreement.  The Obligations include, without limitation, interest accruing after the commencement of a proceeding under bankruptcy, insolvency or similar laws of any jurisdiction at the rate or rates provided in the Credit Agreement.  The Agent shall not be required to exhaust any right or remedy or take any action against the Borrower or any other Person or any collateral prior to any demand or other action hereunder against the Guarantors.  The Guarantors agree that, as between the Guarantors and the Agent, the Obligations may be declared to be due and payable for the purposes of this Guarantee at any time when the Loans may be declared due under Article VII of the Credit Agreement, notwithstanding any stay, injunction or other prohibition which may prevent, delay or vitiate any declaration as regards the Borrower and that in the event of a declaration or attempted declaration, the Obligations shall immediately become due and payable by the Guarantors for the purposes of this Guarantee and each Guarantor shall forthwith pay the Obligations specified by the Agent to be paid as provided in the Credit Agreement without further notice or demand.  Notwithstanding anything contained herein or in the Credit Agreement, any Loan Document or any other document or any other agreement, security document or instrument relating hereto or thereto to the contrary, the maximum liability of each Guarantor hereunder shall never exceed the maximum amount that said Guarantor could pay without having such payment set aside as a fraudulent transfer or fraudulent conveyance or similar action under the U.S. Bankruptcy Code or applicable state or foreign law.
Section 3.    Guarantee Absolute.  The liability of each Guarantor under this Guarantee is absolute and unconditional irrespective of:  (a) any change in the time, manner or place of payment of, or in any other term of, the 

Credit Agreement or the Obligations, or any other amendment or waiver of or any consent to departure from any of the terms of the Credit Agreement or the Obligations, including any increase or decrease in the rate of interest thereon; (b) any release or amendment or waiver of, or consent to departure from, any other guarantee or support document, or any exchange, release or non‐perfection of any collateral, for the Credit Agreement or the Obligations; (c) any present or future law, regulation or order of any jurisdiction or of any agency thereof purporting to reduce, amend, restructure or otherwise affect any term of the Credit Agreement or the Obligations; (d) without being limited by the foregoing, any lack of validity or enforceability of the Credit Agreement or the Obligations; (e) any other setoff, defense or counterclaim whatsoever (in any case, whether based on contract, tort or any other theory) with respect to the Credit Agreement or the transactions contemplated thereby which might constitute a legal or equitable defense available to, or discharge of, the Borrower or other Guarantors and (f) any claim or assertion that any payment by any Guarantor hereunder should be set aside pursuant to Section 2 in connection with any stay, injunction or other prohibition or event, in which case each Guarantor shall be unconditionally required to pay all amounts demanded of it hereunder prior to any determination of the maximum liability of each Guarantor hereunder in accordance with Section 2 and the recipient of such payment, if so required by a final non-appealable court of competent jurisdiction by a final and non-appealable judgment, shall then be liable for the refund of any excess amounts.  If any such rebate or refund is ever required, all other Guarantors shall be fully liable for the repayment thereof to the maximum extent allowed by applicable law.
Section 4.    Guarantee Irrevocable.  This Guarantee is a continuing guarantee of the payment of all Obligations now or hereafter existing under the Credit Agreement and shall remain in full force and effect until payment in full of all Obligations and other amounts payable under this Guarantee and until all Commitments of the Lenders to make Loans under the Credit Agreement shall be terminated in accordance with the terms thereof and the Credit Agreement is no longer in effect.
Section 5.    Reinstatement.  This Guarantee shall continue to be effective, or be automatically reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by the Agent on the insolvency, bankruptcy, dissolution, liquidation or reorganization of any of the Borrower, any Guarantor, or any Person that is a party to the Loan Documents, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to any of the Borrower, any Guarantor or any other Person that is a party to the Loan Documents, or otherwise, all as though the payment had not been made.  
Section 6.    Subrogation.  Each Guarantor hereby agrees that it shall not exercise any rights which it may acquire by way of subrogation, by any payment made under this Guarantee or otherwise, until all the Obligations have been paid in full and the Credit Agreement is no longer in effect.  Any amounts paid to a Guarantor on account of subrogation rights under this Guarantee at any time when all the Obligations have not been paid in full, shall be held in trust for the benefit of the Agent and shall promptly be paid to the Agent to be credited and applied to the Obligations, whether matured or unmatured or absolute or contingent, in accordance with the terms of the Credit Agreement.  If a Guarantor has made a payment to the Agent hereunder of all or any part of the Obligations and all the Obligations are paid in full (other than unasserted indemnity obligations) and the Commitments have been terminated, the Agent shall, at such Guarantor's request, execute and deliver to the Guarantor the appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Guarantor of an interest in the Obligations resulting from the payment.
Section 7.    Subordination.  Any liabilities owed by the Borrower to the Guarantors in connection with any extension of credit or financial accommodation by the Guarantors to or for the account of the Borrower, including but not limited to interest accruing at the agreed contract rate after the commencement of a bankruptcy or similar proceeding, are hereby subordinated to the Obligations, and such liabilities of the Borrower to the Guarantors, if the Agent so requests, shall be collected, enforced and received by the Guarantors as trustee for the Agent and shall be paid over to the Agent on account of the Obligations.
Section 8.    Certain Taxes.  The Guarantors further agree that all payments to be made hereunder shall be made without setoff or counterclaim and free and clear of, and without deduction for Indemnified Taxes or Other Taxes.  If any Indemnified Taxes or Other Taxes are required to be withheld from any amounts payable to the Agent hereunder, the amounts so payable to the Agent shall be increased to the extent necessary to yield to the Agent (after payment of 

all Indemnified Taxes or Other Taxes) the amounts payable hereunder in the full amounts so to be paid.  Whenever any Indemnified Tax or Other Tax is paid by a Guarantor, as promptly as possible thereafter, such Guarantor shall send the Agent evidence of payment thereof, together with such additional documentary evidence as may be reasonably required from time to time by the Agent.
Section 9.    Representations and Warranties.  Each of the Guarantors represents and warrants that:  (a) this Guarantee (i) has been authorized by all necessary action; (ii) does not violate any agreement, instrument, law, regulation or order applicable to it; (iii) does not require the consent or approval of any Person, or any filing or registration of any kind; and (iv) is the legal, valid and binding obligation of such Guarantor enforceable against such Guarantor in accordance with its terms, except to the extent that enforcement may be limited by applicable bankruptcy, insolvency and other similar laws affecting creditors' rights generally; and (b) in executing and delivering this Guarantee, such Guarantor has not relied and will not rely upon any representations or warranties of the Agent not embodied herein or any acts heretofore or hereafter taken by the Agent (including but not limited to any review by the Agent of the affairs of the Borrower).
Section 10.    Remedies Generally.  The remedies provided in this Guarantee are cumulative and not exclusive of any remedies provided by law.
Section 11.    Setoff.  Each Guarantor agrees that, in addition to (and without limitation of) any right of setoff, banker's lien or counterclaim the Agent or the Lenders may otherwise have, the Agent and each of the Lenders shall be entitled, at their option, if an Event of Default shall have occurred and be continuing, to offset balances (general or special, time or demand, provisional or final, but excluding deposits held in a fiduciary capacity for a third party) held by them for the accounts of the Guarantors at any of the Agent's or any Lender's offices, in U.S. dollars or in any other currency, against any amount payable by the Guarantors under this Guarantee which is not paid when due, in which case it shall promptly notify the Guarantors thereof; provided that the Agent's or any Lender's failure to give such notice shall not affect the validity thereof.
Section 12.    Formalities.  Each Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations, the Credit Agreement and this Guarantee and any liability to which the Credit Agreement and this Guarantee applies or may apply, and waives presentment, demand of payment, notice of intent to accelerate, notice of acceleration, notice of dishonor or nonpayment, and any requirement that the Agent institute suit, collection proceedings or take any other action to collect the Obligations, including any requirement that the Agent protect, secure, perfect or insure any security interest or Lien against any property subject thereto or exhaust any right or take any action against the Borrower or any other Person (including the other Guarantors) or any collateral (it being the intention of the Agent and each Guarantor that the obligations of such Guarantor under this Guarantee are to be a guarantee of payment and not of collection) or that the Borrower or any other Person (including the other Guarantors) be joined in any action hereunder.  Each Guarantor hereby waives marshaling of assets and liabilities, notice by the Agent of the creation of any Indebtedness or liability to which it applies or may apply, notice of disposition or substitution of collateral and of the creation, advancement, increase, existence, extension, renewal, rearrangement and/or modification of the Obligations.
Section 13.    Amendments and Waivers.  No amendment or waiver of any provision of this Guarantee, nor consent to any release by any Guarantor therefrom, shall be effective unless it is in writing and signed by the Agent and such Guarantor, and then the waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  No failure on the part of the Agent to exercise, and no delay in exercising, any right under this Guarantee shall operate as a waiver or preclude any other or further exercise thereof or the exercise of any other right.
Section 14.    Expenses.  The Guarantors shall reimburse the Agent on demand for all Expenses without duplication of any reimbursements effected under the Credit Agreement.  The obligations of the Guarantors under this Section shall survive the termination of this Guarantee.
Section 15.    Assignment.  This Guarantee shall be binding on, and shall inure to the benefit of the Guarantors, the Agent and their respective successors and assigns; provided that the Guarantors may not assign or 

transfer their respective rights or obligations under this Guarantee.  Without limiting the generality of the foregoing:  (a) the obligations of the Guarantors under this Guarantee shall continue in full force and effect and shall be binding on any successor partnership and on previous partners and their respective estates if any of the Guarantors is a partnership, regardless of any change in the partnership as a result of death, retirement or otherwise; and (b) the Agent may assign, or otherwise transfer its rights under the Credit Agreement to any other Person in accordance with the terms and conditions thereof, and the other Person shall then become vested with all the rights granted to the Agent in this Guarantee.  Any Guarantor may merge into the Borrower or another Guarantor as provided in the Credit Agreement.
Section 16.    Captions.  The headings and captions in this Guarantee are for convenience only and shall not affect the interpretation or construction of this Guarantee.
Section 17.    Governing Law, Etc.  THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS.  EACH GUARANTOR CONSENTS TO THE NONEXCLUSIVE JURISDICTION AND VENUE OF THE STATE OR FEDERAL COURTS LOCATED IN THE CITY OF HOUSTON.  SERVICE OF PROCESS BY THE AGENT IN CONNECTION WITH ANY SUCH DISPUTE SHALL BE BINDING ON EACH GUARANTOR IF SENT TO SUCH GUARANTOR BY REGISTERED MAIL AT THE ADDRESS SPECIFIED BELOW OR AS OTHERWISE SPECIFIED BY SUCH GUARANTOR FROM TIME TO TIME.  EACH GUARANTOR WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL IN ANY ACTION RELATED TO THIS GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY AND FURTHER WAIVES ANY RIGHT TO INTERPOSE ANY COUNTERCLAIM RELATED TO THIS GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY SUCH ACTION.  TO THE EXTENT THAT ANY GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER FROM SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF A JUDGMENT, EXECUTION OR OTHERWISE), EACH SUCH GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTEE.
Section 18.    Integration; Effectiveness.  This Guarantee alone sets forth the entire understanding of the Guarantors and the Agent relating to the guarantee of the Obligations and constitutes the entire contract between the parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  This Guarantee shall become effective when it shall have been executed and delivered by the Guarantors to the Agent.  Delivery of an executed signature page of this Guarantee by telecopy shall be effective as delivery of a manually executed signature page of this Guarantee.
Section 19.    Automatic Release.  As provided in Section 9.02 of the Credit Agreement, a Guarantor shall be automatically released from its obligations under this Guarantee upon the satisfaction of the conditions set forth therein.
END OF TEXT

EXHIBIT 1.01C
FORM OF
NEW LENDER AGREEMENT
This New Lender Agreement (this “Agreement”), dated as of [________________], 201__, is among Rackspace Hosting, Inc. (the “Borrower”), JPMorgan Chase Bank, N.A., in its capacity as Administrative Agent (the “Agent”) under the Credit Agreement described below, and [_____________] (the “New Lender”).  Capitalized terms used herein without definition have the meanings assigned to such terms in the Credit Agreement.
PRELIMINARY STATEMENTS
A.    Pursuant to Section 2.19 of the Revolving Credit Agreement dated as of September 23, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among the Borrower, the Lenders from time to time party thereto, and the Agent, the Borrower has the right, subject to the terms and conditions thereof, to effectuate from time to time an increase in the total Commitments under the Credit Agreement by offering to the Lenders and additional banks and financial institutions the opportunity to participate in all or a portion of the increased Commitments.
B.    The Borrower has given notice to the Agent of its intention to increase the total Commitments pursuant to such Section 2.19 by $[________] Must be at least $10,000,000..
C.    The New Lender desires to become a Lender under the Credit Agreement and extend Revolving Loans to the Borrower in accordance with the terms thereof.
Accordingly, the parties hereto agree as follows:
SECTION 1.    Loan Documents.  The New Lender hereby acknowledges receipt of copies of the Credit Agreement and the other Loan Documents.
SECTION 2.    Joinder to Credit Agreement. By executing and delivering this Agreement, the New Lender hereby agrees (i) to become a party to the Credit Agreement as a Lender as defined therein for all purposes and to the same extent as if originally a party thereto and (ii) to be bound by all the terms, conditions, representations, and warranties of the Credit Agreement and the other Loan Documents applicable to the Lenders, and all references to the Lenders in the Loan Documents shall be deemed to include the New Lender.  Without limiting the generality of the foregoing, the New Lender hereby agrees to make Loans to the Borrower from time to time during the Availability Period in an aggregate principal amount that will not exceed its Commitment.  The Commitment of the New Lender shall be $[________] Must be at least $10,000,000..  
SECTION 3.    New Lender Credit Decision.  The New Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 5.01 of the Credit Agreement and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and to agree to the various matters set forth herein.  The New Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement.
SECTION 4.    Consent.  The Agent hereby consents to the New Lender being a Lender.
SECTION 5.    Representation and Warranties of the Borrower.  The Borrower represents and warrants as follows:
(a)    The execution, delivery and performance by the Borrower of this Agreement are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action on the part of the 

Borrower and do not contravene (i) the Borrower's articles of incorporation or by-laws or (ii) any indenture, agreement or other instrument binding on the Borrower, except in the case of clause (ii), as could not reasonably be expected to result in a Material Adverse Effect.
(b)    No authorization, consent or approval of any Governmental Authority is required for the valid execution, delivery and performance by the Borrower of this Agreement.
(c)    This Agreement constitutes a valid and binding agreement of the Borrower, enforceable against the Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and equitable principles of general applicability.
(d)    The aggregate amount of the Commitments under the Credit Agreement, including any increases pursuant to Section 2.19 thereof, does not exceed $400,000,000.
(e)    No Default has occurred and is continuing.
SECTION 6.    Representations and Warranties of the Guarantors.  Each Guarantor represents and warrants as follows:
(a)    The execution, delivery and performance by it of this Agreement are within its corporate or organizational powers, have been duly authorized by all necessary corporate action and do not contravene (i) its articles of incorporation or by-laws or certificate of formation or operating agreement or limited partnership agreement, as applicable, or (ii) any indenture, agreement or other instrument binding on such Guarantor, except in the case of clause (ii), as could not reasonably be expected to result in a Material Adverse Effect.
(b)    No authorization, consent or approval of any Governmental Authority is required for the valid execution, delivery and performance by such Guarantor of this Agreement.
(c)    This Agreement constitutes its valid and binding agreement, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and equitable principles of general applicability.
(d)    No Default has occurred and is continuing.
SECTION 7.    Expenses.  The Borrower shall pay on demand all reasonable costs and expenses of the Agent in connection with the preparation, negotiation, execution and delivery of this Agreement, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent with respect thereto.
SECTION 8.    Effectiveness.  This Agreement shall become effective upon the receipt by the Agent of the following:
(a)    counterparts of this Agreement executed by the Borrower, the Agent and the New Lender;
(b)    information as to addresses for notice, lending offices and similar items regarding the New Lender as reasonably requested by the Agent; and
(c)    a certified copy of corporate resolutions of the Borrower authorizing the increase in the Commitments.
SECTION 9.    Governing Law.  This Agreement shall be construed in accordance with and governed by the laws of the State of Texas without regard to any choice of law provision that would require the application of the law of another jurisdiction.
SECTION 10.    Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts and may be delivered in original, facsimile or 

electronic form, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
[Signatures on following page]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunder duly authorized, as of the date first above written.
BORROWER:

RACKSPACE HOSTING, INC.
By:        
Name:        
Title:        

GUARANTORS:

[NAMES OF GUARANTORS]

By:        
Name:        
Title:        

AGENT:

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

By:        
Name:        
Title:        

NEW LENDER:

[NAME OF NEW LENDER]

By:        
Name:        
Title:        

EXHIBIT 1.01D
FORM OF NOTE
$[____________]    ____________________, 2011

FOR VALUE RECEIVED, the undersigned, Rackspace Hosting, Inc., a Delaware corporation, the Borrower under that certain Revolving Credit Agreement, dated as of September 23, 2011 (as may be amended or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Agent for the Lenders, HEREBY PROMISES TO PAY to [_______________________] (the “Lender”), the amount as may be advanced from time to time under the Credit Agreement by the Lender in accordance with such Lender's Commitment outstanding from time to time.  All capitalized terms used herein and not otherwise defined shall have the meanings as defined in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of this Note outstanding from time to time at the place and at such times and at such interest rates as are specified in the Credit Agreement.  Payments made by the Borrower in respect of the amounts due hereunder shall be allocated to the Lender by the Agent on the terms specified in the Credit Agreement.
This Note is one of the Notes in respect of the Loans referred to in, and this Note and all provisions herein are entitled to the benefits of, the Credit Agreement.  The Credit Agreement, among other things, (a) provides for the making of Loans by the Lender and other Lenders to the Borrower from time to time, and (b) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events, for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified, and for limitations on the amount of interest paid such that no provision of the Credit Agreement or this Note shall require the payment or permit the collection of interest in excess of the Maximum Rate.
The Borrower and any and all endorsers, guarantors and sureties severally waive grace (except to the extent expressly provided in the Credit Agreement), demand, presentment for payment, notice of dishonor or default, notice of acceleration, notice of intent to accelerate, protest and notice of protest and diligence in collecting and bringing of suit against any party hereto, and agree to all renewals, extensions or partial payments hereon and to any release or substitution of security herefor, in whole or in part, with or without notice, before or after maturity.
This Note shall be governed by and construed under the laws of the State of Texas.
IN WITNESS WHEREOF, the undersigned has caused this Note to be duly executed and delivered by its duly authorized officer as of the date first written above.
BORROWER:
RACKSPACE HOSTING, INC.,
a Delaware corporation 

By:        
Name:        
Title:        

EXHIBIT 2.03
FORM OF BORROWING REQUEST

JPMorgan Chase Bank, N.A.
    
    
    
Attention:    
Telecopy:    

		
	Re:
	Revolving Credit Agreement dated as of September 23, 2011, by and among Rackspace Hosting, Inc. (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent

Ladies and Gentlemen:
Pursuant to the Credit Agreement, the Borrower hereby makes the requests indicated below:
	
			
	 
	1
	Amount of Borrowing:  ______________

	 
	2
	Requested date of Borrowing:  ___________________

	 
	3
	Type of Borrowing:

_________ ABR Borrowing; or

_________ Eurodollar Borrowing;

	 
	4
	Requested Interest Period for Eurodollar Borrowing:
[one] [three] [six] months

	 
	5
	Location and number of account to which funds are to be disbursed:

___________________

___________________

The undersigned certifies that [s]he is authorized to execute this request on behalf of the Borrower.  The Borrower represents and warrants that:
		
	(a)
	at the time of any immediately after giving effect to the requested Borrowing, (i) no Default or Event of Default shall have occurred and be continuing and (ii) there shall have been no events that have, or could reasonably be expected to cause, a Material Adverse Effect since the date of the last Borrowing;

		
	(b)
	the representations and warranties of the Borrower set forth in the Credit Agreement shall be true and correct on and as of the date of the requested Borrowing (except that any representation or warranty which by its terms is made as of an earlier date shall be true and correct as of such earlier date); and

		
	(c)
	after giving effect to the requested Borrowing, the Borrower shall be in compliance with Section 6.10(c) of the Credit Agreement.  Calculations for such covenant are set forth on Schedule I attached hereto.

Each capitalized term used but not defined herein shall have the meaning assigned to such term in the Credit Agreement.
Very truly yours,

RACKSPACE HOSTING, INC.

By:        
Name:        
Title:        

SCHEDULE I

CALCULATION WORKSHEET FOR SECTION 6.10(C)

	
			
	 
	Pro Forma Calculation
	Covenant Requirement

	Total Required Assets:
	 
	> total Credit Exposures plus $100,000,000

	(i)Tangible Assets of the Borrower
	 
	 

	Minus the sum of:
	 
	 

	(i)Tangible Assets of Subsidiaries that are not Guarantors
	 
	 

	(ii)Restricted cash of the Loan Parties
	 
	 

	and
	 
	 

	(iii)Book value of the Capital Lease Obligations of the Loan Parties
	 
	 

Calculation of Tangible Assets (for the Borrower on a consolidated basis)
total assets;
$________________
Minus the sum of the following:
(i)    intangible assets; and
$________________
(ii)    goodwill.
$________________
Equals Tangible Assets for the Borrower on a consolidated basis
$_________________

Calculation of Tangible Assets (for Subsidiaries that are not Guarantors)
total assets;
$________________
Minus the sum of the following:
(i)    intangible assets; and
$________________
(ii)    goodwill.
$________________
Equals Tangible Assets for Subsidiaries that are not Guarantors
$_________________

EXHIBIT 2.07
FORM OF INTEREST ELECTION REQUEST

JPMorgan Chase Bank, N.A.
    
        
Attention:    
Telecopy:    

		
	Re:
	Revolving Credit Agreement dated as of September 23, 2011, by and among Rackspace Hosting, Inc. (the “Borrower”), the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent

Ladies and Gentlemen:
Pursuant to the Credit Agreement, the Borrower hereby makes the requests indicated below:
1.    The Borrowing to which this Interest Election Request applies is as follows:
		
	(a)
	Date of Borrowing:    ______________.

		
	(b)
	Type of Borrowing:    ______________.

		
	(c)
	Interest Period:    [one] [three] [six] months.

		
	(d)
	Aggregate amount to be [converted] [continued]:    $______________.

		
	2.
	The effective date of the election made pursuant to this Interest Election Request is __________________.

		
	3.
	The Borrowing resulting from this Interest Election Request shall be a _______________ Borrowing.

4.    The Interest Period applicable to the resulting Borrowing is _________________.
The undersigned certifies that [s]he is authorized to execute this request on behalf of the Borrower.  The Borrower represents and warrants that:
		
	(i)
	at the time of any immediately after giving effect to the requested Borrowing, (i) no Default or Event of Default shall have occurred and be continuing and (ii) there shall have been no events that have, or could reasonably be expected to cause, a Material Adverse Effect since the date of the last Borrowing; and

		
	(ii)
	the representations and warranties of the Borrower set forth in the Credit Agreement shall be true and correct on and as of the date of the requested Borrowing (except that any representation or warranty which by its terms is made as of an earlier date shall be true and correct as of such earlier date).

Each capitalized term used but not defined herein shall have the meaning assigned to such term in the Credit Agreement.
Very truly yours,

RACKSPACE HOSTING, INC.

By:        
Name:        
Title:        

EXHIBIT 5.01
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that [s]he is a Financial Officer or the Chief Executive Officer of Rackspace Hosting, Inc., a Delaware corporation (the “Borrower”) and that as such [s]he is authorized to execute this certificate on behalf of the Borrower.  With reference to the Revolving Credit Agreement dated September 23, 2011 (together with all amendments or supplements thereto being the “Credit Agreement”), among the Borrower, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders, the undersigned represents and warrants as follows (each capitalized term used herein having the same meaning given to it in the Credit Agreement unless otherwise specified):
(i)    The representations and warranties of the Borrower set forth in the Credit Agreement are , to the best of the undersigned's knowledge, true and correct at and as of the time of delivery hereof (except any representation or warranty which by its terms was made as of an earlier date was true and correct as of such earlier date).
(ii)    The Borrower hereby certifies that no Default has occurred or is continuing, or if a Default has occurred, the details thereof and any action taken or proposed to be taken with respect thereto are specified on Exhibit A attached hereto.
(iii)    There have been no changes in GAAP or the application thereof since the date of the last audited financial statements referred to in Section 3.04 of the Credit Agreement, or if any such change has occurred, the effect of such change on the financial statements accompanying this Compliance Certificate is set forth on Exhibit A attached hereto.
(iv)    Calculations for all financial covenants are set forth in the worksheet attached hereto as Exhibit B.
EXECUTED AND DELIVERED this _____ day of _____________________.
BORROWER:

RACKSPACE HOSTING, INC.

By:        
Name:        
Title:        

EXHIBIT A

DEFAULTS; CHANGES IN GAAP

EXHIBIT B
FINANCIAL COVENANT CALCULATION WORKSHEET
	
			
	 
	Pro Forma Calculation
	Covenant Requirement

	Leverage Ratio:
	 
	< 3.00

	(i)Total Debt
	 
	 

	To
	 
	 

	(ii)EBITDA
	 
	 

	 
	 
	 

	Interest Coverage Ratio:
	 
	> 3.00

	(i)EBITDA
	 
	 

	To
	 
	 

	(ii)Interest Expense
	 
	 

	 
	 
	 

	Total Required Assets:
	 
	> total Credit Exposures plus $100,000,000

	(i)Tangible Assets of the Borrower
	 
	 

	Minus the sum of:
	 
	 

	(i)Tangible Assets of Subsidiaries that are not Guarantors
	 
	 

	(ii)Restricted cash of the Loan Parties
	 
	 

	and
	 
	 

	(iii)Book value of the Capital Lease Obligations of the Loan Parties
	 
	 

Calculation of Total Debt
For the Borrower and the Subsidiaries on a consolidated basis, the sum of the following:
(i)    obligations for borrowed money or with respect to deposits or advances of any kind;
$___________________
(ii)    obligations evidenced by bonds, debentures, notes or similar instruments;
$___________________
(iii)    obligations upon which interest charges are customarily paid;
$___________________
    
(iv)    obligations under conditional sale or other title retention agreements relating to property acquired by the Borrower or a Subsidiary;
$___________________

(v)    obligations in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business);
$___________________
(vi)    Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or the Borrower or a Subsidiary, whether or not the Indebtedness secured thereby has been assumed;
$___________________
(vii)    Guarantees of Indebtedness of others;
$___________________
(viii)    Capital Lease Obligations;
$___________________
(ix)    obligations, contingent or otherwise, as an account party in respect of letters of credit and letters of guaranty; and
$___________________
(x)    obligations, contingent or otherwise, in respect of bankers' acceptances.
Equals Total Debt                    $________________
Calculation of EBITDA
Net Income                                    $___________
Plus, the following to the extent deducted in calculating such Net Income:
(i)    Interest Expense for such period;
$________________
(ii)    the provision for Federal, state, local and foreign taxes payable during such period;
$________________
(iii)    depreciation and amortization expense (plus any non-cash goodwill or other intangible asset impairment charges); and
$________________
(iv)    non-cash expenses related to equity compensation.
$________________
Equals EBITDA                    $_________________

Calculation of Tangible Assets (for the Borrower on a consolidated basis)
total assets;
$________________
Minus the sum of the following:
(i)    intangible assets; and
$________________
(ii)    goodwill.
$________________
Equals Tangible Assets for the Borrower on a consolidated basis
$_________________
Calculation of Tangible Assets (for Subsidiaries that are not Guarantors)
total assets;
$________________
Minus the sum of the following:
(i)    intangible assets; and
$________________
(ii)    goodwill.
$________________
Equals Tangible Assets for Subsidiaries that are not Guarantors
$_________________

EXHIBIT 9.04
FORM OF ASSIGNMENT AND ASSUMPTION
Reference is made to the Revolving Credit Agreement dated as of September 23, 2011 (as amended and in effect on the date hereof, the “Credit Agreement”), among Rackspace Hosting, Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders.  Capitalized terms defined in the Credit Agreement are used herein with the same meanings.
The Assignor named below hereby sells and assigns, without recourse, to the Assignee named below, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Assignment Date set forth below the interests set forth on the following page hereof (the “Assigned Interest”) in the Assignor's rights and obligations under the Credit Agreement, including, without limitation, the interests set forth on the following page hereof in the Commitment of the Assignor on the Assignment Date and Loans owing to the Assignor which are outstanding on the Assignment Date, together with the participations in Letters of Credit, LC Disbursements and Swingline Loans held by the Assignor on the Assignment Date, but excluding accrued interest and fees to and excluding the Assignment Date.  The Assignee hereby acknowledges receipt of a copy of the Credit Agreement.  From and after the Assignment Date (i) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and, to the extent of the Assigned Interest, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent of the Assigned Interest, relinquish its rights and be released from its obligations under the Credit Agreement.
This Assignment and Assumption is being delivered to the Administrative Agent together with (i) any documentation required to be delivered by the Assignee pursuant to Section 9.04(b) of the Credit Agreement, duly completed and executed by the Assignee, and (ii) if the Assignee is not already a Lender under the Credit Agreement, an Administrative Questionnaire in the form supplied by the Administrative Agent, duly completed by the Assignee.  The [Assignee/Assignor] shall pay the fee payable to the Administrative Agent pursuant to Section 9.04(b) of the Credit Agreement.
This Assignment and Assumption shall be governed by and construed in accordance with the laws of the State of Texas.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment (“Assignment Date”):

	
			
	Facility
	Principal Amount Assigned
	Percentage Assigned of Commitment (set forth, to at least 8 decimals, as a percentage of the aggregate Commitments of all Lenders)

	Commitment Assigned:
	$
	%

	Revolving Loans:
	 
	 

The terms set forth herein are hereby agreed to:
________________________________, 
as Assignor

By:        
Name:        
Title:        

________________________________, 
as Assignee

By:        
Name:        
Title:        

The undersigned hereby consent to the within assignment:
	
		
	Rackspace Hosting, Inc.1

By: __________________________________
Name:
Title:
	JPMorgan Chase Bank, N.A.,
as Administrative Agent 2

By: __________________________________
Name:
Title:

	 
	 

	 
	JPMorgan Chase Bank, N.A., 
as Issuing Bank and Swingline Lender

By: __________________________________
Name:
Title:

	 
	 

	 
	 

	 
	 

1 Consent to be included to the extent required by Section 9.04(b)(i)(A) of the Credit Agreement.
2 Consent to be included to the extent required by Section 9.04(b)(i)(B) of the Credit Agreement.

SCHEDULE 2.01
COMMITMENTS

	
		
	LENDER
	COMMITMENT

	JPMorgan Chase Bank, N.A.
	$45,000,000.00

	Barclays Bank pIc
	$40,000,000.00

	Regions Bank
	$30,000,000.00

	Wells Fargo Bank, N.A.
	$25,000,000.00

	Bank of America, N.A.
	$20,000,000.00

	Frost National Bank
	$20,000,000.00

	Comerica Bank
	$20,000,000.00

	TOTAL
	$200,000,000.00

Schedule 2.05(k) - Existing Letters of Credit

L/C Number: 3224 - 30
Applicant: Rackspace US, Inc.
Third Party: N/A
Opening Bank: Comerica Bank
Amount: USD 460,169.43
Current Expiry: September 30,2011
To Be Extended: One Year from Current Expiration Date
Beneficiary: University of The Incarnate Word

Schedule 3.06 - Disclosed Matters

Part A:

		
	•
	On October 22, 2008, Benjamin E. Rodriguez D/B/A Management and Business Advisors vs. Rackspace Hosting, Inc. and Graham Weston was filed in the 37th District Court in Bexar County Texas by a former consultant to the company, Benjamin E. Rodriguez. The suit alleges breach of an oral agreement to issue Mr. Rodriguez a 1% interest in our stock in the form of options or warrants for compensation for services he was engaged to perform for us.

		
	•
	On September 8, 2011, E-Contact Technologies, Inc. filed a lawsuit against multiple defendants, including Rackspace US, Inc., in the United States District Court for the Eastern District of Texas, Beaumont Division. This lawsuit alleges that Rackspace's use of webmail products and/or systems infringed on EContact's U.S. Patent No. 5,347,579. The lawsuit also claims that Rackspace sold and supplied its customers with products which infringe on E-Contact's Patent.

		
	•
	On September 15,2011, MXGO Technologies, Inc. filed a lawsuit against multiple defendants, including Rackspace US, Inc. in the United States District Court for the Eastern District of Texas, Marshall Division. This lawsuit alleges that Rackspace infringed on MXGO's U.S. Patent No. 7,062,538 by making, using, selling and/or offering for sale apparatuses and/or systems that provide email services capable of preparing and applying dispatch rules to messages received from multiple sources and also capable of dispatching messages to an identified wireless device which may be covered by one or more claims of the Patent.

Part B:

None.

Schedule 3.12 - List of Subsidiaries

	
					
	Subsidiary
	Foreign or Domestic
	Jurisdiction
	Guarantor
	Ownership

	 
	 
	 
	 
	 

	Rackspace US, Inc.
	D
	DE
	Y
	Rackspace Hosting, Inc. (100%)

	Cloudkick, Inc.
	D
	DE
	Y
	Rackspace US, Inc. (100%)

	Slicehost, LLC
	D
	DE
	Y
	Rackspace US, Inc. (100%)

	OpenStack, LLC
	D
	DE
	Y
	Rackspace US, Inc. (100%)

	Jungle Disk, LLC
	D
	DE
	Y
	Rackspace US, Inc. (100%)

	Overstimulate, LLC
	D
	CA
	y
	Rackspace US, Inc. (100%)

	Rackspace SATDC, Ltd.
	D
	TX
	Y
	Rackspace US, Inc. (99%) Rackspace SATDC Management, LLC (1 %)

	Rackspace SATDC Management, LLC
	D
	TX
	Y
	Rackspace US, Inc. (100%)

	Rackspace DALlDC Management, LLC
	D
	TX
	Y
	Rackspace US, Inc. (100%)

	Rackspace lAD IDC, Ltd.
	D
	TX
	Y
	Rackspace US, Inc. (99%) Rackspace SATDC Management, LLC (1 %)

	Rackspace Headquarters, LLC
	D
	TX
	Y
	Rackspace US, Inc. (100%)

	Macro Capital Management, Inc.
	D
	DE
	Y
	Rackspace Hosting, Inc. (100%)

	Rackspace Capital Management LP
	D
	DE
	Y
	Rackspace Hosting, Inc. (99%) Macro Capital Management, Inc. (1%)

	Rackspace (Gibraltar) Ltd. *
	F
	Gibraltar
	N
	Rackspace US, Inc. (100%)

	RSUS3, LLC
	D
	DE
	N
	Rackspace (Gibraltar) Ltd. (100%)

	Rackspace Bermuda, LP
	F
	Bermuda
	N
	Rackspace (Gibraltar) Ltd. (99%) RSUS3, LLC (1%)

	RSUS2, LLC
	D
	DE
	N
	Rackspace Bermuda, LP (100%)

	Rackspace Benelux Cooperatie
	F
	Netherlands
	N
	Rackspace Bermuda, LP (99%) RSUS2, LLC (1 %)

	Rackspace Benelux BV
	F
	Netherlands
	N
	Rackspace Benelux Cooperatie (100%)

	Rackspace Asia Limited
	F
	Hong Kong
	T1'1 "
	Rackspace Benelux BV (100%)

	Rackspace Limited
	F
	UK
	N
	Rackspace Benelux BV (100%)

*First-Tier Foreign Subsidiary

Schedule 3.16 - Intellectual Property

		
	•
	On September 8, 2011, E-Contact Technologies, Inc. filed a lawsuit against multiple defendants, including Rackspace US, Inc., in the United States District Court for the Eastern District of Texas, Beaumont Division. This lawsuit alleges that Rackspace's use of webmail products and/or systems infringed on EContact's U.S. Patent No. 5,347,579. The lawsuit also claims that Rackspace sold and supplied its customers with products which infringe on E-Contact's Patent.

		
	•
	On September 15,2011, MXGO Technologies, Inc. filed a lawsuit against multiple defendants, including Rackspace US, Inc. in the United States District Court for the Eastern District of Texas, Marshall Division. This lawsuit alleges that Rackspace infringed on MXGO's U.S. Patent No. 7,062,538 by making, using, selling and/or offering for sale apparatuses and/or systems that provide email services capable of preparing and applying dispatch rules to messages received from multiple sources and also capable of dispatching messages to an identified wireless device which may be covered by one or more claims of the Patent.

		
	•
	Rackspace received a letter dated December 8, 2010 from IP Navigation Group, LLC, asking us to consider licensing certain data storage patents owned by its client, Parallel Iron, LLC, as an alternative to a claim for patent infringement. We entered into a mutual agreement not to sue so that we can analyze the patents.

		
	•
	On February 25,2009, Rackspace received a demand letter from Microsoft Corporation alleging that our use of Linux Kernel version 2.6 (including subversions) infringes at least five Microsoft patents. The demand letter states that Microsoft is prepared to enter into a patent agreement with Rackspace under commercially reasonable terms.

Schedule 6.01(b) - Existing Indebtedness

	
					
	Lender
	Purpose
	Outstanding Balance
	

	HP Financial Services
	Software License Purchase
	$
	393,116
	

	Microsoft Licensing
	Software License Purchase
	$
	954,948
	

	University ofthe Incarnate Word (from Data Rose Ltd.)
	Inducement Loan from Datapoint Landlord
	$
	437,923
	

The Existing Letter of Credit

Schedule 6.02(b) - Existing Liens

None

Schedule 6.04(b) - Existing Investments

		
	•
	87,563 shares of Common Stock of Sonian, Inc.

		
	•
	20,000 shares of Common Stock of Encoding.corn, Inc.

		
	•
	118,888 shares of Series A Preferred Stock of DataStax, Inc. (f/k/a Riptano, Incorporated)

Schedule 6.09 - Restrictive Agreements

None

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