Document:

umbf-ex103_113.htm

Exhibit 10.3 

 

 
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UMB Financial Corporation

Deferred Compensation Plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 1, 2008 

 

 

UMB Financial Corporation Deferred Compensation Plan

 

Article I

Establishment and Purpose1

 

Article II 

Definitions1

 

Article III

Eligibility and Participation8

 

Article IV

Deferrals9

 

Article V

Company Contributions11

 

Article VI

Benefits12

 

Article VII

Modifications to Payment Schedules15

 

Article VIII

Valuation of Account Balances; Investments16

 

Article IX

Administration17

 

Article X

Amendment and Termination18

 

Article XI

Informal Funding19

 

Article XII

Claims19

 

Article XIII

General Provisions24

 

 

 

UMB Financial Corporation Deferred Compensation Plan

 

Article I

Establishment and Purpose

	
1.1
	
Establishment.  UMB Financial Corporation (the “Company”) hereby establishes the UMB Financial Corporation Deferred Compensation Plan (the “Plan”), effective December 1, 2008.

 

	
1.2
	
Purpose.  The purpose of the Plan is to attract and retain key employees by providing Participants with an opportunity to defer receipt of a portion of their salary, bonus, and other specified compensation. The Plan is not intended to meet the qualification requirements of Code Section 401(a), but is intended to meet the requirements of Code Section 409A, and shall be operated and interpreted consistent with that intent. 

 

	
1.3
	
Top-Hat Status and Unfunded Plan.  The Plan constitutes an unsecured promise by a Participating Employer to pay benefits in the future. Participants in the Plan shall have the status of general unsecured creditors of the Company or the Adopting Employer, as applicable. Each Participating Employer shall be solely responsible for payment of the benefits of its employees and their beneficiaries. The Plan is unfunded for Federal tax purposes and is intended to be an unfunded arrangement for eligible employees who are part of a select group of management or highly compensated employees of the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. Any amounts set aside to defray the liabilities assumed by the Company or an Adopting Employer will remain the general assets of the Company or the Adopting Employer and shall remain subject to the claims of the Company’s or the Adopting Employer’s creditors until such amounts are distributed to the Participants.

 

 

Article II

Definitions

	
2.1
	
Account. Account means a bookkeeping account maintained by the Committee to record the payment obligation of a Participating Employer to a Participant as determined under the terms of the Plan. The Committee may maintain an Account to record the total obligation to a Participant and component Accounts to reflect amounts payable at different times and in different forms. Reference to an Account means any such Account established by the Committee, as the context requires. Accounts are intended to constitute unfunded obligations within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

 

	
2.2
	
Account Balance. Account Balance means, with respect to any Account, the total payment obligation owed to a Participant from such Account as of the most recent Valuation Date.

 

	
2.3
	
Adopting Employer. Adopting Employer means an Affiliate who, with the consent of the Company, has adopted the Plan for the benefit of its Eligible Employees.

 

 Page 1 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
2.4
	
Affiliate. Affiliate means a corporation, trade or business that, together with the Company, is treated as a single employer under Code Section 414(b) or (c).

 

	
2.5
	
Beneficiary. Beneficiary means a natural person, estate, or trust designated by a Participant to receive payments to which a Beneficiary is entitled in accordance with provisions of the Plan. The Participant’s spouse, if living, otherwise the Participant’s estate, shall be the Beneficiary if: (i)the Participant has failed to properly designate a Beneficiary, or (ii) all designated Beneficiaries have predeceased the Participant.

A former spouse shall have no interest under the Plan, as Beneficiary or otherwise, unless the Participant designates such person as a Beneficiary after dissolution of the marriage, except to the extent provided under the terms of a domestic relations order as described in  Code Section 414(p)(1)(B).

 

	
2.6
	
Business Day. Business Day means each day on which the New York Stock Exchange is open for business.

 

	
2.7
	
Change in Control. Change in Control means, with respect to a Participating Employer that is organized as a corporation, any of the following events: (i) a change in the ownership of the Participating Employer, (ii) a change in the effective control of the Participating Employer, or (iii) a change in the ownership of a substantial portion of the assets of the Participating Employer.

 

For purposes of this Section, a change in the ownership of the Participating Employer occurs on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of the Participating Employer that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Participating Employer. A change in the effective control of the Participating Employer occurs on the date on which either: (i) a person, or more than one person acting as a group, acquires ownership of stock of the Participating Employer possessing 50% or more of the total voting power of the stock of the Participating Employer, taking into account all such stock acquired during the 12-month period ending on the date of the most recent acquisition, or (ii) a majority of the members of the Participating Employer’s Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such Board of Directors prior to the date of the appointment or election, but only if no other corporation is a majority shareholder of the Participating Employer . A change in the ownership of a substantial portion of assets occurs on the date on which any one person, or more than one person acting as a group, other than a person or group of persons that is related to the Participating Employer, acquires assets from the Participating Employer that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Participating Employer immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition.

 

 Page 2 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

An event constitutes a Change in Control with respect to a Participant only if the Participant performs services for the Participating Employer that has experienced the Change in Control, or the Participant’s relationship to the affected Participating Employer otherwise satisfies the requirements of Treasury Regulation Section 1.409A-3(i)(5)(ii). 

 

Notwithstanding anything to the contrary herein, with respect to a Participating Employer that is a partnership, Change in Control means only a change in the ownership of the partnership or a change in the ownership of a substantial portion of the assets of the partnership, and the provisions set forth above respecting such changes relative to a corporation shall be applied by analogy.

 

The determination as to the occurrence of a Change in Control shall be based on objective facts and in accordance with the requirements of Code Section 409A.  

 

	
2.8
	
Claimant. Claimant means a Participant or Beneficiary filing a claim under Article XII of this Plan.

 

	
2.9
	
Code. Code means the Internal Revenue Code of 1986, as amended from time to time. 

 

	
2.10
	
Code Section 409A. Code Section 409A means section 409A of the Code, and regulations and other guidance issued by the Treasury Department and Internal Revenue Service thereunder. 

 

	
2.11
	
Committee. Committee means the Personnel Programs and Employee Benefits Administrative Committee appointed by the Board of Directors of the Company (or the appropriate committee of such board) to administer the Plan. If no designation is made, the Chief Executive Officer of the Company or his delegate shall have and exercise the powers of the Committee. 

 

	
2.12
	
Company. Company means UMB Financial Corporation.

 

	
2.13
	
Company Contribution. Company Contribution means a credit by a Participating Employer to a Participant’s Account(s) in accordance with the provisions of Article V of the Plan. Company Contributions are credited at the sole discretion of the Participating Employer and the fact that a Company Contribution is credited in one year shall not obligate the Participating Employer to continue to make such Company Contribution in subsequent years. Unless the context clearly indicates otherwise, a reference to Company Contribution shall include Earnings attributable to such contribution.

 

	
2.14
	
Compensation. Compensation means a Participant’s base salary, incentive, bonus, commission and such other cash or equity-based compensation (if any) approved by the Committee as Compensation that may be deferred under this Plan. Compensation shall not include any compensation that has been previously deferred under this Plan or any other arrangement subject to Code Section 409A.

 

 Page 3 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
2.15
	
Compensation Deferral Agreement. Compensation Deferral Agreement means an agreement between a Participant and a Participating Employer that specifies: (i) the amount of each component of Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Article IV, and (ii) the Payment Schedule applicable to one or more Accounts. The Committee may permit different deferral amounts for each component of Compensation and may establish a minimum or maximum deferral amount for each such component. Unless otherwise specified by the Committee in the Compensation Deferral Agreement, Participants may defer up to (75%) of their base salary and up to 100% of incentives, commissions, or other types of Compensation less required withholding for a Plan Year. A Compensation Deferral Agreement may also specify the investment allocation described in Section 8.4.

 

	
2.16
	
Death Benefit. Death Benefit means the benefit payable under the Plan to a Participant’s Beneficiary(ies) upon the Participant’s death as provided in Section 6.1 of the Plan.

 

	
2.17
	
Deferral. Deferral means a credit to a Participant’s Account(s) that records that portion of the Participant’s Compensation that the Participant has elected to defer to the Plan in accordance with the provisions of Article IV. Unless the context of the Plan clearly indicates otherwise, a reference to Deferrals includes Earnings attributable to such Deferrals.

 

Deferrals shall be calculated with respect to the gross cash Compensation payable to the Participant prior to any deductions or withholdings, but shall be reduced by the Committee as necessary so that it does not exceed 100% of the cash Compensation of the Participant remaining after deduction of all required income and employment taxes, 401(k) and other employee benefit deductions, and other deductions required by law. Changes to payroll withholdings that affect the amount of Compensation being deferred to the Plan shall be allowed only to the extent permissible under Code Section 409A.

 

	
2.18
	
Earnings. Earnings means an adjustment to the value of an Account in accordance with Article VIII.

 

	
2.19
	
Effective Date. Effective Date means December 1, 2008. 

 

	
2.20
	
Eligible Employee. Eligible Employee means a member of a “select group of management or highly compensated employees” of a Participating Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as determined by the Committee from time to time in its sole discretion.

 

	
2.21
	
Employee. Employee means a common-law employee of an Employer.

 

	
2.22
	
Employer. Employer means, with respect to Employees it employs, the Company and each Affiliate.

 

	
2.23
	
ERISA. ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time.

 Page 4 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

 

	
2.24
	
Fiscal Year Compensation. Fiscal Year Compensation means Compensation earned during one or more consecutive fiscal years of a Participating Employer, all of which is paid after the last day of such fiscal year or years.

 

	
2.25
	
Participant. Participant means an Eligible Employee who has received notification of his or her eligibility to defer Compensation under the Plan under Section 3.1 and any other person with an Account Balance greater than zero, regardless of whether such individual continues to be an Eligible Employee.  A Participant’s continued participation in the Plan shall be governed by Section 3.2 of the Plan.

 

	
2.26
	
Participating Employer. Participating Employer means the Company and each Adopting Employer.

 

	
2.27
	
Payment Schedule. Payment Schedule means the date as of which payment of an Account under the Plan will commence and the form in which payment of such Account will be made.

 

	
2.28
	
Performance-Based Compensation. Performance-Based Compensation means Compensation where the amount of, or entitlement to, the Compensation is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months. Organizational or individual performance criteria are considered pre-established if established in writing by not later than 90 days after the commencement of the period of service to which the criteria relate, provided that the outcome is substantially uncertain at the time the criteria are established. The determination of whether Compensation qualifies as “Performance-Based Compensation” will be made in accordance with Treas. Reg. Section 1.409A-1(e) and subsequent guidance.

 

	
2.29
	
Plan. Generally, the term Plan means the “UMB Financial Corporation, Inc. Deferred Compensation Plan” as documented herein and as may be amended from time to time hereafter. However, to the extent permitted or required under Code Section 409A, the term Plan may in the appropriate context also mean a portion of the Plan that is treated as a single plan under Treas. Reg. Section 1.409A-1(c), or the Plan or portion of the Plan and any other nonqualified deferred compensation plan or portion thereof that is treated as a single plan under such section. 

 

	
2.30
	
Plan Year. Plan Year means January 1 through December 31. 

 

	
2.31
	
Retirement. Retirement means a Participant’s Separation from Service after attainment of age 60.

 

	
2.32
	
Retirement Benefit. Retirement Benefit means the benefit payable to a Participant under the Plan following the Retirement of the Participant. 

 Page 5 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
2.33
	
Retirement/Termination Account. Retirement/Termination Account means an Account established by the Committee to record the amounts payable to a Participant upon Separation from Service. Unless the Participant has established a Specified Date Account, all Deferrals and Company Contributions shall be allocated to a Retirement/Termination Account on behalf of the Participant. 

 

	
2.34
	
Separation from Service.  Separation from Service means an Employee’s termination of employment with the Employer. Whether a Separation from Service has occurred shall be determined by the Committee in accordance with Code Section 409A.

 

Except in the case of an Employee on a bona fide leave of absence as provided below, an Employee is deemed to have incurred a Separation from Service if the Employer and the Employee reasonably anticipated that the level of services to be performed by the Employee after a date certain would be reduced to 20% or less of the average services rendered by the Employee during the immediately preceding 36-month period (or the total period of employment, if less than 36 months), disregarding periods during which the Employee was on a bona fide leave of absence.

 

An Employee who is absent from work due to military leave, sick leave, or other bona fide leave of absence shall incur a Separation from Service on the first date immediately following the later of: (i) the six month anniversary of the commencement of the leave, or (ii) the expiration of the Employee’s right, if any, to reemployment under statute or contract. 

 

For purposes of determining whether a Separation from Service has occurred, the Employer means the Employer as defined above, except that in applying Code sections 1563(a)(1), (2) and (3) for purposes of determining whether another organization is an Affiliate of the Company under Code Section 414(b), and in applying Treasury Regulation Section 1.414(c)-2 for purposes of determining whether another organization is an Affiliate of the Company under Code Section 414(c), “at least 50 percent” shall be used instead of “at least 80 percent” each place it appears in those sections.

 

The Committee specifically reserves the right to determine whether a sale or other disposition of substantial assets to an unrelated party constitutes a Separation from Service with respect to a Participant providing services to the seller immediately prior to the transaction and providing services to the buyer after the transaction. Such determination shall be made in accordance with the requirements of Code Section 409A.

 

	
2.35
	
Specified Date Account. Specified Date Account means an Account established by the Committee to record the amounts payable at a future date as specified in the Participant’s Compensation Deferral Agreement. Unless otherwise determined by the Committee, a Participant may maintain no more than five Specified Date Accounts. A Specified Date Account may be identified in enrollment materials as an “In-Service Account” or such other name as established by the Committee without affecting the meaning thereof.

 

 Page 6 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
2.36
	
Specified Date Benefit. Specified Date Benefit means the benefit payable to a Participant under the Plan in accordance with Section 6.1(c). 

 

	
2.37
	
Specified Employee. Specified Employee means an Employee who, as of the date of his or her Separation from Service, is a “key employee” of the Company or any Affiliate, any stock of which is actively traded on an established securities market or otherwise. An Employee is a key employee if he or she meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with applicable regulations thereunder and without regard to Code Section 416(i)(5)) at any time during the 12-month period ending on the Specified Employee Identification Date. Such Employee shall be treated as a key employee for the entire 12-month period beginning on the Specified Employee Effective Date.

 

For purposes of determining whether an Employee is a Specified Employee, the compensation of the Employee shall be determined in accordance with the definition of compensation provided under Treas. Reg. Section 1.415(c)-2(d)(3) (wages within the meaning of Code section 3401(a) for purposes of income tax withholding at the source, plus amounts excludible from gross income under section 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k) or 457(b), without regard to rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed); provided, however, that, with respect to a nonresident alien who is not a Participant in the Plan, compensation shall not include compensation that is not includible in the gross income of the Employee under Code Sections 872, 893, 894, 911, 931 and 933, provided such compensation is not effectively connected with the conduct of a trade or business within the United States.

 

Notwithstanding anything in this paragraph to the contrary: (i) if a different definition of compensation has been designated by the Company with respect to another nonqualified deferred compensation plan in which a key employee participates, the definition of compensation shall be the definition provided in Treas. Reg. Section 1.409A-1(i)(2), and (ii) the Company may through action that is legally binding with respect to all nonqualified deferred compensation plans maintained by the Company, elect to use a different definition of compensation. 

 

In the event of corporate transactions described in Treas. Reg. Section 1.409A-1(i)(6), the identification of Specified Employees shall be determined in accordance with the default rules described therein, unless the Employer elects to utilize the available alternative methodology through designations made within the timeframes specified therein.

 

	
2.38
	
Specified Employee Identification Date. Specified Employee Identification Date means December 31, unless the Employer has elected a different date through action that is legally binding with respect to all nonqualified deferred compensation plans maintained by the Employer.

 

 Page 7 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
2.39
	
Specified Employee Effective Date. Specified Employee Effective Date means the first day of the fourth month following the Specified Employee Identification Date, or such earlier date as is selected by the Committee.

 

	
2.40
	
Substantial Risk of Forfeiture. Substantial Risk of Forfeiture means the description specified in Treas. Reg. Section 1.409A-1(d).

 

	
2.41
	
Termination Benefit. Termination Benefit means the benefit payable to a Participant under the Plan following the Participant’s Separation from Service prior to Retirement.

 

	
2.42
	
Unforeseeable Emergency. Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, the Participant’s dependent (as defined in Code section 152, without regard to section 152(b)(1), (b)(2), and (d)(1)(B)), or a Beneficiary; loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example,  as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The types of events which may qualify as an Unforeseeable Emergency may be limited by the Committee.

 

	
2.43
	
Valuation Date. Valuation Date means each Business Day.

 

 

Article III

Eligibility and Participation

	
3.1
	
Eligibility and Participation. An Eligible Employee becomes a Participant upon the earlier to occur of: (i) a credit of Company Contributions under Article V, or (ii) receipt of notification of eligibility to participate.

 

	
3.2
	
Duration. A Participant shall be eligible to defer Compensation and receive allocations of Company Contributions, subject to the terms of the Plan, for as long as such Participant remains an Eligible Employee. A Participant who is no longer an Eligible Employee but has not Separated from Service may not defer Compensation under the Plan beyond the Plan Year in which he or she became ineligible but may otherwise exercise all of the rights of a Participant under the Plan with respect to his or her Account(s). On and after a Separation from Service, a Participant shall remain a Participant as long as his or her Account Balance is greater than zero (0), and during such time may continue to make allocation elections as provided in Section 8.4. An individual shall cease being a Participant in the Plan when all benefits under the Plan to which he or she is entitled have been paid.

 

 

 

 

 

 

 Page 8 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

Article IV

Deferrals

 

	
4.1
	
Deferral Elections, Generally. 

 

	
 
	
(a)
	
A Participant may elect to defer Compensation by submitting a Compensation Deferral Agreement during the enrollment periods established by the Committee and in the manner specified by the Committee, but in any event, in accordance with Section 4.2. A Compensation Deferral Agreement that is not timely filed with respect to a service period or component of Compensation shall be considered void and shall have no effect with respect to such service period or Compensation. The Committee may modify any Compensation Deferral Agreement prior to the date the election becomes irrevocable under the rules of Section 4.2.

 

	
 
	
(b)
	
The Participant shall specify on his or her Compensation Deferral Agreement the amount of Deferrals and whether to allocate Deferrals to a Retirement/Termination Account or to a Specified Date Account. If no designation is made, Deferrals shall be allocated to the Retirement/Termination Account. A Participant may also specify in his or her Compensation Deferral Agreement the Payment Schedule applicable to his or her Plan Accounts. If the Payment Schedule is not specified in a Compensation Deferral Agreement, the Payment Schedule shall be the Payment Schedule specified in Section 6.2.

 

4.2Timing Requirements for Compensation Deferral Agreements.

 

	
 
	
(a)
	
First Year of Eligibility. In the case of the first year in which an Eligible Employee becomes eligible to participate in the Plan, he or she has up to 30 days following his or her initial eligibility to submit a Compensation Deferral Agreement with respect to Compensation to be earned during such year. The Compensation Deferral Agreement described in this paragraph becomes irrevocable upon the end of such 30-day period. The determination of whether an Eligible Employee may file a Compensation Deferral Agreement under this paragraph shall be determined in accordance with the rules of Code Section 409A, including the provisions of Treas. Reg. Section 1.409A-2(a)(7).

 

	
 
	

	
A Compensation Deferral Agreement filed under this paragraph applies to Compensation earned on and after the date the Compensation Deferral Agreement becomes irrevocable.

	
 
	
(b)
	
Prior Year Election. Except as otherwise provided in this Section 4.2, Participants may defer Compensation by filing a Compensation Deferral Agreement no later than December 31 of the year prior to the year in which the Compensation to be deferred is earned. A Compensation Deferral Agreement described in this paragraph shall become irrevocable with respect to such Compensation as of January 1 of the year in which such Compensation is earned.

 Page 9 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

 

	
 
	
(c)
	
Performance-Based Compensation. Participants may file a Compensation Deferral Agreement with respect to Performance-Based Compensation no later than the date that is six months before the end of the performance period, provided that:

 

	
 
	
(i)
	
the Participant performs services continuously from the later of the beginning of the performance period or the date the criteria are established through the date the Compensation Deferral Agreement is submitted; and

	
 
	
(ii)
	
the Compensation is not readily ascertainable as of the date the Compensation Deferral Agreement is filed.

 

A Compensation Deferral Agreement becomes irrevocable with respect to Performance-Based Compensation as of the day immediately following the latest date for filing such election. Any election to defer Performance-Based Compensation that is made in accordance with this paragraph and that becomes payable as a result of the Participant’s death or disability (as defined in Treas. Reg. Section 1.409A-1(e)) or upon a Change in Control (as defined in Treas. Reg. Section 1.409A-3(i)(5)) prior to the satisfaction of the performance criteria, will be void.

 

	
 
	
(d)
	
Sales Commissions. Sales commissions (as defined in Treas. Reg. Section 1.409A-2(a)(12)(i)) are considered to be earned by the Participant in the taxable year of the Participant in which the sale occurs. The Compensation Deferral Agreement must be filed before the last day of the year preceding the year in which the sales commissions are earned, and becomes irrevocable after that date.

 

	
 
	
(e)
	
Investment Commissions. Investment commissions (as defined in Treas. Reg. Section 1.409A-2(a)(12)(ii)) are considered to be earned in the 12-month period immediately preceding the date assets are valued for purposes of calculating the commission. Investment Commissions must be deferred under the timing rules set forth in this Section 4.2. 

 

	
 
	
(f)
	
Fiscal Year Compensation. A Participant may defer Fiscal Year Compensation by filing a Compensation Deferral Agreement prior to the first day of the fiscal year or years in which such Fiscal Year Compensation is earned. The Compensation Deferral Agreement described in this paragraph becomes irrevocable on the first day of the fiscal year or years to which it applies.

 

	
 
	
(g)
	
Certain Forfeitable Rights. With respect to a legally binding right to a payment in a subsequent year that is subject to a forfeiture condition requiring the Participant’s continued services for a period of at least 12 months from the date the Participant obtains the legally binding right, an election to defer such Compensation may be made on or before the 30th day after the Participant obtains the legally binding right to the Compensation, provided that the election is made at least 12 months in advance of the earliest date at which the forfeiture condition 

 Page 10 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
 
		
could lapse. The Compensation Deferral Agreement described in this paragraph becomes irrevocable after such 30th day. If the forfeiture condition applicable to the payment lapses before the end of the required service period as a result of the Participant’s death or disability (as defined in Treas. Reg. Section 1.409A-3(i)(4)) or upon a Change in Control (as defined in Treas. Reg. Section 1.409A-3(i)(5)), the Compensation Deferral Agreement will be void unless it would be considered timely under another rule described in this Section.

 

	
 
	
(h)
	
Company Awards. Participating Employers may unilaterally provide for deferrals of Company awards prior to the date of such awards. Deferrals of Company awards (such as sign-on, retention, or severance pay) may be negotiated with a Participant prior to the date the Participant has a legally binding right to such Compensation.

 

	
4.3
	
Allocation of Deferrals. A Compensation Deferral Agreement may allocate Deferrals to one or more Specified Date Accounts and/or to the Retirement/Termination Account. The Committee may, in its discretion, establish a minimum deferral period for the establishment of a Specified Date Account (for example, the third Plan Year following the year Compensation is allocated to such accounts). 

 

	
4.4
	
Deductions from Pay. The Committee has the authority to determine the payroll practices under which any component of Compensation subject to a Compensation Deferral Agreement will be deducted from a Participant’s Compensation.

 

	
4.5
	
Vesting. Participant Deferrals shall be 100% vested at all times.

 

	
4.6
	
Cancellation of Deferrals. The Committee may cancel a Participant’s Deferrals: (i) for the balance of the Plan Year in which an Unforeseeable Emergency occurs, (ii) if the Participant receives a hardship distribution under the Employer’s qualified 401(k) plan, through the end of the Plan Year in which the six month anniversary of the hardship distribution falls, and (iii) during periods in which the Participant is unable to perform the duties of his or her position or any substantially similar position due to a mental or physical impairment that can be expected to result in death or last for a continuous period of at least six months, provided cancellation occurs by the later of the end of the taxable year of the Participant or the 15th day of the third month following the date the Participant incurs the disability (as defined in this paragraph).

 

 

Article V

Company Contributions

	
5.1
	
Discretionary Company Contributions. The Participating Employer may, from time to time in its sole and absolute discretion, credit Company Contributions to any Participant’s Account in any amount determined by the Participating Employer. Such contributions will be credited to a Participant’s Retirement/Termination Account.

 

 Page 11 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
5.2
	
Vesting. Company Contributions described in Section 5.1, above, and the Earnings thereon, shall vest in accordance with the vesting schedule(s) established by the Committee at the time the Company Contribution is made.  All Company Contributions shall become 100% vested upon the occurrence of the earliest of: (i) the death of the Participant while actively employed, (ii) the Disability of the Participant, (iii) Retirement of the Participant, or (iv) a Change in Control.  The Partcipating Employer may, at any time, in its sole discretion, increase a Participant’s vested interest in a Company Conribution.  The portion of a Participant’s Accounts that remains unvested upon his or her Separation from Service after the application of the terms of this Section 5.2 shall be forfeited. 

 

 

Article VI

Benefits

	
6.1
	
Benefits, Generally. A Participant shall be entitled to the following benefits under the Plan:

 

	
 
	
(a)
	
Retirement Benefit. Upon the Participant’s Separation from Service due to Retirement, he or she shall be entitled to a Retirement Benefit. The Retirement Benefit shall be equal to the vested portion of the Retirement/Termination Account and (i) if the Retirement/Termination Account is payable in a lump sum, the unpaid balances of any Specified Date Accounts, or (ii) if the Retirement/Termination Account is payable in installments, any Specified Date Accounts with respect to which payments have not yet commenced. The Retirement Benefit shall be based on the value of that Account(s) as of the end of the month in which Separation from Service occurs or such later date as the Committee, in its sole discretion, shall determine, and will be paid the following month. Payment of the Retirement Benefit to a Specified Employee will be valued on the last day of the sixth month following Separation from Service and made or begin in the seventh month following the month in which Separation from Service occurs. If the Retirement Benefit is to be paid in the form of installments, any subsequent installment payments to a Specified Employee will be paid on the anniversary of the date the initial installment was made.

 

	
 
	
(b)
	
Termination Benefit. Upon the Participant’s Separation from Service for reasons other than death or Retirement, he or she shall be entitled to a Termination Benefit. The Termination Benefit shall be equal to the vested portion of the Retirement/Termination Account and the unpaid balances of any Specified Date Accounts. The Termination Benefit shall be based on the value of that Account(s) as of the end of the month in which Separation from Service occurs or such later date as the Committee, in its sole discretion, shall determine, and will be paid the following month. Payment of the Termination Benefit for a Specified Employee will be valued the last day of the sixth month following Separation from Service and made or begin in the seventh month following the month in which Separation from Service occurs.   

 

 Page 12 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
 
	
(c)
	
Specified Date Benefit. If the Participant has established one or more Specified Date Accounts, he or she shall be entitled to a Specified Date Benefit with respect to each such Specified Date Account. The Specified Date Benefit shall be equal to the vested portion of the Specified Date Account, based on the value of that Account as of the end of the month designated by the Participant at the time the Account was established. Payment of the Specified Date Benefit will be made or begin in the month following the designated month.

	
 
	
(d)
	
Death Benefit. In the event of the Participant’s death, his or her designated Beneficiary(ies) shall be entitled to a Death Benefit. The Death Benefit shall be equal to the Retirement/Termination Account and unpaid balances of any Specified Date Accounts. The Death Benefit shall be based on the value of the Accounts as of the end of the month in which death occurred, with payment made in the following month.

 

	
 
	
(e)
	
Unforeseeable Emergency Payments. A Participant who experiences an Unforeseeable Emergency may submit a written request to the Committee to receive payment of all or any portion of his or her vested Accounts. Whether a Participant or Beneficiary is faced with an Unforeseeable Emergency permitting an emergency payment shall be determined by the Committee based on the relevant facts and circumstances of each case, but, in any case, a distribution on account of Unforeseeable Emergency may not be made to the extent that such emergency is or may be reimbursed through insurance or otherwise, by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not cause severe financial hardship, or by cessation of Deferrals under this Plan. If an emergency payment is approved by the Committee, the amount of the payment shall not exceed the amount reasonably necessary to satisfy the need, taking into account the additional compensation that is available to the Participant as the result of cancellation of deferrals to the Plan, including amounts necessary to pay any taxes or penalties that the Participant reasonably anticipates will result from the payment. The amount of the emergency payment shall be subtracted first from the vested portion of the Participant’s Retirement/Termination Account until depleted and then from the Specified Date Accounts, beginning with the Specified Date Account with the latest payment commencement date. Emergency payments shall be paid in a single lump sum within the 90-day period following the date the payment is approved by the Committee.

 

	
6.2
	
Form of Payment.

 

	
 
	
(a)
	
Retirement Benefit. A Participant who is entitled to receive a Retirement Benefit shall receive payment of such benefit in a single lump sum, unless the Participant elects on his or her initial Compensation Deferral Agreement to have such benefit paid in one of the following alternative forms of payment (i) substantially equal annual installments over a period of two to ten years, as elected by the Participant, or (ii) a lump sum payment of a percentage of the balance in the Retirement/Termination Account, with the balance paid in substantially equal 

 Page 13 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
 
		
annual installments over a period of two to ten  years, as elected by the Participant.

 

	
 
	
(b)
	
Termination Benefit. A Participant who is entitled to receive a Termination Benefit shall receive payment of such benefit in a single lump sum.

	
 
	
(c)
	
Specified Date Benefit. The Specified Date Benefit shall be paid in a single lump sum, unless the Participant elects on the Compensation Deferral Agreement with which the account was established to have the Specified Date Account paid in substantially equal annual installments over a period of two to five years, as elected by the Participant.  

 

Notwithstanding any election of a form of payment by the Participant, upon a Separation from Service the unpaid balance of a Specified Date Account with respect to which payments have not commenced shall be paid in accordance with the form of payment applicable to the Retirement, Termination or Death Benefit, as applicable. If such benefit is payable in a single lump sum, the unpaid balance of all Specified Date Accounts (including those in pay status) will be paid in a lump sum.

 

	
 
	
(d)
	
Death Benefit. A designated Beneficiary who is entitled to receive a Death Benefit shall receive payment of such benefit in a single lump sum.

 

	
 
	
(e)
	
Change in Control. A Participant will receive his or her Retirement or Termination Benefit in a single lump sum payment equal to the unpaid balance of all of his or her Accounts if Separation from Service occurs within 24 months following a Change in Control.  

 

A Participant or Beneficiary receiving installment payments when a Change in Control occurs, will receive the remaining account balance in a single lump sum within 90 days following the Change in Control.

 

(f)        Small Account Balances. Notwithstanding any Participant election or other provisions of the Plan, a Participant’s Accounts will be paid in a single lump sum if, upon the commencement of his or her Retirement, Termination or Death Benefit,  the combined value of his or her Accounts is not greater than  $25,000.

 

(g)       Rules Applicable to Installment Payments. If a Payment Schedule specifies installment payments, annual payments will be made beginning as of the payment commencement date for such installments and shall continue on each anniversary thereof until the number of installment payments specified in the Payment Schedule has been paid. The amount of each installment payment shall be determined by dividing (a) by (b), where (a) equals the Account Balance as of the Valuation Date and (b) equals the remaining number of installment payments.

 

 Page 14 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

 For purposes of Article VII, installment payments will be treated as a single form of payment. If a lump sum equal to less than 100% of the Retirement/Termination Account is paid, the payment commencement date for the installment form of payment will be the first anniversary of the payment of the lump sum.

 

	
6.3
	
Acceleration of or Delay in Payments. The Committee, in its sole and absolute discretion, may elect to accelerate the time or form of payment of a benefit owed to the Participant hereunder, provided such acceleration is permitted under Treas. Reg. Section 1.409A-3(j)(4). The Committee may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to the extent permitted under Treas. Reg. Section 1.409A-2(b)(7). If the Plan receives a domestic relations order (within the meaning of Code Section 414(p)(1)(B)) directing that all or a portion of a Participant’s Accounts be paid to an “alternate payee,” any amounts to be paid to the alternate payee(s) shall be paid in a single lump sum.

 

 

Article VII

Modifications to Payment Schedules

	
7.1
	
Participant’s Right to Modify.  A Participant may modify any or all of the alternative Payment Schedules with respect to an Account, consistent with the permissible Payment Schedules available under the Plan, provided such modification complies with the requirements of this Article VII.

 

	
7.2
	
Time of Election. The date on which a modification election is submitted to the Committee must be at least 12 months prior to the date on which payment is scheduled to commence under the Payment Schedule in effect prior to the modification.

 

	
7.3
	
Date of Payment under Modified Payment Schedule. The date payments are to commence under the modified Payment Schedule must be no earlier than five years after the date payment would have commenced under the original Payment Schedule. Under no circumstances may a modification election result in an acceleration of payments in violation of Code Section 409A.

	
7.4
	
Effective Date. A modification election submitted in accordance with this Article VII is irrevocable upon receipt by the Committee and becomes effective 12 months after such date.

 

	
7.5
	
Effect on Accounts. An election to modify a Payment Schedule is specific to the Account or payment event to which it applies, and shall not be construed to affect the Payment Schedules of any other Accounts.

 Page 15 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

Article VIII

Valuation of Account Balances; Investments

	
8.1
	
Valuation. Deferrals shall be credited to appropriate Accounts on the date such Compensation would have been paid to the Participant absent the Compensation Deferral Agreement. Company Contributions shall be credited to the Retirement/Termination Account at the times determined by the Committee. Valuation of Accounts shall be performed under procedures approved by the Committee.

 

	
8.2
	
Earnings Credit. Each Account will be credited with Earnings on each Business Day, based upon the Participant’s investment allocation among a menu of investment options selected in advance by the Committee, in accordance with the provisions of this Article VIII (“investment allocation”).

 

	
8.3
	
Investment Options. Investment options will be determined by the Committee. The Committee, in its sole discretion, shall be permitted to add or remove investment options from the Plan menu from time to time, provided that any such additions or removals of investment options shall not be effective with respect to any period prior to the effective date of such change.

 

	
8.4
	
Investment Allocations. A Participant’s investment allocation constitutes a deemed, not actual, investment among the investment options comprising the investment menu. At no time shall a Participant have any real or beneficial ownership in any investment option included in the investment menu, nor shall the Participating Employer or any trustee acting on its behalf have any obligation to purchase actual securities as a result of a Participant’s investment allocation. A Participant’s investment allocation shall be used solely for purposes of adjusting the value of a Participant’s Account Balances.

A Participant shall specify an investment allocation for each of his Accounts in accordance with procedures established by the Committee.  Allocation among the investment options must be designated in increments of 1%. The Participant’s investment allocation will become effective on the same Business Day or, in the case of investment allocations received after a time specified by the Committee, the next Business Day.

 

A Participant may change an investment allocation on any Business Day, both with respect to future credits to the Plan and with respect to existing Account Balances, in accordance with procedures adopted by the Committee. Changes shall become effective on the same Business Day or, in the case of investment allocations received after a time specified by the Committee, the next Business Day, and shall be applied prospectively.

 

	
8.5
	
Unallocated Deferrals and Accounts. If the Participant fails to make an investment allocation with respect to an Account, such Account shall be invested in an investment option, the primary objective of which is the preservation of capital, as determined by the Committee.

 

 Page 16 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

Article IX

Administration

	
9.1
	
Plan Administration. This Plan shall be administered by the Committee which shall have discretionary authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Plan and to utilize its discretion to decide or resolve any and all questions, including but not limited to eligibility for benefits and interpretations of this Plan and its terms, as may arise in connection with the Plan. Claims for benefits shall be filed with the Committee and resolved in accordance with the claims procedures in Article XII.

 

	
9.2
	
Administration Upon Change in Control. Upon a Change in Control, the Committee, as constituted immediately prior to such Change in Control, shall continue to act as the Committee. The individual who was the Chief Executive Officer of the Company (or if such person is unable or unwilling to act, the next highest ranking officer) prior to the Change in Control shall have the authority (but shall not be obligated) to appoint an independent third party to act as the Committee.

 

Upon such Change in Control, the Company may not remove the Committee, unless 2/3rds of the members of the Board of Directors of the Company consent to the removal and replacement of the Committee. Notwithstanding the foregoing, neither the Committee nor the officer described above shall have authority to direct investment of trust assets under any rabbi trust described in Section 11.2.

 

The Participating Employer shall, with respect to the Committee identified under this Section: (i) pay all reasonable expenses and fees of the Committee, (ii) indemnify the Committee (including individuals serving as Committee members) against any costs, expenses and liabilities including, without limitation, attorneys’ fees and expenses arising in connection with the performance of the Committee’s duties hereunder, except with respect to matters resulting from the Committee’s gross negligence or willful misconduct, and (iii) supply full and timely information to the Committee on all matters related to the Plan, any rabbi trust, Participants, Beneficiaries and Accounts as the Committee may reasonably require.

 

	
9.3
	
Withholding. The Participating Employer shall have the right to withhold from any payment due under the Plan (or with respect to any amounts credited to the Plan) any taxes required by law to be withheld in respect of such payment (or credit). Withholdings with respect to amounts credited to the Plan shall be deducted from Compensation that has not been deferred to the Plan.

 

	
9.4
	
Indemnification. The Participating Employers shall indemnify and hold harmless each employee, officer, director, agent or organization, to whom or to which are delegated duties, responsibilities, and authority under the Plan or otherwise with respect to administration of the Plan, including, without limitation, the Committee and its agents, against all claims, liabilities, fines and penalties, and all expenses reasonably incurred by or imposed upon him or it (including but not limited to reasonable attorney fees) which 

 Page 17 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

		
arise as a result of his or its actions or failure to act in connection with the operation and administration of the Plan to the extent lawfully allowable and to the extent that such claim, liability, fine, penalty, or expense is not paid for by liability insurance purchased or paid for by the Participating Employer. Notwithstanding the foregoing, the Participating Employer shall not indemnify any person or organization if his or its actions or failure to act are due to gross negligence or willful misconduct or for any such amount incurred through any settlement or compromise of any action unless the Participating Employer consents in writing to such settlement or compromise.

 

	
9.5
	
Delegation of Authority. In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with legal counsel who shall be legal counsel to the Company.

 

	
9.6
	
Binding Decisions or Actions. The decision or action of the Committee in respect of any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations thereunder shall be final and conclusive and binding upon all persons having any interest in the Plan. 

 

 

Article X

Amendment and Termination

	
10.1
	
Amendment and Termination. The Company may at any time and from time to time amend the Plan or may terminate the Plan as provided in this Article X. Each Participating Employer may also terminate its participation in the Plan.

	
10.2
	
Amendments. The Company, by action taken by its Board of Directors, may amend the Plan at any time and for any reason, provided that any such amendment shall not reduce the vested Account Balances of any Participant accrued as of the date of any such amendment or restatement (as if the Participant had incurred a voluntary Separation from Service on such date) or reduce any rights of a Participant under the Plan or other Plan features with respect to Deferrals made prior to the date of any such amendment or restatement without the consent of the Participant. The Board of Directors of the Company may delegate to the Committee the authority to amend the Plan without the consent of the Board of Directors for the purpose of: (i) conforming the Plan to the requirements of law; (ii) facilitating the administration of the Plan; (iii) clarifying provisions based on the Committee’s interpretation of the document; and (iv) making such other amendments as the Board of Directors may authorize.

	
10.3
	
Termination. The Company, by action taken by its Board of Directors, may terminate the Plan and pay Participants and Beneficiaries their Account Balances in a single lump sum at any time, to the extent and in accordance with Treas. Reg. Section 1.409A-3(j)(4)(ix). If a Participating Employer terminates its participation in the Plan, the benefits of affected Employees shall be paid at the time provided in Article VI.

 

 Page 18 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
10.4
	
Accounts Taxable Under Code Section 409A. The Plan is intended to constitute a plan of deferred compensation that meets the requirements for deferral of income taxation under Code Section 409A. The Committee, pursuant to its authority to interpret the Plan, may sever from the Plan or any Compensation Deferral Agreement any provision or exercise of a right that otherwise would result in a violation of Code Section 409A.

 

 

Article XI

Informal Funding

	
11.1
	
General Assets. Obligations established under the terms of the Plan may be satisfied from the general funds of the Participating Employers, or a trust described in this Article XI. No Participant, spouse or Beneficiary shall have any right, title or interest whatever in assets of the Participating Employers. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Participating Employers and any Employee, spouse, or Beneficiary. To the extent that any person acquires a right to receive payments hereunder, such rights are no greater than the right of an unsecured general creditor of the Participating Employer.

 

	
11.2
	
Rabbi Trust. A Participating Employer may, in its sole discretion, establish a grantor trust, commonly known as a rabbi trust, as a vehicle for accumulating assets to pay benefits under the Plan. Payments under the Plan may be paid from the general assets of the Participating Employer or from the assets of any such rabbi trust. Payment from any such source shall reduce the obligation owed to the Participant or Beneficiary under the Plan.

 

 

Article XII

Claims

	
12.1
	
Filing a Claim. Any controversy or claim arising out of or relating to the Plan shall be filed in writing with the Committee which shall make all determinations concerning such claim. Any claim filed with the Committee and any decision by the Committee denying such claim shall be in writing and shall be delivered to the Participant or Beneficiary filing the claim (the “Claimant”). 

 

	
 
	
(a)
	
In General. Notice of a denial of benefits  will be provided within 90 days of the Committee’s receipt of the Claimant’s claim for benefits. If the Committee determines that it needs additional time to review the claim, the Committee will provide the Claimant with a notice of the extension before the end of the initial 90-day period. The extension will not be more than 90 days from the end of the initial 90-day period and the notice of extension will explain the special circumstances that require the extension and the date by which the Committee expects to make a decision.

 

 Page 19 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
 
	
(b)
	
Contents of Notice. If a claim for benefits is completely or partially denied, notice of such denial shall be in writing and shall set forth the reasons for denial in plain language. The notice shall: (i) cite the pertinent provisions of the Plan document, and (ii) explain, where appropriate, how the Claimant can perfect the claim, including a description of any additional material or information necessary to complete the claim and why such material or information is necessary. The claim denial also shall include an explanation of the claims review procedures and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse decision on review.

 

	
12.2
	
Appeal of Denied Claims. A Claimant whose claim has been completely or partially denied shall be entitled to appeal the claim denial by filing a written appeal with a committee designated to hear such appeals (the “Appeals Committee”). A Claimant who timely requests a review of the denied claim (or his or her authorized representative) may review, upon request and free of charge, copies of all documents, records and other information relevant to the denial and may submit written comments, documents, records and other information relevant to the claim to the Appeals Committee. All written comments, documents, records, and other information shall be considered “relevant” if the information: (i) was relied upon in making a benefits determination, (ii) was submitted, considered or generated in the course of making a benefits decision regardless of whether it was relied upon to make the decision, or (iii) demonstrates compliance with administrative processes and safeguards established for making benefit decisions. The Appeals Committee may, in its sole discretion and if it deems appropriate or necessary, decide to hold a hearing with respect to the claim appeal.

 

	
 
	
(a)
	
In General. Appeal of a denied benefits claim must be filed in writing with the Appeals Committee no later than 60 days after receipt of the written notification of such claim denial. The Appeals Committee shall make its decision regarding the merits of the denied claim within 60 days following receipt of the appeal (or within 120 days after such receipt, in a case where there are special circumstances requiring extension of time for reviewing the appealed claim). If an extension of time for reviewing the appeal is required because of special circumstances, written notice of the extension shall be furnished to the Claimant prior to the commencement of the extension. The notice will indicate the special circumstances requiring the extension of time and the date by which the Appeals Committee expects to render the determination on review. The review will take into account comments, documents, records and other information submitted by the Claimant relating to the claim without regard to whether such information was submitted or considered in the initial benefit determination.

 

	
 
	
(b)
	
Contents of Notice. If a benefits claim is completely or partially denied on review, notice of such denial shall be in writing and shall set forth the reasons for denial in plain language. 

 

 Page 20 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

The decision on review shall set forth: (i) the specific reason or reasons for the denial, (ii) specific references to the pertinent Plan provisions on which the denial is based, (iii) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, or other information relevant (as defined above) to the Claimant’s claim, and (iv) a statement describing any voluntary appeal procedures offered by the plan and a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA. 

 

	
12.3
	
Claims Appeals Upon Change in Control. Upon a Change in Control, the Appeals Committee, as constituted immediately prior to such Change in Control, shall continue to act as the Appeals Committee. Upon such Change in Control, the Company may not remove any member of the Appeals Committee, but may replace resigning members if 2/3rds of the members of the Board of Directors of the Company and a majority of Participants and Beneficiaries with Account Balances consent to the replacement.

 

The Appeals Committee shall have the exclusive authority at the appeals stage to interpret the terms of the Plan and resolve appeals under the Claims Procedure.

 

Each Participating Employer shall, with respect to the Committee identified under this Section: (i) pay its proportionate share of all reasonable expenses and fees of the Appeals Committee, (ii) indemnify the Appeals Committee (including individual committee members) against any costs, expenses and liabilities including, without limitation, attorneys’ fees and expenses arising in connection with the performance of the Appeals Committee hereunder, except with respect to matters resulting from the Appeals Committee’s gross negligence or willful misconduct, and (iii) supply full and timely information to the Appeals Committee on all matters related to the Plan, any rabbi trust, Participants, Beneficiaries and Accounts as the Appeals Committee may reasonably require.

 

	
12.4
	
Legal Action. A Claimant may not bring any legal action, including commencement of any arbitration, relating to a claim for benefits under the Plan unless and until the Claimant has followed the claims procedures under the Plan and exhausted his or her administrative remedies under such claims procedures.

 

If a Participant or Beneficiary prevails in a legal proceeding brought under the Plan to enforce the rights of such Participant or any other similarly situated Participant or Beneficiary, in whole or in part, the Participating Employer shall reimburse such Participant or Beneficiary for all legal costs, expenses, attorneys’ fees and such other liabilities incurred as a result of such proceedings. If the legal proceeding is brought in connection with a Change in Control, or a “change in control” as defined in a rabbi trust described in Section 11.2, the Participant or Beneficiary may file a claim directly with the trustee for reimbursement of such costs, expenses and fees. For purposes of the preceding sentence, the amount of the claim shall be treated as if it were an addition to the Participant’s or Beneficiary’s Account Balance.

 

 Page 21 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
12.5
	
Discretion of Appeals Committee. All interpretations, determinations and decisions of the Appeals Committee with respect to any claim shall be made in its sole discretion, and shall be final and conclusive.

 

	
12.6
	
Arbitration.

 

	
 
	
(a)
	
Prior to Change in Control. If, prior to a Change in Control, any claim or controversy between a Participating Employer and a Participant or Beneficiary is not resolved through the claims procedure set forth in Article XII, such claim shall be submitted to and resolved exclusively by expedited binding arbitration by a single arbitrator.  Arbitration shall be conducted in accordance with the following procedures:

 

The complaining party shall promptly send written notice to the other party identifying the matter in dispute and the proposed remedy. Following the giving of such notice, the parties shall meet and attempt in good faith to resolve the matter. In the event the parties are unable to resolve the matter within 21 days, the parties shall meet and attempt in good faith to select a single arbitrator acceptable to both parties. If a single arbitrator is not selected by mutual consent within ten Business Days following the giving of the written notice of dispute, an arbitrator shall be selected from a list of nine persons each of whom shall be an attorney who is either engaged in the active practice of law or recognized arbitrator and who, in either event, is experienced in serving as an arbitrator in disputes between employers and employees, which list shall be provided by the main office of either JAMS, the American Arbitration Association (“AAA”) or the Federal Mediation and Conciliation Service. If, within three Business Days of the parties’ receipt of such list, the parties are unable to agree on an arbitrator from the list, then the parties shall each strike names alternatively from the list, with the first to strike being determined by the flip of a coin. After each party has had four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected.

 

Unless the parties agree otherwise, within 60 days of the selection of the arbitrator, a hearing shall be conducted before such arbitrator at a time and a place agreed upon by the parties. In the event the parties are unable to agree upon the time or place of the arbitration, the time and place shall be designated by the arbitrator after consultation with the parties. Within 30 days of the conclusion of the arbitration hearing, the arbitrator shall issue an award, accompanied by a written decision explaining the basis for the arbitrator’s award.

 

In any arbitration hereunder, the Participating Employer shall pay all administrative fees of the arbitration and all fees of the arbitrator, except that the Participant or Beneficiary may, if he/she/it wishes, pay up to one-half of those amounts. Each party shall pay its own attorneys’ fees, costs, and expenses, unless the arbitrator orders otherwise. The prevailing party in such arbitration, as 

 Page 22 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party’s costs (including but not limited to the arbitrator’s compensation), expenses, and attorneys’ fees. The arbitrator shall have no authority to add to or to modify this Plan, shall apply all applicable law, and shall have no lesser and no greater remedial authority than would a court of law resolving the same claim or controversy. The arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that it would be entitled to summary judgment if the matter had been pursued in court litigation.

 

The parties shall be entitled to discovery as follows: Each party may take no more than three depositions. The Participating Employer may depose the Participant or Beneficiary plus two other witnesses, and the Participant or Beneficiary may depose the Participating Employer, pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure, plus two other witnesses. Each party may make such reasonable document discovery requests as are allowed in the discretion of the arbitrator.

 

The decision of the arbitrator shall be final, binding, and non-appealable, and may be enforced as a final judgment in any court of competent jurisdiction.

 

This arbitration provision of the Plan shall extend to claims against any parent, subsidiary, or affiliate of each party, and, when acting within such capacity, any officer, director, shareholder, Participant, Beneficiary, or agent of any party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law or under this Plan.

 

Notwithstanding the foregoing, and unless otherwise agreed between the parties, either party may apply to a court for provisional relief, including a temporary restraining order or preliminary injunction, on the ground that the arbitration award to which the applicant may be entitled may be rendered ineffectual without provisional relief.

 

Any arbitration hereunder shall be conducted in accordance with the Federal Arbitration Act: provided, however, that, in the event of any inconsistency between the rules and procedures of the Act and the terms of this Plan, the terms of this Plan shall prevail.

 

If any of the provisions of this Section 12.6(a) are determined to be unlawful or otherwise unenforceable, in the whole part, such determination shall not affect the validity of the remainder of this section and this section shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration. If 

 Page 23 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

a court should find that the provisions of this Section 12.6(a) are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of fact and treated as determinative to the maximum extent permitted by law.

 

The parties do not agree to arbitrate any putative class action or any other representative action. The parties agree to arbitrate only the claims(s) of a single Participant or Beneficiary.

 

	
 
	
(b)
	
Upon Change in Control. If, upon the occurrence of a Change in Control, any dispute, controversy or claim arises between a Participant or Beneficiary and the Participating Employer out of or relating to or concerning the provisions of the Plan, such dispute, controversy or claim shall be finally settled by a court of competent jurisdiction which, notwithstanding any other provision of the Plan, shall apply a de novo standard of review to any determination made by the Company or its Board of Directors, a Participating Employer, the Committee, or the Appeals Committee.

 

 

Article XIII

General Provisions

	
13.1
	
Assignment. No interest of any Participant, spouse or Beneficiary under this Plan and no benefit payable hereunder shall be assigned as security for a loan, and any such purported assignment shall be null, void and of no effect, nor shall any such interest or any such benefit be subject in any manner, either voluntarily or involuntarily, to anticipation, sale, transfer, assignment or encumbrance by or through any Participant, spouse or Beneficiary. Notwithstanding anything to the contrary herein, however, the Committee has the discretion to make payments to an alternate payee in accordance with the terms of a domestic relations order (as defined in Code Section 414(p)(1)(B)). 

 

	

	
The Company may assign any or all of its liabilities under this Plan in connection with any restructuring, recapitalization, sale of assets or other similar transactions affecting a Participating Employer without the consent of the Participant.

 

	
13.2
	
No Legal or Equitable Rights or Interest. No Participant or other person shall have any legal or equitable rights or interest in this Plan that are not expressly granted in this Plan. Participation in this Plan does not give any person any right to be retained in the service of the Participating Employer. The right and power of a Participating Employer to dismiss or discharge an Employee is expressly reserved. The Participating Employers make no representations or warranties as to the tax consequences to a Participant or a Participant’s beneficiaries resulting from a deferral of income pursuant to the Plan.

 

	
13.3
	
No Employment Contract. Nothing contained herein shall be construed to constitute a contract of employment between an Employee and a Participating Employer.

 

 Page 24 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
13.4
	
Notice. Any notice or filing required or permitted to be delivered to the Committee under this Plan shall be delivered in writing, in person, or through such electronic means as is established by the Committee. Notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Written transmission shall be sent by certified mail to:

 

UMB FINANCIAL CORPORATION

ATTN: EVP Chief Organization Effectiveness Officer

1010 GRAND BOULEVARD 

KANSAS CITY, MO  64106 

 

Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing or hand-delivered, or sent by mail to the last known address of  the Participant.

 

	
13.5
	
Headings. The headings of Sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of this Plan, the text shall control. 

 

	
13.6
	
Invalid or Unenforceable Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof and the Committee may elect in its sole discretion to construe such invalid or unenforceable provisions in a manner that conforms to applicable law or as if such provisions, to the extent invalid or unenforceable, had not been included.

 

	
13.7
	
Lost Participants or Beneficiaries. Any Participant or Beneficiary who is entitled to a benefit from the Plan has the duty to keep the Committee advised of his or her current mailing address. If benefit payments are returned to the Plan or are not presented for payment after a reasonable amount of time, the Committee shall presume that the payee is missing. The Committee, after making such efforts as in its discretion it deems reasonable and appropriate to locate the payee, shall stop payment on any uncashed checks and may discontinue making future payments until contact with the payee is restored. 

 

	
13.8
	
Facility of Payment to a Minor.  If a distribution is to be made to a minor, or to a person who is otherwise incompetent, then the Committee may, in its discretion, make such distribution: (i) to the legal guardian, or if none, to a parent of a minor payee with whom the payee maintains his or her residence, or (ii) to the conservator or committee or, if none, to the person having custody of an incompetent payee. Any such distribution shall fully discharge the Committee, the Company, and the Plan from further liability on account thereof.

 Page 25 of 26

 

UMB Financial Corporation Deferred Compensation Plan

 

	
13.9
	
Governing Law. To the extent not preempted by ERISA, the laws of the State of Missouri shall govern the construction and administration of the Plan.

 

 

 

IN WITNESS WHEREOF, the undersigned executed this Plan as of the _____ day of _______________, 2008, to be effective as of the Effective Date.

 

 

UMB Financial Corporation.

 

By: _______________________________ (Print Name)

 

Its: ________________________________ (Title)

 

 

_____________________________________________ (Signature)

 

 

 Page 26 of 26Exhibit 10.31

 

Execution Version

 

 

CREDIT AGREEMENT

 

by and among

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Administrative Agent,

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Sole Lead Arranger and Book Runner,

 

THE LENDERS THAT ARE PARTIES HERETO

 

as the Lenders,

 

and

 

FTS INTERNATIONAL SERVICES, LLC and

 

FTS INTERNATIONAL, INC.

 

as Borrowers

 

Dated as of February 22, 2018

 

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1.
    	
DEFINITIONS AND   CONSTRUCTION
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
1.1
    	
Definitions
    	
 
    	
1
    
	
 
    	
1.2
    	
Accounting Terms
    	
 
    	
1
    
	
 
    	
1.3
    	
Code
    	
 
    	
2
    
	
 
    	
1.4
    	
Construction
    	
 
    	
2
    
	
 
    	
1.5
    	
Time References
    	
 
    	
3
    
	
 
    	
1.6
    	
Schedules and Exhibits
    	
 
    	
3
    
	
 
    	
1.7
    	
Rounding
    	
 
    	
3
    
	
 
    	
1.8
    	
Financial Statements
    	
 
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
LOANS AND TERMS OF   PAYMENT
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.1
    	
Revolving Loans
    	
 
    	
4
    
	
 
    	
2.2
    	
Reserved
    	
 
    	
5
    
	
 
    	
2.3
    	
Borrowing Procedures   and Settlements
    	
 
    	
5
    
	
 
    	
2.4
    	
Payments; Reductions of   Commitments; Prepayments
    	
 
    	
13
    
	
 
    	
2.5
    	
Promise to Pay;   Promissory Notes
    	
 
    	
17
    
	
 
    	
2.6
    	
Interest Rates and   Letter of Credit Fee: Rates, Payments, and Calculations
    	
 
    	
18
    
	
 
    	
2.7
    	
Crediting Payments
    	
 
    	
20
    
	
 
    	
2.8
    	
Designated Account
    	
 
    	
20
    
	
 
    	
2.9
    	
Maintenance of Loan   Account; Statements of Obligations
    	
 
    	
20
    
	
 
    	
2.10
    	
Fees
    	
 
    	
21
    
	
 
    	
2.11
    	
Letters of Credit
    	
 
    	
21
    
	
 
    	
2.12
    	
LIBOR Option
    	
 
    	
29
    
	
 
    	
2.13
    	
Capital Requirements
    	
 
    	
31
    
	
 
    	
2.14
    	
Accordion
    	
 
    	
33
    
	
 
    	
2.15
    	
Joint and Several   Liability of Borrowers
    	
 
    	
34
    
	
 
    	
2.16
    	
Increased Costs
    	
 
    	
37
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
CONDITIONS; TERM OF   AGREEMENT
    	
 
    	
37
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.1
    	
Conditions Precedent to   the Initial Extension of Credit
    	
 
    	
37
    
	
 
    	
3.2
    	
Conditions Precedent to   all Extensions of Credit
    	
 
    	
37
    
	
 
    	
3.3
    	
Maturity
    	
 
    	
38
    
	
 
    	
3.4
    	
Effect of Maturity
    	
 
    	
38
    
	
 
    	
3.5
    	
Early Termination by   Borrowers
    	
 
    	
38
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
REPRESENTATIONS AND   WARRANTIES
    	
 
    	
38
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.1
    	
Due Organization and   Qualification; Subsidiaries
    	
 
    	
39
    
	
 
    	
4.2
    	
Due Authorization; No   Conflict
    	
 
    	
40
    
	
 
    	
4.3
    	
Governmental Consents
    	
 
    	
40
    
	
 
    	
4.4
    	
Binding Obligations;   Perfected Liens
    	
 
    	
40
    
	
 
    	
4.5
    	
No Encumbrances
    	
 
    	
41
    
	
 
    	
4.6
    	
Litigation
    	
 
    	
41
    

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.7
    	
Compliance with Laws
    	
 
    	
41
    
	
 
    	
4.8
    	
No Material Adverse   Effect
    	
 
    	
41
    
	
 
    	
4.9
    	
Solvency
    	
 
    	
41
    
	
 
    	
4.10
    	
Employee Benefits
    	
 
    	
41
    
	
 
    	
4.11
    	
Environmental Condition
    	
 
    	
42
    
	
 
    	
4.12
    	
Complete Disclosure
    	
 
    	
42
    
	
 
    	
4.13
    	
Patriot Act
    	
 
    	
43
    
	
 
    	
4.14
    	
[Reserved]
    	
 
    	
43
    
	
 
    	
4.15
    	
Payment of Taxes
    	
 
    	
43
    
	
 
    	
4.16
    	
Margin Stock
    	
 
    	
43
    
	
 
    	
4.17
    	
Governmental Regulation
    	
 
    	
44
    
	
 
    	
4.18
    	
OFAC; Sanctions;   Anti-Corruption Laws; Anti-Money Laundering Laws
    	
 
    	
44
    
	
 
    	
4.19
    	
[Reserved]
    	
 
    	
44
    
	
 
    	
4.20
    	
[Reserved]
    	
 
    	
44
    
	
 
    	
4.21
    	
[Reserved]
    	
 
    	
44
    
	
 
    	
4.22
    	
Eligible Accounts
    	
 
    	
44
    
	
 
    	
4.23
    	
Eligible Inventory
    	
 
    	
44
    
	
 
    	
4.24
    	
Location of Inventory
    	
 
    	
45
    
	
 
    	
4.25
    	
Inventory Records
    	
 
    	
45
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
AFFIRMATIVE COVENANTS
    	
 
    	
45
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.1
    	
Financial Statements,   Reports, Certificates
    	
 
    	
45
    
	
 
    	
5.2
    	
Reporting
    	
 
    	
46
    
	
 
    	
5.3
    	
Existence
    	
 
    	
46
    
	
 
    	
5.4
    	
Maintenance of Properties
    	
 
    	
46
    
	
 
    	
5.5
    	
Taxes
    	
 
    	
46
    
	
 
    	
5.6
    	
Insurance
    	
 
    	
46
    
	
 
    	
5.7
    	
Inspection
    	
 
    	
47
    
	
 
    	
5.8
    	
Compliance with Laws
    	
 
    	
47
    
	
 
    	
5.9
    	
Environmental
    	
 
    	
48
    
	
 
    	
5.10
    	
Disclosure Updates
    	
 
    	
48
    
	
 
    	
5.11
    	
Formation of   Subsidiaries
    	
 
    	
48
    
	
 
    	
5.12
    	
Further Assurances
    	
 
    	
50
    
	
 
    	
5.13
    	
Lender Meetings
    	
 
    	
50
    
	
 
    	
5.14
    	
Location of Inventory
    	
 
    	
50
    
	
 
    	
5.15
    	
OFAC; Sanctions;   Anti-Corruption Laws; Anti-Money Laundering Laws
    	
 
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
NEGATIVE COVENANTS
    	
 
    	
51
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.1
    	
Indebtedness
    	
 
    	
51
    
	
 
    	
6.2
    	
Liens
    	
 
    	
51
    
	
 
    	
6.3
    	
Restrictions on   Fundamental Changes
    	
 
    	
51
    
	
 
    	
6.4
    	
Disposal of Assets
    	
 
    	
51
    
	
 
    	
6.5
    	
Nature of Business
    	
 
    	
52
    

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.6
    	
Prepayments and   Amendments
    	
 
    	
52
    
	
 
    	
6.7
    	
Restricted Payments
    	
 
    	
53
    
	
 
    	
6.8
    	
Accounting Methods
    	
 
    	
55
    
	
 
    	
6.9
    	
Investments
    	
 
    	
55
    
	
 
    	
6.10
    	
Transactions with   Affiliates
    	
 
    	
55
    
	
 
    	
6.11
    	
Use of Proceeds
    	
 
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
FINANCIAL COVENANT
    	
 
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.1
    	
Fixed Charge Coverage   Ratio
    	
 
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
EVENTS OF DEFAULT
    	
 
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.1
    	
Payments
    	
 
    	
57
    
	
 
    	
8.2
    	
Covenants
    	
 
    	
58
    
	
 
    	
8.3
    	
Judgments
    	
 
    	
58
    
	
 
    	
8.4
    	
Voluntary Bankruptcy,   etc.
    	
 
    	
58
    
	
 
    	
8.5
    	
Involuntary Bankruptcy,   etc.
    	
 
    	
58
    
	
 
    	
8.6
    	
Default Under Other   Agreements
    	
 
    	
59
    
	
 
    	
8.7
    	
Representations, etc.
    	
 
    	
59
    
	
 
    	
8.8
    	
Guaranty
    	
 
    	
59
    
	
 
    	
8.9
    	
Collateral
    	
 
    	
59
    
	
 
    	
8.10
    	
Loan Documents
    	
 
    	
59
    
	
 
    	
8.11
    	
Change of Control
    	
 
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
RIGHTS AND REMEDIES
    	
 
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.1
    	
Rights and Remedies
    	
 
    	
60
    
	
 
    	
9.2
    	
Remedies Cumulative
    	
 
    	
61
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
WAIVERS;   INDEMNIFICATION
    	
 
    	
61
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.1
    	
Demand; Protest; etc.
    	
 
    	
61
    
	
 
    	
10.2
    	
The Lender Group’s   Liability for Collateral
    	
 
    	
61
    
	
 
    	
10.3
    	
Indemnification
    	
 
    	
61
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
NOTICES
    	
 
    	
62
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
CHOICE OF LAW AND   VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION
    	
 
    	
64
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
ASSIGNMENTS AND   PARTICIPATIONS; SUCCESSORS
    	
 
    	
65
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
13.1
    	
Assignments and   Participations
    	
 
    	
65
    
	
 
    	
13.2
    	
Successors
    	
 
    	
70
    
	
 
    	
 
    	
 
    	
 
    
	
14.
    	
AMENDMENTS; WAIVERS
    	
 
    	
70
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.1
    	
Amendments and Waivers
    	
 
    	
70
    
	
 
    	
14.2
    	
Replacement of Certain   Lenders
    	
 
    	
72
    

 

iii

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
14.3
    	
No Waivers; Cumulative   Remedies
    	
 
    	
73
    
	
 
    	
 
    	
 
    	
 
    
	
15.
    	
AGENT; THE LENDER GROUP
    	
 
    	
74
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
15.1
    	
Appointment and   Authorization of Agent
    	
 
    	
74
    
	
 
    	
15.2
    	
Delegation of Duties
    	
 
    	
75
    
	
 
    	
15.3
    	
Liability of Agent
    	
 
    	
75
    
	
 
    	
15.4
    	
Reliance by Agent
    	
 
    	
75
    
	
 
    	
15.5
    	
Notice of Default or   Event of Default
    	
 
    	
76
    
	
 
    	
15.6
    	
Credit Decision
    	
 
    	
76
    
	
 
    	
15.7
    	
Costs and Expenses;   Indemnification
    	
 
    	
77
    
	
 
    	
15.8
    	
Agent in Individual   Capacity
    	
 
    	
77
    
	
 
    	
15.9
    	
Successor Agent
    	
 
    	
78
    
	
 
    	
15.10
    	
Lender in Individual   Capacity
    	
 
    	
78
    
	
 
    	
15.11
    	
Collateral and   Guarantee Matters
    	
 
    	
79
    
	
 
    	
15.12
    	
Restrictions on Actions   by Lenders; Sharing of Payments
    	
 
    	
82
    
	
 
    	
15.13
    	
Agency for Perfection
    	
 
    	
82
    
	
 
    	
15.14
    	
Payments by Agent to   the Lenders
    	
 
    	
82
    
	
 
    	
15.15
    	
Concerning the   Collateral and Related Loan Documents
    	
 
    	
82
    
	
 
    	
15.16
    	
Field Examination   Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information
    	
 
    	
83
    
	
 
    	
15.17
    	
Several Obligations; No   Liability
    	
 
    	
84
    
	
 
    	
15.18
    	
Lead Arranger and Book   Runner
    	
 
    	
84
    
	
 
    	
 
    	
 
    	
 
    
	
16.
    	
TAXES
    	
 
    	
84
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
16.1
    	
Defined Terms
    	
 
    	
84
    
	
 
    	
16.2
    	
Payments Free of Taxes
    	
 
    	
84
    
	
 
    	
16.3
    	
Payment of Other Taxes   by the Loan Parties
    	
 
    	
85
    
	
 
    	
16.4
    	
Indemnification by the   Loan Parties
    	
 
    	
85
    
	
 
    	
16.5
    	
Indemnification by the   Lenders
    	
 
    	
85
    
	
 
    	
16.6
    	
Evidence of Payments
    	
 
    	
86
    
	
 
    	
16.7
    	
Status of Lenders
    	
 
    	
86
    
	
 
    	
16.8
    	
Treatment of Certain   Refunds
    	
 
    	
87
    
	
 
    	
16.9
    	
Survival
    	
 
    	
88
    
	
 
    	
 
    	
 
    	
 
    
	
17.
    	
GENERAL PROVISIONS
    	
 
    	
88
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
17.1
    	
Effectiveness
    	
 
    	
88
    
	
 
    	
17.2
    	
Section Headings
    	
 
    	
88
    
	
 
    	
17.3
    	
Interpretation
    	
 
    	
88
    
	
 
    	
17.4
    	
Severability of   Provisions
    	
 
    	
88
    
	
 
    	
17.5
    	
Bank Product Providers
    	
 
    	
88
    
	
 
    	
17.6
    	
Debtor-Creditor   Relationship
    	
 
    	
89
    
	
 
    	
17.7
    	
Counterparts;   Electronic Execution
    	
 
    	
89
    
	
 
    	
17.8
    	
Revival and Reinstatement   of Obligations; Certain Waivers
    	
 
    	
90
    

 

iv

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
17.9
    	
Confidentiality
    	
 
    	
90
    
	
 
    	
17.10
    	
Survival
    	
 
    	
92
    
	
 
    	
17.11
    	
Patriot Act; Due   Diligence
    	
 
    	
93
    
	
 
    	
17.12
    	
Integration
    	
 
    	
93
    
	
 
    	
17.13
    	
Parent Borrower as   Agent for Borrowers
    	
 
    	
93
    
	
 
    	
17.14
    	
Intercreditor Agreement
    	
 
    	
94
    
	
 
    	
17.15
    	
Acknowledgement and   Consent to Bail-In of EEA Financial Institutions
    	
 
    	
94
    

 

v

 

EXHIBITS AND SCHEDULES

 

	
Exhibit A-1
    	
Form of Assignment   and Acceptance
    
	
Exhibit B-1
    	
Form of Borrowing   Base Certificate
    
	
Exhibit C-1
    	
Form of Compliance   Certificate
    
	
Exhibit J-1
    	
Form of Joinder   Agreement
    
	
Exhibit L-1
    	
Form of LIBOR Notice
    
	
Exhibit P-1
    	
Form of Perfection   Certificate
    
	
Exhibit T-1
    	
Form of U.S. Tax   Compliance Certificate
    
	
Exhibit T-2
    	
Form of U.S. Tax   Compliance Certificate
    
	
Exhibit T-3
    	
Form of U.S. Tax   Compliance Certificate
    
	
Exhibit T-4
    	
Form of U.S. Tax   Compliance Certificate
    
	
 
    	
 
    
	
Schedule A-1
    	
Agent’s Account
    
	
Schedule A-2
    	
Authorized Persons
    
	
Schedule C-1
    	
Commitments
    
	
Schedule D-1
    	
Designated Account
    
	
Schedule P-1
    	
Permitted Investments
    
	
Schedule P-2
    	
Permitted Liens
    
	
Schedule U-1
    	
Unrestricted   Subsidiaries
    
	
Schedule 1.1
    	
Definitions
    
	
Schedule 2.11
    	
Existing Letters of   Credit
    
	
Schedule 3.1
    	
Conditions Precedent
    
	
Schedule 4.1(c)
    	
Capitalization of   Parent Borrower’s Subsidiaries
    
	
Schedule 4.1(d)
    	
Subscriptions, Options,   Warrants, Calls
    
	
Schedule 4.11
    	
Environmental Matters
    
	
Schedule 4.24
    	
Location of Inventory
    
	
Schedule 5.1
    	
Financial Statements,   Reports, Certificates
    
	
Schedule 5.2
    	
Collateral Reporting
    
	
Schedule 6.1
    	
Permitted Indebtedness
    

 

vi

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of February 22, 2018 by and among the lenders identified on the signature pages hereof (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender”, as that term is hereinafter further defined), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “Agent”), FTS INTERNATIONAL SERVICES, LLC, a Texas limited liability company (“OpCo Borrower”), and FTS INTERNATIONAL, INC., a Delaware corporation (“Parent Borrower,” together with the OpCo Borrower and those additional Persons that are joined as a party hereto by executing the form of Joinder attached hereto as Exhibit J-1, are referred to hereinafter each individually as a “Borrower”, and individually and collectively, jointly and severally, as the “Borrowers”).

 

The parties agree as follows:

 

1.                                      DEFINITIONS AND CONSTRUCTION.

 

1.1                               Definitions.  Capitalized terms used in this Agreement shall have the meanings specified therefor on Schedule 1.1.

 

1.2                               Accounting Terms.  All accounting terms not specifically defined herein shall be construed in accordance with GAAP; provided, that (a) subject to each of clause (b) of this sentence and the last sentence of this Section 1.2, if Administrative Borrower notifies Agent that Borrowers request an amendment to any provision hereof to eliminate the effect of any Accounting Change occurring after the Closing Date or in the application thereof on the operation of such provision (or if Agent notifies Administrative Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such Accounting Change or in the application thereof, then Agent and Borrowers agree that they will negotiate in good faith amendments to the provisions of this Agreement that are directly affected by such Accounting Change with the intent of having the respective positions of the Lenders and Borrowers after such Accounting Change conform as nearly as possible to their respective positions as of the date of this Agreement and, until any such amendments have been agreed upon and agreed to by the Required Lenders, the provisions in this Agreement shall be calculated as if no such Accounting Change had occurred, and (b) notwithstanding the foregoing or any other provision of the Loan Documents, Administrative Borrower may cause the definition of Capital Lease to be defined as provided in clause (b) of the definition of Capital Lease for so long as a Lease Accounting Change Effective Date occurs and is continuing by notifying Agent in writing of Borrowers’ election to invoke such clause (b) as of the Borrower Election Date specified in such notice (such notice, a “Borrower Election Notice”).  When used herein, the term “financial statements” shall include the notes and schedules thereto.  Whenever the term “Borrowers” is used in respect of a financial covenant or a related definition, it shall be understood to mean Parent Borrower and its Restricted Subsidiaries, on a consolidated basis in accordance with GAAP, unless the context clearly requires otherwise.  Notwithstanding anything to the contrary contained herein, (a) all financial statements delivered hereunder shall be prepared, and all financial covenants contained

 

 

herein shall be calculated, without giving effect to any election under the Statement of Financial Accounting Standards No. 159 (or any similar accounting principle) permitting a Person to value its financial liabilities or Indebtedness at the fair value thereof, and (b) the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that is (i) unqualified, and (ii) does not include any explanation, supplemental comment, or other comment concerning the ability of the applicable Person to continue as a going concern or concerning the scope of the audit.  Notwithstanding anything to the contrary in this Section 1.2 or any other provision in any Loan Document, but subject to clause (b) of the first sentence of this Section 1.2 (which clause (b) shall control over this sentence), if a Lease Accounting Change Effective Date occurs and is continuing, only those leases that would have constituted Capital Leases on the Closing Date (assuming for purposes hereof that all leases were in existence on the Closing Date regardless of whether any such leases were actually in existence on the Closing Date or entered into thereafter) shall be considered Capital Leases as defined in clause (a) of the definition thereof, and all calculations (including the Fixed Charge Coverage Ratio and all definitions used therein) and deliverables under this Agreement or any other Loan Document shall be made in accordance therewith (provided that, until the Borrower Election Date, all financial statements delivered to Agent in accordance with the terms of this Agreement after the Lease Accounting Change Effective Date shall contain a schedule showing the adjustments necessary to reconcile such financial statements with GAAP as in effect immediately prior to the Lease Accounting Change Effective Date).

 

1.3                               Code.  Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein; provided, that to the extent that the Code is used to define any term herein and such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 of the Code shall govern.

 

1.4                               Construction.  Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be.  Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified.  Any reference in this Agreement or in any other Loan Document to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein).  Unless otherwise expressly provided herein, any definition or reference to any law, rule or regulation shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law, rule or regulation.  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.  Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations shall mean (a) the payment or repayment in full in

 

2

 

immediately available funds of (i) the principal amount of, and interest accrued and unpaid with respect to, all outstanding Loans, together with the payment of any premium applicable to the repayment of the Loans, (ii) all Lender Group Expenses and Indemnified Taxes that have accrued and are unpaid regardless of whether demand has been made therefor, (iii) all fees or charges that have accrued hereunder or under any other Loan Document (including the Letter of Credit Fee and the Unused Line Fee) and are unpaid, (b) in the case of contingent reimbursement obligations with respect to Letters of Credit, providing Letter of Credit Collateralization, (c) in the case of obligations with respect to Bank Products (other than Hedge Obligations), providing Bank Product Collateralization, (d) the receipt by Agent of cash collateral in order to secure any other contingent Obligations for which a claim or demand for payment has been made on or prior to such time or in respect of matters or circumstances known to Agent or a Lender at such time that are reasonably expected to result in any loss, cost, damage, or expense (including attorneys’ fees and legal expenses), such cash collateral to be in such amount as Agent reasonably determines is appropriate to secure such contingent Obligations, (e) the payment or repayment in full in immediately available funds of all other outstanding Obligations (including the payment of any termination amount then applicable (or which would or could become applicable as a result of the repayment of the other Obligations) under Hedge Agreements provided by Hedge Providers) other than (i) unasserted contingent indemnification Obligations, (ii) any Bank Product Obligations (other than Hedge Obligations) that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding without being required to be repaid or cash collateralized, and (iii) any Hedge Obligations that, at such time, are allowed by the applicable Hedge Provider to remain outstanding without being required to be repaid, and (f) the termination of all of the Commitments of the Lenders.  Any reference herein to any Person shall be construed to include such Person’s successors and assigns.  Any requirement of a writing contained herein or in any other Loan Document shall be satisfied by the transmission of a Record.

 

1.5                               Time References.  Unless the context of this Agreement or any other Loan Document clearly requires otherwise, all references to time of day refer to Central standard time or Central daylight saving time, as in effect in Dallas, Texas on such day.  For purposes of the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to and including”; provided that, with respect to a computation of fees or interest payable to Agent or any Lender, such period shall in any event consist of at least one full day.

 

1.6                               Schedules and Exhibits.  All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

 

1.7                               Rounding.  Any financial ratios required to be determined pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio or percentage is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

1.8                               Financial Statements.  Any action of Parent Borrower or a Restricted Subsidiary that would be permitted based on delivery of financial statements to Agent, will be permitted following the Closing Date and prior to the delivery of four full fiscal quarters of financial

 

3

 

statements under the Loan Documents based on the consolidated financial statements of Parent Borrower for the most recently ended four fiscal quarters for which internal financial statements are available.

 

2.                                      LOANS AND TERMS OF PAYMENT.

 

2.1                               Revolving Loans.

 

(a)                                 Subject to the terms and conditions of this Agreement, and during the term of this Agreement, each Revolving Lender agrees (severally, not jointly or jointly and severally) to make revolving loans (“Revolving Loans”) to Borrowers in an amount at any one time outstanding not to exceed the lesser of:

 

(i)                                     such Lender’s Revolver Commitment, or

 

(ii)                                  such Lender’s Pro Rata Share of an amount equal to the lesser of:

 

(A)                               the amount equal to (1) the Maximum Revolver Amount less (2) the sum of (y) the Letter of Credit Usage at such time, plus (z) the principal amount of Swing Loans outstanding at such time, and

 

(B)                               the amount equal to (1) the Borrowing Base as of such date (based upon the most recent Borrowing Base Certificate delivered by Borrowers to Agent), as adjusted for Reserves established by Agent in accordance with Section 2.1(c), less (2) the sum of (y) the Letter of Credit Usage at such time, plus (z) the principal amount of Swing Loans outstanding at such time.

 

(b)                                 Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement.  The outstanding principal amount of the Revolving Loans, together with interest accrued and unpaid thereon, shall constitute Obligations and shall be due and payable on the Maturity Date or, if earlier, on the date on which they are declared due and payable pursuant to the terms of this Agreement.

 

(c)                                  Anything to the contrary in this Section 2.1 notwithstanding, Agent shall have the right (but not the obligation), in the exercise of its Permitted Discretion, to establish and increase or decrease Receivable Reserves, Inventory Reserves, Bank Product Reserves, and other Reserves against the Borrowing Base or the Maximum Revolver Amount.  The amount of any Receivable Reserve, Inventory Reserve, Bank Product Reserve, or other Reserve established by Agent shall have a reasonable relationship to the event, condition, other circumstance, or fact that is the basis for such reserve and shall not be duplicative of any other reserve established and currently maintained.  Upon establishment or increase in reserves, Agent agrees to promptly notify Borrowers and make itself available to discuss the reserve or increase, and Borrowers may take such action as may be required so that the event, condition, circumstance, or fact that is the basis for such reserve or increase no longer exists, in a manner and to the extent reasonably satisfactory to Agent in the exercise of its Permitted Discretion.  In no event shall such notice and opportunity limit the right of Agent to establish or change such Receivable Reserve, Inventory Reserve, Bank Product Reserve, or other Reserves, unless Agent shall have

 

4

 

determined, in its Permitted Discretion, that the event, condition, other circumstance, or fact that was the basis for such Receivable Reserve, Inventory Reserve, Bank Product Reserve, or other Reserves or such change no longer exists or has otherwise been adequately addressed by Borrowers.

 

2.2                               Reserved.

 

2.3                               Borrowing Procedures and Settlements.

 

(a)                                 Procedure for Borrowing Revolving Loans.  Each Borrowing shall be made by a written request by an Authorized Person delivered to Agent (which may be delivered through Agent’s electronic platform or portal) and received by Agent no later than (i) 11:00 a.m. (i) on the Business Day that is the requested Funding Date in the case of a request for a Swing Loan, (ii) on the Business Day that is one Business Day prior to the requested Funding Date in the case of a request for a Base Rate Loan, and (iii) on the Business Day that is three Business Days prior to the requested Funding Date in the case of all other requests, specifying (A) the amount of such Borrowing and (B) the requested Funding Date (which shall be a Business Day); provided, that Agent may, in its sole discretion, elect to accept as timely requests that are received later than the designated time on the applicable Business Day. All Borrowing requests which are not made on-line via Agent’s electronic platform or portal shall be subject to (and unless Agent elects otherwise in the exercise of its sole discretion, such Borrowings shall not be made until the completion of) Agent’s authentication process (with results satisfactory to Agent) prior to the funding of such requested Revolving Loan.

 

(b)                                 Making of Swing Loans.  In the case of a request for a Revolving Loan and so long as the aggregate amount of Swing Loans made since the last Settlement Date, minus all payments or other amounts applied to Swing Loans since the last Settlement Date, plus the amount of the requested Swing Loan does not exceed 10% of the Maximum Revolver Amount, Swing Lender shall make a Revolving Loan (any such Revolving Loan made by Swing Lender pursuant to this Section 2.3(b) being referred to as a “Swing Loan” and all such Revolving Loans being referred to as “Swing Loans”) available to Borrowers on the Funding Date applicable thereto by transferring immediately available funds in the amount of such requested Borrowing to the Designated Account.  Each Swing Loan shall be deemed to be a Revolving Loan hereunder and shall be subject to all the terms and conditions (including Section 3) applicable to other Revolving Loans, except that all payments (including interest) on any Swing Loan shall be payable to Swing Lender solely for its own account.  Subject to the provisions of Section 2.3(d)(ii), Swing Lender shall not make and shall not be obligated to make any Swing Loan if Swing Lender has actual knowledge that (i) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing, or (ii) the requested Borrowing would exceed the Excess Availability on such Funding Date.  Swing Lender shall not otherwise be required to determine whether the applicable conditions precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto prior to making any Swing Loan.  The Swing Loans shall be secured by Agent’s Liens, constitute Revolving Loans and Obligations, and bear interest at the rate applicable from time to time to Revolving Loans that are Base Rate Loans.

 

5

 

(c)                                  Making of Revolving Loans.

 

(i)                                     In the case of a request for a Revolving Loan (other than a Swing Loan), then after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent shall notify the Lenders by telecopy, telephone, email, or other electronic form of transmission, of the requested Borrowing; such notification to be sent on the Business Day that is (A) in the case of a Base Rate Loan, at least one Business Day prior to the requested Funding Date, or (B) in the case of a LIBOR Rate Loan, prior to 1:00 p.m. at least three Business Days prior to the requested Funding Date.  If Agent has notified the Lenders of a requested Borrowing on the Business Day that is one Business Day prior to the Funding Date, then each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s Account, not later than 12:00 p.m. on the Business Day that is the requested Funding Date.  After Agent’s receipt of the proceeds of such Revolving Loans from the Lenders, Agent shall make the proceeds thereof available to Borrowers on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Agent to the Designated Account; provided, that, subject to the provisions of Section 2.3(d)(ii), no Lender shall have an obligation to make any Revolving Loan, if (1) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or (2) the requested Borrowing would exceed the Excess Availability on such Funding Date.

 

(ii)                                  Unless Agent receives notice from a Lender prior to 9:30 a.m. on the Business Day that is the requested Funding Date relative to a requested Borrowing as to which Agent has notified the Lenders of a requested Borrowing that such Lender will not make available as and when required hereunder to Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrowers a corresponding amount.  If, on the requested Funding Date, any Lender shall not have remitted the full amount that it is required to make available to Agent in immediately available funds and if Agent has made available to Borrowers such amount on the requested Funding Date, then such Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s Account, no later than 12:00 p.m. on the Business Day that is the first Business Day after the requested Funding Date (in which case, the interest accrued on such Lender’s portion of such Borrowing for the Funding Date shall be for Agent’s separate account).  If any Lender shall not remit the full amount that it is required to make available to Agent in immediately available funds as and when required hereby and if Agent has made available to Borrowers such amount, then that Lender shall be obligated to immediately remit such amount to Agent, together with interest at the Defaulting Lender Rate for each day until the date on which such amount is so remitted.  A notice submitted by Agent to any Lender with respect to amounts owing under this Section 2.3(c)(ii) shall be conclusive, absent manifest error.  If the amount that a Lender is required to remit is made available to Agent, then such payment to Agent shall constitute such Lender’s Revolving Loan for all purposes of this Agreement.  If such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Revolving Loans composing such Borrowing.

 

6

 

(d)                                 Protective Advances and Optional Overadvances.

 

(i)                                     Any contrary provision of this Agreement or any other Loan Document notwithstanding, but subject to Section 2.3(d)(iv), at any time (A) after the occurrence and during the continuance of a Default or an Event of Default, or (B) that any of the other applicable conditions precedent set forth in Section 3 are not satisfied, Agent hereby is authorized by Borrowers and the Lenders, from time to time, in Agent’s sole discretion, to make Revolving Loans to, or for the benefit of, Borrowers, on behalf of the Revolving Lenders, that Agent, in its Permitted Discretion, deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, or (2) to enhance the likelihood of repayment of the Obligations (other than the Bank Product Obligations) (the Revolving Loans described in this Section 2.3(d)(i) shall be referred to as “Protective Advances”). Agent’s authorization to make Protective Advances may be revoked at any time by the Required Lenders delivering written notice of such revocation to Agent.  Any such revocation shall become effective prospectively upon Agent’s receipt thereof.

 

(ii)                                  Any contrary provision of this Agreement or any other Loan Document notwithstanding, but subject to Section 2.3(d)(iv), the Lenders hereby authorize Agent or Swing Lender, as applicable, and either Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly and intentionally, continue to make Revolving Loans (including Swing Loans) to Borrowers notwithstanding that an Overadvance exists or would be created thereby, so long as (A) after giving effect to such Revolving Loans, the outstanding Revolver Usage does not exceed the Borrowing Base by more than $10,000,000, and (B) after giving effect to such Revolving Loans, the outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account for interest, fees, Indemnified Taxes, or Lender Group Expenses) does not exceed the Maximum Revolver Amount.  In the event Agent obtains actual knowledge that an Overadvance exists, Agent shall notify the Lenders as soon as practicable (and prior to making any (or any additional) intentional Overadvances (except for and excluding amounts charged to the Loan Account for interest, fees, Indemnified Taxes, or Lender Group Expenses) unless Agent determines that prior notice would result in imminent harm to the Collateral or its value, in which case Agent may make such Overadvances and provide notice as promptly as practicable thereafter), and the Lenders with Revolver Commitments thereupon shall, together with Agent, jointly determine the terms of arrangements that shall be implemented with Borrowers intended to eliminate the Overadvance.  In such circumstances, if any Lender with a Revolver Commitment objects to the proposed terms of reduction or repayment of any Overadvance, the terms of reduction or repayment thereof shall be implemented according to the determination of the Required Lenders.  In any event, (1) Borrowers may not have outstanding Overadvances for more than 30 consecutive days and at the end of such period shall immediately repay Revolving Loans in an amount sufficient to eliminate all Overadvances, and (2) once eliminated, no further Overadvances may exist or be made for at least 5 consecutive days thereafter.  The foregoing provisions are meant for the benefit of the Lenders and Agent and are not meant for the benefit of Borrowers, which shall continue to be bound by the provisions of Section 2.4(e)(i).  Each Lender with a Revolver Commitment shall be obligated to settle with Agent as provided in Section 2.3(e) (or Section 2.3(g), as applicable) for the amount of such Lender’s Pro Rata Share of any unintentional Overadvances by Agent reported to such Lender, any intentional Overadvances made as permitted under this Section 2.3(d)(ii), and any Overadvances resulting

 

7

 

from the charging to the Loan Account of interest, fees, Indemnified Taxes, or Lender Group Expenses.

 

(iii)                               Each Protective Advance and each Overadvance (each, an “Extraordinary Advance”) shall be deemed to be a Revolving Loan hereunder, except that no Extraordinary Advance shall be eligible to be a LIBOR Rate Loan and, prior to Settlement therefor, all payments on the Extraordinary Advances, including interest thereon, shall be payable to Agent solely for its own account.  The Extraordinary Advances shall be repayable on demand, secured by Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Revolving Loans that are Base Rate Loans.  The provisions of this Section 2.3(d) are for the exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended to benefit Borrowers (or any other Loan Party) in any way.

 

(iv)                              Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary, no Extraordinary Advance may be made by Agent if such Extraordinary Advance would cause the aggregate principal amount of Extraordinary Advances outstanding to exceed an amount equal to 10% of the Maximum Revolver Amount, or any Lender’s Pro Rata Share of the Revolver Usage to exceed such Lender’s Revolver Commitments; provided that Agent may make Extraordinary Advances in excess of the foregoing limitations so long as such Extraordinary Advances that would cause the aggregate Revolver Usage to exceed the Maximum Revolver Amount or a Lender’s Pro Rata Share of the Revolver Usage to exceed such Lender’s Revolver Commitments are for Agent’s sole and separate account and not for the account of any Lender (except for amounts charged to the Loan Account for interest, fees, Indemnified Taxes, and Lender Group Expenses).  No Lender shall have an obligation to settle with Agent for such Extraordinary Advances that cause the aggregate Revolver Usage to exceed the Maximum Revolver Amount or a Lender’s Pro Rata Share of the Revolver Usage to exceed such Lender’s Revolver Commitments as provided in Section 2.3(e) (or Section 2.3(g), as applicable).

 

(e)                                  Settlement.  It is agreed that each Lender’s funded portion of the Revolving Loans is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding Revolving Loans.  Such agreement notwithstanding, Agent, Swing Lender, and the other Lenders agree (which agreement shall not be for the benefit of Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among the Lenders as to the Revolving Loans, the Swing Loans, and the Extraordinary Advances shall take place on a periodic basis in accordance with the following provisions:

 

(i)                                     Agent shall request settlement (“Settlement”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by Agent in its sole discretion (1) on behalf of Swing Lender, with respect to the outstanding Swing Loans, (2) for itself, with respect to the outstanding Extraordinary Advances, and (3) with respect to Borrowers’ or any of their Restricted Subsidiaries’ payments or other amounts received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m. on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the “Settlement Date”).  Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Revolving

 

8

 

Loans, Swing Loans, and Extraordinary Advances for the period since the prior Settlement Date.  Subject to the terms and conditions contained herein (including Section 2.3(g)):  (y) if the amount of the Revolving Loans (including Swing Loans, and Extraordinary Advances) made by a Lender that is not a Defaulting Lender exceeds such Lender’s Pro Rata Share of the Revolving Loans (including Swing Loans, and Extraordinary Advances) as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Swing Loans, and Extraordinary Advances), and (z) if the amount of the Revolving Loans (including Swing Loans, and Extraordinary Advances) made by a Lender is less than such Lender’s Pro Rata Share of the Revolving Loans (including Swing Loans, and Extraordinary Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m. on the Settlement Date transfer in immediately available funds to Agent’s Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances).  Such amounts made available to Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Swing Loans or Extraordinary Advances and, together with the portion of such Swing Loans or Extraordinary Advances representing Swing Lender’s Pro Rata Share thereof, shall constitute Revolving Loans of such Lenders.  If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.

 

(ii)                                  In determining whether a Lender’s balance of the Revolving Loans, Swing Loans, and Extraordinary Advances is less than, equal to, or greater than such Lender’s Pro Rata Share of the Revolving Loans, Swing Loans, and Extraordinary Advances as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Agent with respect to principal, interest, fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral.

 

(iii)                               Between Settlement Dates, Agent, to the extent Extraordinary Advances or Swing Loans are outstanding, may pay over to Agent or Swing Lender, as applicable, any payments or other amounts received by Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to the Extraordinary Advances or Swing Loans.  Between Settlement Dates, Agent, to the extent no Extraordinary Advances or Swing Loans are outstanding, may pay over to Swing Lender any payments or other amounts received by Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to Swing Lender’s Pro Rata Share of the Revolving Loans.  If, as of any Settlement Date, payments or other amounts of Borrowers or their Restricted Subsidiaries received since the then immediately preceding Settlement Date have been applied to Swing Lender’s Pro Rata Share of the Revolving Loans other than to Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the Lenders (other than a Defaulting Lender if Agent has implemented the provisions of Section 2.3(g)), to be applied to the outstanding Revolving Loans of such Lenders, an amount such that each such Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the

 

9

 

Revolving Loans.  During the period between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with respect to Extraordinary Advances, and each Lender with respect to the Revolving Loans other than Swing Loans and Extraordinary Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Swing Lender, Agent, or the Lenders, as applicable.

 

(iv)                              Anything in this Section 2.3(e) to the contrary notwithstanding, in the event that a Lender is a Defaulting Lender, Agent shall be entitled to refrain from remitting settlement amounts to the Defaulting Lender and, instead, shall be entitled to elect to implement the provisions set forth in Section 2.3(g).

 

(f)                                   Notation.  Agent, as a non-fiduciary agent for Borrowers, shall maintain a register showing the principal amount and stated interest of the Revolving Loans owing to each Lender, including the Swing Loans owing to Swing Lender, and Extraordinary Advances owing to Agent, and the interests therein of each Lender, from time to time and such register shall, absent manifest error, conclusively be presumed to be correct and accurate.

 

(g)                                  Defaulting Lenders.

 

(i)                                     Notwithstanding the provisions of Section 2.4(b)(ii), Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrowers to Agent for the Defaulting Lender’s benefit or any proceeds of Collateral that would otherwise be remitted hereunder to the Defaulting Lender, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments (A) first, to Agent to the extent of any Extraordinary Advances that were made by Agent and that were required to be, but were not, paid by Defaulting Lender, (B) second, to Swing Lender to the extent of any Swing Loans that were made by Swing Lender and that were required to be, but were not, paid by the Defaulting Lender, (C) third, to Issuing Bank, to the extent of the portion of a Letter of Credit Disbursement that was required to be, but was not, paid by the Defaulting Lender, (D) fourth, to each Non-Defaulting Lender ratably in accordance with their Commitments (but, in each case, only to the extent that such Defaulting Lender’s portion of a Revolving Loan (or other funding obligation) was funded by such other Non-Defaulting Lender), (E) fifth, to a suspense account maintained by Agent, the proceeds of which shall be retained by Agent and may be made available to be re-advanced to or for the benefit of Borrowers (upon the request of Borrowers and subject to the conditions set forth in Section 3.2) as if such Defaulting Lender had made its portion of Revolving Loans (or other funding obligations) hereunder, and (F) sixth, from and after the date on which all other Obligations have been paid in full, to such Defaulting Lender in accordance with tier (L) of Section 2.4(b)(ii).  Subject to the foregoing, Agent may hold and, in its discretion, re-lend to Borrowers for the account of such Defaulting Lender the amount of all such payments received and retained by Agent for the account of such Defaulting Lender.  Solely for the purposes of voting or consenting to matters with respect to the Loan Documents (including the calculation of Pro Rata Share in connection therewith) and for the purpose of calculating the fee payable under Section 2.10(b), such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero; provided, that the foregoing shall not apply to any of the matters governed by Section 14.1(a)(i) through (iii).  The provisions of this Section 2.3(g) shall remain effective with respect to such Defaulting Lender until the earlier of (y) the date on which all of the Non-Defaulting Lenders, Agent, Issuing Bank,

 

10

 

and Borrowers shall have waived, in writing, the application of this Section 2.3(g) to such Defaulting Lender, or (z) the date on which such Defaulting Lender makes payment of all amounts that it was obligated to fund hereunder, pays to Agent all amounts owing by Defaulting Lender in respect of the amounts that it was obligated to fund hereunder, and, if requested by Agent, provides adequate assurance of its ability to perform its future obligations hereunder (on which earlier date, so long as no Event of Default has occurred and is continuing, any remaining cash collateral held by Agent pursuant to Section 2.3(g)(ii) shall be released to Borrowers).  The operation of this Section 2.3(g) shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by any Borrower of its duties and obligations hereunder to Agent, Issuing Bank, or to the Lenders other than such Defaulting Lender.  Any failure by a Defaulting Lender to fund amounts that it was obligated to fund hereunder shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Borrowers, at their option, upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Agent.  In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being paid its share of the outstanding Obligations (other than Bank Product Obligations, but including (1) all interest, fees, and other amounts that may be due and payable in respect thereof, and (2) an assumption of its Pro Rata Share of its participation in the Letters of Credit); provided, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’ rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.  In the event of a direct conflict between the priority provisions of this Section 2.3(g) and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other.  In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.3(g) shall control and govern.

 

(ii)                                  If any Swing Loan or Letter of Credit is outstanding at the time that a Lender becomes a Defaulting Lender then:

 

(A)                               such Defaulting Lender’s Swing Loan Exposure and Letter of Credit Exposure shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Pro Rata Shares but only to the extent (x) the sum of all Non-Defaulting Lenders’ Pro Rata Share of Revolver Usage plus such Defaulting Lender’s Swing Loan Exposure and Letter of Credit Exposure does not exceed the total of all Non-Defaulting Lenders’ Revolver Commitments and (y) the conditions set forth in Section 3.2 are satisfied at such time;

 

(B)                               if the reallocation described in clause (A) above cannot, or can only partially, be effected, Borrowers shall within one Business Day following notice by the Agent (x) first, prepay such Defaulting Lender’s Swing Loan Exposure (after giving effect to any partial reallocation pursuant to clause (A) above) and (y) second, cash collateralize such Defaulting Lender’s Letter of Credit Exposure (after giving effect to any partial reallocation

 

11

 

pursuant to clause (A) above), pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the Agent, for so long as such Letter of Credit Exposure is outstanding; provided, that Borrowers shall not be obligated to cash collateralize any Defaulting Lender’s Letter of Credit Exposure if such Defaulting Lender is also the Issuing Bank;

 

(C)                               if Borrowers cash collateralize any portion of such Defaulting Lender’s Letter of Credit Exposure pursuant to this Section 2.3(g)(ii), Borrowers shall not be required to pay any Letter of Credit Fees to Agent for the account of such Defaulting Lender pursuant to Section 2.6(b) with respect to such cash collateralized portion of such Defaulting Lender’s Letter of Credit Exposure during the period such Letter of Credit Exposure is cash collateralized;

 

(D)                               to the extent the Letter of Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant to this Section 2.3(g)(ii), then the Letter of Credit Fees payable to the Non-Defaulting Lenders pursuant to Section 2.6(b) shall be adjusted in accordance with such Non-Defaulting Lenders’ Letter of Credit Exposure;

 

(E)                                to the extent any Defaulting Lender’s Letter of Credit Exposure is neither cash collateralized nor reallocated pursuant to this Section 2.3(g)(ii), then, without prejudice to any rights or remedies of the Issuing Bank or any Lender hereunder, all Letter of Credit Fees that would have otherwise been payable to such Defaulting Lender under Section 2.6(b) with respect to such portion of such Letter of Credit Exposure shall instead be payable to the Issuing Bank until such portion of such Defaulting Lender’s Letter of Credit Exposure is cash collateralized or reallocated;

 

(F)                                 so long as any Lender is a Defaulting Lender, the Swing Lender shall not be required to make any Swing Loan and the Issuing Bank shall not be required to issue, amend, or increase any Letter of Credit, in each case, to the extent (x) the Defaulting Lender’s Pro Rata Share of such Swing Loans or Letter of Credit cannot be reallocated pursuant to this Section 2.3(g)(ii) or (y) the Swing Lender or Issuing Bank, as applicable, has not otherwise entered into arrangements reasonably satisfactory to the Swing Lender or Issuing Bank, as applicable, and Borrowers to eliminate the Swing Lender’s or Issuing Bank’s risk with respect to the Defaulting Lender’s participation in Swing Loans or Letters of Credit; and

 

(G)                               Agent may release any cash collateral provided by Borrowers pursuant to this Section 2.3(g)(ii) to the Issuing Bank and the Issuing Bank may apply any such cash collateral to the payment of such Defaulting Lender’s Pro Rata Share of any Letter of Credit Disbursement that is not reimbursed by Borrowers pursuant to Section 2.11(d). Subject to Section 17.14, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

 

(h)                                 Independent Obligations.  All Revolving Loans (other than Swing Loans and Extraordinary Advances) shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares.  It is understood that (i) no Lender shall be responsible

 

12

 

for any failure by any other Lender to perform its obligation to make any Revolving Loan (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.

 

2.4                               Payments; Reductions of Commitments; Prepayments.

 

(a)                                 Payments by Borrowers.

 

(i)                                     Except as otherwise expressly provided herein, all payments by Borrowers shall be made to Agent’s Account for the account of the Lender Group and shall be made in immediately available funds, no later than 1:30 p.m. on the date specified herein.  Any payment received by Agent later than 1:30 p.m. shall be deemed to have been received (unless Agent, in its sole discretion, elects to credit it on the date received) on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day.

 

(ii)                                  Unless Agent receives notice from Borrowers prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in full as and when required, Agent may assume that Borrowers have made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender.  If and to the extent Borrowers do not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid.

 

(b)                                 Apportionment and Application.

 

(i)                                     So long as no Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, all principal and interest payments received by Agent shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender) and all payments of fees and expenses received by Agent (other than fees or expenses that are for Agent’s separate account or for the separate account of Issuing Bank) shall be apportioned ratably among the Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee or expense relates.  Subject to Section 2.4(b)(iv), all payments to be made hereunder by Borrowers shall be remitted to Agent and all such payments, and all proceeds of Collateral received by Agent, shall be applied, so long as no Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, to reduce the balance of the Revolving Loans outstanding and, thereafter, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.

 

13

 

(ii)                                  At any time that an Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, all payments remitted to Agent and all proceeds of Collateral received by Agent shall, subject to the terms of the Intercreditor Agreement, be applied as follows:

 

(A)                               first, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities (including any indemnities for Taxes pursuant to Section 16) then due to Agent under the Loan Documents and to pay interest and principal on Extraordinary Advances that are held solely by Agent pursuant to the terms of Section 2.4(d)(iv), until paid in full,

 

(B)                               second, to pay any fees or premiums then due to Agent under the Loan Documents until paid in full,

 

(C)                               third, to pay interest due in respect of all Protective Advances until paid in full,

 

(D)                               fourth, to pay the principal of all Protective Advances until paid in full,

 

(E)                                fifth, ratably, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities (including any indemnities for Taxes pursuant to Section 16) then due to any of the Lenders under the Loan Documents, until paid in full,

 

(F)                                 sixth, ratably, to pay any fees or premiums then due to any of the Lenders under the Loan Documents until paid in full,

 

(G)                               seventh, to pay interest accrued in respect of the Swing Loans until paid in full,

 

(H)                              eighth, to pay the principal of all Swing Loans until paid in full,

 

(I)                                   ninth, ratably, to pay interest accrued in respect of the Revolving Loans (including Extraordinary Advances other than Protective Advances) until paid in full,

 

(J)                                   tenth, ratably, (i) ratably, to pay the principal of all Revolving Loans (including Extraordinary Advances other than Protective Advances) until paid in full, (ii) to Agent, to be held by Agent, for the benefit of Issuing Bank (and for the ratable benefit of each of the Lenders that have an obligation to pay to Agent, for the account of Issuing Bank, a share of each Letter of Credit Disbursement), as cash collateral in an amount up to 105% of the Letter of Credit Usage (to the extent permitted by applicable law, such cash collateral shall be applied to the reimbursement of any Letter of Credit Disbursement as and when such disbursement occurs and, if a Letter of Credit expires undrawn, the cash collateral held by Agent in respect of such Letter of Credit shall, to the extent permitted by applicable law, be reapplied pursuant to this Section 2.4(b)(ii), beginning with tier (A) hereof), and (iii) ratably, up to the amount (after taking into account any amounts previously paid pursuant to this clause iii. during

 

14

 

the continuation of the applicable Application Event) of the most recently established Bank Product Reserve to (y) the Bank Product Providers that are existing Lenders or Affiliates of existing Lenders based upon amounts then certified by the applicable Bank Product Provider to Agent (in form and substance satisfactory to Agent) to be due and payable to such Bank Product Providers on account of Bank Product Obligations, and (z) with any balance to be paid to Agent, to be held by Agent, for the ratable benefit of the Bank Product Providers that are existing Lenders or Affiliates of existing Lenders, as cash collateral (which cash collateral may be released by Agent to the applicable Bank Product Provider and applied by such Bank Product Provider to the payment or reimbursement of any amounts due and payable with respect to Bank Product Obligations owed to the applicable Bank Product Provider as and when such amounts first become due and payable and, if and at such time as all such Bank Product Obligations are paid or otherwise satisfied in full, the cash collateral held by Agent in respect of such Bank Product Obligations shall be reapplied pursuant to this Section 2.4(b)(ii), beginning with tier (A) hereof),

 

(K)                               eleventh, to pay any other Obligations other than Obligations owed to Defaulting Lenders (including being paid, ratably, to the Bank Product Providers on account of all amounts then due and payable in respect of Bank Product Obligations, with any balance to be paid to Agent, to be held by Agent, for the ratable benefit of the Bank Product Providers, as cash collateral),

 

(L)                                twelfth, ratably to pay any Obligations owed to Defaulting Lenders, and

 

(M)                            thirteenth, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.

 

(iii)                               Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided in Section 2.3(e).

 

(iv)                              In each instance, so long as no Application Event has occurred and is continuing, Section 2.4(b)(i) shall not apply to any payment made by Borrowers to Agent and specified by Borrowers to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement or any other Loan Document.

 

(v)                                 For purposes of Section 2.4(b)(ii), “paid in full” of a type of Obligation means payment in cash or immediately available funds of all amounts owing on account of such type of Obligation, including interest accrued after the commencement of any Insolvency Proceeding, default interest, interest on interest, indemnities, and expense reimbursements, irrespective of whether any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

 

(vi)                              In the event of a direct conflict between the priority provisions of this Section 2.4 and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other.  In the event of any

 

15

 

actual, irreconcilable conflict that cannot be resolved as aforesaid, if the conflict relates to the provisions of Section 2.3(g) and this Section 2.4, then the provisions of Section 2.3(g) shall control and govern, and if otherwise, then the terms and provisions of this Section 2.4 shall control and govern.

 

(c)                                  Reduction of Commitments.  The Revolver Commitments shall terminate on the Maturity Date.  Borrowers may reduce the Revolver Commitments, without premium or penalty, from time to time and at any time to an amount (which may be zero) not less than the sum of (i) the Revolver Usage as of such date, plus (ii) the principal amount of all Revolving Loans not yet made as to which a request has been given by Borrowers under Section 2.3(a), plus (iii) the amount of all Letters of Credit not yet issued as to which a request has been given by Borrowers pursuant to Section 2.11(a).  Each such reduction shall be in an amount which is not less than $5,000,000, shall be made by providing not less than three Business Days prior written notice to Agent, and shall be irrevocable.  Once reduced, the Revolver Commitments may not be increased.  Each such reduction of the Revolver Commitments shall reduce the Revolver Commitments of each Lender proportionately in accordance with its ratable share thereof. In connection with any reduction in the Revolver Commitments prior to the Maturity Date, if any Loan Party or any of its Subsidiaries owns any Margin Stock, Borrowers shall deliver to Agent an updated Form U-1 (with sufficient additional originals thereof for each Lender), duly executed and delivered by the Borrowers, together with such other documentation as Agent shall reasonably request, in order to enable Agent and the Lenders to comply with any of the requirements under Regulations T, U or X of the Federal Reserve Board.

 

(d)                                 Optional Prepayments.  Borrowers may prepay the principal of any Revolving Loan from time to time and at any time in whole or in part, without premium or penalty.

 

(e)                                  Mandatory Prepayments.

 

(i)                                     Borrowing Base.  If, at any time, (A) the Revolver Usage on such date exceeds (B) the lesser of (x) Borrowing Base reflected in the Borrowing Base Certificate most recently delivered by Borrowers to Agent, or (y) the Maximum Revolver Amount, in all cases as adjusted for any establishment, increase or decrease in Reserves since the date of such Borrowing Base Certificate, then Borrowers shall promptly, but in any event, within 1 Business Day, prepay the Obligations in accordance with Section 2.4(f) in an aggregate amount equal to the amount of such excess.

 

(ii)                                  Dispositions.  Within 2 Business Days of the date of receipt by Parent Borrower or any of its Restricted Subsidiaries of the Net Cash Proceeds of any voluntary or involuntary sale or disposition by Parent Borrower or the applicable Restricted Subsidiary of Collateral (including casualty losses or condemnations but excluding sales or dispositions which qualify as Permitted Dispositions under clauses (a), (b), (c), (d), (e), (i), (j), (k), (l), (m), (n), (o), (q), (r) or (s) of the definition of Permitted Dispositions), subject to the terms of the Intercreditor Agreement, Borrowers shall prepay the outstanding principal amount of the Obligations in accordance with Section 2.4(f) in an amount equal to 100% of such Net Cash Proceeds (including condemnation awards and payments in lieu thereof) received by such Person in

 

16

 

connection with such sales or dispositions; provided however, that, notwithstanding the foregoing,

 

(1) unless an Activation Instruction has been given by the Agent (which has not been rescinded), no prepayment shall be required until the aggregate Net Cash Proceeds received in any 12-month period exceeds $5 million and (2) in the case of Net Cash Proceeds constituting proceeds of Note Collateral, so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, Parent Borrower may, at its option apply such funds to (x) (1) repay the Term Loan Facility and/or other Pari Passu Lien Obligations (as defined in the Term Loan Facility Credit Agreement), (2) repay Indebtedness of a Restricted Subsidiary that is not a Guarantor of the Term Loan Facility, or (3) make a Collateral Waivable Mandatory Prepayment (as defined in the Term Loan Facility Credit Agreement), in each case, pursuant to Section 4.4(b)(ii) the Term Loan Facility Credit Agreement, or (y) purchase Replacement Assets, so long as (I) Parent Borrower shall have given Agent prior written notice of its intention to apply such monies to the costs of Replacement Assets, and (II) Parent Borrower or the applicable Restricted Subsidiary, as applicable, complete such replacement, purchase, or construction within 365 days after the initial receipt of such monies; provided, however, that any Net Cash Proceeds remaining after having been applied as set forth in subclauses (x) and (y) above shall be applied to prepay the outstanding principal amount of the Obligations pursuant to Section 2.4(f) of the Agreement.

 

Nothing contained in this Section 2.4(e)(ii) shall permit Parent Borrower or any of its Restricted Subsidiaries to sell or otherwise dispose of any assets other than in accordance with Section 6.4.

 

(f)                                   Application of Payments.  Each prepayment pursuant to Section 2.4(e) shall, (A) so long as no Application Event shall have occurred and be continuing, be applied, first, to the outstanding principal amount of the Revolving Loans until paid in full (but, for purposes of clarification, with no corresponding reduction in the Maximum Revolver Amount or Commitments) and second, to cash collateralize the Letters of Credit in an amount equal to 105% of the then outstanding Letter of Credit Usage, provided that such cash collateral shall be returned to Borrowers promptly if an Overadvance does not exist (or after an Overadvance no longer exists) upon delivery to Lender of a written request of Borrowers requesting the return of such cash collateral and (B) if an Application Event shall have occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(ii).

 

2.5                               Promise to Pay; Promissory Notes.

 

(a)                                 Borrowers agree to pay the Lender Group Expenses on the earlier of (i) the first day of the month following the date on which the applicable Lender Group Expenses were first incurred or (ii) 5 Business Days after the date on which demand therefor is made by Agent (it being acknowledged and agreed that any charging of such Lender Group Expenses to the Loan Account pursuant to the provisions of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for the purposes of this subclause (ii)).  Borrowers promise to pay all of the Obligations (including principal, interest, premiums, if any, fees, costs, and expenses (including Lender Group Expenses)) in full on the Maturity Date or, if earlier, on the date on which the Obligations (other than the Bank Product Obligations) become due and payable pursuant to the terms of this Agreement.  Borrowers agree that their obligations contained in the

 

17

 

first sentence of this Section 2.5(a) shall survive payment or satisfaction in full of all other Obligations.

 

(b)                                 Any Lender may request that any portion of its Commitments or the Loans made by it be evidenced by one or more registered promissory notes.  In such event, Borrowers shall execute and deliver to such Lender the requested registered promissory notes payable to such Lender in a form furnished by Agent and reasonably satisfactory to Borrowers.  Thereafter, the portion of the Commitments and Loans evidenced by such registered promissory notes and interest thereon shall at all times be represented by one or more promissory notes in such form payable to the payee named therein.

 

2.6                               Interest Rates and Letter of Credit Fee:  Rates, Payments, and Calculations.

 

(a)                                 Interest Rates.  Except as provided in Section 2.6(c), all Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest as follows:

 

(i)                                     if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin, and

 

(ii)                                  otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.

 

(b)                                 Letter of Credit Fee.  Borrowers shall pay Agent (for the ratable benefit of the Revolving Lenders), a Letter of Credit fee (the “Letter of Credit Fee”) (which fee shall be in addition to the fronting fees and commissions, other fees, charges and expenses set forth in Section 2.11(k)) that shall accrue at a per annum rate equal to the LIBOR Rate Margin times the average amount of the Letter of Credit Usage during the immediately preceding quarter (or if an Event of Default has occurred and is continuing, month).

 

(c)                                  Default Rate.  Upon the occurrence and during the continuation of an Event of Default, at the election of Agent or the Required Lenders,

 

(i)                                     all Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest at a per annum rate equal to 2 percentage points above the per annum rate otherwise applicable thereunder (or in the event there is no applicable rate, 2 percentage points per annum in excess of the rate otherwise applicable to Base Rate Loans from time to time), and

 

(ii)                                  the Letter of Credit Fee shall be increased to 2 percentage points above the per annum rate otherwise applicable hereunder.

 

(d)                                 Payment.  Except to the extent provided to the contrary in Section 2.10, Section 2.11(k) or Section 2.12(a), (i) all interest and all other fees payable hereunder or under any of the other Loan Documents (other than Letter of Credit Fees) shall be due and payable, in arrears, on the first day of each quarter; provided, that if an Event of Default has occurred and is continuing, such amounts shall be due and payable, in arrears, on the first day of each month, (ii) all Letter of Credit Fees payable hereunder, and all fronting fees and all commissions, other fees,

 

18

 

charges and expenses provided for in Section 2.11(k)  shall be due and payable, in arrears, on the first Business Day of each quarter; provided, that if an Event of Default has occurred and is continuing, such Letter of Credit Fees shall be due and payable, in arrears, on the first Business Day of each month, and (iii) all costs and expenses payable hereunder or under any of the other Loan Documents, and all other Lender Group Expenses shall be due and payable on the earlier of (x) the first day of the month following the date on which the applicable costs, expenses, or Lender Group Expenses were first incurred, or (y) the date on which demand therefor is made by Agent (it being acknowledged and agreed that any charging of such costs, expenses or Lender Group Expenses to the Loan Account pursuant to the provisions of the following sentence shall be deemed to constitute a demand for payment thereof for the purposes of this subclause (y)).  Borrowers hereby authorize Agent, from time to time without prior notice to Borrowers, to charge to the Loan Account (A) on the first day of each quarter (or, if an Event of Default has occurred and is continuing, on the first day of each month), all interest accrued during the prior quarter (or if an Event of Default has occurred and is continuing, month) on the Revolving Loans, (B) on the first Business Day of each quarter (or, if an Event of Default has occurred and is continuing, on the first Business Day of each month), all Letter of Credit Fees accrued or chargeable hereunder during the prior quarter (or, if an Event of Default has occurred and is continuing, during the prior month), (C) as and when incurred or accrued, all fees and costs provided for in Section 2.10(a) or (c), (D) on the first day of each quarter (or, if an Event of Default has occurred and is continuing, during the prior month), the Unused Line Fee accrued during the prior quarter (or if an Event of Default has occurred and is continuing, month) pursuant to Section 2.10(b), (E) as and when due and payable, all other fees payable (including any Indemnified Taxes payable pursuant to Section 16) hereunder or under any of the other Loan Documents, (F) as and when incurred or accrued, all other Lender Group Expenses, and (G) as and when due and payable all other payment obligations payable under any Loan Document or any Bank Product Agreement (including any amounts due and payable to the Bank Product Providers in respect of Bank Products).  All amounts (including interest, fees, costs, expenses, Lender Group Expenses, or other amounts payable hereunder or under any other Loan Document or under any Bank Product Agreement) charged to the Loan Account shall thereupon constitute Revolving Loans hereunder (unless paid on the same day they are charged to the Loan Account, in which case they shall not constitute Revolving Loans and shall not accrue interest), shall constitute Obligations hereunder, and shall initially accrue interest at the rate then applicable to Revolving Loans that are Base Rate Loans (unless and until converted into LIBOR Rate Loans in accordance with the terms of this Agreement).

 

(e)                                  Computation.  All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year, in each case, for the actual number of days elapsed in the period during which the interest or fees accrue.  In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Base Rate automatically and immediately shall be increased or decreased by an amount equal to such change in the Base Rate.

 

(f)                                   Intent to Limit Charges to Maximum Lawful Rate.  In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable.  Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest

 

19

 

and manner of payment stated within it; provided, that, anything contained herein to the contrary notwithstanding, if such rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum amount as is allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.

 

2.7                               Crediting Payments.  The receipt of any payment item by Agent shall not be required to be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to Agent’s Account or unless and until such payment item is honored when presented for payment.  Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not to have made such payment and interest shall be calculated accordingly.  Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Agent only if it is received into Agent’s Account on a Business Day on or before 1:30 p.m.  If any payment item is received into Agent’s Account on a non-Business Day or after 1:30 p.m. on a Business Day (unless Agent, in its sole discretion, elects to credit it on the date received), it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day.

 

2.8                               Designated Account.  Agent is authorized to make the Revolving Loans, and Issuing Bank is authorized to issue the Letters of Credit, under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(d).  Borrowers agree to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Revolving Loans requested by Borrowers and made by Agent or the Lenders hereunder.  Unless otherwise agreed by Agent and Borrowers, any Revolving Loan or Swing Loan requested by Borrowers and made by Agent or the Lenders hereunder shall be made to the Designated Account.

 

2.9                               Maintenance of Loan Account; Statements of Obligations.  Agent shall maintain an account on its books in the name of Borrowers (the “Loan Account”) on which Borrowers will be charged with all Revolving Loans (including Extraordinary Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrowers or for Borrowers’ account, the Letters of Credit issued or arranged by Issuing Bank for Borrowers’ account, and with all other payment Obligations hereunder or under the other Loan Documents, including, accrued interest, fees and expenses (including Indemnified Taxes payable pursuant to Section 16), and Lender Group Expenses.  In accordance with Section 2.7, the Loan Account will be credited with all payments received by Agent from Borrowers or for Borrowers’ account.  Agent shall make available to Borrowers monthly statements regarding the Loan Account, including the principal amount of the Revolving Loans, interest accrued hereunder, fees accrued or charged hereunder or under the other Loan Documents, and a summary itemization of all charges and expenses constituting Lender Group Expenses accrued hereunder or under the other Loan Documents, and each such statement, absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and the Lender Group unless, within 30 days after Agent first makes such a statement available to Borrowers, Borrowers shall deliver to Agent written objection thereto describing the error or errors contained in such statement.

 

20

 

2.10                        Fees.

 

(a)                                 Agent Fees.  Borrowers shall pay to Agent, for the account of Agent, as and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter.

 

(b)                                 Unused Line Fee.  Borrowers shall pay to Agent, for the ratable account of the Revolving Lenders, an unused line fee (the “Unused Line Fee”) in an amount equal to the Applicable Unused Line Fee Percentage per annum times the result of (i) the aggregate amount of the Revolver Commitments, less (ii) the average amount of the Revolver Usage during the immediately preceding quarter, which Unused Line Fee shall be due and payable on the first day of each calendar quarter; provided, that if an Event of Default has occurred and is continuing, such Unused Line Fee shall be due and payable, in arrears, on the first day of each month, from and after the Closing Date until the first day of the calendar quarter (or month, if applicable) prior to the date on which the Obligations are paid in full and on the date on which the Obligations are paid in full.

 

(c)                                  Field Examination and Other Fees.  Borrowers shall pay to Agent, field examination, appraisal, and valuation fees and charges, as and when incurred or chargeable, as follows (i) a fee of $1,000 per day, per examiner, plus reasonable, documented out-of-pocket expenses (including travel, meals, and lodging) for each field examination of a Borrower performed by personnel employed by Agent, and (ii) the reasonable fees or charges paid or incurred by Agent (but, in any event, no less than a charge of $1,000 per day, per Person, plus reasonable, documented out-of-pocket expenses (including travel, meals, and lodging)) if it elects to employ the services of one or more third Persons to perform field examinations of a Borrower or to appraise the Collateral, or any portion thereof; provided, that (i) so long as no Event of Default shall have occurred and be continuing, Borrowers shall not be obligated to reimburse Agent for more than one (1) field examination during any calendar year or more than one (1) inventory appraisal during any calendar year, in each case, whether any such field examination or appraisal is conducted as to any or all Borrowers and/or all or any portion of their respective Collateral; provided further that Agent will be able to conduct, at the sole cost and expense of Borrowers, one (1) additional field examination and one (1) additional inventory appraisal during any calendar year, if Excess Availability shall be less than the greater of (1) $20,000,000 and (2) 15.0% of the Line Cap at any time.  Notwithstanding the foregoing, following the occurrence and during the continuation of an Event of Default such field examinations and inventory appraisals may be conducted at the Borrowers’ expense as many times as the Agent shall consider reasonably necessary.

 

2.11                        Letters of Credit.

 

(a)                                 Subject to the terms and conditions of this Agreement, upon the request of Borrowers made in accordance herewith, and prior to the Maturity Date, Issuing Bank agrees to issue a requested standby Letter of Credit or a sight commercial Letter of Credit for the account of either or both of Borrowers or any of their respective Restricted Subsidiaries.  By submitting a request to Issuing Bank for the issuance of a Letter of Credit, Borrowers shall be deemed to have requested that Issuing Bank issue the requested Letter of Credit.  Each request for the issuance of a Letter of Credit, or the amendment, renewal, or extension of any outstanding Letter of Credit, shall be (i) irrevocable made in writing by an Authorized Person (ii) delivered to Agent and

 

21

 

Issuing Bank via telefacsimile or other electronic method of transmission reasonably acceptable to Agent and Issuing Bank and reasonably in advance of the requested date of issuance, amendment, renewal, or extension and (iii) subject to Issuing Bank’s authentication procedures with results satisfactory to Issuing Bank.  Each such request shall be in form and substance reasonably satisfactory to Agent and Issuing Bank and (i) shall specify (A) the amount of such Letter of Credit, (B) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (C) the proposed expiration date of such Letter of Credit, (D) the name and address of the beneficiary of the Letter of Credit, and (E) such other information (including, the conditions to drawing, and, in the case of an amendment, renewal, or extension, identification of the Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit, and (ii) shall be accompanied by such Issuer Documents as Agent or Issuing Bank may request or require, to the extent that such requests or requirements are consistent with the Issuer Documents that Issuing Bank generally requests for Letters of Credit in similar circumstances.  Issuing Bank’s records of the content of any such request will be conclusive.  Anything contained herein to the contrary notwithstanding, Issuing Bank may, but shall not be obligated to, issue a Letter of Credit that supports the obligations of Borrowers or one of the Restricted Subsidiaries in respect of (x) a lease of real property to the extent that the face amount of such Letter of Credit exceeds the highest rent (including all rent-like charges) payable under such lease for a period of one year, or (y) an employment contract to the extent that the face amount of such Letter of Credit exceeds the highest compensation payable under such contract for a period of one year.

 

(b)                                 Issuing Bank shall not issue a Letter of Credit if any of the following would result after giving effect to the requested issuance:

 

(i)                                     the Letter of Credit Usage would exceed $50,000,000; or

 

(ii)                                  the Letter of Credit Usage would exceed the Maximum Revolver Amount less the outstanding amount of Revolving Loans (including Swing Loans), or

 

(iii)                               the Letter of Credit Usage would exceed the Borrowing Base at such time less the outstanding principal balance of the Revolving Loans (inclusive of Swing Loans) at such time.

 

(c)                                  In the event there is a Defaulting Lender as of the date of any request for the issuance of a Letter of Credit, Issuing Bank shall not be required to issue or arrange for such Letter of Credit to the extent (i) the Defaulting Lender’s Letter of Credit Exposure with respect to such Letter of Credit may not be reallocated pursuant to Section 2.3(g)(ii), or (ii) Issuing Bank has not otherwise entered into arrangements reasonably satisfactory to it and Borrowers to eliminate Issuing Bank’s risk with respect to the participation in such Letter of Credit of the Defaulting Lender, which arrangements may include Borrowers cash collateralizing such Defaulting Lender’s Letter of Credit Exposure in accordance with Section 2.3(g)(ii).  Additionally, Issuing Bank shall have no obligation to issue a Letter of Credit if (A) any order, judgment, or decree of any Governmental Authority or arbitrator shall, by its terms, purport to enjoin or restrain Issuing Bank from issuing such Letter of Credit, or any law applicable to Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over Issuing Bank shall prohibit or request that Issuing

 

22

 

Bank refrain from the issuance of letters of credit generally or such Letter of Credit in particular, (B) the issuance of such Letter of Credit would violate one or more policies of Issuing Bank applicable to letters of credit generally, or (C) if amounts demanded to be paid under any Letter of Credit will not or may not be in United States Dollars.

 

(d)                                 Any Issuing Bank (other than Wells Fargo or any of its Affiliates) shall notify Agent in writing no later than the Business Day prior to the Business Day on which such Issuing Bank issues any Letter of Credit.  In addition, each Issuing Bank (other than Wells Fargo or any of its Affiliates) shall, on the first Business Day of each week, submit to Agent a report detailing the daily undrawn amount of each Letter of Credit issued by such Issuing Bank during the prior calendar week.  Borrowers and the Lender Group hereby acknowledge and agree that all Existing Letters of Credit listed on Schedule 2.11 shall constitute Letters of Credit under this Agreement on and after the Closing Date with the same effect as if such Existing Letters of Credit were issued by Issuing Bank at the request of Borrowers on the Closing Date; provided that, notwithstanding the foregoing or any other provision of the Loan Documents to the contrary, no issuance or similar fees shall be charged to Borrowers pursuant to Section 2.11(k) or any other provision of the Loan Documents with respect to any Existing Letter of Credit on or after the Closing Date (all of which are hereby waived by the Lender Group) unless such Existing Letter of Credit is renewed or extended. If Issuing Bank makes a payment under a Letter of Credit, Borrowers shall pay to Agent an amount equal to the applicable Letter of Credit Disbursement on the Business Day such Letter of Credit Disbursement is made and, in the absence of such payment, the amount of the Letter of Credit Disbursement immediately and automatically shall be deemed to be a Revolving Loan hereunder (notwithstanding any failure to satisfy any condition precedent set forth in Section 3) and, initially, shall bear interest at the rate then applicable to Revolving Loans that are Base Rate Loans.  If a Letter of Credit Disbursement is deemed to be a Revolving Loan hereunder, Borrowers’ obligation to pay the amount of such Letter of Credit Disbursement to Issuing Bank shall be automatically converted into an obligation to pay the resulting Revolving Loan.  Promptly following receipt by Agent of any payment from Borrowers pursuant to this paragraph, Agent shall distribute such payment to Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to Section 2.11(e) to reimburse Issuing Bank, then to such Revolving Lenders and Issuing Bank as their interests may appear.

 

(e)                                  Promptly following receipt of a notice of a Letter of Credit Disbursement pursuant to Section 2.11(d), each Revolving Lender agrees to fund its Pro Rata Share of any Revolving Loan deemed made pursuant to Section 2.11(d) on the same terms and conditions as if Borrowers had requested the amount thereof as a Revolving Loan and Agent shall promptly pay to Issuing Bank the amounts so received by it from the Revolving Lenders.  By the issuance of a Letter of Credit (or an amendment, renewal, or extension of a Letter of Credit) and without any further action on the part of Issuing Bank or the Revolving Lenders, Issuing Bank shall be deemed to have granted to each Revolving Lender, and each Revolving Lender shall be deemed to have purchased, a participation in each Letter of Credit issued by Issuing Bank, in an amount equal to its Pro Rata Share of such Letter of Credit, and each such Revolving Lender agrees to pay to Agent, for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share of any Letter of Credit Disbursement made by Issuing Bank under the applicable Letter of Credit.  In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to Agent, for the account of Issuing Bank, such Revolving

 

23

 

Lender’s Pro Rata Share of each Letter of Credit Disbursement made by Issuing Bank and not reimbursed by Borrowers on the date due as provided in Section 2.11(d), or of any reimbursement payment that is required to be refunded (or that Agent or Issuing Bank elects, based upon the advice of counsel, to refund) to Borrowers for any reason.  Each Revolving Lender acknowledges and agrees that its obligation to deliver to Agent, for the account of Issuing Bank, an amount equal to its respective Pro Rata Share of each Letter of Credit Disbursement pursuant to this Section 2.11(e) shall be absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth in Section 3.  If any such Revolving Lender fails to make available to Agent the amount of such Revolving Lender’s Pro Rata Share of a Letter of Credit Disbursement as provided in this Section, such Revolving Lender shall be deemed to be a Defaulting Lender and Agent (for the account of Issuing Bank) shall be entitled to recover such amount on demand from such Revolving Lender together with interest thereon at the Defaulting Lender Rate until paid in full.

 

(f)                                   Each Borrower agrees to indemnify, defend and hold harmless each member of the Lender Group (including Issuing Bank and its branches, Affiliates, and correspondents) and each such Person’s respective directors, officers, employees, attorneys and agents (each, including Issuing Bank, a “Letter of Credit Related Person”) (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and disbursements of attorneys, experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), which may be incurred by or awarded against any Letter of Credit Related Person (other than Taxes, except for Taxes arising from a non-Tax claim pursuant to this Section 2.11(f)) (the “Letter of Credit Indemnified Costs”), and which arise out of or in connection with, or as a result of this Agreement, any Letter of Credit, any Issuer Document, or any Drawing Document referred to in or related to any Letter of Credit, or any action or proceeding arising out of any of the foregoing (whether administrative, judicial or in connection with arbitration); in each case, including that resulting from the Letter of Credit Related Person’s own negligence, or any prohibition or payment or delay in payment of any amount payable by Issuing Bank to a beneficiary or transferee beneficiary of a Letter of Credit arising out of Anti-Corruption Laws, Anti-Money Laundering Laws, or Sanctions; provided, however, that such indemnity shall not be available to any Letter of Credit Related Person claiming indemnification to the extent that such Letter of Credit Indemnified Costs may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction to have resulted directly from the gross negligence, bad faith or willful misconduct of the Letter of Credit Related Person claiming indemnity or the material breach by the Letter of Credit Related Person of this Agreement, any other Loan Document or any Issuer Document finally determined in a final, non-appealable judgment of a court of competent jurisdiction.  This indemnification provision shall survive termination of this Agreement and all Letters of Credit.

 

(g)                                  The liability of Issuing Bank (or any other Letter of Credit Related Person) under, in connection with or arising out of any Letter of Credit (or pre-advice), regardless of the form or legal grounds of the action or proceeding, shall be limited to direct damages suffered by Borrowers that are caused directly by Issuing Bank’s gross negligence, bad faith or willful

 

24

 

misconduct in (i) honoring a presentation under a Letter of Credit that on its face does not at least substantially comply with the terms and conditions of such Letter of Credit, (ii) failing to honor a presentation under a Letter of Credit that strictly complies with the terms and conditions of such Letter of Credit or (iii) retaining Drawing Documents presented under a Letter of Credit.  Issuing Bank shall be deemed to have acted with due diligence and reasonable care if Issuing Bank’s conduct is in accordance with Standard Letter of Credit Practice or in accordance with this Agreement.  Borrowers’ aggregate remedies against Issuing Bank and any Letter of Credit Related Person for wrongfully honoring a presentation under any Letter of Credit or wrongfully retaining honored Drawing Documents shall in no event exceed the aggregate amount paid by Borrowers to Issuing Bank in respect of the honored presentation in connection with such Letter of Credit under Section 2.11(d), plus interest at the rate then applicable to Base Rate Loans hereunder.  Borrowers shall take action to avoid and mitigate the amount of any damages claimed against Issuing Bank or any other Letter of Credit Related Person, including by enforcing its rights against the beneficiaries of the Letters of Credit.  Any claim by Borrowers under or in connection with any Letter of Credit shall be reduced by an amount equal to the sum of (x) the amount (if any) saved by Borrowers as a result of the breach or alleged wrongful conduct complained of; and (y) the amount (if any) of the loss that would have been avoided had Borrowers taken all reasonable steps to mitigate any loss, and in case of a claim of wrongful dishonor, by specifically and timely authorizing Issuing Bank to effect a cure.

 

(h)                                 Borrowers are responsible for the final text of the Letter of Credit as issued by Issuing Bank, irrespective of any assistance Issuing Bank may provide such as drafting or recommending text or by Issuing Bank’s use or refusal to use text submitted by Borrowers.  Borrowers understand that the final form of any Letter of Credit may be subject to such revisions and changes as are deemed necessary or appropriate by Issuing Bank, and Borrowers hereby consent to such revisions and changes not materially different from the application executed in connection therewith. Borrowers are solely responsible for the suitability of the Letter of Credit for Borrowers’ purposes.  If Borrowers request Issuing Bank to issue a Letter of Credit for an affiliated or unaffiliated third party (an “Account Party”), (i) such Account Party shall have no rights against Issuing Bank; (ii) Borrowers shall be responsible for the application and obligations under this Agreement; and (iii) communications (including notices) related to the respective Letter of Credit shall be among Issuing Bank and Borrowers.  Borrowers will examine the copy of the Letter of Credit and any other documents sent by Issuing Bank in connection therewith and shall promptly notify Issuing Bank (not later than three (3) Business Days following Borrowers’ receipt of documents from Issuing Bank) of any non-compliance with Borrowers’ instructions and of any discrepancy in any document under any presentment or other irregularity.  Borrowers understand and agree that Issuing Bank is not required to extend the expiration date of any Letter of Credit for any reason.  With respect to any Letter of Credit containing an “automatic amendment” to extend the expiration date of such Letter of Credit, Issuing Bank, in its sole and absolute discretion, may give notice of nonrenewal of such Letter of Credit and, if Borrowers do not at any time want the then current expiration date of such Letter of Credit to be extended, Borrowers will so notify Agent and Issuing Bank at least 30 calendar days before Issuing Bank is required to notify the beneficiary of such Letter of Credit or any advising bank of such non-extension pursuant to the terms of such Letter of Credit.

 

(i)                                     Borrowers’ reimbursement and payment obligations under this Section 2.11 are absolute, unconditional and irrevocable and shall be performed strictly in

 

25

 

accordance with the terms of this Agreement under any and all circumstances whatsoever, provided, however, that subject to Section 2.11(g) above, the foregoing shall not release Issuing Bank from such liability to Borrowers as may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction against Issuing Bank following reimbursement or payment of the obligations and liabilities, including reimbursement and other payment obligations, of Borrowers to Issuing Bank arising under, or in connection with, this Section 2.11 or any Letter of Credit.

 

(j)                                    Without limiting any other provision of this Agreement, Issuing Bank and each other Letter of Credit Related Person (if applicable) shall not be responsible to Borrowers for, and Issuing Bank’s rights and remedies against Borrowers and the obligation of Borrowers to reimburse Issuing Bank for each drawing under each Letter of Credit shall not be impaired by:

 

(i)                                     honor of a presentation under any Letter of Credit that on its face substantially complies with the terms and conditions of such Letter of Credit, even if the Letter of Credit requires strict compliance by the beneficiary;

 

(ii)                                  honor of a presentation of any Drawing Document that appears on its face to have been signed, presented or issued (A) by any purported successor or transferee of any beneficiary or other Person required to sign, present or issue such Drawing Document or (B) under a new name of the beneficiary;

 

(iii)                               acceptance as a draft of any written or electronic demand or request for payment under a Letter of Credit, even if nonnegotiable or not in the form of a draft or notwithstanding any requirement that such draft, demand or request bear any or adequate reference to the Letter of Credit;

 

(iv)                              the identity or authority of any presenter or signer of any Drawing Document or the form, accuracy, genuineness or legal effect of any Drawing Document (other than Issuing Bank’s determination that such Drawing Document appears on its face substantially to comply with the terms and conditions of the Letter of Credit);

 

(v)                                 acting upon any instruction or request relative to a Letter of Credit or requested Letter of Credit that Issuing Bank in good faith believes to have been given by a Person authorized to give such instruction or request;

 

(vi)                              any errors, omissions, interruptions or delays in transmission or delivery of any message, advice or document (regardless of how sent or transmitted) or for errors in interpretation of technical terms or in translation or any delay in giving or failing to give notice to Borrowers;

 

(vii)                           any acts, omissions or fraud by, or the insolvency of, any beneficiary, any nominated person or entity or any other Person or any breach of contract between any beneficiary and any Borrower or any of the parties to the underlying transaction to which the Letter of Credit relates;

 

26

 

(viii)                        assertion or waiver of any provision of the ISP or UCP that primarily benefits an issuer of a letter of credit, including any requirement that any Drawing Document be presented to it at a particular hour or place;

 

(ix)                              payment to any paying or negotiating bank (designated or permitted by the terms of the applicable Letter of Credit) claiming that it rightfully honored or is entitled to reimbursement or indemnity under Standard Letter of Credit Practice applicable to it;

 

(x)                                 acting or failing to act as required or permitted under Standard Letter of Credit Practice applicable to where Issuing Bank has issued, confirmed, advised or negotiated such Letter of Credit, as the case may be;

 

(xi)                              honor of a presentation after the expiration date of any Letter of Credit notwithstanding that a presentation was made prior to such expiration date and dishonored by Issuing Bank if subsequently Issuing Bank or any court or other finder of fact determines such presentation should have been honored;

 

(xii)                           dishonor of any presentation that does not strictly comply or that is fraudulent, forged or otherwise not entitled to honor; or

 

(xiii)                        honor of a presentation that is subsequently determined by Issuing Bank to have been made in violation of international, federal, state or local restrictions on the transaction of business with certain prohibited Persons.

 

(k)                                 Borrowers shall pay immediately upon demand to Agent for the account of Issuing Bank as non-refundable fees, commissions, and charges (it being acknowledged and agreed that any charging of such fees, commissions, and charges to the Loan Account pursuant to the provisions of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for the purposes of this Section 2.11(k)):  (i) a fronting fee which shall be imposed by Issuing Bank upon the issuance of each Letter of Credit of .125% per annum times the average amount of the Letter of Credit Usage during the immediately preceding quarter (or if an Event of Default has occurred, month), plus (ii) any and all other customary commissions, fees and charges then in effect imposed by, and any and all expenses incurred by, Issuing Bank, or by any adviser, confirming institution or entity or other nominated person, relating to Letters of Credit, at the time of issuance of any Letter of Credit and upon the occurrence of any other activity with respect to any Letter of Credit (including transfers, assignments of proceeds, amendments, drawings, renewals or cancellations).

 

(l)                                     If by reason of (x) any Change in Law, or (y) compliance by Issuing Bank or any other member of the Lender Group with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Board of Governors as from time to time in effect (and any successor thereto):

 

(i)                                     any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued or caused to be issued hereunder or hereby, or

 

27

 

(ii)                                  there shall be imposed on Issuing Bank or any other member of the Lender Group any other condition regarding any Letter of Credit,

 

and the result of the foregoing is to increase, directly or indirectly, the cost (other than Taxes) to Issuing Bank or any other member of the Lender Group of issuing, making, participating in, or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof, then, and in any such case, Agent may, at any time within a reasonable period after such additional cost is incurred or the amount received is reduced, notify Borrowers, and Borrowers shall pay within 30 days after demand therefor, such amounts as Agent may specify to be necessary to compensate Issuing Bank or any other member of the Lender Group for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Base Rate Loans hereunder; provided, that (A) Borrowers shall not be required to provide any compensation pursuant to this Section 2.11(l) for any such amounts incurred more than 180 days prior to the date on which the demand for payment of such amounts is first made to Borrowers, and (B) if an event or circumstance giving rise to such amounts is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.  The determination by Agent of any amount due pursuant to this Section 2.11(l), as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto.

 

(m)                             Each standby Letter of Credit shall expire not later than the date that is 12 months after the date of the issuance of such Letter of Credit; provided, that any standby Letter of Credit may provide for the automatic extension thereof for any number of additional periods each of up to one year in duration; provided further, that with respect to any Letter of Credit which extends beyond the Maturity Date, Letter of Credit Collateralization shall be provided therefor on or before the date that is five Business Days prior to the Maturity Date.  Each commercial Letter of Credit shall expire on the earlier of (i) 120 days after the date of the issuance of such commercial Letter of Credit and (ii) five Business Days prior to the Maturity Date.

 

(n)                                 Unless otherwise expressly agreed by Issuing Bank and Borrowers when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP and the UCP shall apply to each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter of Credit.

 

(o)                                 In the event of a direct conflict between the provisions of this Section 2.11 and any provision contained in any Issuer Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other.  In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.11 shall control and govern.

 

(p)                                 At Borrowers’ cost and expense, Borrowers shall execute and deliver to Issuing Bank such additional certificates, instruments and/or documents and take such additional action as may be reasonably requested by Issuing Bank to enable Issuing Bank to issue any Letter of Credit pursuant to this Agreement and related Issuer Document, to protect, exercise and/or enforce Issuing Bank’s rights and interests under this Agreement or to give effect to the

 

28

 

terms and provisions of this Agreement or any Issuer Document. Each Borrower irrevocably appoints Issuing Bank as its attorney-in-fact and authorizes Issuing Bank, without notice to Borrowers, to execute and deliver ancillary documents and letters customary in the letter of credit business that may include but are not limited to advisements, indemnities, checks, bills of exchange and issuance documents. The power of attorney granted by the Borrowers is limited solely to such actions related to the issuance or confirmation of any Letter of Credit and to ancillary documents or letters customary in the letter of credit business. This appointment is coupled with an interest.

 

(q)                                 The provisions of this Section 2.11 shall survive the termination of this Agreement and the repayment in full of the Obligations with respect to any Letters of Credit that remain outstanding.

 

2.12                        LIBOR Option.

 

(a)                                 Interest and Interest Payment Dates.  In lieu of having interest charged at the rate based upon the Base Rate, Borrowers shall have the option, subject to Section 2.12(b) below (the “LIBOR Option”) to have interest on all or a portion of the Revolving Loans be charged (whether at the time when made (unless otherwise provided herein), upon conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the LIBOR Rate.  Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the Interest Period applicable thereto; provided, that, subject to the following clauses (ii) and (iii), in the case of any Interest Period greater than 3 months in duration, interest shall be payable at 3 month intervals after the commencement of the applicable Interest Period and on the last day of such Interest Period), (ii) the date on which all or any portion of the Obligations are accelerated pursuant to the terms hereof, or (iii) the date on which this Agreement is terminated pursuant to the terms hereof.  On the last day of each applicable Interest Period, unless Borrowers have properly exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of interest then applicable to Base Rate Loans of the same type hereunder.  At any time that an Event of Default has occurred and is continuing, Borrowers no longer shall have the option to request that Revolving Loans bear interest at a rate based upon the LIBOR Rate.

 

(b)                                 LIBOR Election.

 

(i)                                     Borrowers may, at any time and from time to time, so long as no Event of Default has occurred and is continuing, elect to exercise the LIBOR Option by notifying Agent prior to 12:00 p.m. (noon) at least 3 Business Days prior to the commencement of the proposed Interest Period (the “LIBOR Deadline”).  Notice of Borrowers’ election of the LIBOR Option for a permitted portion of the Revolving Loans and an Interest Period pursuant to this Section shall be made by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline.  Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of the affected Lenders.

 

(ii)                                  Each LIBOR Notice shall be irrevocable and binding on Borrowers.  In connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend,

 

29

 

and hold Agent and the Lenders harmless against any loss, cost, or expense actually incurred by Agent or any Lender as a result of (A) the payment or required assignment of any principal of any LIBOR Rate 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 LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto, or (C) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses, “Funding Losses”).  A certificate of Agent or a Lender delivered to Borrowers setting forth in reasonable detail any amount or amounts that Agent or such Lender is entitled to receive pursuant to this Section 2.12 shall be conclusive absent manifest error.  Borrowers shall pay such amount to Agent or the Lender, as applicable, within 30 days of the date of its receipt of such certificate.  If a payment of a LIBOR Rate Loan on a day other than the last day of the applicable Interest Period would result in a Funding Loss, Agent may, in its sole discretion at the request of Borrowers, hold the amount of such payment as cash collateral in support of the Obligations until the last day of such Interest Period and apply such amounts to the payment of the applicable LIBOR Rate Loan on such last day, it being agreed that Agent has no obligation to so defer the application of payments to any LIBOR Rate Loan and that, in the event that Agent does not defer such application, Borrowers shall be obligated to pay any resulting Funding Losses.

 

(iii)                               Unless Agent, in its sole discretion, agrees otherwise, Borrowers shall have not more than 8 LIBOR Rate Loans in effect at any given time.  Borrowers may only exercise the LIBOR Option for proposed LIBOR Rate Loans of at least $1,000,000.

 

(c)                                  Conversion.  Borrowers may convert LIBOR Rate Loans to Base Rate Loans or prepay LIBOR Rate Loans at any time; provided, that in the event that LIBOR Rate Loans are converted or prepaid on any date that is not the last day of the Interest Period applicable thereto, including as a result of any prepayment through the required application by Agent of any payments or proceeds of Collateral in accordance with Section 2.4(b) or for any other reason, including early termination of the term of this Agreement or acceleration of all or any portion of the Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders and their Participants harmless against any and all Funding Losses in accordance with Section 2.12 (b)(ii).

 

(d)                                 Special Provisions Applicable to LIBOR Rate.

 

(i)                                     The LIBOR Rate may be adjusted by Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs (other than Taxes) to such Lender of maintaining or obtaining any eurodollar deposits or increased costs (other than Taxes), in each case, due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period, including any Changes in Law (including any changes in tax laws (except changes in laws with respect to Excluded Taxes)) and changes in the reserve requirements imposed by the Board of Governors, which additional or increased costs would increase the cost of funding or maintaining loans bearing interest at the LIBOR Rate. In any such event, the affected Lender shall give Borrowers and Agent notice of such a determination and adjustment and Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Borrowers may, by notice to such affected Lender (A) require such Lender to furnish to Borrowers a statement setting forth in

 

30

 

reasonable detail the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment, or (B) repay the LIBOR Rate Loans of such Lender with respect to which such adjustment is made (together with any amounts due under Section 2.12(b)(ii)).

 

(ii)                                  In the event that any change in market conditions or any Change in Law shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give notice of such changed circumstances to Agent and Borrowers and Agent promptly shall transmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR Option until such Lender determines that it would no longer be unlawful or impractical to do so.

 

(e)                                  No Requirement of Matched Funding.  Anything to the contrary contained herein notwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate.

 

2.13                        Capital Requirements.

 

(a)                                 Capital Requirements.  If, after the date hereof, Issuing Bank or any Lender determines that (i) any Change in Law regarding capital, liquidity or reserve requirements for banks or bank holding companies, or (ii) compliance by Issuing Bank or such Lender, or their respective parent bank holding companies, with any guideline, request or directive of any Governmental Authority regarding capital adequacy or liquidity requirements (whether or not having the force of law), has the effect of reducing the return on Issuing Bank’s, such Lender’s, or such holding companies’ capital or liquidity as a consequence of Issuing Bank’s or such Lender’s commitments, Loans, participations, Letters of Credit or other obligations hereunder to a level below that which Issuing Bank, such Lender, or such holding companies could have achieved but for such Change in Law or compliance (taking into consideration Issuing Bank’s, such Lender’s, or such holding companies’ then existing policies with respect to capital adequacy or liquidity requirements and assuming the full utilization of such entity’s capital) by any amount deemed by Issuing Bank or such Lender to be material, then Issuing Bank or such Lender may notify Borrowers and Agent thereof.  Following receipt of such notice, Borrowers agree to pay Issuing Bank or such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, payable within 30 days after presentation by Issuing Bank or such Lender of a statement in the amount and setting forth in reasonable detail Issuing Bank’s or such Lender’s calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error).  In determining such amount, Issuing Bank or such Lender may use any reasonable averaging and attribution methods.

 

(b)                                 Delay in Requests.  Failure or delay on the part of Issuing Bank or any Lender to demand compensation pursuant to Section 2.11(l), Section 2.12(d), Section 2.13(a) or

 

31

 

Section 2.16 shall not constitute a waiver of Issuing Bank’s or such Lender’s right to demand such compensation; provided that Borrowers shall not be required to compensate Issuing Bank or any Lender pursuant to Section 2.11(l), Section 2.12(d), Section 2.13(a) or Section 2.16 for any increased costs incurred or reductions suffered more than 180 days prior to the date that Issuing Bank or such Lender, as the case may be, notifies Borrowers of the Change in Law giving rise to such increased costs or reductions, and of Issuing Bank’s or such Lender’s intention to claim compensation therefor (except that if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof).

 

(c)                                  If Issuing Bank or any Lender requests additional or increased costs referred to in Section 2.11(l), Section 2.12(d)(i) or Section 2.16 or amounts under Section 2.13(a) or Section 16 or sends a notice under Section 2.12(d)(ii) relative to changed circumstances (such Issuing Bank or Lender, an “Affected Lender”), then such Affected Lender shall use reasonable efforts to promptly designate a different one of its lending offices or to assign its rights and obligations hereunder to another of its offices or branches, if (i) in the reasonable judgment of such Affected Lender, such designation or assignment would eliminate or reduce amounts payable pursuant to Section 2.11(l), Section 2.12(d)(i), Section 2.13(a), Section 2.16, or Section 16, as applicable, or would eliminate the illegality or impracticality of funding or maintaining LIBOR Rate Loans and (ii) in the reasonable judgment of such Affected Lender, such designation or assignment would not subject it to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to it.  Borrowers agree to pay all reasonable out-of-pocket costs and expenses incurred by such Affected Lender in connection with any such designation or assignment.  If, after such reasonable efforts, such Affected Lender does not so designate a different one of its lending offices or assign its rights to another of its offices or branches so as to eliminate Borrowers’ obligation to pay any future amounts to such Affected Lender pursuant to Section 2.11(l), Section 2.12(d)(i), Section 2.13(a), or Section 2.16, as applicable, or to enable Borrowers to obtain LIBOR Rate Loans, then Borrowers (without prejudice to any amounts then due to such Affected Lender under Section 2.11(l), Section 2.12(d)(i), Section 2.13(a), or Section 2.16, as applicable) may, unless prior to the effective date of any such assignment the Affected Lender withdraws its request for such additional amounts under Section 2.11(l), Section 2.12(d)(i), Section 2.13(a), or Section 2.16, as applicable, or indicates that it is no longer unlawful or impractical to fund or maintain LIBOR Rate Loans, may designate a different Issuing Bank or substitute a Lender, in each case, reasonably acceptable to Agent to purchase the Obligations owed to such Affected Lender and such Affected Lender’s Commitments hereunder (a “Replacement Lender”), and if such Replacement Lender agrees to such purchase, such Affected Lender shall assign to the Replacement Lender its Obligations and Commitments, and upon such purchase by the Replacement Lender, which such Replacement Lender shall be deemed to be “Issuing Bank” or a “Lender” (as the case may be) for purposes of this Agreement and such Affected Lender shall cease to be “Issuing Bank” or a “Lender” (as the case may be) for purposes of this Agreement, provided that the provisions of Section 17.9 shall continue to apply to such Affected Lender after such assignment.

 

(d)                                 Notwithstanding anything herein to the contrary, the protection of Sections 2.11(l), 2.12(d), 2.13 and 2.16 shall be available to Issuing Bank and each Lender (as applicable) regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, judicial ruling, judgment, guideline, treaty or other change or condition which

 

32

 

shall have occurred or been imposed, so long as it shall be customary for issuing banks or lenders affected thereby to comply therewith.  Notwithstanding any other provision herein, neither Issuing Bank nor any Lender shall demand compensation pursuant to this Section 2.13 if it shall not at the time be the general policy or practice of Issuing Bank or such Lender (as the case may be) to demand such compensation in similar circumstances under comparable provisions of other credit agreements, if any.

 

2.14                        Accordion.

 

(a)                                 At any time during the period from and after the Closing Date through but excluding the date that is 180 days prior to the Maturity Date, at the option of Borrowers (but subject to the conditions set forth in clause (b) below), the Revolver Commitments and the Maximum Revolver Amount may be increased by an amount in the aggregate for all such increases of the Revolver Commitments and the Maximum Revolver Amount not to exceed the Available Increase Amount (each such increase, an “Increase”).  Agent shall invite each Lender to increase its Revolver Commitments (it being understood that no Lender shall be obligated to increase its Revolver Commitments) in connection with a proposed Increase at the interest margin proposed by Borrowers, and if sufficient Lenders do not agree to increase their Revolver Commitments in connection with such proposed Increase, then Agent or Borrowers may invite any prospective lender who is reasonably satisfactory to Agent and Borrowers to become a Lender in connection with a proposed Increase.  Any Increase shall be in an amount of at least $10,000,000 and integral multiples of $5,000,000 in excess thereof.  In no event may the Revolver Commitments and the Maximum Revolver Amount be increased pursuant to this Section 2.14 on more than three (3) occasions in the aggregate for all such Increases.

 

(b)                                 Each of the following shall be conditions precedent to any Increase of the Revolver Commitments and the Maximum Revolver Amount:

 

(i)                                     Agent or Borrowers have obtained the commitment of one or more Lenders (or other prospective lenders) reasonably satisfactory to Agent and Borrowers to provide the applicable Increase and any such Lenders (or prospective lenders), Borrowers, and Agent have signed a joinder agreement to this Agreement (an “Increase Joinder”), in form and substance reasonably satisfactory to Agent, to which such Lenders (or prospective lenders), Borrowers, and Agent are party,

 

(ii)                                  each of the conditions precedent set forth in Section 3.2 are satisfied, and Borrowers shall have delivered to Agent (A) an officers’ certificate dated as of the proposed date of such Increase certifying to such effect, and (B) any and all agreements, instruments and other documents reasonably requested by the Agent in connection with the Increase, each in form and substance reasonably satisfactory to the Agent, and

 

(iii)                               Borrowers shall have reached agreement with the Lenders (or prospective lenders) agreeing to the increased Revolver Commitments (the date of the effectiveness of any increased Revolver Commitments and the updated Maximum Revolver Amount, an “Increase Date”)).  Any Increase Joinder may, with the consent of Agent, Borrowers and the Lenders or prospective lenders agreeing to the proposed Increase, effect such

 

33

 

amendments to this Agreement and the other Loan Documents as may be necessary or appropriate to effectuate the provisions of this Section 2.14.

 

(c)                                  Any Increase shall have the same terms as the existing Revolver Commitments.

 

(d)                                 Unless otherwise specifically provided herein, all references in this Agreement and any other Loan Document to Revolving Loans shall be deemed, unless the context otherwise requires, to include Revolving Loans made pursuant to the increased Revolver Commitments and Maximum Revolver Amount pursuant to this Section 2.14.

 

(e)                                  Each of the Lenders having a Revolver Commitment prior to the Increase Date (the “Pre-Increase Revolver Lenders”) shall assign to any Lender which is acquiring a new or additional Revolver Commitment on the Increase Date (the “Post-Increase Revolver Lenders”), and such Post-Increase Revolver Lenders shall purchase from each Pre-Increase Revolver Lender, at the principal amount thereof, such interests in the Revolving Loans and participation interests in Letters of Credit on such Increase Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans and participation interests in Letters of Credit will be held by Pre-Increase Revolver Lenders and Post-Increase Revolver Lenders ratably in accordance with their Pro Rata Share after giving effect to such increased Revolver Commitments.

 

(f)                                   The Revolving Loans, Revolver Commitments, and Maximum Revolver Amount established pursuant to this Section 2.14 shall constitute Revolving Loans, Revolver Commitments, and Maximum Revolver Amount under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from any guarantees and the security interests created by the Loan Documents.  Borrowers shall take any actions reasonably required by Agent to ensure and demonstrate that the Liens and security interests granted by the Loan Documents continue to be perfected under the Code or otherwise after giving effect to the establishment of any such new Revolver Commitments and Maximum Revolver Amount.

 

2.15                        Joint and Several Liability of Borrowers.

 

(a)                                 Each Borrower is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Lender Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations; provided, however, that each Borrower shall only be liable under this Section for the maximum amount of such liability that can be hereby incurred without rendering this Section, as it relates to such Borrower, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount.

 

(b)                                 Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including any Obligations arising under this Section 2.15), it being the intention of the parties

 

34

 

hereto that all the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them. Accordingly, each Borrower hereby waives any and all suretyship defenses that would otherwise be available to such Borrower under applicable law (other than the defense of prior payment or satisfaction).

 

(c)                                  If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due, whether upon maturity, acceleration, or otherwise, or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to, or perform, such Obligation until such time as all of the Obligations are paid in full, and without the need for demand, protest, or any other notice or formality.

 

(d)                                 The Obligations of each Borrower under the provisions of this Section 2.15 constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of the provisions of this Agreement (other than this Section 2.15(d)) or any other circumstances whatsoever.

 

(e)                                  Except as otherwise expressly provided in this Agreement, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of any Revolving Loans or Letters of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement).  Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any Borrower.  Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of any Agent or Lender with respect to the failure by any Borrower to comply with any of its respective Obligations, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.15 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of its Obligations under this Section 2.15, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this Section 2.15 shall not be discharged except by performance and then only to the extent of such performance.  The Obligations of each Borrower under this Section 2.15 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any other Borrower or any Agent or Lender.

 

35

 

(f)                                   Each Borrower represents and warrants to Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations.  Each Borrower further represents and warrants to Agent and Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents.  Each Borrower hereby covenants that such Borrower will continue to keep informed of Borrowers’ financial condition and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.

 

(g)                                  The provisions of this Section 2.15 are made for the benefit of Agent, each member of the Lender Group, each Bank Product Provider, and their respective successors and assigns, and may be enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may arise and without requirement on the part of Agent, any member of the Lender Group, any Bank Product Provider, or any of their successors or assigns first to marshal any of its or their claims or to exercise any of its or their rights against any Borrower or to exhaust any remedies available to it or them against any Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy.  The provisions of this Section 2.15 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied.  If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by Agent or any Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.15 will forthwith be reinstated in effect, as though such payment had not been made.

 

(h)                                 Each Borrower hereby agrees that it will not enforce any of its rights of contribution or subrogation against any other Borrower with respect to any liability incurred by it hereunder or under any of the other Loan Documents, any payments made by it to Agent or Lenders with respect to any of the Obligations or any collateral security therefor until such time as all of the Obligations have been paid in full in cash.  Any claim which any Borrower may have against any other Borrower with respect to any payments to any Agent or any member of the Lender Group hereunder or under any of the Bank Product Agreements are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.

 

(i)                                     Each Borrower hereby agrees that after the occurrence and during the continuance of any Default or Event of Default, such Borrower will not demand, sue for or otherwise attempt to collect any indebtedness of any other Borrower owing to such Borrower until the Obligations shall have been paid in full in cash.  If, notwithstanding the foregoing sentence, such Borrower shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Borrower as trustee for Agent, and such Borrower shall deliver any such amounts to Agent for application to the Obligations in accordance with Section 2.4(b).

 

36

 

2.16                        Increased Costs.  If any Change in Law shall:

 

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

 

(b)                                 subject any Recipient to any Taxes (other than (i) Indemnified Taxes, (ii) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (iii) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

 

(c)                                  impose on any Lender or any Issuing Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or 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 or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, such Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, Issuing Bank or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, Issuing Bank or other Recipient, the Borrowers will pay to such Lender, Issuing Bank or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, Issuing Bank or other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

 

3.                                      CONDITIONS; TERM OF AGREEMENT.

 

3.1                               Conditions Precedent to the Initial Extension of Credit.  The obligation of each Lender to make the initial extensions of credit provided for hereunder is subject to the fulfillment, to the satisfaction of Agent and each Lender, of each of the conditions precedent set forth on Schedule 3.1 (the making of such initial extensions of credit by a Lender being conclusively deemed to be its satisfaction or waiver of the conditions precedent).

 

3.2                               Conditions Precedent to all Extensions of Credit.  The obligation of the Lender Group (or any member thereof) to make any Revolving Loans hereunder (or to extend any other credit hereunder) at any time shall be subject to the following conditions precedent:

 

(a)                                 the representations and warranties of each Loan Party contained in this Agreement or in the other Loan Documents shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such

 

37

 

materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date); and

 

(b)                                 no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof.

 

3.3                               Maturity.  This Agreement shall continue in full force and effect for a term ending on the Maturity Date (unless terminated earlier in accordance with the terms hereof).

 

3.4                               Effect of Maturity.  On the Maturity Date, all Commitments shall automatically be terminated and all of the outstanding Obligations (other than Bank Product Obligations not yet due and payable and contingent indemnification and reimbursement Obligations for which no claim has been made in accordance with the Loan Documents (collectively, “Contingent Surviving Obligations”)) immediately shall become due and payable without notice or demand and Borrowers shall be required to repay all of the outstanding Obligations (other than Contingent Surviving Obligations) in full.  No termination of the obligations of the Lender Group (other than payment in full of the Obligations (other than Contingent Surviving Obligations) and termination of the Commitments) shall relieve or discharge any Loan Party of its duties, obligations, or covenants hereunder or under any other Loan Document and Agent’s Liens in the Collateral shall continue to secure the Obligations (other than Contingent Surviving Obligations) and shall remain in effect until all Obligations (other than Contingent Surviving Obligations) have been paid in full and the Commitments have been terminated.  When all of the Obligations (other than Contingent Surviving Obligations)  have been paid in full and the Lender Group’s obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrowers’ sole expense, promptly execute and deliver any termination statements, lien releases, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, Agent’s Liens and all notices of security interests and liens previously filed by Agent.

 

3.5                               Early Termination by Borrowers.  Borrowers have the option, at any time upon 3 Business Days prior written notice to Agent, to terminate this Agreement and terminate all Commitments hereunder by repaying to Agent all of the Obligations (other than Contingent Surviving Obligations) in full.  The foregoing notwithstanding, (a) Borrowers may rescind termination notices relative to proposed payments in full of such Obligations with the proceeds of third party Indebtedness if the closing for such issuance or incurrence does not happen on or before the date of the proposed termination (in which case, a new notice shall be required to be sent in connection with any subsequent termination), and (b) Borrowers may extend the date of termination at any time with the consent of Agent (which consent shall not be unreasonably withheld or delayed).

 

4.                                      REPRESENTATIONS AND WARRANTIES.

 

In order to induce the Lender Group to enter into this Agreement, each Borrower makes the following representations and warranties to the Lender Group which shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by

 

38

 

materiality in the text thereof), as of the Closing Date, and shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), as of the date of the making of each Revolving Loan (or other extension of credit pursuant thereto) made thereafter, as though made on and as of the date of such Revolving Loan (or other extension of credit) (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement:

 

4.1                               Due Organization and Qualification; Subsidiaries.

 

(a)                                 Each Loan Party (i) is duly organized and existing and in good standing (to the extent such concept is applicable in the relevant jurisdiction) under the laws of the jurisdiction of its organization, (ii) is qualified to do business in each jurisdiction where the failure to be so qualified could reasonably be expected to result in a Material Adverse Effect, and (iii) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted, to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby.

 

(b)                                 [Reserved].

 

(c)                                  Set forth on Schedule 4.1(c) (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement), is a complete and accurate list of the Subsidiaries of Parent Borrower, showing:  (i) the number of shares of each class of common and preferred (if applicable) Equity Interests authorized for each of such Subsidiaries, and (ii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by Parent Borrower and the other Subsidiaries and, if such percentage is not 100% (excluding directors’ qualifying shares as required by law), a description of each class issued and outstanding.  All of the outstanding Equity Interests of each such Subsidiary has been validly issued and is fully paid and non-assessable (to the extent such concepts are applicable in the relevant jurisdiction) and all such shares and other equity interests indicated on Schedule 4.1(c) as owned by Parent Borrower or another Subsidiary are owned, beneficially and of record, by Parent Borrower or any Subsidiary free and clear of all Liens, other than Permitted Liens and Liens created under the Loan Documents.

 

(d)                                 Except as set forth on Schedule 4.1(d), there are no subscriptions, options, warrants, or calls relating to any shares of Parent Borrower’s or any of its Restricted Subsidiaries’ Equity Interests, including any right of conversion or exchange under any outstanding security or other instrument.

 

39

 

4.2                               Due Authorization; No Conflict.

 

(a)                                 As to each Loan Party, the execution, delivery, and performance by such Loan Party of the Loan Documents to which it is a party have been duly authorized by all necessary organizational action on the part of such Loan Party.

 

(b)                                 As to each Loan Party, the execution, delivery, and performance by such Loan Party of the Loan Documents to which it is a party do not and will not (i) violate (x) any material provision of federal, state, or local law or regulation applicable to such Loan Party or its Restricted Subsidiaries, or (y) the Governing Documents of such Loan Party, (ii) violate any order, judgment, or decree of any court or other Governmental Authority binding on any Loan Party or its Restricted Subsidiaries where any such violation would individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (iii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material agreement of any Loan Party where any such conflict, breach or default would individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (iv) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of any Loan Party, other than Permitted Liens, or (v) require any approval of any holder of Equity Interests of a Loan Party, other than consents or approvals that have been obtained and that are still in force and effect.

 

4.3                               Governmental Consents.  The execution, delivery, and performance by each Loan Party of the Loan Documents to which such Loan Party is a party and the consummation of the transactions contemplated by the Loan Documents do not and will not, except, in each case, where the failure would not reasonably be expected to have a Material Adverse Effect, require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Agent for filing or recordation, as of the Closing Date.

 

4.4                               Binding Obligations; Perfected Liens.

 

(a)                                 Each Loan Document has been duly executed and delivered by each Loan Party that is a party thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally and requirements of reasonableness, good faith and fair dealing.

 

(b)                                 Agent’s Liens in the ABL Collateral are validly created and perfected (other than (i) money, (ii) letter-of-credit rights (other than supporting obligations), (iii) commercial tort claims (other than those that, by the terms of the Guaranty and Security Agreement, are required to be perfected), and (iv) any Deposit Accounts and Securities Accounts not subject to a Control Agreement as permitted by Section 7(k)(iv) of the Guaranty and Security Agreement, and subject only to the filing of financing statements, in each case, in the appropriate filing offices), and first priority Liens, subject only to Permitted Liens.

 

40

 

(c)                                  Agent’s Liens on the Notes Collateral are validly created and perfected second priority Liens, subject only to Permitted Liens.

 

4.5                               No Encumbrances.  All assets of the Loan Parties and its Restricted Subsidiaries are free and clear of Liens except for Permitted Liens.

 

4.6                               Litigation.  There are no actions, suits, or proceedings pending or, to the knowledge of any Borrower, threatened in writing against a Loan Party or any Restricted Subsidiary that either individually or in the aggregate would reasonably be expected to result in a Material Adverse Effect.

 

4.7                               Compliance with Laws.  No Loan Party nor any Restricted Subsidiary (a) is in violation of any applicable laws, rules, regulations, executive orders, or codes (including Environmental Laws and ERISA) that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect, or (b) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.

 

4.8                               No Material Adverse Effect.  The consolidated financial statements of Parent Borrower and its Subsidiaries as of and for the fiscal year ended December 31, 2016 and the nine-month period ended September 30, 2017 that have been delivered by Borrowers to Agent have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, Parent Borrower and its Subsidiaries’ consolidated financial position as of the date thereof and results of operations for the period covered thereby.  Since December 31, 2016, no event, circumstance, or change has occurred that has had, or would reasonably be expected to result in, a Material Adverse Effect.

 

4.9                               Solvency.

 

(a)                                 The Loan Parties on a consolidated basis are Solvent.

 

(b)                                 No transfer of property is being made by any Loan Party and no obligation is being incurred by any Loan Party in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of such Loan Party.

 

4.10                        Employee Benefits.  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, would reasonably be expected to result in a Material Adverse Effect.  Except as would not reasonably be expected to have a Material Adverse Effect, (i) each Employee Plan complies with, and has been operated in accordance with, all applicable laws, including ERISA and the IRC, and the terms of such Employee Plan, (ii) no Loan Party has any liability for a fine, penalty, damage, or excise tax with respect to an Employee Plan and no Loan Party has received notice from a Governmental Authority, plan administrator, or participant (or any participant’s agent) that any such fine, penalty, damage or excise tax may be owing by such

 

41

 

Loan Party and (iii) each Employee Plan intended by a Loan Party to be qualified under Section 401 of the IRC is so qualified.

 

4.11                        Environmental Condition.  Except as set forth on Schedule 4.11, or as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect:

 

(a)                                 to its knowledge, the properties owned, leased or operated by each Loan Party and each Subsidiary thereof now or in the past do not contain, and have not previously contained, any Hazardous Materials in amounts or concentrations which constitute or constituted a violation of applicable Environmental Laws;

 

(b)                                 to its knowledge, each Loan Party and each Subsidiary thereof and such properties and all operations conducted in connection therewith are in compliance, and have been in compliance, with all applicable Environmental Laws, and there is no contamination by Hazardous Materials at, under or about such properties or such operations which could interfere with the continued operation of such properties or impair the fair saleable value thereof;

 

(c)                                  no Loan Party nor any Subsidiary thereof has received any unresolved notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters, Hazardous Materials, or compliance with Environmental Laws;

 

(d)                                 to its knowledge, Hazardous Materials have not been transported or disposed of to or from the properties owned, leased or operated by any Loan Party or any Subsidiary thereof in violation of, or in a manner or to a location which would reasonably be expected to give rise to liability under, Environmental Laws, nor have any Hazardous Materials been generated, treated, stored or disposed of at, on or under any of such properties in violation of, or in a manner that would reasonably be expected to give rise to liability under, any applicable Environmental Laws;

 

(e)                                  no judicial proceedings or governmental or administrative action is pending, or, to the knowledge of Parent Borrower, threatened, under any Environmental Law to which any Loan Party or any Subsidiary thereof is or, to the knowledge of Parent Borrower, will be named as a potentially responsible party, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any applicable Environmental Law with respect to any Loan Party or any Subsidiary thereof; and

 

(f)                                   to its knowledge, there has been no release or threat of release, of Hazardous Materials at or from properties owned, leased or operated by any Loan Party or any Subsidiary, now or in the past, in violation of or in amounts or in a manner that could give rise to liability under applicable Environmental Laws.

 

4.12                        Complete Disclosure.  All factual information taken as a whole (other than forward-looking information and projections and information of a general economic nature and general information about Borrowers’ industry) furnished by or on behalf of a Loan Party or its Subsidiaries in writing to Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement or the other Loan Documents (as modified or supplemented by other information so

 

42

 

furnished), and all other such factual information taken as a whole (other than forward-looking information and projections and information of a general economic nature and general information about Borrowers’ industry) hereafter furnished by or on behalf of a Loan Party or its Subsidiaries in writing to Agent or any Lender will be, true and accurate, in all material respects, on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole after giving effect to any updates provided) not misleading in any material respect at such time in light of the circumstances under which such information was provided, it being understood that financial statements only contain such disclosures as are required by GAAP.  The Projections delivered to Agent on November 9, 2017 represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent, Borrowers’ good faith estimate, on the date such Projections are delivered, of the Loan Parties’ and their Restricted Subsidiaries’ future performance for the periods covered thereby based upon assumptions believed by Borrowers to be reasonable at the time of the delivery thereof to Agent (it being understood that such Projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Loan Parties and their Restricted Subsidiaries, and no assurances can be given that such Projections will be realized, and although reflecting Borrowers’ good faith estimate, projections or forecasts based on methods and assumptions which Borrowers believed to be reasonable at the time such Projections were prepared, are not to be viewed as facts, and that actual results during the period or periods covered by the Projections may differ materially from projected or estimated results).

 

4.13                        Patriot Act.  To the extent applicable, each Loan Party, each of its Subsidiaries and, to their knowledge, each of their Related Parties is in compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001) (the “Patriot Act”).

 

4.14                        [Reserved].

 

4.15                        Payment of Taxes.  Except as otherwise permitted under Section 5.5, all Tax returns of each Loan Party and each Restricted Subsidiary required to be filed by any of them have been timely filed (except for extensions duly obtained), and each Loan Party and Restricted Subsidiary has paid all Taxes shown on such Tax returns to be due and payable and all Taxes otherwise imposed upon a Loan Party and its Restricted Subsidiaries and upon their respective assets, income, businesses and franchises to the extent due and payable, except (a) Taxes that are subject to a Permitted Protest or (b) to the extent that the failure to do so would not reasonably be expected to result in a Material Adverse Effect.

 

4.16                        Margin Stock.  Neither any Loan Party nor any of its Subsidiaries owns any Margin Stock or is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock.  No part of the proceeds of the Loans made to Borrowers will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock or for any

 

43

 

purpose that violates the provisions of Regulation T, U or X of the Board of Governors.  Neither any Loan Party nor any of its Subsidiaries expects to acquire any Margin Stock.

 

4.17                        Governmental Regulation.  No Loan Party nor any of its Subsidiaries is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable.  No Loan Party nor any of its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940.

 

4.18                        OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws.  No Loan Party or any of its Subsidiaries is in violation of any applicable Sanctions.  No Loan Party nor any of its Subsidiaries nor, to the knowledge of such Loan Party, any director, officer, employee, agent or Affiliate of such Loan Party or such Subsidiary (a) is a Sanctioned Person or a Sanctioned Entity, (b) has any assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities.  Each of the Loan Parties and its Subsidiaries has implemented and maintains in effect policies and procedures designed to ensure compliance with all applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.  Each of the Loan Parties and its Subsidiaries, and to the knowledge of each such Loan Party, each director, officer, employee, agent and Affiliate of each such Loan Party and each such Subsidiary, is in compliance with all applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.  No proceeds of any Loan made or Letter of Credit issued hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity, or otherwise used in any manner that would result in a violation of any applicable Sanction, Anti-Corruption Law or Anti-Money Laundering Law by any Person (including any Lender, Bank Product Provider, or other individual or entity participating in any transaction).

 

4.19                        [Reserved].

 

4.20                        [Reserved].

 

4.21                        [Reserved].

 

4.22                        Eligible Accounts.  As to each Account that is identified by a Borrower as an Eligible Account or Eligible Unbilled Account in a Borrowing Base Certificate submitted to Agent, such Account is not excluded as ineligible by virtue of one or more of the excluding criteria (other than any Agent-discretionary criteria) set forth in the definition of Eligible Accounts or Eligible Unbilled Accounts, as applicable.

 

4.23                        Eligible Inventory.  As to each item of Inventory that is identified by a Borrower as Eligible Inventory or Eligible In-Transit Inventory in a Borrowing Base Certificate submitted to Agent, such Inventory is not excluded as ineligible by virtue of one or more of the excluding criteria (other than any Agent-discretionary criteria) set forth in the definition of Eligible Inventory (in the case of Eligible In-Transit Inventory, after giving effect to any exclusions therefrom specified in the definition of Eligible In-Transit Inventory), except if or with respect to

 

44

 

any such Eligible Inventory that (a) is located at a customer site or at a site for which Agent has established a Landlord Reserve, (b) is out for repair, (c) is at a rail yard, (d) is on consignment or in the possession of lessees in the ordinary course of business, or (e) has been sold or disposed of in accordance with the terms of the Loan Documents since the date of such Borrowing Base Certificate.

 

4.24                        Location of Inventory.  As to any Inventory that is identified by a Borrower as Eligible Inventory in the most recent Borrowing Base Certificate delivered pursuant hereto, such Eligible Inventory of Borrowers is not stored with a bailee, warehouseman, or similar party, except at locations for which Agent has received a Collateral Access Agreement or established a Landlord Reserve, and is located only at, or in-transit between, the locations identified on Schedule 4.24 (as such Schedule may be updated pursuant to Section 5.14), or otherwise constitutes Eligible In-Transit Inventory, except if or with respect to any such Eligible Inventory that (a) is out for repair, (b) is at a rail yard, (c) is on consignment or in the possession of lessees in the ordinary course of business, or (d) has been sold or disposed of in accordance with the terms of the Loan Documents since the date of such Borrowing Base Certificate.

 

4.25                        Inventory Records.  Each Borrower keeps correct and accurate records itemizing and describing the type, quality, and quantity of its Inventory and the book value thereof.

 

5.                                      AFFIRMATIVE COVENANTS.

 

Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations (other than Contingent Surviving Obligations):

 

5.1                               Financial Statements, Reports, Certificates.  Borrowers (a) will deliver to Agent, with copies to each Lender, each of the financial statements, reports, and other items set forth on Schedule 5.1 no later than the times specified therein, (b) agree that no Subsidiary of Parent Borrower that is consolidated in accordance with GAAP with Parent Borrower will have a fiscal year different from that of Administrative Borrower, and (c) agree to maintain a system of accounting that enables Parent Borrower to produce financial statements in accordance with GAAP.

 

Documents required to be delivered pursuant to this Section 5.1 (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Parent Borrower posts such documents, or provides a link thereto on the Parent Borrower’s website on the Internet at the website address listed in Section 11, if any; or (ii) on which such documents are posted on the Parent Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and Agent have access (whether a commercial, third-party website or whether sponsored by the Agent) or posted on the website of the SEC at http://www.sec.gov/; provided that: (i) Parent Borrower shall deliver paper copies of such documents to the Agent or any Lender that requests the Parent Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Agent or such Lender and (ii) Parent Borrower shall notify (which may be by facsimile, by customary electronic or internet postings, or by an e-mail communication identifying such documents and containing a hyperlink to electronic versions of such documents) the Agent. The Agent shall

 

45

 

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 Parent Borrower with any such request for delivery, and each Lender shall be solely responsible for timely accessing posted documents or requesting delivery to it or maintaining its copies of such documents.

 

5.2                               Reporting.  Borrowers will deliver to Agent (and if so requested by Agent, with copies for each Lender) each of the reports set forth on Schedule 5.2 at the times specified therein.

 

5.3                               Existence.  Except as otherwise permitted under Section 6.3 or Section 6.4, Parent Borrower will, and will cause each of its Restricted Subsidiaries to, at all times preserve and keep in full force and effect such Person’s valid existence and good standing (to the extent such concept is applicable in the relevant jurisdiction) in its jurisdiction of organization and, except as would not reasonably be expected to result in a Material Adverse Effect, (a) good standing (to the extent such concept is applicable in the relevant jurisdiction) with respect to all other jurisdictions in which it is qualified to do business and (b) any rights, franchises, permits, licenses, accreditations, authorizations, or other approvals necessary to the conduct of the business of Parent Borrower and its Restricted Subsidiaries taken as a whole.

 

5.4                               Maintenance of Properties.  Parent Borrower will, and will cause each of its Restricted Subsidiaries to, maintain and preserve all of its assets that are necessary in and material to the conduct of its business in good working order and condition, ordinary wear, tear, casualty, and condemnation and Permitted Dispositions excepted (and except where the failure to so maintain and preserve assets would not reasonably be expected to result in a Material Adverse Effect).

 

5.5                               Taxes.  Parent Borrower will, and will cause each of its Restricted Subsidiaries to, pay in full before delinquency or before the expiration of any extension period all material governmental assessments and taxes imposed, levied, or assessed against it, or any of its assets or in respect of any of its income, businesses, or franchises, except (a) to the extent that the validity of such governmental assessment or Tax is the subject of a Permitted Protest or (b) where the failure to pay such governmental assessment or Tax would not reasonably be expected to result in a Material Adverse Effect.

 

5.6                               Insurance.  Parent Borrower will, and will cause each of its Restricted Subsidiaries to, at Parent Borrower’s expense, (a) maintain insurance respecting each of Parent Borrower’s and its Restricted Subsidiaries’ assets wherever located, covering liabilities, losses or damages as are customarily are insured against by other Persons engaged in same or similar businesses and similarly situated and located.  All such policies of insurance shall be with financially sound and reputable insurance companies reasonably acceptable to Agent (it being agreed that the insurance companies in place as of the Closing Date are acceptable to Agent) and in such amounts as are carried generally in accordance with sound business practice by companies in similar businesses similarly situated and located and, in any event, in amount, adequacy, and scope reasonably satisfactory to Agent (it being agreed that the amount, adequacy, and scope of the policies of insurance of Parent Borrower and its Restricted Subsidiaries in effect as of the Closing Date are satisfactory to Agent).  Subject to the Intercreditor Agreement, all

 

46

 

property insurance policies covering the Collateral are to be made payable to Agent for the benefit of Agent and the Lenders, as their interests may appear, in case of loss, pursuant to a standard loss payable endorsement with a standard non-contributory “lender” or “secured party” clause and are to contain such other provisions as Agent may reasonably require to fully protect the Lenders’ interest in the Collateral and to any payments to be made under such policies.  All certificates of property and general liability insurance are to be delivered to Agent, with the loss payable (but only in respect of Collateral) and additional insured endorsements in favor of Agent and shall provide for not less than 30 days (10 days in the case of non-payment) prior written notice to Agent of the exercise of any right of cancellation, unless the applicable insurer does not routinely provide an endorsement regarding such notice.  If Parent Borrower or its Restricted Subsidiaries fails to maintain such insurance, Agent may arrange for such insurance, but at Parent Borrower’s expense and without any responsibility on Agent’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims.  Upon the occurrence and during the continuance of an Event of Default, subject to the Intercreditor Agreement, Agent shall have the sole right to file claims under any property and general liability insurance policies in respect of the Collateral, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments, reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.  Notwithstanding the foregoing and anything to the contrary in any Loan Document, the Loan Parties may self-insure against such risks and in such amounts as are customary in Borrowers’ industry, in which case no such insurance certificates and endorsements otherwise required by the Loan Documents will be required.

 

5.7                               Inspection.

 

(a)                                 Subject to Sections 2.10(c) and 5.7(b), Parent Borrower will, and will cause each other Loan Party to, permit Agent, accompanied by any Lender, and Agent’s duly authorized representatives or agents (accompanied by any Lender) to visit any of its properties and inspect any of its assets or books and records, to examine and make copies of its books and records, and to discuss its affairs, finances, and accounts with, and to be advised as to the same by, its officers and employees (provided an authorized representative of Parent Borrower shall be allowed to be present) with no less than 5 Business Days prior written notice to Parent Borrower and during regular business hours of such Loan Party.

 

(b)                                 Parent Borrower will, and will cause each other Borrower to, permit Agent and each of its duly authorized representatives or agents to conduct field exams and inventory appraisals, in each case, subject to the restrictions on costs and frequency contained in Section 2.10(c).  So long as no Default or Event of Default has occurred and is continuing, Agent agrees to provide Borrowers with a copy of the report for any such inventory appraisal, provided that the appraiser consents to the Borrowers being provided a copy of such report.

 

5.8                               Compliance with Laws.  Parent Borrower will, and will cause each of its Restricted Subsidiaries to, comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority (including Environmental Laws and ERISA), other than laws, rules, regulations, and orders the non-compliance with which,

 

47

 

individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect.

 

5.9                               Environmental.  Parent Borrower will, and will cause each of its Restricted Subsidiaries to,

 

(a)                                 keep any property either owned or operated by Parent Borrower or its Restricted Subsidiaries free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, in each case, other than Permitted Liens,

 

(b)                                 comply with Environmental Laws applicable to Parent Borrower and its Restricted Subsidiaries, except if the failure to so comply would not reasonably be expected to result in a Material Adverse Effect,

 

(c)                                  promptly, but in any event within 5 Business Days after Parent Borrower has knowledge thereof, notify Agent of any release of which Parent Borrower has knowledge of a Hazardous Material in any reportable quantity from or onto property owned or operated by Parent Borrower or its Restricted Subsidiaries and take any Remedial Actions required to abate said release pursuant to applicable Environmental Law, except if the failure to take such Remedial Actions would not reasonably be expected to result in a Material Adverse Effect, and

 

(d)                                 promptly, but in any event within 5 Business Days after its receipt thereof, provide Agent with written notice of any of the following:  (i) notice that an Environmental Lien has been filed against any of the real or personal property of Parent Borrower or its Restricted Subsidiaries, (ii) commencement of any Environmental Action (or written notice that an Environmental Action will be) filed against Parent Borrower or its Restricted Subsidiaries, and (iii) written notice of a violation, citation, or other administrative order to Parent Borrower or any Restricted Subsidiary from a Governmental Authority pursuant to applicable Environmental Laws, in each case of clauses (ii) and (iii), that has resulted in, or could result in, Environmental Liabilities that could reasonably be expected to result in a Material Adverse Effect.

 

5.10                        Disclosure Updates.  Parent Borrower will, promptly and in no event later than 5 Business Days after obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished to Agent or the Lenders pursuant to the Loan Documents contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein (taken as a whole) not misleading in any material respect in light of the circumstances in which made, it being understood that financial statements contain only such disclosures as are required by GAAP.  The foregoing to the contrary notwithstanding, any notification pursuant to the foregoing provision will not cure or remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the effect of amending or modifying this Agreement or any of the Schedules hereto.

 

5.11                        Formation of Subsidiaries.

 

(a)                                 Parent Borrower will, promptly after (x) the creation or acquisition of any (i) Wholly Owned Subsidiary that is a Domestic Subsidiary (other than an Excluded Subsidiary)

 

48

 

or upon a wholly owned domestic Unrestricted Subsidiary (other than an Excluded Subsidiary) being designated as a Restricted Subsidiary and (y) any Restricted Subsidiary (except for any Excluded Subsidiary) that is not already a Guarantor guarantees or becomes an obligor of any other Indebtedness of any Loan Party with an aggregate principal amount of $5,000,000 or more, in each case, cause such Subsidiary to (i) if such Subsidiary is a Domestic Subsidiary and Administrative Borrower requests, subject to the consent of Agent (not to be unreasonably withheld, delayed or conditioned), that such Domestic Subsidiary be joined as a Borrower hereunder, provide to Agent a duly executed joinder to this Agreement substantially in the form of Exhibit J-1, (ii) become a Guarantor by delivering to the Agent a duly executed joinder to the Guaranty and Security Agreement or such other document as the Agent shall deem appropriate for such purpose, (iii) grant a security interest in all Collateral specified in the Guaranty and Security Agreement (subject to the exceptions specified in the Guaranty and Security Agreement, including with respect to Excluded Assets) owned by such Subsidiary by delivering to the Agent a duly executed joinder to the Guaranty and Security Agreement, together with such other security documents and financing statements as the Agent shall reasonably deem appropriate for such purpose and comply with the terms of each applicable security document, (iv)  deliver to the Agent a duly executed joinder to the Intercreditor Agreement, (v) to deliver to the Agent such opinions, documents and certificates referred to in Section 3.1 as may be reasonably requested by the Agent, (vi) if the Equity Interests of such Subsidiary constitute Collateral and are certificated, deliver, subject to the Intercreditor Agreement, to the Agent such original certificated Equity Interests or other certificates and stock or other transfer powers evidencing the Equity Interests of such Subsidiary and (vii) deliver to the Agent such updated Schedules to the Loan Documents as requested by the Agent with respect to such Person.

 

(b)                                 Parent Borrower will notify the Agent promptly after any Loan Party creates or acquires a First-Tier Foreign Subsidiary, and promptly thereafter (and, in any event, within 45 days after such notification, as such time period may be extended by the Agent in its sole discretion), cause (i) the applicable Loan Party to deliver to the Agent a pledge agreement, an addendum to the Guaranty and Security Agreement, and/or other security documents pledging, solely to the extent that the following does not constitute Excluded Assets, Equity Interests of any such new First-Tier Foreign Subsidiary and, if reasonably requested by Agent, a consent thereto executed by such new First-Tier Foreign Subsidiary (including, without limitation, if applicable, original certificated Equity Interests (or the equivalent thereof pursuant to the applicable laws and practices of any relevant foreign jurisdiction) evidencing the Equity Interests to be pledged of such new First-Tier Foreign Subsidiary, together with an appropriate undated stock or other transfer power for each certificate duly executed in blank by the registered owner thereof), (ii) such Person to deliver to the Agent such opinions, documents and certificates referred to in Section 3.1 as may be reasonably requested by the Agent, (iii) such Person to deliver to the Agent such updated Schedules to the Loan Documents as requested by the Agent with regard to such Person and (iv) such Person to deliver to the Agent such other documents as may be reasonably requested by the Agent, all in form, content and scope reasonably satisfactory to the Agent.

 

(c)                                  Any document, agreement, or instrument executed or issued pursuant to this Section 5.11 shall constitute a Loan Document.  For purposes of this Section 5.11 and any other provision of any Loan Document, compliance with applicable foreign laws with respect to

 

49

 

the grant, creation and perfection of Liens on and security interests in the Collateral will not be required.

 

5.12                        Further Assurances.  Each Borrower will, and will cause each of the other Loan Parties to, at any time upon the reasonable request of Agent, execute or deliver to Agent any and all financing statements, fixture filings, security agreements, pledges, assignments, opinions of counsel, and all other documents (the “Additional Documents”) that Agent may reasonably request in form and substance reasonably satisfactory to Agent, to create, perfect, and continue perfected Agent’s Liens in all of the assets constituting Collateral, subject to the provisions of Section 5.11 and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents.  To the maximum extent permitted by applicable law, if any Borrower or any other Loan Party refuses or fails to execute or deliver any reasonably requested Additional Documents within a reasonable period of time following the request to do so, each Borrower and each other Loan Party hereby authorizes Agent to execute any such Additional Documents in the applicable Loan Party’s name and authorizes Agent to file such executed Additional Documents in any appropriate filing office.  In furtherance of, and not in limitation of, the foregoing, except to the extent not required by any Loan Document, each Loan Party shall take such actions as Agent may reasonably request from time to time to ensure that the Obligations are guaranteed by the Guarantors and are secured by the Collateral.  For purposes of this Section 5.12 and any other provision of any Loan Document, compliance with applicable foreign laws with respect to the grant, creation and perfection of Liens on and security interests in the Collateral will not be required.

 

5.13                        Lender Meetings.  Parent Borrower will, within 90 days after the close of each fiscal year of Administrative Borrower (commencing with the fiscal year ending December 31, 2017), at the request of Agent or of the Required Lenders and upon reasonable prior written notice, hold a meeting (at a mutually agreeable location and time or, at the option of Agent, by conference call) with all Lenders who choose to attend such meeting at which meeting shall be reviewed the financial results of the previous fiscal year and the financial condition of Parent Borrower and its Restricted Subsidiaries and the projections presented for the current fiscal year of Administrative Borrower.

 

5.14                        Location of Inventory.  As to any Inventory that is identified by a Borrower as Eligible Inventory in the most recent Borrowing Base Certificate delivered pursuant hereto, each Borrower will keep such Eligible Inventory only at the locations identified on Schedule 4.24, except if or with respect to any such Eligible Inventory that (a) is Eligible In-Transit Inventory or for which Agent has established a Landlord Reserve, (b) is out for repair, (c) is at a rail yard, (d) is on consignment or in the possession of lessees in the ordinary course of business, or (e) has been sold or disposed of in accordance with the terms of the Loan Documents since the date of such Borrowing Base Certificate; provided, that Borrowers may amend Schedule 4.24 so long as such amendment occurs by written notice to Agent not less than 5 days prior to the date on which such Inventory is moved to such new location is relocated and so long as such new location is within the continental United States.

 

5.15                        OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws.  Each Loan Party will, and will cause each of its Subsidiaries to, comply with all applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws. Each of the Loan Parties

 

50

 

and its Subsidiaries shall implement and maintain in effect policies and procedures designed to ensure compliance by the Loan Parties and their Subsidiaries and their respective directors, officers, employees, agents and Affiliates with all applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.

 

6.                                      NEGATIVE COVENANTS.

 

Each Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations (other than Contingent Surviving Obligations):

 

6.1                               Indebtedness.  Parent Borrower will not, and will not permit any of its Restricted Subsidiaries to create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except for Permitted Indebtedness.

 

6.2                               Liens.  Parent Borrower will not, and will not permit any of its Restricted Subsidiaries to create, incur, assume, or suffer to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens.

 

6.3                               Restrictions on Fundamental Changes.  Parent Borrower will not, and will not permit any of its Restricted Subsidiaries to,

 

(a)                                 other than in order to consummate a Permitted Acquisition, enter into any merger, consolidation, or recapitalization, or reclassify its Equity Interests, except for (i) any merger between or among Loan Parties, provided, that if the transaction involves a Borrower, a Borrower must be the surviving entity of any such merger to which it is a party, (ii) any merger between a Loan Party and a Subsidiary of such Loan Party that is not a Loan Party so long as such Loan Party is the surviving entity of any such merger, (iii) any merger between Restricted Subsidiaries of Parent Borrower that are not Loan Parties, and (iv) any distribution of assets (including Equity Interests of any Subsidiary) by Parent Borrower or any Restricted Subsidiary to any other Restricted Subsidiary or Parent Borrower, provided that if any such assets (or Equity Interests) are to be distributed by a Loan Party, such assets (or Equity Interests) must be distributed to another Loan Party (except to the extent permitted by Section 6.9), or

 

(b)                                 liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution), except for (i) the liquidation or dissolution of non-operating Restricted Subsidiaries of Parent Borrower with nominal assets and nominal liabilities, (ii) the liquidation or dissolution of a Loan Party (other than a Borrower) so long as (except to the extent permitted by Section 6.9) all of the assets (including any interest in any Equity Interests) of such liquidating or dissolving Loan are transferred to a Loan Party that is not liquidating or dissolving, or (iii) the liquidation or dissolution of a Restricted Subsidiary of Parent Borrower that is not a Loan Party (other than any such Restricted Subsidiary the Equity Interests of which (or any portion thereof) is subject to a Lien in favor of Agent) so long as (except to the extent permitted by Section 6.9) all of the assets of such liquidating or dissolving Restricted Subsidiary are transferred to a Restricted Subsidiary of Parent Borrower that is not liquidating or dissolving.

 

6.4                               Disposal of Assets.  Other than Permitted Dispositions or transactions expressly permitted by Sections 6.3 or 6.9, Parent Borrower will not, and will not permit any of its

 

51

 

Restricted Subsidiaries to convey, sell, lease, license, assign, transfer, or otherwise dispose of any of its or their assets.

 

6.5                               Nature of Business.  Parent Borrower will not, and will not permit any of its Restricted Subsidiaries to engage in any business other than a Permitted Business, except to such extent as would not be material to Parent Borrower and its Restricted Subsidiaries, taken as a whole.

 

6.6                               Prepayments and Amendments.  Parent Borrower will not, and will not permit any of its Restricted Subsidiaries to:

 

(a)                                 except in connection with Refinancing Indebtedness permitted by Section 6.1,

 

(i)                                     optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of Parent Borrower or any of its Restricted Subsidiaries, other than (A) the Obligations, (B) Permitted Intercompany Advances, (C) in connection with the sale of Inventory in the ordinary course of business and consistent with past practices, and (D) payments, redemptions, defeasance, purchases or other acquisitions of Indebtedness outstanding under the Term Loan Facility or the Senior Notes expressly permitted by Section 6.6(a)(iii), in each case, together with all interest, fees, premiums and other amounts required by the Term Loan Facility Documents or the Senior Notes or Senior Notes Indenture required to be paid in connection therewith,

 

(ii)                                  make any payment on account of Indebtedness that has been contractually subordinated in writing to the Obligations in right of payment if such payment is not permitted at such time under the subordination terms and conditions, or

 

(iii)                               make any payment of principal in respect of the Term Loan Facility or the Senior Notes, other than

 

(A)                               regularly scheduled payments of principal, including at the maturity thereof,

 

(B)                               payments made with the proceeds of any sale, transfer or other disposition of assets (including by casualty or condemnation) other than ABL Collateral which are, by the terms of the Term Loan Facility Credit Agreement or the Senior Notes Indenture, in each case, required to be paid to the Term Loan Facility Agent for application to the Term Loans or to the Senior Notes Trustee for application to the Senior Notes, as the case may be, and

 

(C)                               optional prepayments, redemptions, defeasance, purchases or other acquisitions of Indebtedness outstanding under the Term Loan Facility Credit Agreement or any of the Senior Notes so long as (I) no Event of Default exists or would exist immediately before or after giving effect to such prepayment, redemption, defeasance, purchase or other acquisition and (II) on a pro forma basis, after giving effect to each such prepayment, redemption, defeasance, purchase or other acquisition and any Revolving Loans made in connection therewith, either (A) Excess Availability shall not be less than the greater of (x)

 

52

 

22.5% of the Line Cap and (y) $30,000,000 at any time during the period from the 30th day prior to the date of such prepayment through and including the date of such prepayment, redemption, defeasance, purchase or other acquisition (measured as if such prepayment, redemption, defeasance, purchase or other acquisition and any Revolving Loans made in connection therewith had been made on the first day of such 30 day period), or (B)(1) Excess Availability shall not be less than the greater of (x) 17.5% of the Line Cap and (y) $25,000,000 at any time during the period from the 30th day prior to the date of such prepayment, redemption, defeasance, purchase or other acquisition through and including the date of such prepayment, redemption, defeasance, purchase or other acquisition (measured as if such prepayment, redemption, defeasance, purchase or other acquisition and any Revolving Loans made in connection therewith had been made on the first day of such 30 day period), and (2) the Fixed Charge Coverage Ratio for the most recent 12 fiscal month period for which Parent Borrower’s financial statements are then required to have been delivered pursuant to Section 5.1 is at least 1.0 to 1.0, as calculated on a pro forma basis as if such prepayment, redemption, defeasance, purchase or other acquisition and any Revolving Loans made in connection therewith were made on the first day of such period, or

 

(b)                                 directly or indirectly, amend, modify, or change any of the terms or provisions of:

 

(i)                                     except in connection with Refinancing Indebtedness permitted by Section 6.1, any agreement, instrument, document, indenture, or other writing evidencing Permitted Indebtedness described in clauses (b) and (c) of the definition thereof other than any amendment, modification, or change would not (A) shorten or hasten the maturity date of the Term Loan Facility or the Senior Notes (in each case, as in effect on the Closing Date), (B) increase the principal amount of the Term Loan Facility except to the extent constituting “Permitted Indebtedness” under clause (b) or (c) of the definition of “Permitted Indebtedness,” respectively, (C) shorten or hasten the date scheduled for any principal payment thereunder, or (D) increase the amount of any required principal payment thereunder (or change the methodology by which any such principal amount is determined, unless the same shall have in all cases the effect of reducing the amount of any required principal payment thereunder or extending the date on which such required principal payment becomes due) (with it being agreed that nothing in this clause (i) shall prohibit the making of any payment otherwise permitted under Section 6.6(a)(iii)), or

 

(ii)                                  the Governing Documents of Parent Borrower or any of its Restricted Subsidiaries if the effect thereof, either individually or in the aggregate, would reasonably be expected to be materially adverse to the interests of the Lenders.

 

6.7                               Restricted Payments.  Parent Borrower will not, and will not permit any of its Restricted Subsidiaries to make any Restricted Payment; provided, that, so long as it is permitted by applicable law, and so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom,

 

(a)                                 any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Equity Interests of Parent Borrower or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Disqualified Equity

 

53

 

Interests of Parent Borrower or such Restricted Subsidiary, as the case may be, that, in each case, is permitted to be incurred pursuant to Section 6.1 hereof and that in each case constitutes Refinancing Indebtedness,

 

(b)                                 the payment of any dividend or redemption payment or the making of any distribution (in each case, other than a payment or distribution permitted by Section 6.7(a) of the Agreement) within 60 days after the date of declaration thereof, if at such date of declaration such dividend would have complied with the provisions of this Agreement, or any dividend or similar distribution by a Restricted Subsidiary to the holders of its Equity Interests on a pro rata basis,

 

(c)                                  the purchase, redemption or other acquisition, cancellation or retirement for value of Equity Interests of Parent Borrower or any Restricted Subsidiary held by any existing or former employees, officers, managers, partners, directors or holders of Equity Interests of Administrative Borrower or any Restricted Subsidiary of Parent Borrower or their assigns, estates or heirs, in each case, in connection with the repurchase provisions under employee stock option, restricted stock units or stock purchase agreements or other agreements; provided that such redemptions or repurchases pursuant to this clause will not exceed $1.5 million in the aggregate during any calendar year (with any unused amounts in any calendar year being carried over to the immediately succeeding calendar year subject to a maximum of $3.0 million in any calendar year), plus the amount of any capital contributions to Parent Borrower as a result of sales of Equity Interests of Parent Borrower to such persons, plus the net cash proceeds of any “key-man” life insurance policies, and

 

(d)                                 loans or advances to employees, officers or directors of Parent Borrower or any Subsidiary of Parent Borrower, the proceeds of which are used to purchase Equity Interests of Parent Borrower, in an aggregate amount not in excess of $2.0 million at any one time outstanding (without giving effect to the forgiveness of any such loan);

 

(e)                                  repurchases of Equity Interests deemed to occur upon the vesting or settlement of restricted stock units, exercise of stock options, warrants, other rights to purchase Equity Interests or other convertible securities or similar securities if such Equity Interests represent a portion of the exercise price thereof (or withholding, purchases or deemed purchases of Equity Interests to satisfy related withholding Taxes with regard to the exercise of such stock options, warrants or other rights to purchase Equity Interests or the vesting or settlement of any such restricted stock, restricted stock units, deferred stock units or any similar securities);

 

(f)                                   payments or distributions to dissenting stockholders pursuant to applicable law in connection with a merger or consolidation that complies with Section 6.3 hereof;

 

(g)                                  cash payment in lieu of issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for the Equity Interests of Parent Borrower or a Restricted Subsidiary; provided, that such payment shall not be for the purpose of evading the limitations of this covenant (as determined by the Board of Directors of Parent Borrower in good faith);

 

54

 

(h)                                 Parent Borrower and its Restricted Subsidiaries may make Restricted Payments in an amount not to exceed the Available Amount Basket;

 

(i)                                     Parent Borrower and its Restricted Subsidiaries may make other Restricted Payments so long as (i) each such Restricted Payment is permitted by law, (ii) on a pro forma basis, after giving effect to each such Restricted Payment and any Revolving Loans made in connection therewith, either (A) Excess Availability shall not be less than the greater of (x) 22.5% of the Line Cap and (y) $30,000,000 at any time during the period from the 30th day prior to the date of such Restricted Payment through and including the date of such Restricted Payment (measured as if such Restricted Payment and any Revolving Loans made in connection therewith had been made on the first day of such 30 day period), or (B)(1) Excess Availability shall not be less than the greater of (x) 17.5% of the Line Cap and (y) $25,000,000 at any time during the period from the 30th day prior to the date of such Restricted Payment through and including the date of such Restricted Payment (measured as if such Restricted Payment and any Revolving Loans made in connection therewith had been made on the first day of such 30 day period), and (2) the Fixed Charge Coverage Ratio for the most recent 12 fiscal month period for which Parent Borrower’s interim financial statements are then required to have been delivered pursuant to Section 5.1 is at least 1.0 to 1.0, as calculated on a pro forma basis as if such Restricted Payment and any Revolving Loans made in connection therewith were made on the first day of such period, and (iii) on or prior to the date of each such Restricted Payment, Borrowers shall have delivered to Agent an officer’s certificate from an Authorized Person as to the satisfaction of all conditions set forth above in this clause (i); and

 

(j)                                    Parent Borrower and its Restricted Subsidiaries may make any other Restricted Payments in an aggregate amount not to exceed $20,000,000 during the term of this Agreement.

 

6.8                               Accounting Methods.  Parent Borrower will not, and will not permit any of its Subsidiaries to modify or change its fiscal year or its method of accounting (other than as may be required to conform to GAAP).

 

6.9                               Investments.  Parent Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make or acquire any Investment except for Permitted Investments.

 

6.10                        Transactions with Affiliates.  Parent Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction with any Affiliate of Parent Borrower or any of its Restricted Subsidiaries involving aggregate consideration in excess of $1,000,000 unless:

 

(a)                                 such transaction is on terms that are no less favorable to Parent Borrower or the relevant Restricted Subsidiary than those that would have been obtained in a comparable arm’s-length transaction by Parent Borrower or such Restricted Subsidiary with an unaffiliated party; and

 

(b)                                 with respect to any transaction or series of related transactions involving aggregate consideration in excess of $20,000,000, the terms of such transaction shall have been

 

55

 

approved by a majority of the members of the Board of Directors of Parent Borrower and by a majority of the Disinterested Members (or, if there is only one Disinterested Member, such Disinterested Member), if any, and Parent Borrower delivers to the Agent a resolution adopted by such majority or majorities, as the case may be, of the Board of Directors of Parent Borrower approving such transaction and resolving that such transaction complies with clause (a) above.

 

The foregoing limitations do not limit, and shall not apply to:

 

(i)                                     payment of reasonable and customary fees and expenses to, and reasonable and customary indemnification arrangements and similar arrangements and payments on behalf of, directors of Parent Borrower or any Subsidiary of Parent Borrower;

 

(ii)                                  any employment, consulting, service or termination agreement, or reasonable and customary indemnification arrangements, entered into by Parent Borrower or any Restricted Subsidiary with officers and employees of Parent Borrower or any Subsidiary thereof and the payment of compensation to officers and employees of Parent Borrower or any Subsidiary thereof (including amounts paid pursuant to employee benefit plans, employee stock option or similar plans), so long as such agreement or payment has been approved by a majority of the Disinterested Members (or, if there is only one Disinterested Member, such Disinterested Member);

 

(iii)                               transactions permitted by Section 6.3,  Section 6.4, Section 6.6, Section 6.7, or Section 6.9, or any Permitted Intercompany Advance;

 

(iv)                              any sale or other issuance of Equity Interests (other than Disqualified Equity Interests) of Parent Borrower to, or receipt of a capital contribution from, an Affiliate (or a Person that becomes an Affiliate) of Parent Borrower;

 

(v)                                 loans or advances to employees, officers or directors of Parent Borrower or any of its Restricted Subsidiaries in an aggregate amount not in excess of $5,000,000 at any one time outstanding;

 

(vi)                              transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case, in the ordinary course of the business of Parent Borrower or any of its Restricted Subsidiaries and otherwise in compliance with the terms of this Agreement; provided that in the reasonable determination of the members of the Board of Directors or senior management of Parent Borrower, such transactions are on terms that are no less favorable to Parent Borrower or any of its Restricted Subsidiaries than those that would have been obtained in a comparable Transaction by Parent Borrower or any of its Restricted Subsidiaries with an unrelated Person;

 

(vii)                           direct or indirect sales of equipment, supplies, products and services by Parent Borrower or any of its Restricted Subsidiaries to any direct or indirect joint venture of Parent Borrower or any of its Restricted Subsidiaries at or above Cost;

 

(viii)                        transactions in which Parent Borrower or any of its Restricted Subsidiaries delivers to the Agent a letter from an independent financial advisor stating that such

 

56

 

transaction is fair to Parent Borrower or the applicable Restricted Subsidiary, as the case may be, from a financial point of view;

 

(ix)                              transactions described on Schedule 6.10, or any amendment, modification or supplement thereto or replacement thereof so long as such agreement, as so amended, modified, supplemented or replaced, taken as a whole, is not materially adverse to the Lenders;

 

(x)                                 transactions among Parent Borrower and/or the Restricted Subsidiaries; and

 

(xi)                              any issuance or sale of Equity Interests (other than Disqualified Equity Interests) of Parent Borrower.

 

6.11                        Use of Proceeds.  Each Borrower will not, and will not permit any of its Restricted Subsidiaries to use the proceeds of any Loan made hereunder for any purpose other than (a) on the Closing Date, to pay the fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby, in each case, as set forth in the Funds Flow Agreement, and (b) consistent with the terms and conditions hereof, for their lawful and permitted purposes (including that no part of the proceeds of the loans made to Borrowers will be used for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors); provided (1) Loans made to Parent Borrower may be used only to fund working capital and general corporate purposes of Parent Borrower and its Subsidiaries (other than OpCo Borrower and its Subsidiaries) and (2) Loans made to OpCo Borrower may be used for working capital and general corporate purposes.

 

7.                                      FINANCIAL COVENANT.

 

7.1                               Fixed Charge Coverage Ratio.  Parent Borrower covenants and agrees that, until termination of all of the Commitments and payment in full of the Obligations (other than Contingent Surviving Obligations), upon the occurrence and during the continuance of a Covenant Testing Period, Borrowers will maintain a Fixed Charge Coverage Ratio, measured on a fiscal quarter-end basis of at least 1.0:1.0 for the trailing twelve (12) month period ended as of the last day of each such quarter or month, as applicable, commencing with the most recent period for which financial statements were, or were required to be, delivered hereunder prior to the applicable Covenant Testing Period.

 

8.                                      EVENTS OF DEFAULT.

 

Any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under this Agreement:

 

8.1                               Payments.  If Borrowers fail to pay when due and payable, or when declared due and payable, (a) all or any portion of the Obligations consisting of interest, fees, or charges due the Lender Group, reimbursement of Lender Group Expenses, Indemnified Taxes payable pursuant to Section 16, or other amounts (other than any portion thereof constituting principal) constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a

 

57

 

claim in any such Insolvency Proceeding), and such failure continues for a period of 3 Business Days, (b) all or any portion of the principal of the Loans, or (c) any amount payable to Issuing Bank in reimbursement of any drawing under a Letter of Credit;

 

8.2                               Covenants.  If any Loan Party or any of its Restricted Subsidiaries:

 

(a)                                 fails to perform or observe any covenant or other agreement contained in any of (i) Sections 5.1, 5.2, 5.3 (solely if any Borrower is not in good standing in its jurisdiction of organization), 5.6, 5.7 (solely if any Borrower refuses to allow Agent or its representatives or agents to visit any Borrower’s properties, inspect its assets or books or records, examine and make copies of its books and records, or discuss Borrowers’ affairs, finances, and accounts with officers and employees of any Borrower), 5.11, or 5.13, of this Agreement, (ii) Section 6 of this Agreement, (iii) Section 7 of this Agreement, or (iv) Section 7(c), 7(h), 7(j), 7(k) or 7(l) of the Guaranty and Security Agreement;

 

(b)                                 fails to perform or observe any covenant or other agreement contained in any of Sections 5.3 (other than if any Borrower is not in good standing in its jurisdiction of organization), 5.5, 5.8, 5.10, 5.12 and 5.14 of this Agreement or any clause of Section 7 of the Guaranty and Security Agreement not listed in Section 8.2(a), and such failure continues for a period of 10 days after the earlier of (i) the date on which such failure shall first become known to any officer of any Borrower or (ii) the date on which written notice thereof is given to Borrowers by Agent; or

 

(c)                                  fails to perform or observe any covenant or other agreement of a Loan Party contained in this Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or agreement that is the subject of another provision of this Section 8 (in which event such other provision of this Section 8 shall govern), and such failure continues for a period of 30 days after the earlier of (i) the date on which such failure shall first become known to any officer of any Borrower or (ii) the date on which written notice thereof is given to Borrowers by Agent;

 

8.3                               Judgments.  If one or more final judgments, orders, or awards for the payment of money involving an aggregate amount of $30,000,000, or more (except to the extent fully covered (other than to the extent of customary deductibles) by insurance pursuant to which the insurer has not denied coverage or valid third party indemnifications for which the indemnifying party thereof has been notified of such claim and has not challenged such indemnification) is entered or filed against a Loan Party or any of its Restricted Subsidiaries, or with respect to any of their respective assets, and there is a period of 60 consecutive days at any time after the entry of any such judgment, order, or award during which (a) the same is not discharged, satisfied, vacated, or bonded pending appeal, or (b) a stay of enforcement thereof is not in effect;

 

8.4                               Voluntary Bankruptcy, etc.  If an Insolvency Proceeding with respect to a Loan Party or any Restricted Subsidiary is commenced by a Loan Party or a Restricted Subsidiary;

 

8.5                               Involuntary Bankruptcy, etc.  If an Insolvency Proceeding is commenced against a Loan Party or any of its Restricted Subsidiaries and any of the following events occur:  (a) such Loan Party or such Restricted Subsidiary consents to the institution of such Insolvency

 

58

 

Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, such Loan Party or its Restricted Subsidiary, or (e) an order for relief shall have been issued or entered therein;

 

8.6                               Default Under Other Agreements.  If there is a default in one or more agreements to which a Loan Party or any of its Restricted Subsidiaries is a party with one or more third Persons relative to a Loan Party’s or any of its Restricted Subsidiaries’ Indebtedness involving an aggregate amount of $30,000,000 or more, and such default (after giving effect to any applicable grace or cure period with respect thereto) (a) occurs at the final maturity of the obligations thereunder, or (b) results in a right by such third Person, irrespective of whether exercised, to accelerate the maturity of such Loan Party’s or its Restricted Subsidiary’s obligations thereunder;

 

8.7                               Representations, etc.  If any warranty or representation made by any Loan Party herein or in any other Loan Document proves to be untrue in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of the date when made;

 

8.8                               Guaranty.  If the obligation of any Guarantor under the guaranty contained in the Guaranty and Security Agreement is limited or terminated by operation of law or by such Guarantor (other than in accordance with the terms of this Agreement);

 

8.9                               Collateral.  Unless all of the Collateral has been released from the Liens in accordance with the provisions of the Loan Documents, (a) the liens and security interests on assets or collections of assets constituting Collateral having a fair market value in excess of $30,000,000 shall cease to be perfected, or shall fail to have the priority contemplated hereby, in each case, subject to Permitted Liens, and the same shall continue for a period in excess of 30 consecutive days following written notice from Agent, or (b) the determination in a judicial proceeding that the Loan Documents are unenforceable or invalid against any Loan Party party thereto for any reason with respect to any Collateral, individually or in the aggregate, having a fair market value in excess of $30,000,000; provided that such default, repudiation, disaffirmation or determination is not rescinded, stayed, or waived by the Persons having such authority pursuant to the Loan Documents or otherwise cured within 60 days after Borrowers receive written notice thereof specifying such occurrence from Agent or the Required Lenders and demanding that such default be remedied;

 

8.10                        Loan Documents.  The validity or enforceability of any Loan Document shall at any time for any reason (other than solely as the result of an action or failure to act on the part of Agent or as expressly permitted by a Loan Document) be declared by a Governmental Authority with valid jurisdiction over such matter to be null and void, or a proceeding before a Governmental Authority shall be commenced by a Loan Party or its Restricted Subsidiaries, or by any Governmental Authority having jurisdiction over a Loan Party or its Restricted Subsidiaries, in each case, seeking to establish the invalidity or unenforceability of any such Loan Document, or a Loan Party or its Restricted Subsidiaries shall deny in writing that such

 

59

 

Loan Party or its Restricted Subsidiaries has any Indebtedness outstanding under any Loan Document; or

 

8.11                        Change of Control.  A Change of Control shall occur, whether directly or indirectly.

 

9.                                      RIGHTS AND REMEDIES.

 

9.1                               Rights and Remedies.  Upon the occurrence and during the continuation of an Event of Default, Agent may and, at the instruction of the Required Lenders, shall (in each case under clauses (a) or (b) by written notice to Borrowers), in addition to any other rights or remedies provided for hereunder or under any other Loan Document or by applicable law, do any one or more of the following:

 

(a)                                 (i) declare the principal of, and any and all accrued and unpaid interest and fees in respect of, the Loans and all other Obligations (other than Contingent Surviving Obligations), whether evidenced by this Agreement or by any of the other Loan Documents to be immediately due and payable, whereupon the same shall become and be immediately due and payable and Borrowers shall be obligated to repay all of such Obligations in full, without presentment, demand, protest, or further notice or other requirements of any kind, all of which are hereby expressly waived by each Borrower, and (ii) direct Borrowers to provide (and Borrowers agree that upon receipt of such notice Borrowers will provide) Letter of Credit Collateralization to Agent to be held as security for Borrowers’ reimbursement obligations for drawings that may subsequently occur under issued and outstanding Letters of Credit;

 

(b)                                 declare the Commitments terminated, whereupon the Commitments shall immediately be terminated together with (i) any obligation of any Revolving Lender to make Revolving Loans, (ii) the obligation of the Swing Lender to make Swing Loans, and (iii) the obligation of Issuing Bank to issue Letters of Credit; and

 

(c)                                  exercise all other rights and remedies available to Agent or the Lenders under the Loan Documents, under applicable law, or in equity;

 

The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Section 8.4 or Section 8.5, in addition to the remedies set forth above, without any notice to Borrowers or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations (other than Contingent Surviving Obligations), inclusive of the principal of, and any and all accrued and unpaid interest and fees in respect of, the Loans and all other Obligations (other than Contingent Surviving Obligations), whether evidenced by this Agreement or by any of the other Loan Documents, shall automatically become and be immediately due and payable and Borrowers shall automatically be obligated to repay all of such Obligations in full (including Borrowers being obligated to provide (and Borrowers agree that they will provide) (1) Letter of Credit Collateralization to Agent to be held as security for Borrowers’ reimbursement obligations in respect of drawings that may subsequently occur under issued and outstanding Letters of Credit and (2) Bank Product Collateralization to be held as security for Borrowers’ or their Restricted Subsidiaries’ obligations in respect of outstanding Bank Products), without presentment, demand, protest, or

 

60

 

notice or other requirements of any kind, all of which are expressly waived by Borrowers.  If any amount remains on deposit as Letter of Credit Collateralization after all Letters of Credit have either been fully drawn or expired, terminated, cancelled or returned, such remaining amount shall be applied to the other Obligations, if any, in the order set forth in Section 2.4(b)(ii).

 

9.2                               Remedies Cumulative.  The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative.  The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity.  No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver.  No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.

 

10.                               WAIVERS; INDEMNIFICATION.

 

10.1                        Demand; Protest; etc.  Each Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which any Borrower may in any way be liable.

 

10.2                        The Lender Group’s Liability for Collateral.  Each Borrower hereby agrees that:  (a) so long as Agent complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for:  (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by Borrowers, except, in each case, to the extent such loss, damage or destruction is determined by a final non-appealable judgment of a court of competent jurisdiction to have resulted from the gross negligence, bad faith or willful misconduct of a member of the Lender Group.

 

10.3                        Indemnification.  Each Borrower shall pay, indemnify, defend, and hold the Agent-Related Persons and the Lender-Related Persons (each, an “Indemnified Person”) harmless (to the fullest extent permitted by applicable law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable, documented fees and disbursements of attorneys (limited to one firm of counsel for the Indemnified Persons, taken as a whole, (plus any local counsel or regulatory counsel (if the applicable Indemnified Person or Indemnified Persons reasonably determine that local or regulatory counsel is necessary) or any additional counsel reasonably necessary as a result of an actual conflict of interest or a reasonable likelihood of a conflict of interest of any Indemnified Person, which, in the case of local counsel, shall be limited to one firm of counsel for each applicable jurisdiction, in the case of regulatory counsel, shall be limited to one firm of such counsel for all Indemnified Persons, and in the case of a conflict of interest, shall be limited to one firm of counsel for all Indemnified Persons similarly situated)), experts, or consultants and all other reasonable, documented out-of-pocket costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification

 

61

 

(as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution and delivery (provided that Borrowers shall not be liable for costs and expenses (including attorneys’ fees) of any Lender (other than Wells Fargo) incurred in advising, structuring, drafting, reviewing, administering or syndicating the Loan Documents), enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Borrowers’ and their Restricted Subsidiaries’ compliance with the terms of the Loan Documents (provided, that, notwithstanding anything to the contrary in any Loan Document, the indemnification in this clause (a), and any other indemnification requirements in the Loan Documents, in each case, shall not extend to (i) disputes solely between or among the Lenders that do not involve any acts or omissions of any Loan Party, or (ii) disputes solely between or among any Lender-Related Persons that do not involve any acts or omissions of any Loan Party; it being understood and agreed that the indemnification in this clause (a) shall extend to Agent (but not the Lenders if within the limitations provided above) relative to disputes between or among Agent on the one hand, and one or more Lenders, or one or more of their Affiliates, on the other hand, or (iii) any Taxes or any costs attributable to Taxes, except for Taxes arising from a non-Tax claim pursuant to this Section 10.3), (b) with respect to any actual or prospective investigation, litigation, or proceeding related to this Agreement, any other Loan Document, the making of any Loans or issuance of any Letters of Credit hereunder, or the use of the proceeds of the Loans or the Letters of Credit provided hereunder (irrespective of whether any Indemnified Person or a Loan Party is a party thereto), or any act, omission, event, or circumstance in any manner related thereto, and (c) in connection with or arising out of any presence or release of Hazardous Materials at, on, under, to or from any assets or properties owned, leased or operated by any Borrower or any of its Restricted Subsidiaries, or any Environmental Actions, Environmental Liabilities or Remedial Actions related in any way to any such assets or properties of any Borrower or any of its Restricted Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”).  The foregoing to the contrary notwithstanding, no Borrower shall have any obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence, bad faith or willful misconduct of such Indemnified Person or its officers, directors, employees, attorneys, or agents.  This provision shall survive the termination of this Agreement and the repayment in full of the Obligations.  If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which Borrowers were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Borrowers with respect thereto.  WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

11.                               NOTICES.

 

Unless otherwise provided in this Agreement, all notices or demands relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements

 

62

 

and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as a party may designate in accordance herewith), or telefacsimile.  In the case of notices or demands to any Borrower or Agent, as the case may be, they shall be sent to the respective address set forth below:

 

	
If to any Borrower:
    	
c/o Administrative Borrower
   777 Main Street
   Suite 2900
   Fort Worth, TX 76102
   Attn: Lance Turner
   Fax No. 817-339-3697
   Email address:  Lance.Turner@FTSI.com
    Website:   http://www.ftsi.com/investor-relations/default.aspx
    
	
 
    	
 
    
	
with copies to:
    	
Jennifer Keefe
   777 Main Street
   Suite 2900
   Fort Worth, TX 76102
   Fax No. 817-339-3641
   Email address:  Jennifer.Keefe@FTSI.com
    Website:   http://www.ftsi.com/investor-relations/default.aspx
    
	
 
    	
 
    
	
If to Agent:
    	
WELLS FARGO BANK, NATIONAL
   ASSOCIATION
    14241 Dallas Parkway, Suite 900
   Dallas, TX 75254
   Attn:  Mark M. Galovic Jr. 
   Fax No.:  866-494-6028
   Email address:  Mark.galovic@wellsfargo.com
    
	
 
    	
 
    
	
with copies to:
    	
Goldberg Kohn Ltd.
   55 East Monroe, Suite 3300
   Chicago, IL 60603
   Attn:  Jessica L. DeBruin, Esq.
   Fax No.:  312-863-7857
   Email address:    jessica.debruin@goldbergkohn.com
    

 

Any party hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party.  All notices or demands sent in accordance with this Section 11, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail; provided, that (a) notices sent by overnight courier service shall be deemed to have been given when received, (b) notices by facsimile shall be deemed to have been given when sent (except that, if not given during

 

63

 

normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient) and (c) notices by electronic mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return email or other written acknowledgment).

 

12.                               CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION.

 

(a)                                 THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO, AND ANY CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

(b)                                 THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM  NON  CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).

 

(c)                                  TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH A “CLAIM”).  EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND 

 

64

 

VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

(d)                                 EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND FEDERAL COURTS LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT.  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 OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(e)                                  NO CLAIM MAY BE MADE BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH PARTY HERETO HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR. IT BEING UNDERSTOOD THAT THE FOREGOING DOES NOT LIMIT THE LOAN PARTIES’ INDEMNIFICATION OBLIGATIONS UNDER SECTION 10.3.

 

13.                               ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

 

13.1                        Assignments and Participations.

 

(a)                                 (i) Subject to the conditions set forth in clause (a)(ii) below, any Lender may assign and delegate all or any portion of its rights and duties under the Loan Documents (including the Obligations owed to it and its Commitments) to one or more assignees so long as such prospective assignee is an Eligible Transferee (each, an “Assignee”), with the prior written consent (such consent not be unreasonably withheld or delayed) of:

 

65

 

(A)                               Borrowers; provided, that no consent of Borrowers shall be required (1) if an Event of Default has occurred and is continuing, and (2) in connection with an assignment to a Person that is a Lender or an Affiliate (other than natural persons) of a Lender; provided, that Borrowers shall be deemed to have consented to a proposed assignment unless they object thereto by written notice to Agent within five Business Days after having received notice thereof; and

 

(B)                               Agent, Swing Lender, and Issuing Bank.

 

(ii)                                  Assignments shall be subject to the following additional conditions:

 

(A)                               no assignment may be made (i) so long as no Event of Default has occurred and is continuing, to a Competitor, or (ii) to a natural person,

 

(B)                               no assignment may be made to a Loan Party or an Affiliate of a Loan Party,

 

(C)                               the amount of the Commitments and the other rights and obligations of the assigning Lender hereunder and under the other Loan Documents subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to Agent) shall be in a minimum amount (unless waived by Agent and, so long as no Event of Default has occurred and is continuing, the Borrowers) of $10,000,000 (except such minimum amount shall not apply to (I) an assignment or delegation by any Lender to any other Lender, an Affiliate of any Lender, or a Related Fund of such Lender or (II) a group of new Lenders, each of which is an Affiliate of each other or a Related Fund of such new Lender to the extent that the aggregate amount to be assigned to all such new Lenders is at least $10,000,000),

 

(D)                               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,

 

(E)                                the parties to each assignment shall execute and deliver to Agent an Assignment and Acceptance; provided, that Borrowers and Agent may continue to deal solely and directly with the assigning Lender in connection with the interest so assigned to an Assignee until written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Borrowers and Agent by such Lender and the Assignee;

 

(F)                                 unless waived by Agent, the assigning Lender or Assignee has paid to Agent, for Agent’s separate account, a processing fee in the amount of $3,500, and

 

(G)                               the assignee, if it is not a Lender, shall deliver to Agent an Administrative Questionnaire in a form approved by Agent (the “Administrative Questionnaire”) and any Tax forms or documentation required to be delivered pursuant to Section 16.7.

 

(b)                                 From and after the date that Agent receives the executed Assignment and Acceptance and, if applicable, payment of the required processing fee, (i) the Assignee 

 

66

 

thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall be a “Lender” and shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 10.3) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto); provided, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Section 15 and Section 17.9(a).

 

(c)                                  By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows:  (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or the performance or observance by any Borrower of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such Assignee will, independently and without reliance upon Agent, such assigning Lender 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 this Agreement, (v) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement and the other Loan Documents as are delegated to Agent, by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, and (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

 

(d)                                 Immediately upon Agent’s receipt of the required processing fee, if applicable, and delivery of notice to the assigning Lender pursuant to Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom.  The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

 

(e)                                  Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons (a “Participant”) participating interests in all or any portion of its Obligations, its Commitment, and the other rights and interests of that Lender (the “Originating Lender”) hereunder and under the other Loan Documents; provided, that (i) the Originating Lender shall remain a “Lender” for all purposes of this Agreement and the other 

 

67

 

Loan Documents and the Participant receiving the participating interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender (other than a waiver of default interest), or (E) decreases the amount or postpones the due dates of scheduled principal repayments or prepayments or premiums payable to such Participant through such Lender, (v) no participation shall be sold to a natural person, (vi) no participation shall be sold to a Loan Party or an Affiliate of a Loan Party, and (vii) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement.  The Borrowers agree that each Participant shall be entitled to the benefits of Section 16 (subject to the requirements and limitations therein, including the requirements under Section 16.7 (it being understood that the documentation required under Section 16.7 shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to this Section 13.1; provided that such Participant (A) agrees to be subject to the provisions of Sections 2.13(c), Section 14.2 and Section 17.9 as if it were an assignee (without duplication of any such benefits that would otherwise be owed to the Lender with respect to the Loans subject to such participation) and (B) shall not be entitled to receive any greater payment under Section 16 with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired such participation.  Each Lender that sells a participation agrees, at Borrowers’ request and expense, to use reasonable efforts to cooperate with Borrowers to effectuate the provisions of Section 2.13(c) (to the extent such section addresses designation of or assignment to a Replacement Lender), Section 14.2 and Section 17.9 with respect to any Participant.  The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Borrowers, the Collateral, or otherwise in respect of the Obligations.  No 

 

68

 

Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves.

 

(f)                                   In connection with any such assignment or participation or proposed assignment or participation or any grant of a security interest in, or pledge of, its rights under and interest in this Agreement, a Lender may, subject to the provisions of Section 17.9, disclose all documents and information which it now or hereafter may have relating to any Borrower and its Restricted Subsidiaries and their respective businesses.

 

(g)                                  Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest to secure obligations of such Lender, including any pledge in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law; provided, that no such pledge shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(h)                                 Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the “Register”) on which it enters the name and address of each Lender as the registered owner of the Loans (and the principal amount thereof and stated interest thereon) held by such Lender (each, a “Registered Loan”).  A Registered Loan (and the registered note, if any, evidencing the same) may be assigned only by registration of such assignment on the Register (and each registered note shall expressly so provide) and any assignment of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s).  The entries in the Register shall be conclusive, absent manifest error.  Prior to the registration of assignment of any Registered Loan (and the registered note, if any evidencing the same), Borrowers, Agent and the Lenders shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary. The parties intend that the Register be maintained such that the Loans are in “registered form” for the purposes of the IRC.

 

(i)                                     In the event that a Lender sells participations in the Registered Loan, such Lender, as a non-fiduciary agent on behalf of Borrowers, shall maintain (or cause to be maintained) a register on which it enters the name of all participants in the Registered Loans held by it (and the principal amount (and stated interest thereon) of the portion of such Registered Loans that is subject to such participations) (the “Participant Register”).  A Registered Loan (and the registered note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each registered note shall expressly so provide).  No Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any other obligations under any Loan Document) 

 

69

 

to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.

 

(j)                                    Agent shall make a copy of the Register (and each Lender shall make a copy of its Participant Register in the extent it has one) available for review by Borrowers from time to time as Borrowers may reasonably request.

 

13.2                        Successors.  This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, that no Borrower may assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio.  No consent to assignment by the Lenders shall release any Borrower from its Obligations.  A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 13.1 and, except as expressly required pursuant to Section 13.1, no consent or approval by any Borrower is required in connection with any such assignment.

 

14.                               AMENDMENTS; WAIVERS.

 

14.1                        Amendments and Waivers.

 

(a)                                 No amendment, waiver or other modification of any provision of this Agreement or any other Loan Document (other than, for purposes of clarification, Bank Product Agreements, Issuer Documents or the Fee Letter, provided that any such agreements, documents and the Fee Letter shall only be amended or waived in accordance with the terms thereof), and no consent with respect to any departure by any Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and the Loan Parties that are party thereto and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders directly affected thereby and all of the Loan Parties that are party thereto, do any of the following:

 

(i)                                     increase the amount of or extend the expiration date of any Commitment of any Lender or amend, modify, or eliminate the last sentence of Section 2.4(c)  (for purposes of clarification, consent of all Lenders is not required in connection with the exercise of Borrowers’ rights under Section 2.14),

 

(ii)                                  postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document,

 

(iii)                               reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under 

 

70

 

any other Loan Document (except (y) in connection with the waiver of applicability of Section 2.6(c) (which waiver shall be effective with the written consent of the Required Lenders)), and (z) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or a reduction of fees for purposes of this clause (iii),

 

(iv)                              amend, modify, or eliminate this Section or any provision of this Agreement providing for consent or other action by all Lenders,

 

(v)                                 amend, modify, or eliminate Section 3.1 or 3.2,

 

(vi)                              amend, modify, or eliminate Section 15.11,

 

(vii)                           other than as permitted by Section 15.11, release Agent’s Lien in and to any of the Collateral,

 

(viii)                        amend, modify, or eliminate the definitions of “Required Lenders”, “Supermajority Lenders” or “Pro Rata Share”,

 

(ix)                              contractually subordinate any of Agent’s Liens (except as set forth in the last sentence of Section 15.11(a)),

 

(x)                                 other than in connection with a merger, liquidation, dissolution or sale of such Person expressly permitted by the terms hereof or the other Loan Documents, release any Borrower or any Guarantor from any obligation for the payment of money or consent to the assignment or transfer by any Borrower or any Guarantor of any of its rights or duties under this Agreement or the other Loan Documents,

 

(xi)                              amend, modify, or eliminate any of the provisions of Section 2.4(b)(i) or (ii), or

 

(xii)                           amend or modify any of the terms or provisions of the Intercreditor Agreement in a manner that increases the obligations of any Lender thereunder, or add any additional terms or provisions to the Intercreditor Agreement that impose any obligation on any Lender.

 

(b)                                 No amendment, waiver, modification, or consent shall amend, modify, waive, or eliminate,

 

(i)                                     the definition of, or any of the terms or provisions of, the Fee Letter, without the written consent of Agent and Borrowers (and shall not require the written consent of any of the Lenders),

 

(ii)                                  any provision of Section 15 pertaining to Agent, or any other rights or duties of Agent under this Agreement or the other Loan Documents, without the written consent of Agent, Borrowers, and the Required Lenders;

 

71

 

(c)                                  No amendment, waiver, modification, elimination, or consent shall amend, without written consent of Agent, Borrowers and the Supermajority Lenders, modify, or eliminate the definition of Borrowing Base or any of the defined terms (including the definitions of Eligible Accounts, Eligible Unbilled Accounts, Eligible In-Transit Inventory and Eligible Inventory) that are used in such definition to the extent that any such change results in more credit being made available to Borrowers based upon the Borrowing Base, but not otherwise, or the definition of Maximum Revolver Amount, or change Section 2.1(c);

 

(d)                                 No amendment, waiver, modification, elimination, or consent shall amend, modify, or waive any provision of this Agreement or the other Loan Documents pertaining to Issuing Bank, or any other rights or duties of Issuing Bank under this Agreement or the other Loan Documents, without the written consent of Issuing Bank, Agent, Borrowers, and the Required Lenders;

 

(e)                                  No amendment, waiver, modification, elimination, or consent shall amend, modify, or waive any provision of this Agreement or the other Loan Documents pertaining to Swing Lender, or any other rights or duties of Swing Lender under this Agreement or the other Loan Documents, without the written consent of Swing Lender, Agent, Borrowers, and the Required Lenders; and

 

(f)                                   Anything in this Section 14.1 to the contrary notwithstanding, (i) any amendment, modification, elimination, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of any Borrower, shall not require consent by or the agreement of any Loan Party, and (ii) any amendment, waiver, modification, elimination, or consent of or with respect to any provision of this Agreement or any other Loan Document may be entered into without the consent of, or over the objection of, any Defaulting Lender.

 

(g)                                  Anything in this Section 14.1 to the contrary notwithstanding, any amendment or modification with respect to any provision of this Agreement or any other Loan Document to evidence and provide for the designation of a Guarantor as a Borrower under the Agreement at any time or from time to time (and any related changes that are necessary in the determination of Agent and Borrowers, such as to the required use of proceeds of Loans), may be entered into with the consent of Borrowers and Agent, and shall not require consent by or the agreement of any Lender, provided (i) that the Lenders are notified in writing of such designation and amendment not less than 5 days before the effective date thereof, and (ii) Agent and each Lender shall have received all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Patriot Act and anti-corruption rules and regulations, including OFAC, requested by it with respect to the proposed new Borrower prior to the effective date of such amendment.

 

14.2                        Replacement of Certain Lenders.

 

(a)                                 If (i) any action to be taken by the Lender Group or Agent hereunder requires the consent, authorization, or agreement of all Lenders or all Lenders affected thereby, 

 

72

 

as applicable, and if such action has received the consent, authorization, or agreement of the Required Lenders but not of all Lenders or all Lenders affected thereby, as applicable, (ii) any Lender makes a claim for compensation under Section 16 (a “Tax Lender”), or (iii) any Lender is a Defaulting Lender, then Borrowers or Agent, upon at least 5 Business Days prior irrevocable notice, may permanently replace any Lender that failed to give its consent, authorization, or agreement (a “Non-Consenting Lender”), or any Defaulting Lender with one or more Replacement Lenders, and the Non-Consenting Lender, Tax Lender or Defaulting Lender, as applicable, shall have no right to refuse to be replaced hereunder.  Such notice to replace the Non-Consenting Lender, Tax Lender or Defaulting Lender, as applicable, shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.

 

(b)                                 Prior to the effective date of such replacement, the Non-Consenting Lender, Tax Lender or Defaulting Lender, as applicable, and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Non-Consenting Lender, Tax Lender or Defaulting Lender, as applicable, being repaid in full its share of the outstanding Obligations (without any premium or penalty of any kind whatsoever, but including (i) all interest, fees and other amounts that may be due in payable in respect thereof, and (ii) an assumption of its Pro Rata Share of participations in the Letters of Credit).  If the Non-Consenting Lender, Tax Lender or Defaulting Lender, as applicable, shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, Agent may, but shall not be required to, execute and deliver such Assignment and Acceptance in the name or and on behalf of the Non-Consenting Lender, Tax Lender or Defaulting Lender, as applicable, and irrespective of whether Agent executes and delivers such Assignment and Acceptance, the Non-Consenting Lender, Tax Lender or Defaulting Lender, as applicable, shall be deemed to have executed and delivered such Assignment and Acceptance.  The replacement of any Non-Consenting Lender, Tax Lender or Defaulting Lender, as applicable, shall be made in accordance with the terms of Section 13.1.  Until such time as one or more Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Non-Consenting Lender, Tax Lender or Defaulting Lender, as applicable, hereunder and under the other Loan Documents, the Non-Consenting Lender, Tax Lender or Defaulting Lender, as applicable, shall remain obligated to make the Non-Consenting Lender’s, Tax Lender’s or Defaulting Lender’s, as applicable, Pro Rata Share of Revolving Loans and to purchase a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of participations in such Letters of Credit.  Notwithstanding any other provision herein, the provisions of Section 17.9 shall continue to apply to each Non-Consenting Lender after replacement of such Non-Consenting Lender.

 

14.3                        No Waivers; Cumulative Remedies.  No failure by Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof.  No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated.  No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and each Lender’s rights thereafter to require strict performance by Borrowers of any provision of this Agreement.  Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Agent or any Lender may have.

 

73

 

15.                               AGENT; THE LENDER GROUP.

 

15.1                        Appointment and Authorization of Agent.  Each Lender hereby designates and appoints Wells Fargo as its agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to designate, appoint, and authorize) Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto.  Agent agrees to act as agent for and on behalf of the Lenders (and the Bank Product Providers) on the conditions contained in this Section 15.  Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Loan Documents, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender (or Bank Product Provider), and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent.  Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement or the other Loan Documents with reference to Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only a representative relationship between independent contracting parties.  Each Lender hereby further authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Agent to act as the secured party under each of the Loan Documents that create a Lien on any item of Collateral.  Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents.  Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect:  (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, payments and proceeds of Collateral, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, or to take any other action with respect to any Collateral or Loan Documents which may be necessary to perfect, and maintain perfected, the security interests and Liens upon Collateral pursuant to the Loan Documents, (c) make Revolving Loans, for itself or on behalf of Lenders, as provided in the Loan Documents, (d) exclusively receive, apply, and distribute payments and proceeds of the Collateral as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to any Borrower or any Guarantor, the Obligations, the Collateral, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay any such Indemnified Taxes and 

 

74

 

(h) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents.

 

15.2                        Delegation of Duties.  Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence, bad faith or willful misconduct.

 

15.3                        Liability of Agent.  None of the Agent-Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence, bad faith or willful misconduct), or (b) be responsible in any manner to any of the Lenders (or Bank Product Providers) for any recital, statement, representation or warranty made by any Borrower or any of its Restricted Subsidiaries or Affiliates, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower or any Guarantor or any other party to any Loan Document to perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any obligation to any Lenders (or Bank Product Providers) to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the books and records or properties of any Borrower or any Guarantor.  No Agent-Related Person shall have any liability to any Lender, any Loan Party or any of their respective Affiliates if any request for a Loan, Letter of Credit or other extension of credit was not authorized by the applicable Borrower.  Agent shall not be required to take any action that, in its opinion or in the opinion of its counsel, may expose it to liability or that is contrary to any Loan Document or applicable law or regulation.

 

15.4                        Reliance by Agent.  Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it in good faith to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including an opinion of counsel to Borrowers or advice of counsel to any Lender), independent accountants and other experts selected by Agent.  Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable.  If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders (and, if it so elects, the Bank Product Providers) against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.  Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders (or Supermajority Lenders or all Lenders, as required by Section 14.1) and such request 

 

75

 

and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders (and Bank Product Providers).

 

15.5                        Notice of Default or Event of Default.  Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Borrowers referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.”  Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge.  If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default.  Each Lender shall be solely responsible for giving any notices to its Participants, if any.  Subject to Section 15.4, Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 9; provided, that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable.

 

15.6                        Credit Decision.  Each Lender (and Bank Product Provider) acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of any Borrower and its Restricted Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender (or Bank Product Provider).  Each Lender represents (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to represent) to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such due diligence, documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of each Borrower or any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers.  Each Lender also represents (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to represent) that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of each Borrower or any other Person party to a Loan Document.  Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender (or Bank Product Provider) with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any Borrower or any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons.  Each Lender acknowledges (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that Agent does not have any duty or responsibility, either initially or on a continuing basis (except to the extent, if any, that is expressly specified herein) 

 

76

 

to provide such Lender (or Bank Product Provider) with any credit or other information with respect to any Borrower, its Affiliates or any of their respective business, legal, financial or other affairs, and irrespective of whether such information came into Agent’s or its Affiliates’ or representatives’ possession before or after the date on which such Lender became a party to this Agreement (or such Bank Product Provider entered into a Bank Product Agreement).

 

15.7                        Costs and Expenses; Indemnification.  Agent may incur and pay Lender Group Expenses and Indemnified Taxes to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys’ fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant to this Agreement or otherwise.  Agent is authorized and directed to deduct and retain sufficient amounts from payments or proceeds of the Collateral received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders (or Bank Product Providers).  In the event Agent is not reimbursed for such costs and expenses by Borrowers or their Restricted Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay to Agent such Lender’s ratable thereof.  Whether or not the transactions contemplated hereby are consummated, each of the Lenders, on a ratable basis, shall indemnify and defend the Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so) from and against any and all Indemnified Liabilities; provided, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make a Revolving Loan or other extension of credit hereunder.  Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s ratable share of any costs or out-of-pocket expenses (including attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Loan Document to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers.  Notwithstanding anything herein to the contrary, Lenders shall be liable and indemnify Agent-Related Persons only for Indemnified Liabilities and other costs and expenses that relate to or arise from an Agent-Related Person acting as or for Agent (in its capacity as Agent).  The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.

 

15.8                        Agent in Individual Capacity.  Wells Fargo and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide Bank Products to, acquire Equity Interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with any Borrower and its Restricted Subsidiaries and Affiliates and any other Person party to any Loan Document as though Wells Fargo were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group.  The other members of the Lender Group acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, 

 

77

 

pursuant to such activities, Wells Fargo or its Affiliates may receive information regarding a Borrower or its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of such Borrower or such other Person and that prohibit the disclosure of such information to the Lenders (or Bank Product Providers), and the Lenders acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them.  The terms “Lender” and “Lenders” include Wells Fargo in its individual capacity.

 

15.9                        Successor Agent.  Agent may resign as Agent upon 30 days (10 days if an Event of Default has occurred and is continuing) prior written notice to the Lenders (unless such notice is waived by the Required Lenders) and Borrowers (unless such notice is waived by Borrowers) and without any notice to the Bank Product Providers.  If Agent resigns under this Agreement, the Required Lenders shall be entitled, with (so long as no Event of Default has occurred and is continuing) the consent of Borrowers (such consent not to be unreasonably withheld, delayed, or conditioned), appoint a successor Agent for the Lenders (and the Bank Product Providers).  If, at the time that Agent’s resignation is effective, it is acting as Issuing Bank or the Swing Lender, such resignation shall also operate to effectuate its resignation as Issuing Bank or the Swing Lender, as applicable, and it shall automatically be relieved of any further obligation to issue Letters of Credit, or to make Swing Loans.  If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders and Borrowers, a successor Agent.  If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders with (so long as no Event of Default has occurred and is continuing) the consent of Borrowers (such consent not to be unreasonably withheld, delayed, or conditioned).  In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated provided that the retiring Agent’s obligations under Section 17.9 shall survive.  After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.  If no successor Agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Required Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Required Lenders appoint a successor Agent as provided for above; provided that in such circumstance, the Required Lenders shall designate a single Lender for purposes of giving to or receiving from Borrowers any notices, documents, certificates, schedules, updates or other information, written or otherwise, until a successor agent shall have been appointed pursuant to the terms hereof, and each obligation of Borrowers to deliver notices, documents, certificates, schedules, updates or other information to Agent shall be deemed satisfied when delivered by Borrowers to such designated Lender for such period of time.

 

15.10                 Lender in Individual Capacity.  Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide Bank 

 

78

 

Products to, acquire Equity Interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with any Borrower and its Restricted Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group (or the Bank Product Providers).  The other members of the Lender Group acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding a Borrower or its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of such Borrower or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in such circumstances, such Lender shall not be under any obligation to provide such information to them.

 

15.11                 Collateral and Guarantee Matters.

 

(a)                                 Subject to the terms of the Intercreditor Agreement, the Lenders hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Agent to release any Lien on any Collateral and such Liens on the Collateral securing the Obligations will be automatically and unconditionally released, (i) upon the termination of the Commitments and payment and satisfaction in full by Borrowers of all of the Obligations (other than Contingent Surviving Obligations), (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Borrowers certify to Agent that the sale or disposition is permitted under Section 6.4 (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which no Borrower or Guarantor owned any interest at the time Agent’s Lien was granted nor at any time thereafter, (iv) constituting property leased or licensed to a Borrower or Guarantor under a lease or license that has expired or is terminated in a transaction permitted under this Agreement, (v) in connection with a credit bid or purchase authorized under this Section 15.11, (vi) as to the pledge of Equity Interests of First-Tier Foreign Subsidiaries, in connection with a reorganization, change or modification of the direct or indirect ownership of such First-Tier Foreign Subsidiaries by a Borrower or a Guarantor, as applicable, in compliance with this Agreement, a release may be obtained as to such Equity Interests in connection with the substitution of a pledge of 65% of the voting Equity Interests (and 100% of the non-voting Equity Interests, if any) of any one or more new or replacement First-Tier Foreign Subsidiaries pursuant to valid security documents, or (vii) with respect to and to the extent of the Collateral pledged by a Guarantor, upon the release of the Guarantee of such Guarantor pursuant to this Section 15.11.  The Loan Parties and the Lenders hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Agent, based upon the instruction of the Required Lenders, to (i) consent to, credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any sale thereof conducted under the provisions of the Bankruptcy Code, including Section 363 of the Bankruptcy Code, (ii) credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any sale or other disposition thereof conducted under the provisions of the Code, including pursuant to Sections 9-610 or 9-620 of the Code, or (iii) credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any other sale or foreclosure conducted or 

 

79

 

consented to by Agent in accordance with applicable law in any judicial action or proceeding or by the exercise of any legal or equitable remedy.  In connection with any such credit bid or purchase, (i) the Obligations owed to the Lenders and the Bank Product Providers shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims being estimated for such purpose if the fixing or liquidation thereof would not impair or unduly delay the ability of Agent to credit bid or purchase at such sale or other disposition of the Collateral and, if such contingent or unliquidated claims cannot be estimated without impairing or unduly delaying the ability of Agent to credit bid at such sale or other disposition, then such claims shall be disregarded, not credit bid, and not entitled to any interest in the Collateral that is the subject of such credit bid or purchase) and the Lenders and the Bank Product Providers whose Obligations are credit bid shall be entitled to receive interests (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) in the Collateral that is the subject of such credit bid or purchase (or in the Equity Interests of the any entities that are used to consummate such credit bid or purchase), and (ii) Agent, based upon the instruction of the Required Lenders, may accept non-cash consideration, including debt and equity securities issued by any entities used to consummate such credit bid or purchase and in connection therewith Agent may reduce the Obligations owed to the Lenders and the Bank Product Providers (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) based upon the value of such non-cash consideration.  Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders (without requiring the authorization of the Bank Product Providers), or (z) otherwise, the Required Lenders (without requiring the authorization of the Bank Product Providers).  Upon request by Agent or Borrowers at any time, the Lenders will (and if so requested, the Bank Product Providers will) confirm in writing Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 15.11; provided, that (1) anything to the contrary contained in any of the Loan Documents notwithstanding, Agent shall not be required to execute any document or take any action necessary to evidence such release on terms that, in Agent’s opinion, could expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly released) upon (or obligations of Borrowers in respect of) any and all interests retained by any Borrower, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.  Each Lender further hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to irrevocably authorize) Agent, at its option and in its sole discretion, to subordinate any Lien granted to or held by Agent under any Loan Document to the holder of any Permitted Lien on such property if such Permitted Lien secures Permitted Purchase Money Indebtedness.

 

(b)                                 Agent shall have no obligation whatsoever to any of the Lenders (or the Bank Product Providers) (i) to verify or assure that the Collateral exists or is owned by Borrowers or their Restricted Subsidiaries or is cared for, protected, or insured or has been encumbered, (ii) to verify or assure that Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, (iii) to verify or assure that any particular items of Collateral meet the eligibility criteria applicable in respect thereof, (iv) to impose, maintain, increase, reduce, implement, or eliminate any particular 

 

80

 

reserve hereunder or to determine whether the amount of any reserve is appropriate or not, or (v) to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any Lender (or Bank Product Provider) as to any of the foregoing, except as otherwise expressly provided herein.

 

(c)                                  A Guarantee of a Guarantor will be automatically and unconditionally released (and thereupon shall terminate and be discharged and be of no further force and effect):

 

(i)                                     in connection with any sale or other disposition (including by merger or otherwise) of Equity Interests of the Guarantor after which such Guarantor is no longer a Restricted Subsidiary, if the sale or disposition of such Equity Interests of that Guarantor complies with Section 6.4 of this Agreement;

 

(ii)                                  in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) Parent Borrower or a Restricted Subsidiary, if the sale or other disposition does not violate Section 6.4 of this Agreement;

 

(iii)                               in connection with an enforcement action with respect to the Collateral as provided by the Intercreditor Agreement;

 

(iv)                              if Parent Borrower properly designates the Guarantor as an Unrestricted Subsidiary under this Agreement;

 

(v)                                 in the case of a Guarantee entered into because a Person has guaranteed other Indebtedness of a Loan Party, upon the release or discharge of the guarantee that resulted in the creation of such Guarantee pursuant to Section 5.11 of this Agreement or a payment of the Indebtedness supported by such Guarantee; and

 

(vi)                              upon the Guarantor becoming an Excluded Subsidiary.

 

Except as provided above, Agent will not execute and deliver a release of any Guarantee without the prior written authorization of (y) if the release is of all or substantially all of the Guarantees, all of the Lenders (without requiring the authorization of the Bank Product Providers), or (z) otherwise, the Required Lenders (without requiring the authorization of the Bank Product Providers).  Upon any occurrence giving rise to a release of a Guarantee as specified above, Agent shall execute any documents reasonably required in order to evidence or effect such release, suspension, discharge and termination in respect of such Guarantee.

 

81

 

15.12                 Restrictions on Actions by Lenders; Sharing of Payments.

 

(a)                                 Each of the Lenders agrees that it shall not, without the express written consent of Agent, set off against the Obligations, any amounts owing by such Lender to any Loan Party or any deposit accounts of any Loan Party now or hereafter maintained with such Lender.  Each of the Lenders further agrees that it shall not, unless specifically requested to do so in writing by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings to enforce any Loan Document against any Borrower or any Guarantor or to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

 

(b)                                 If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such distributions by Agent, such Lender promptly shall (A) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.

 

15.13                 Agency for Perfection.  Agent hereby appoints each other Lender (and each Bank Product Provider) as its agent (and each Lender hereby accepts (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to accept) such appointment) for the purpose of perfecting Agent’s Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Code can be perfected by possession or control.  Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions.

 

15.14                 Payments by Agent to the Lenders.  All payments to be made by Agent to the Lenders (or Bank Product Providers) shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent.  Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations.

 

15.15                 Concerning the Collateral and Related Loan Documents.  Each member of the Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents.  Each member of the Lender Group agrees (and by entering into a Bank Product 

 

82

 

Agreement, each Bank Product Provider shall be deemed to agree) that any action taken by Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders (and such Bank Product Provider).

 

15.16                 Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information.  By becoming a party to this Agreement, each Lender:

 

(a)                                 is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field examination report respecting any Loan Party (each, a “Report”) prepared by or at the request of Agent, and Agent shall so furnish each Lender with such Reports,

 

(b)                                 expressly agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report,

 

(c)                                  expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any field examination will inspect only specific information regarding the Loan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of Borrowers’ personnel,

 

(d)                                 agrees to keep all Reports and other material, non-public information regarding the Loan Parties, their Subsidiaries and their respective operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 17.9, and

 

(e)                                  without limiting the generality of any other indemnification provision contained in this Agreement, agrees:  (i) to hold Agent and any other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrowers, and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys’ fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who obtain, directly or indirectly, all or part of any Report through the indemnifying Lender.

 

(f)                                   In addition to the foregoing,  (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by any Borrower or its Restricted Subsidiaries to Agent that has not been contemporaneously provided by such Borrower or such Restricted Subsidiary to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to request

 

83

 

additional reports or information from any Borrower or its Restricted Subsidiaries, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall request of Borrowers the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from such Borrower or such Restricted Subsidiary, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Borrowers a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender.

 

15.17                 Several Obligations; No Liability.  Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments.  Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender.  Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender.  Except as provided in Section 15.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group.  No Lender shall be responsible to any Borrower or any other Person for any failure by any other Lender (or Bank Product Provider) to fulfill its obligations to make credit available hereunder, nor to advance for such Lender (or Bank Product Provider) or on its behalf, nor to take any other action on behalf of such Lender (or Bank Product Provider) hereunder or in connection with the financing contemplated herein.

 

15.18                 Lead Arranger and Book Runner.  Each of the Lead Arranger and the Book Runner, in such capacities, shall not have any right, power, obligation, liability, responsibility, or duty under this Agreement other than those applicable to it in its capacity as a Lender, as Agent, as Swing Lender, or as Issuing Bank.  Without limiting the foregoing, each of the Lead Arranger and the Book Runner, in such capacities, shall not have or be deemed to have any fiduciary relationship with any Lender or any Loan Party.  Each Lender, Agent, Swing Lender, the Issuing Bank, and each Loan Party acknowledges that it has not relied, and will not rely, on the Lead Arranger and the Book Runner in deciding to enter into this Agreement or in taking or not taking action hereunder.  Each of the Lead Arranger and Book Runner, in such capacities, shall be entitled to resign at any time by giving notice to Agent and Borrowers.

 

16.                               TAXES.

 

16.1                        Defined Terms.  For purposes of this Section 16, all references to “applicable law” shall include FATCA.

 

16.2                        Payments Free of Taxes.  Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law.  If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the 

 

84

 

deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that, after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 16), the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

 

16.3                        Payment of Other Taxes by the Loan Parties.  The Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of Agent timely reimburse it for the payment of, any Other Taxes.

 

16.4                        Indemnification by the Loan Parties.  The Loan Parties shall jointly and severally indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 16) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; provided, however, that the Loan Parties shall not be obligated to make payment to a Recipient pursuant to this Section 16.4 in respect of penalties, interest and other similar liabilities attributable to any Indemnified Taxes required to be withheld or deducted from a payment to such Recipient or payable or paid by such Recipient, if written demand therefor has not been made by such Recipient within 180 days from the date on which it received written notice of the imposition of Indemnified Taxes by the relevant Governmental Authority (but only to the extent that making such demand after such 180-day period gave rise to such penalties, interest and other similar liabilities); provided  further that, if the Indemnified Taxes imposed or asserted giving rise to such claims are retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. A certificate as to the amount of such payment or liability delivered to Borrowers by a Recipient (with a copy to Agent), or by Agent on its own behalf or on behalf of a Recipient, shall be conclusive absent manifest error.

 

16.5                        Indemnification by the Lenders.  Each Lender shall severally indemnify Agent, within ten (10) days after demand therefor, for (a) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (b) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 13.1(i)) relating to the maintenance of a Participant Register and (c) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by Agent to the Lender from any other source against any amount due to Agent under this Section 16.5.

 

85

 

16.6                        Evidence of Payments.  As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 16, such Loan Party shall deliver to 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 Agent.

 

16.7                        Status of Lenders.

 

(a)                                 Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to Borrowers and Agent, at the time or times reasonably requested by Borrowers or Agent, such properly completed and executed documentation reasonably requested by Borrowers or Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by Borrowers or Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by Borrowers or Agent as will enable Borrowers or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 16.7(b)(i), (b)(ii) and (b)(iv) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender

 

(b)                                 Without limiting the generality of the foregoing:

 

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

 

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

 

(A)                               in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, United States federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, United States federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

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

 

86

 

(C)                               in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the IRC, (x) a certificate substantially in the form of Exhibit T-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the IRC, a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the IRC, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the IRC (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable; or

 

(D)                               to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit T-2 or Exhibit T-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit T-4 on behalf of each such direct and indirect partner;

 

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

 

(iv)                              if a payment made to a Lender under any Loan Document would be subject to United States federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the IRC, as applicable), such Lender shall deliver to Borrowers and Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrowers or Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the IRC) and such additional documentation reasonably requested by Borrowers or Agent as may be necessary for Borrowers and Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (iv), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

 

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrowers and Agent in writing of its legal inability to do so.

 

16.8                        Treatment of Certain Refunds.  If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 16 (including by the payment of additional amounts pursuant to this Section 16), it shall pay to the indemnifying party an amount equal to such 

 

87

 

refund (but only to the extent of indemnity payments made under this Section 16 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 16.8 (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this Section 16.8, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 16.8 the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.  This Section 16.8 shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

 

16.9                        Survival.  Each party’s obligations under this Section 16 shall survive the resignation or replacement of Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

 

17.                               GENERAL PROVISIONS.

 

17.1                        Effectiveness.  This Agreement shall be binding and deemed effective when executed by each Borrower, Agent, and each Lender whose signature is provided for on the signature pages hereof.

 

17.2                        Section Headings.  Headings and numbers have been set forth herein for convenience only.  Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

 

17.3                        Interpretation.  Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender Group or any Borrower, whether under any rule of construction or otherwise.  On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

 

17.4                        Severability of Provisions.  Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

17.5                        Bank Product Providers.  Each Bank Product Provider in its capacity as such shall be deemed a third party beneficiary hereof and of the provisions of the other Loan Documents for purposes of any reference in a Loan Document to the parties for whom Agent is acting.  Agent hereby agrees to act as agent for such Bank Product Providers and, by virtue of entering into a Bank Product Agreement, the applicable Bank Product Provider shall be 

 

88

 

automatically deemed to have appointed Agent as its agent and to have accepted the benefits of the Loan Documents.  It is understood and agreed that the rights and benefits of each Bank Product Provider under the Loan Documents consist exclusively of such Bank Product Provider’s being a beneficiary of the Liens and security interests (and, if applicable, guarantees) granted to Agent and the right to share in payments and collections out of the Collateral as more fully set forth herein.  In addition, each Bank Product Provider, by virtue of entering into a Bank Product Agreement, shall be automatically deemed to have agreed that Agent shall have the right, but shall have no obligation, to establish, maintain, relax, or release reserves in respect of the Bank Product Obligations and that if reserves are established there is no obligation on the part of Agent to determine or insure whether the amount of any such reserve is appropriate or not.  In connection with any such distribution of payments or proceeds of Collateral, Agent shall be entitled to assume no amounts are due or owing to any Bank Product Provider unless such Bank Product Provider has provided a written certification (setting forth a reasonably detailed calculation) to Agent as to the amounts that are due and owing to it and such written certification is received by Agent a reasonable period of time prior to the making of such distribution.  Agent shall have no obligation to calculate the amount due and payable with respect to any Bank Products, but may rely upon the written certification of the amount due and payable from the applicable Bank Product Provider.  In the absence of an updated certification, Agent shall be entitled to assume that the amount due and payable to the applicable Bank Product Provider is the amount last certified to Agent by such Bank Product Provider as being due and payable (less any distributions made to such Bank Product Provider on account thereof).  Borrowers may obtain Bank Products from any Bank Product Provider, although Borrowers are not required to do so.  Each Borrower acknowledges and agrees that no Bank Product Provider has committed to provide any Bank Products and that the providing of Bank Products by any Bank Product Provider is in the sole and absolute discretion of such Bank Product Provider.  Notwithstanding anything to the contrary in this Agreement or any other Loan Document, no provider or holder of any Bank Product shall have any voting or approval rights hereunder (or be deemed a Lender) solely by virtue of its status as the provider or holder of such agreements or products or the Obligations owing thereunder, nor shall the consent of any such provider or holder be required (other than in their capacities as Lenders, to the extent applicable) for any matter hereunder or under any of the other Loan Documents, including as to any matter relating to the Collateral or the release of Collateral or Guarantors.

 

17.6                        Debtor-Creditor Relationship.  The relationship between the Lenders and Agent, on the one hand, and the Loan Parties, on the other hand, is solely that of creditor and debtor.  No member of the Lender Group has (or shall be deemed to have) any fiduciary relationship or duty to any Loan Party arising out of or in connection with the Loan Documents or the transactions contemplated thereby, and there is no agency or joint venture relationship between the members of the Lender Group, on the one hand, and the Loan Parties, on the other hand, by virtue of any Loan Document or any transaction contemplated therein.

 

17.7                        Counterparts; Electronic Execution.  This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.  Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement.  Any party delivering 

 

89

 

an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.  The foregoing shall apply to each other Loan Document mutatis mutandis.

 

17.8                        Revival and Reinstatement of Obligations; Certain Waivers.  If any member of the Lender Group or any Bank Product Provider repays, refunds, restores, or returns in whole or in part, any payment or property (including any proceeds of Collateral) previously paid or transferred to such member of the Lender Group or such Bank Product Provider in full or partial satisfaction of any Obligation or on account of any other obligation of any Loan Party under any Loan Document or any Bank Product Agreement, because the payment, transfer, or the incurrence of the obligation so satisfied is asserted or declared to be void, voidable, or otherwise recoverable under any law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent transfers, preferences, or other voidable or recoverable obligations or transfers (each, a “Voidable Transfer”), or because such member of the Lender Group or Bank Product Provider elects to do so on the reasonable advice of its counsel in connection with a claim that the payment, transfer, or incurrence is or may be a Voidable Transfer, then, as to any such Voidable Transfer, or the amount thereof that such member of the Lender Group or Bank Product Provider elects to repay, restore, or return (including pursuant to a settlement of any claim in respect thereof), and as to all reasonable, documented out-of-pocket costs, expenses, and reasonable and documented attorneys’ fees of such member of the Lender Group or Bank Product Provider related thereto, (i) the liability of the Loan Parties with respect to the amount or property paid, refunded, restored, or returned will automatically and immediately be revived, reinstated, and restored and will exist and (ii) Agent’s Liens securing such liability shall be effective, revived, and remain in full force and effect, in each case, as fully as if such Voidable Transfer had never been made.  If, prior to any of the foregoing, (A) Agent’s Liens shall have been released or terminated or (B) any provision of this Agreement shall have been terminated or cancelled, Agent’s Liens, or such provision of this Agreement, shall be reinstated in full force and effect and such prior release, termination, cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligation of any Loan Party in respect of such liability or any Collateral securing such liability.

 

17.9                        Confidentiality.

 

(a)                                 Agent and Lenders each individually (and not jointly or jointly and severally) agree that material, non-public information regarding Borrowers and their Restricted Subsidiaries, their operations, assets, and existing and contemplated business plans (“Confidential Information”) shall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except:  (i) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group and to employees, agents, directors and officers of any member of the Lender Group (the Persons in this clause (i), “Lender Group Representatives”) on a “need to know” basis in connection with this Agreement and the transactions contemplated hereby and on a confidential basis on substantially the same terms as provided herein, (ii) to Affiliates of any member of the Lender Group (including the Bank Product Providers), provided that any such Affiliate shall have agreed to receive such information hereunder subject to the 

 

90

 

terms of this Section 17.9, (iii) upon the request or demand of any regulatory or similar authorities having jurisdiction over such person or any of its Affiliates if, when and solely to the extent required to be delivered thereto and so long as such authorities are informed of the confidential nature of such information, (iv) as may be required by statute, decision, or judicial or administrative order, rule, or regulation; provided that (x) each of the Agent and the Lenders, as applicable, agree to promptly notify the Borrowers (if such notice is permitted under applicable law) so that Borrowers may seek a protective order or take other appropriate action, and the Agent and the Lenders, as applicable, will cooperate in the Borrower’s efforts to obtain a protective order or other reasonable assurance that the confidential treatment will be accorded the Confidential Information, and (y) any disclosure under this clause (iv) shall be limited to the portion of the Confidential Information as may be required by such statute, decision, or judicial or administrative order, rule, or regulation, (v) as may be agreed to in advance in writing by Borrowers, (vi) as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, provided, that, (x) each of the Agent and the Lenders, as applicable, agree to promptly notify the Borrowers so that Borrowers may seek a protective order or take other appropriate action, and the Agent and the Lenders, as applicable, will cooperate in the Borrower’s efforts to obtain a protective order or other reasonable assurance that the confidential treatment will be accorded the Confidential Information, and (y) any disclosure under this clause (vi) shall be limited to the portion of the Confidential Information as may be required by such Governmental Authority pursuant to such subpoena or other legal process, (vii) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders or the Lender Group Representatives), (viii) in connection with any assignment, participation or pledge of any Lender’s interest under this Agreement, provided that prior to receipt of Confidential Information any such assignee, participant, or pledgee shall have agreed in writing to receive such Confidential Information either subject to the terms of this Section 17.9 or pursuant to confidentiality requirements substantially similar to those contained in this Section 17.9 (and such Person may disclose such Confidential Information to Persons employed or engaged by them as described in clause (i) above), (ix) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents; provided, that, prior to any disclosure to any Person (other than any Loan Party, Agent, any Lender, any of their respective Affiliates, or their respective counsel) under this clause (ix) with respect to litigation involving any Person (other than any Borrower, Agent, any Lender, any of their respective Affiliates, or their respective counsel), the disclosing party agrees to provide Borrowers with prior written notice thereof, (x) if (and solely to the extent) reasonably necessary in connection with the exercise of any secured creditor remedy under this Agreement or under any other Loan Document, and (xi) to any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrowers and their Obligations; provided that, any such actual or prospective party shall have agreed to receive such information hereunder subject to the terms of this Section 17.9.

 

(b)                                 Anything in this Agreement to the contrary notwithstanding, Agent may disclose information concerning the terms and conditions of this Agreement and the other Loan Documents to loan syndication and pricing reporting services or in its marketing or promotional materials, with such information to consist of deal terms and other information customarily found in such publications or marketing or promotional materials and may otherwise use the 

 

91

 

name, logos, and other insignia of any Borrower or the other Loan Parties and the Commitments provided hereunder in any “tombstone” or other advertisements, on its website or in other marketing materials.

 

(c)                                  The Loan Parties hereby acknowledge that Agent or its Affiliates may make available to the Lenders materials or information provided by or on behalf of Borrowers hereunder (collectively, “Borrower Materials”) by posting Borrower Materials on IntraLinks, SyndTrak or another similar electronic system (the “Platform”).  The Platform is provided “as is” and “as available.”  Agent does not warrant the accuracy or completeness of the Borrower Materials, or the adequacy of the Platform and expressly disclaims liability for errors or omissions in the communications.  No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by Agent in connection with the Borrower Materials or the Platform.  In no event shall Agent or any of the Agent-Related Persons have any liability to the Loan Parties, any Lender or any other person for damages of any kind, including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s or Agent’s transmission of communications through the Internet, except to the extent the liability of such person is found in a final non-appealable judgement by a court of competent jurisdiction to have resulted from such person’s gross negligence or willful misconduct.  Each Loan Party further agrees that certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Loan Parties or their securities) (each, a “Public Lender”).  The Loan Parties shall be deemed to have authorized Agent and its Affiliates and the Lenders to treat Borrower Materials marked “PUBLIC” or otherwise at any time filed with the SEC as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Loan Parties or their securities for purposes of United States federal and state securities laws; provided, however, that to the extent such Borrower Materials constitute Confidential Information, they shall be treated as set forth in Section 17.9(a).  The Loan Parties hereby agrees that they will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, means that the word “PUBLIC” shall appear prominently on the first page thereof.  All Borrower Materials marked “PUBLIC” by the Loan Parties are permitted to be made available through a portion of the Platform designated as “Public Investor” (or another similar term).  Agent and its Affiliates and the Lenders shall treat any Borrower Materials that are not marked “PUBLIC” or that are not at any time filed with the SEC as being suitable only for posting on a portion of the Platform not marked as “Public Investor” (or such other similar term).  Notwithstanding the foregoing, the Loan Parties shall be under no obligation to mark any Borrower Materials “PUBLIC”.

 

17.10                 Survival.  All representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents 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 Agent, Issuing Bank, or any Lender may have had notice or knowledge of any Default or Event of 

 

92

 

Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall 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 or unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or been terminated.

 

17.11                 Patriot Act; Due Diligence.  Each Lender that is subject to the requirements of the Patriot Act hereby notifies the Loan Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender to identify each Loan Party in accordance with the Patriot Act.  In addition, Agent and each Lender shall have the right to periodically conduct due diligence on all Loan Parties, their senior management and key principals and legal and beneficial owners.  Each Loan Party agrees to cooperate in respect of the conduct of such due diligence and further agrees that the reasonable costs and charges for any such due diligence by Agent shall constitute Lender Group Expenses hereunder and be for the account of Borrowers.

 

17.12                 Integration.  This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.  The foregoing to the contrary notwithstanding, all Bank Product Agreements, if any, are independent agreements governed by the written provisions of such Bank Product Agreements, which will remain in full force and effect, unaffected by any repayment, prepayments, acceleration, reduction, increase, or change in the terms of any credit extended hereunder, except as otherwise expressly provided in such Bank Product Agreement.

 

17.13                 Parent Borrower as Agent for Borrowers.  (a)  Each Borrower hereby irrevocably appoints Parent Borrower as the borrowing agent and attorney-in-fact for all Borrowers (the “Administrative Borrower”) which appointment shall remain in full force and effect unless and until Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower.  Parent Borrower accepts such appointment and designation and agrees to act in such capacity.  Without limiting the foregoing, each Borrower authorizes and directs Administrative Borrower, on behalf of Borrowers, or any of them, to deliver and receive notices and other communications, prepare and deliver Borrowing Base Certificates and financial and Collateral reporting, request Loans and Letters of Credit, and receive and disburse proceeds of Loans, pay Obligations, execute and deliver any documents, instruments, and certificates contemplated by the Loan Documents, and carry on all other dealings with Agent and the Lender Group under the Loan Documents, in each case, on behalf of Borrowers.

 

(b)                                 Any action, notice, certification, agreement, direction, consent or other action which would otherwise be effective if given or taken by Borrowers, or any of them, shall be valid and effective if given or taken by Administrative Borrower, whether or not any other Borrower joins therein.  Agent and Lenders, in their discretion, may direct or deliver to Administrative Borrower, on behalf of Borrowers, any notice or communication to or with Borrowers, or any of them, and any such notice or communication shall be deemed valid and received by Borrowers upon receipt by Administrative Borrower.  Agent and Lenders shall be

 

93

 

entitled to rely upon Administrative Borrower in connection with its authority under this Section 17.13 and shall have no duty or obligation to make further inquiry with respect to such authority.

 

(c)                                  It is understood that the handling of the Loan Account and Collateral in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall not incur liability to any Borrower as a result hereof.  Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group.  To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the Lender Group harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from or incurred by reason of (i) the handling of the Loan Account and Collateral of Borrowers as herein provided, or (ii) the Lender Group’s relying on any instructions of the Administrative Borrower, except that Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person under this Section 17.13 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence, bad faith or willful misconduct (or material breach of any Loan Documents by any) of such Agent-Related Person or Lender-Related Person, as the case may be.

 

17.14                 Intercreditor Agreement.  Each Lender, by becoming a party to this Agreement, acknowledges that it shall be bound by all of the terms and provisions of the Intercreditor Agreement applicable to it and, without limiting anything else contained herein, authorizes Agent to enter into the Intercreditor Agreement and any other intercreditor or subordination agreement (and any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to, any of the foregoing) and to take all actions (and execute all documents) required (or otherwise deemed advisable by Agent) in connection with the incurrence by any Loan Party of any Indebtedness permitted hereunder, in order to permit such Indebtedness to be secured by a valid, perfected Lien (if permitted hereunder) and/or to have the priority contemplated hereby and each Lender acknowledges that any such intercreditor or subordination agreement will be binding upon it.

 

17.15                 Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

 

(a)                                 the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

 

94

 

(b)                                 the effects of any Bail-in Action on any such liability, including, if applicable:

 

(i)                                     a reduction in full or in part or cancellation of any such liability;

 

(ii)                                  a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

 

(iii)                               the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

 

[Signature pages to follow.]

 

95

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

 

	
BORROWERS:
    	
FTS INTERNATIONAL, INC.
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Lance Turner
    
	
 
    	
Name: Lance Turner
    
	
 
    	
Title: Chief Financial   Officer and Treasurer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FTS INTERNATIONAL SERVICES, LLC
    
	
 
    	
a Texas limited   liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Lance Turner
    
	
 
    	
Name: Lance Turner
    
	
 
    	
Title: Chief Financial   Officer and Treasurer
    
	
 
    	
 
    

 

FTS — ABL Credit Agreement — Signature Page

 

 

	
 
    	
WELLS FARGO BANK, NATIONAL   ASSOCIATION,
    
	
 
    	
a national banking   association, as Agent, as Lead Arranger, as Book Runner, and as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Heath Israel
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Heath Israel
    
	
 
    	
 
    	
Its Authorized   Signatory
    

 

FTS — ABL Credit Agreement — Signature Page

 

 

	
 
    	
MORGAN STANLEY BANK, N.A.,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Michael King
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Michael King
    
	
 
    	
 
    	
Its Authorized   Signatory
    

 

FTS — ABL Credit Agreement — Signature Page

 

 

	
 
    	
Citibank, N.A.,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Saqeeb Ludhi
    
	
 
    	
 
    	
 
    
	
 
    	
Name: 
    	
Saqeeb Ludhi
    
	
 
    	
 
    	
 
    
	
 
    	
Title: 
    	
Vice President
    

 

FTS — ABL Credit Agreement — Signature Page

 

 

	
 
    	
CREDIT SUISSE AG, CAYMAN   ISLANDS BRANCH,
    
	
 
    	
as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Nupur Kumar
    
	
 
    	
 
    	
 
    
	
 
    	
Name: 
    	
Nupur Kumar
    
	
 
    	
 
    	
 
    
	
 
    	
Title: 
    	
Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Christopher Zybrick
    
	
 
    	
 
    	
 
    
	
 
    	
Name: 
    	
Christopher Zybrick
    
	
 
    	
 
    	
 
    
	
 
    	
Title: 
    	
Authorized Signatory
    

 

FTS — ABL Credit Agreement — Signature Page

 

 

	
 
    	
BARCLAYS BANK PLC,
    
	
 
    	
as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Sydney G. Dennis
    
	
 
    	
 
    	
 
    
	
 
    	
Name: 
    	
Sydney G. Dennis
    
	
 
    	
 
    	
 
    
	
 
    	
Title: 
    	
Director
    

 

FTS — ABL Credit Agreement — Signature Page

 

 

EXHIBIT A-1

 

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

 

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered into as of                                     between                              (“Assignor”) and                                            (“Assignee”).  Reference is made to the Agreement described in Annex I hereto (the “Credit Agreement”).  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Credit Agreement.

 

1.                                      In accordance with the terms and conditions of Section 13 of the Credit Agreement, the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to the Assignor’s rights and obligations under the Loan Documents as of the date hereof with respect to the Obligations owing to the Assignor, and Assignor’s portion of the Commitments, all to the extent specified on Annex I.

 

2.                                      The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim and (ii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment Agreement and to consummate the transactions contemplated hereby; (b) makes no representation or warranty and assumes no responsibility with respect to (i) any statements, representations or warranties made in or in connection with the Loan Documents, or (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other instrument or document furnished pursuant thereto; (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or any Guarantor or the performance or observance by any Borrower or any Guarantor of any of their respective obligations under the Loan Documents or any other instrument or document furnished pursuant thereto, and (d) represents and warrants that the amount set forth as the Purchase Price on Annex I represents the amount owed by Borrowers to Assignor with respect to Assignor’s share of the Revolving Loans assigned hereunder, as reflected on Assignor’s books and records.

 

3.                                      The Assignee (a) confirms that it has received copies of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (b) agrees that it will, independently and without reliance upon Agent, Assignor, or any other Lender, based upon such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under the Loan Documents; (c) confirms that it is an Eligible Transferee and not a Competitor; (d) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (e) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender; and (f) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee’s status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty.

 

4.                                      Following the execution of this Assignment Agreement by the Assignor and Assignee, the Assignor will deliver this Assignment Agreement to the Agent for recording by the Agent.

 

Exhibit A-1 - 1

 

The effective date of this Assignment (the “Settlement Date”) shall be the latest to occur of (a) the date of the execution and delivery hereof by the Assignor and the Assignee, (b) the receipt by Agent for its sole and separate account a processing fee in the amount of $3,500 (if required by the Credit Agreement), (c) the receipt of any required consent of the Agent, and (d) the date specified in Annex I.

 

5.                                      As of the Settlement Date (a) the Assignee shall be a party to the Credit Agreement and, to the extent of the interest assigned pursuant to this Assignment Agreement, have the rights and obligations of a Lender thereunder and under the other Loan Documents, and (b) the Assignor shall, to the extent of the interest assigned pursuant to this Assignment Agreement, relinquish its rights and be released from its obligations under the Credit Agreement and the other Loan Documents, provided, however, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of the Credit Agreement, including such assigning Lender’s obligations under Article 15 and Section 17.9(a) of the Credit Agreement.

 

6.                                      Upon the Settlement Date, Assignee shall pay to Assignor the Purchase Price (as set forth in Annex I). From and after the Settlement Date, Agent shall make all payments that are due and payable to the holder of the interest assigned hereunder (including payments of principal, interest, fees and other amounts) to Assignor for amounts which have accrued up to but excluding the Settlement Date and to Assignee for amounts which have accrued from and after the Settlement Date. On the Settlement Date, Assignor shall pay to Assignee an amount equal to the portion of any interest, fee, or any other charge that was paid to Assignor prior to the Settlement Date on account of the interest assigned hereunder and that are due and payable to Assignee with respect thereto, to the extent that such interest, fee or other charge relates to the period of time from and after the Settlement Date.

 

7.                                      This Assignment Agreement may be executed in counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. This Assignment Agreement may be executed and delivered by telecopier or other facsimile transmission all with the same force and effect as if the same were a fully executed and delivered original manual counterpart.

 

8.                                      THIS ASSIGNMENT AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION 12 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

 

Exhibit A-1 - 2

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and Annex I hereto to be executed by their respective officers, as of the first date written above.

 

	
 
    	
[NAME OF ASSIGNOR]
    
	
 
    	
 
    
	
 
    	
as Assignor
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[NAME OF ASSIGNEE]
    
	
 
    	
 
    
	
 
    	
as   Assignee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
ACCEPTED THIS        DAY OF
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
WELLS   FARGO BANK, NATIONAL ASSOCIATION, a national banking   association, as Agent, as Swing Lender and as Issuing Bank
    	
 
    
	
 
    	
 
    
	
By
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
[[                          ], [as Swing Lender] [and] [as   Issuing Bank]
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
[FTS   INTERNATIONAL, INC., a Delaware corporation, as   Administrative Borrower, on behalf of the Borrowers
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:]
    	
 
    
						

 

[Signature Page to Assignment and Acceptance Agreement]

 

Exhibit A-1 - 3

 

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

 

ANNEX I

 

	
1.
    	
Borrowers: FTS International, Inc. and FTS   International Services, LLC, and its Subsidiaries from time to time party to   the Credit Agreement
    
	
 
    	
 
    
	
2.
    	
Name and Date of Credit Agreement:
    

 

Credit Agreement dated as of February 22, 2018 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”) by and among FTS International, Inc., as parent borrower (“Parent Borrower”), FTS International Services, LLC, as borrower (“OpCo Borrower,” together with Parent Borrower and those additional entities that become parties thereto as Borrowers in accordance with the terms thereof by executing the form of Joinder attached thereto as Exhibit J-1, each, a “Borrower” and individually and collectively, jointly and severally, the “Borrowers”), the lenders identified on the signature pages thereto (each of such lenders, together with its successors and permitted assigns, a “Lender”), and Wells Fargo Bank, National Association, a national banking association (“Wells Fargo”), as administrative agent for each member of the Lender Group and the Bank Product Providers.

 

	
3.
    	
Date of Assignment   Agreement:
    
	
 
    	
 
    
	
4.
    	
Amounts:
    
	
 
    	
 
    
	
 
    	
a.
    	
Assigned Amount of   Revolver Commitment 
    	
$
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
b.
    	
Assigned Amount of   Revolving Loans
    	
$
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
Settlement Date:
    	
 
    
	
 
    	
 
    	
 
    
	
6.
    	
Purchase Price:
    	
$
    
	
 
    	
 
    	
 
    
	
7.
    	
Notice and Payment   Instructions, etc.
    
	
 
    	
 
    	
 
    
	
 
    	
Assignee:
    	
 
    	
Assignor:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
						

 

[Annex I to Assignment and Acceptance Agreement] 

 

Exhibit A-1 - 4

 

Exhibit B-1

 

Form of Borrowing Base Certificate

 

(see attached)

 

 

Summary Page   Borrowing Base Certificate Date Name FTS International, Inc. A/R As of:   Accounts Receivable Balance per Aging Report Assigned To Wells Fargo Capital   Finance Less Ineligibles (detailed on page 2) Eligible Accounts Receivable   Accounts Receivable Availability before Sublimit(s) Net Available Accounts   Receivable after Sublimit(s) Reserves P Card Reserve Total Reserves   Calculated before the Credit Line Total Collateral Availability Suppressed   Availability Availability before Reserves Total Credit Line 250,000,000.00   Reserves Total Reserves Calculated after the Credit Line Total Availability   after Reserves before Loan Balance and LCs Letter of Credit Balance Loan   Ledger Balance As of: As of: Net Availability Authorized Signer Additionally,   the undersigned hereby certifies and represents and warrants to the Lender   Group on behalf of the Borrowers that (i) as of the date hereof, each   representation or warranty contained in or pursuant to any Loan Document, and   as of the effective date of any advance, continuation or conversion requested   above is true and correct in all material respects (except to the extent any   representation or warranty expressly related to an earlier date), (ii) no   Default or Event of Default has occurred and is continuing on the date   hereof, nor will any thereof occur immediately after giving effect to the   request above, and (iii) all of the foregoing is true and correct as of the   effective date of the calculations set forth above and that such calculations   have been made in accordance with the requirements of the Credit Agreement.   Summary & Other Assets Accounts Receivable The undersigned, (“Parent   Borrower”), pursuant to that certain Credit Agreement dated as of (as   amended, restated, modified, supplemented, refinanced, renewed, or extended   from time to time, the “Credit Agreement”), entered into among Parent   Borrower, the other borrowers party thereto from time to time (together with   the Parent Borrower, the "Borrowers"), the lenders signatory   thereto from time to time and Wells Fargo Bank, N.A. as the arranger and   administrative agent (in such capacity, together with its successors and   assigns, if any, in such capacity, “Agent”), hereby certifies on behalf of   the Borrowers to Agent that the following items, calculated in accordance   with the terms and definitions set forth in the Credit Agreement for such   items are true and correct, and that the Borrowers are in compliance with   and, after giving effect to any currently requested Advances, will be in   compliance with, the terms, conditions, and provisions of the Credit   Agreement. 

    

 

 

EXHIBIT C-1

 

FORM OF COMPLIANCE CERTIFICATE

 

[on Parent Borrower’s letterhead]

 

To:                             Wells Fargo Bank, National Association

2450 Colorado Avenue, Suite 3000 West

Santa Monica, California 90404

Attn:

 

Re:                             Compliance Certificate dated                , 20

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement dated as of February 22, 2018 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”) by and among FTS International, Inc., as borrower (“Parent Borrower” and, acting in its capacity as agent for OpCo Borrower, “Administrative Borrower”), FTS International Services, LLC, as borrower (“OpCo Borrower” together with Parent Borrower and those additional entities that become parties thereto as Borrowers in accordance with the terms thereof by executing the form of Joinder attached thereto as Exhibit J-1, each, a “Borrower” and individually and collectively, jointly and severally, the “Borrowers”), the lenders identified on the signature pages thereto (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender”), and Wells Fargo Bank, National Association, a national banking association (“Wells Fargo”), as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, the “Agent”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

 

Pursuant to Section 5.1 of the Credit Agreement, the undersigned officer of Administrative Borrower hereby certifies on behalf of the Borrowers as of the date hereof that:

 

1.                                      The consolidated financial statements of Parent Borrower and its Subsidiaries furnished in Schedule 1 attached hereto, have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for year-end audit adjustments and the lack of footnotes), and fairly present in all material respects the consolidated financial condition of Parent Borrower and its Subsidiaries on a consolidated basis as of the date set forth therein.

 

2.                                      Such officer has reviewed the terms of the Credit Agreement and has made, or caused to be made under their supervision, a review in reasonable detail of the transactions and financial condition of Parent Borrower and its Subsidiaries during the accounting period covered by the financial statements attached hereto.

 

3.                                      Such review has not disclosed the existence on and as of the date hereof, and the undersigned does not have knowledge of the existence as of the date hereof, of any Default or Event of Default, except for such Defaults or Events of Default listed on Schedule 2 attached hereto, in each case

 

Exhibit C-1 - 1

 

specifying the nature and the period of existence thereof and what action Borrowers and/or its Subsidiaries have taken, are taking, or propose to take with respect thereto.

 

4.                                      Except as set forth on Schedule 3 attached hereto, the representations and warranties of each Loan Party set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date.

 

5.                                      [Schedule 4 hereof reflects the calculation of the Fixed Charge Coverage Ratio as of the date of the consolidated balance sheet of Parent Borrower and its Subsidiaries furnished in Schedule 1 attached hereto [, and as of the date hereof, Borrowers are in compliance with the covenant contained in Section 7 of the Credit Agreement as demonstrated on Schedule 4 hereof](1).

 

[Signature page follows.]

 

(1) Bracketed text to be included if a Covenant Testing Period has occurred and is continuing and a Covenant Testing Reversion Date with respect thereto has not occurred.

 

Exhibit C-1 - 2

 

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this           day of                , 20  .

 

	
 
    	
FTS   INTERNATIONAL, INC.,
    
	
 
    	
a Delaware corporation,   as Administrative Borrower, on behalf of the Borrowers
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Compliance Certificate]

 

Exhibit C-1 - 3

 

SCHEDULE 1

 

Financial Statements

 

[Schedule 1 to Compliance Certificate]

 

Exhibit C-1 - 4

 

SCHEDULE 2

 

Default or Event of Default

 

[Schedule 2 to Compliance Certificate]

 

Exhibit C-1 - 5

 

SCHEDULE 3

 

Representations and Warranties

 

[Schedule 3 to Compliance Certificate]

 

Exhibit C-1 - 6

 

SCHEDULE 4

 

Financial Covenant

 

1.                                      Fixed Charge Coverage Ratio.

 

Parent Borrower and its Restricted Subsidiaries’ Fixed Charge Coverage Ratio, measured on a fiscal quarter-end basis, for the 12 month period ended              , 20   , is    :1.0 [To be included if a Covenant Testing Period has occurred and is continuing and a Covenant Testing Reversion Date with respect thereto has not occurred: , which ratio [is/is not] greater than or equal to the ratio set forth in Section 7.1 of the Credit Agreement for the corresponding period.]

 

[Schedule 4 to Compliance Certificate]

 

Exhibit C-1 - 7

 

EXHIBIT J-1

 

[FORM OF] JOINDER AGREEMENT

 

This JOINDER AGREEMENT (this “Agreement”), is entered into as of         , 20  , by and among      , a       (“New Borrower”), and WELLS FARGO BANK, NATIONAL  ASSOCIATION, a national banking association (“Wells Fargo”), as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “Agent”).

 

W  I  T  N  E  S  S  E  T  H:

 

WHEREAS, pursuant to that certain Credit Agreement, dated as of February 22, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the lenders identified on the signature pages thereto (each of such lenders, together with its successors and permitted assigns, a “Lender”), Agent, FTS International, Inc., as borrower, (“Parent Borrower”), FTS International Services, LLC, as borrower (“OpCo Borrower”) together with Parent Borrower and those additional Persons that are joined as a party to the Credit Agreement by executing the form of Joinder attached thereto as Exhibit J-1, each, a “Borrower” and individually and collectively, jointly and severally, the “Borrowers”), the Lender Group has agreed to make or issue Loans, Letters of Credit and other certain financial accommodations thereunder;

 

WHEREAS, initially capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Credit Agreement;

 

WHEREAS, pursuant to that certain Fee Letter, dated as of February 22, 2018 (as amended, restated, supplemented or otherwise modified from time to the, the “Fee Letter”), by and among Borrowers and Agent, each Borrower has agreed to pay certain fees to Agent on the terms set forth therein; and

 

WHEREAS, New Borrower has determined that the execution, delivery and performance of this Agreement directly benefit, and are within the corporate or limited liability company, as applicable, purposes and in the best interests of, New Borrower, by virtue of the financial accommodations available to New Borrower from time to time pursuant to the terms and conditions of the Credit Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties hereto hereby agrees as follow:

 

1.                                      Joinder of New Borrower to the Credit Agreement. By its execution of this Agreement, New Borrower hereby (a) agrees that from and after the date of this Agreement it shall be a party to the Credit Agreement as a “Borrower” and shall be bound by all of the terms, conditions, covenants, agreements and obligations set forth in the Credit Agreement, (b) accepts joint and several liability for the Obligations pursuant to the terms of the Loan Documents, and (c) confirms that, after giving effect to the supplement to the Schedules to the Credit Agreement provided for in Section 2 below, the representations and warranties contained in Section 4 of the Credit Agreement are true and correct as they relate to New Borrower as of the date of this Agreement. New Borrower hereby agrees that each reference to a “Borrower” or the “Borrowers” in the Credit Agreement and the other Loan Documents shall include

 

 

New Borrower. New Borrower acknowledges that it has received a copy of the Credit Agreement and the other Loan Documents and that it has read and understands the terms thereof.

 

2.                                      Updated Schedules. Attached as Exhibit A hereto is an updated copy of Schedule 4.1(c) to the Credit Agreement revised to include all information required to be provided therein including information with respect to New Borrower. Such Schedule shall be attached to the Credit Agreement, and on and after the date hereof all references in any Loan Document to such Schedule to the Credit Agreement shall mean such Schedule as so amended; provided, that any use of the term “as of the date hereof” or any term of similar import, in any provision of the Credit Agreement relating to New Borrower or any of the information amended by such Schedule hereby, shall be deemed to refer to the date of this Agreement.

 

3.                                      Joinder of New Borrower to the Fee Letter. By its execution of this Agreement, New Borrower hereby (a) agrees that from and after the date of this Agreement it shall be a “Borrower” party to the Fee Letter as if it were a signatory thereto and shall be bound by all of the provisions thereof, and (b) agrees that it shall comply with and be subject to all of the terms, conditions, covenants, agreements and obligations set forth in the Fee Letter applicable to Borrowers. New Borrower hereby agrees that each reference to “Borrower” or “Borrowers” in the Fee Letter shall include New Borrower. New Borrower acknowledges that it has received a copy of the Fee Letter and that it has read and understands the terms thereof.

 

4.                                      Representations and Warranties of New Borrower. New Borrower hereby represents and warrants to Agent for the benefit of the Lender Group and the Bank Product Providers as follows:

 

(a)                                 It (i) is duly organized and existing and in good standing under the laws of the jurisdiction of its organization, (ii) is qualified to do business in any state where the failure to be so qualified could reasonably be expected to result in a Material Adverse Effect, and (iii) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted, to enter into this Agreement and the other Loan Documents to which it is made a party and to carry out the transactions contemplated hereby and thereby.

 

(b)                                 The execution, delivery, and performance by it of this Agreement and any other Loan Document to which New Borrower is made a party (i) have been duly authorized by all necessary action on the part of New Borrower and (ii) do not and will not (A) violate any material provision of federal, state, or local law or regulation applicable to New Borrower or its Restricted Subsidiaries or the Governing Documents of New Borrower, (B) violate any order, judgment, or decree of any court or other Governmental Authority binding on New Borrower or its Restricted Subsidiaries, where any such violation would individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (C) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material agreement of New Borrower where any such conflict, breach or default could individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (D) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of New Borrower, other than Permitted Liens, (E) require the approval of any holder of Equity Interests of New Borrower, other than consents or approvals that have been obtained and that are still in force and effect, or (F) except, in each case, where the failure would not reasonably be expected to have a Material Adverse Effect, require any registration with, consent, or approval of, or notice to or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect, and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Agent for filing or recordation, as of the date hereof.

 

Exhibit J-1 - 2

 

(c)                                  This Agreement and each Loan Document to which New Borrower is a party is the legally valid and binding obligation of New Borrower, enforceable against New Borrower in accordance with its respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally and requirements of reasonableness, good faith and fair dealing.

 

(d)                                 Each other representation and warranty applicable to New Borrower as a Borrower under the Loan Documents is true, correct and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date).

 

5.                                      Additional Requirements. Concurrent with the execution and delivery of this Agreement, Agent shall have received the following, each in form and substance satisfactory to Agent:

 

(a)                                 a Joinder No.    to the Guaranty and Security Agreement, dated as of the date hereof, by and among New Borrower and Agent (“Joinder No.   ”), together with the original Equity Interest certificates, if any, representing all of the Equity Interests of the Subsidiaries of New Borrower required to be pledged under the Guaranty and Security Agreement and any original promissory notes payable to New Borrower required to be pledged under the Guaranty and Security Agreement, accompanied by undated Equity Interest powers/transfer forms executed in blank, and the same shall be in full force and effect;

 

(b)                                 a Pledged Interests Addendum by        , a      , dated as of the date hereof, with respect to the pledge of Equity Interest of New Borrower, owned by          , together with the original stock certificates, if any, representing all of the Equity Interests of New Borrower held by          , accompanied by undated stock powers executed in blank and other proper instruments of transfer, and the same shall be in full force and effect;

 

(c)                                  appropriate financing statement to be filed in the office of the        Secretary of State against New Borrower to perfect the Agent’s Liens in and to the Collateral of New Borrower;

 

(d)                                 a certificate from the Secretary of New Borrower, dated as of the date hereof, (i) attesting to the resolutions of New Borrower’s [Board of Directors][Managers] authorizing its execution, delivery, and performance of this Agreement and the other Loan Documents to which New Borrower is or will become a party, (ii) authorizing officers of New Borrower to execute the same, and (iii) attesting to the incumbency and signatures of such specific officers of New Borrower;

 

(e)                                  a certificate of status with respect to New Borrower, dated as of a recent date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of New Borrower, which certificate shall indicate that New Borrower is in good standing in such jurisdiction;

 

(f)                                   certificates of status with respect to New Borrower, dated as of a recent date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of New Borrower) in which the failure to be duly qualified or licensed would constitute a Material Adverse Effect, which certificates shall indicate that New Borrower is in good standing in such jurisdictions;

 

(g)                                  copies of New Borrower’s Governing Documents, as amended, modified or supplemented to the date hereof, certified by the Secretary of New Borrower; and

 

Exhibit J-1 - 3

 

(h)                                 evidence that New Borrower has been added to the Loan Parties’ existing insurance policies required by Section 5.6 of the Credit Agreement;

 

(i)                                     a customary opinion of counsel regarding such matters as to New Borrower as Agent or its counsel may reasonably request, and which is otherwise in form and substance reasonably satisfactory to Agent (it being understood that such opinion shall be limited to this Agreement, and the documents executed or delivered in connection herewith (including the financing statement filed against New Borrower); and

 

(j)                                    such  other  agreements,  instruments,  approvals  or  other  documents reasonably requested by Agent prior to the date hereof in order to create, perfect and establish the priority of, or otherwise protect, any Lien purported to be covered by any Loan Document or otherwise to effect the intent that New Borrower shall become bound by all of the terms, covenants and agreements contained in the Loan Documents and that, to the extent set forth in the Credit Agreement and the Guaranty and Security Agreement, all property and assets constituting Collateral of New Borrower shall become Collateral for the Obligations.

 

6.                                      Further Assurances. At any time upon the reasonable request of Agent, New Borrower shall promptly execute and deliver to Agent such Additional Documents as Agent shall reasonably request pursuant to the Credit Agreement and the other Loan Documents, in each case in form and substance reasonably satisfactory to Agent.

 

7.                                      Notices. Notices to New Borrower shall be given in the manner set forth for Borrowers in Section 11 of the Credit Agreement.

 

8.                                      Choice of Law and Venue; Jury Trial Waiver; Judicial Reference. THIS AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION 12 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

 

9.                                      Binding Effect. This Agreement shall be binding upon New Borrower and the other Loan Parties and shall inure to the benefit of the Agent and the Lenders, together with their respective successors and permitted assigns.

 

10.                               Effect on Loan Documents.

 

(a)                                 Except as contemplated to be supplemented hereby, the Credit Agreement, the Fee Letter and each other Loan Document shall continue to be, and shall remain, in full force and effect. Except as expressly contemplated hereby, this Agreement shall not be deemed (i) to be a waiver of, or consent to, or a modification or amendment of any other term or condition of the Credit Agreement, the Fee Letter, or any of the instruments or agreements referred to therein, as the same may be amended or modified from time to time.

 

(b)                                 Each reference in the Credit Agreement and the other Loan Documents to “Borrower” or words of like import referring to a Borrower shall include and refer to New Borrower and (b) each reference in the Credit Agreement, the Fee Letter, or any other Loan Document to this “Agreement”, “hereunder”, “herein”, “hereof”, “thereunder”, “therein”, “thereof”, or words of like import referring to the Credit Agreement, the Fee Letter or any other Loan Document shall mean and refer to such agreement as supplemented by this Agreement.

 

Exhibit J-1 - 4

 

11.                               Miscellaneous

 

(a)                                 This Agreement is a Loan Document. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic image scan transmission (e.g., “PDF” or “tif” via email) shall be equally effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic image scan transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.

 

(b)                                 Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

(c)                                  Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

 

(d)                                 Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against any member of the Lender Group or New Borrower, whether under any rule of construction or otherwise. This Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

 

(e)                                  The pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction of sentences shall conform thereto.

 

(f)                                   This Agreement shall be subject to the rules of construction set forth in Section 1.4 of the Credit Agreement, and such rules of construction are incorporated herein by this reference, mutatis mutandis.

 

[remainder of this page intentionally left blank].

 

Exhibit J-1 - 5

 

IN WITNESS WHEREOF, New Borrower and Agent have caused this Agreement to be duly executed by its authorized officer as of the day and year first above written.

 

 

	
NEW   BORROWER:
    	
         ,
    
	
 
    	
a       
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Joinder Agreement]

 

Exhibit J-1 - 6

 

	
AGENT:
    	
WELLS   FARGO BANK, NATIONAL ASSOCIATION,
    
	
 
    	
a national banking   association, as Agent, as Swing Lender and as Issuing Bank
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Joinder Agreement]

 

Exhibit J-1 - 7

 

Exhibit A

 

(SEE ATTACHED)

 

[Exhibit A to Joinder Agreement]

 

Exhibit J-1 - 8

 

EXHIBIT L-1

FORM OF LIBOR NOTICE

 

Wells Fargo Bank, National Association, as Agent 

under the below referenced Credit Agreement 

2450 Colorado Avenue

Suite 3000 West

Santa Monica, California 90404

 

Ladies and Gentlemen:

 

Reference hereby is made to that certain Credit Agreement dated as of February 22, 2018 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”) by and among FTS International, Inc., as borrower (“Parent Borrower” and, acting in its capacity as agent for OpCo Borrower, “Administrative Borrower”),  FTS International Services, LLC, as borrower (“OpCo Borrower” together with Parent Borrower and those additional entities that become parties thereto as Borrowers in accordance with the terms thereof by executing the form of Joinder attached thereto as Exhibit J-1, each, a “Borrower” and individually and collectively, jointly and severally, the “Borrowers”), the lenders identified on the signature pages thereto (each of such lenders, together with its successors and permitted assigns, as a “Lender” and, collectively, the “Lenders”), and Wells Fargo Bank, National Association, a national banking association (“Wells Fargo”), as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, the “Agent”).  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

 

This LIBOR Notice represents Borrowers’ request to elect the LIBOR Option with respect to outstanding Revolving Loans in the amount of $                    (the “LIBOR Rate Advance”) [, and is a written confirmation of the telephonic notice of such election given to Agent].

 

The LIBOR Rate Advance will have an Interest Period of [1, 2, 3 or 6] month(s) commencing on                       .

 

This LIBOR Notice further confirms Borrowers’ acceptance, for purposes of determining the rate of interest based on the LIBOR Rate under the Credit Agreement, of the LIBOR Rate as determined pursuant to the Credit Agreement.

 

Administrative Borrower, on behalf of the Borrowers, represents and warrants that (i) as of the date hereof, each representation and warranty contained in the Credit Agreement and in the other Loan Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date)), (ii) each of the covenants and agreements contained in any Loan Document have been performed (to the extent required to be performed on or before the date hereof or each such effective date), and (iii) no Default or Event of

 

Exhibit L-1 - 1

 

Default has occurred and is continuing on the date hereof, nor will any thereof occur after giving effect to the request above.

 

 

	
 
    	
Dated:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FTS   INTERNATIONAL, INC., a Delaware
   corporation, as Administrative Borrower, on behalf of
   the Borrowers
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Acknowledged by:
    	
 
    
	
 
    	
 
    
	
WELLS   FARGO BANK, NATIONAL
   ASSOCIATION, a national banking
   association, as Agent
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    

 

[Signature Page to LIBOR Notice]

 

Exhibit L-1 - 2

 

EXHIBIT P-1

 

FORM OF PERFECTION CERTIFICATE

 

[                            ], 201 [     ]

 

Reference is hereby made to:

 

(a) that certain Credit Agreement dated as of February 22, 2018 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”) by and among FTS INTERNATIONAL, INC., as borrower (the “Company”), FTS INTERNATIONAL SERVICES, LLC, as borrower (“OpCo” and, together with the Company and those additional entities that become parties thereto as Borrowers in accordance with the terms thereof by executing the form of Joinder attached thereto as Exhibit J-1, each, a “Borrower” and individually and collectively, jointly and severally, the “Borrowers”), the lenders identified on the signature pages thereto (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender” and collectively, the “Lenders”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (“Wells Fargo”), as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “Agent”), and (b) that certain Guaranty and Security Agreement dated as of February 22, 2018 (as amended, restated, supplemented, or otherwise modified from time to time, the “Guaranty and Security Agreement”) by and among the Borrowers, the Subsidiaries of the Borrowers parties thereto (each, a “Grantor” and collectively, the “Grantors”) and the Agent for each member of the Lender Group and the Bank Product Providers,

 

All initially capitalized terms used herein without definition shall have the meanings ascribed thereto in each Agreement, as applicable. Any terms (whether capitalized or lower case) used in this Perfection Certificate that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein or in the Credit Agreement; provided that to the extent that the Code is used to define any term used herein and if such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 of the Code shall govern. As used herein, the term “Loan Parties” shall mean the “Loan Parties” as that term is defined in the Credit Agreement, and “Code” shall mean the “Code” as that term is defined in the Guaranty and Security Agreement.

 

The undersigned, the Senior Vice President — Finance and Treasurer of the Company, hereby certifies (in my capacity as Senior Vice President — Finance and Treasurer and not in my individual capacity) to the Agent, each of the other members of the Lending Group and the Bank Product Providers, as follows as of February 22, 2018:

 

1.                                      Names.

 

(a)                                 The exact legal name of each Loan Party, as such name appears in its certified certificate of incorporation, articles of incorporation, certificate of formation, or any other organizational document, is set forth in Schedule 1(a). Each Loan Party is (i) the type of entity disclosed next to its name in Schedule 1(a)  and (ii) a registered organization except to the extent disclosed in Schedule 1(a). Also set forth in Schedule 1(a) is the organizational identification number, if any, of each Loan Party that is a registered organization, the Federal Taxpayer Identification Number of each Loan Party and the jurisdiction of formation of each Loan Party. Each Loan Party has qualified to do business in the states listed on Schedule 1(a).

 

 

(b)                            Set forth in Schedule 1(b) hereto is a list of any other legal names each Loan Party has had in the past five years, together with the date of the relevant name change.

 

(c)                             Set forth in Schedule 1(c)  is a list of all other names used by each Loan Party in connection with any business or organization to which such Loan Party became the successor by merger, consolidation, acquisition, change in form, nature or jurisdiction of organization or otherwise or on any filings with the Internal Revenue Service, in each case, at any time in the past five years. Except as set forth in Schedule 1(c), no Loan Party has changed its jurisdiction of organization at any time during the past four months.

 

2.                                 Chief Executive Offices. The chief executive office of each Loan Party is located at the address set forth in Schedule 2 hereto.

 

3.                                 Extraordinary Transactions. Except for those purchases, mergers, acquisitions, consolidations, and other transactions described on Schedule 3 attached hereto, all of the Collateral has been originated by each Loan Party in the ordinary course of business or consists of goods which have been acquired by such Loan Party in the ordinary course of business from a person in the business of selling goods of that kind.

 

4.                                 File Search Reports. Attached hereto as Schedule 4 is a true and accurate summary of certified file search reports from the Uniform Commercial Code filing offices (a) in each jurisdiction of formation identified in Section 1(a) and in each location identified Section 2 with respect to each legal name set forth in Section 1 and (b) in each jurisdiction described in Schedule 1(c) relating to any of the transactions described in Schedule 1(c)  or Schedule 3 with respect to each legal name of the person or entity from which each Loan Party purchased or otherwise acquired any assets.

 

5.                                 UCC Filings. The financing statements, including the indications of the collateral, attached as Schedule 5 relating to the Guaranty and Security Agreement, are in the appropriate forms for filing in the filing offices in the jurisdictions identified in Schedule 6 hereof.

 

6.                                 Schedule of Filings. Set forth on Schedule 6 is a complete and correct list of each filing office in which the financing statements attached as Schedule 5 is to be filed.

 

7.                                 Termination Statements. Attached hereto as Schedule 7 are the termination statements in the appropriate form for filing in each applicable jurisdiction identified in Schedule 4 hereto with respect to each Lien described therein.

 

8.                                 Stock Ownership and Other Equity Interests. Attached hereto as Schedule 8(a)  is a true and correct list of each of all of the authorized, and the issued and outstanding, Equity Interests of each Loan Party and its Subsidiaries and the record and beneficial owners of such Equity Interests. Also set forth on Schedule 8(a)  is each equity investment of each Loan Party that represents 50% or less of the equity of the entity in which such investment was made. Attached hereto as Schedule 8(b)  is a true and correct organizational chart of the Company and its Subsidiaries.

 

9.                                 Instruments and Chattel Paper. Attached hereto as Schedule 9 is a true and correct list of all promissory notes, instruments (other than checks to be deposited in the ordinary course of business), tangible chattel paper, electronic chattel paper and other evidence of Indebtedness held by each Loan Party as of February 22, 2018, in each case, relating to the Collateral, having an aggregate value or face amount in excess of $3,000,000 including all intercompany notes between or among any two or more Loan Parties or any of their Subsidiaries.

 

Exhibit P-1 - 2

 

10.                               Intellectual Property.

 

(a)                                 Schedule 10(a)  provides a complete and correct list of all registered Trademarks (as defined in the Guaranty and Security Agreement) owned by any Loan Party, all applications for registration of Trademarks owned by any Loan Party, and all other Trademarks owned by any Loan Party and material to the conduct of the business of any Loan Party.

 

(b)                                 Schedule 10(b)  provides a complete and correct list of all Intellectual Property Licenses (as defined in the Guaranty and Security Agreement) entered into by any Loan Party pursuant to which (i) any Loan Party has provided any license or other rights in Intellectual Property (as defined in the Guaranty and Security Agreement) owned or controlled by such Loan Party to any other Person (other than non-exclusive software licenses granted in the ordinary course of business) or (ii) any Person has granted to any Loan Party any license or other rights in Intellectual Property owned or controlled by such Person that is material to the business of such Loan Party, including any Intellectual Property that is incorporated in any Inventory, software, or other product marketed, sold, licensed, or distributed by such Loan Party.

 

(c)                                  Attached hereto as Schedule 10(c)  in proper form for filing with the United States Patent and Trademark Office are the filings necessary to preserve, protect and perfect the security interests in the United States Trademarks set forth on Schedule 10(a), including duly signed copies of the Trademark Security Agreement.

 

11.                               Commercial Tort Claims. Attached hereto as Schedule 11 is a true and correct list of all commercial tort claims that exceed $3,000,000 held by each Loan Party and relating to the Collateral, including a brief description thereof.

 

12.                               Deposit Accounts and Securities Accounts. Attached hereto as Schedule 12 is a true and complete list of all Deposit Accounts and Securities Accounts (each as defined in the Guaranty and Security Agreement) maintained by each Loan Party, including the name of each institution where each such account is held, the name of each such account and the name of each entity that holds each account.

 

13.                               Letter-of-Credit Rights. Attached hereto as Schedule 13 is a true and correct list of all letters of credit issued in favor of any Loan Party, as beneficiary thereunder, having an aggregate value or face amount in excess of $3,000,000.

 

[The Remainder of this Page has been intentionally left blank]

 

Exhibit P-1 - 3

 

IN WITNESS WHEREOF, we have hereunto signed this Perfection Certificate as of the date first set forth above.

 

 

	
 
    	
FTS   INTERNATIONAL, INC., as Borrower
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name: 
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FTS   INTERNATIONAL SERVICES, LLC, as
   Borrower
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name: 
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FTS   INTERNATIONAL MANUFACTURING, LLC,
   as Grantor
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name: 
    
	
 
    	
Title:
    

 

[Signature Page to Perfection Certificate]

 

Exhibit P-1 - 4

 

Schedule 1(a)

 

Legal Names, Etc.

 

	
Legal Name
    	
 
    	
Type of Entity
    	
 
    	
Registered
   Organization
   (Yes/No)
    	
 
    	
Organizational
   Number(1)
    	
 
    	
Federal Taxpayer
   Identification Number
    	
 
    	
Jurisdiction
   of
   Formation
    	
 
    	
States
   Where
   Qualified to
   do Business
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(1)                                 If none, so state.

 

[Schedule 1(a) to Perfection Certificate]

 

Exhibit P-1 - 5

 

Schedule 1(b)

 

Prior Names

 

	
Loan Party/Subsidiary
    	
 
    	
Prior Name
    	
 
    	
Date of Change
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

[Schedule 1(b) to Perfection Certificate]

 

Exhibit P-1 - 6

 

Schedule 1(c)

 

Changes in Corporate Identity; Other Names

 

	
Loan
   Party/Subsidiary
    	
 
    	
Name of Entity
    	
 
    	
Action
    	
 
    	
Date of
   Action
    	
 
    	
State of
   Formation
    	
 
    	
List of All Other
   Names Used on Any
   Filings with the
   Internal Revenue
   Service During Past
   Five Years
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

[Add Information required by Section 1 to the extent required by Section 1 (c) of the Perfection Certificate]

 

[Schedule 1(c) to Perfection Certificate]

 

Exhibit P-1 - 7

 

Schedule 2

 

Chief Executive Offices

 

	
Loan
   Party/Subsidiary
    	
 
    	
Address
    	
 
    	
County
    	
 
    	
State
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

[Schedule 2 to Perfection Certificate]

 

Exhibit P-1 - 8

 

Schedule 3

 

Transactions Other Than in the Ordinary Course of Business

 

 

	
Loan Party/Subsidiary
    	
 
    	
Description of Transaction Including Parties
   Thereto
    	
 
    	
Date of
   Transaction
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

[Schedule 3 to Perfection Certificate]

 

Exhibit P-1 - 9

 

Schedule 4

 

Summary of Certified UCC File Search Reports

 

[Schedule 4 to Perfection Certificate]

 

Exhibit P-1 - 10

 

Schedule 5

 

Financing Statements

(See Attached)

 

[Schedule 5 to Perfection Certificate]

 

Exhibit P-1 - 11

 

Schedule 6

 

Filing Offices

 

[Schedule 6 to Perfection Certificate]

 

Exhibit P-1 - 12

 

Schedule 7

 

Termination Statements

 

(See Attached)

 

[Schedule 7 to Perfection Certificate]

 

Exhibit P-1 - 13

 

Schedule 8(a)

 

(a) Equity Interests of Loan Parties and Subsidiaries

 

	
Current Legal
   Entities Owned
    	
 
    	
Record Owner
    	
 
    	
Certificate No.
    	
 
    	
No. Shares/Interest
    	
 
    	
Percent
   Pledged
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(b) Other Equity Interests

 

[Schedule 8(a) to Perfection Certificate]

 

Exhibit P-1 - 14

 

Schedule 8(b)

 

Organizational Chart

 

[Schedule 8(b) to Perfection Certificate]

 

Exhibit P-1 - 15

 

Schedule 9

 

Instruments and Chattel Paper

 

1.             Promissory Notes:

 

	
Entity
    	
 
    	
Principal
   Amount
    	
 
    	
Date of Issuance
    	
 
    	
Interest Rate
    	
 
    	
Maturity Date
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

2.             Chattel Paper:

 

[Schedule 9 to Perfection Certificate]

 

Exhibit P-1 - 16

 

Schedule 10(a)

 

Trademarks

 

UNITED STATES TRADEMARKS:

 

Registrations:

 

	
 
    	
 
    	
REGISTRATION
    	
 
    	
 
    	
 
    
	
OWNER
    	
 
    	
NUMBER
    	
 
    	
TRADEMARK
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Applications:

 

	
 
    	
 
    	
APPLICATION
    	
 
    	
 
    	
 
    
	
OWNER
    	
 
    	
NUMBER
    	
 
    	
TRADEMARK
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

OTHER TRADEMARKS:

 

Registrations:

 

	
 
    	
 
    	
REGISTRATION
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
OWNER
    	
 
    	
NUMBER
    	
 
    	
COUNTRY/STATE
    	
 
    	
 TRADEMARK
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Applications:

 

	
 
    	
 
    	
APPLICATION
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
OWNER
    	
 
    	
NUMBER
    	
 
    	
COUNTRY/STATE
    	
 
    	
TRADEMARK
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

[Schedule 10(a) to Perfection Certificate]

 

Exhibit P-1 - 17

 

Schedule 10(b)

 

Intellectual Property Licenses

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
REGISTRATION/
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
APPLICATION
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
NUMBER, IF
    	
 
    	
 
    	
 
    
	
LICENSEE
    	
 
    	
LICENSOR
    	
 
    	
COUNTRY/STATE
    	
 
    	
ANY
    	
 
    	
DESCRIPTION
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

[Schedule 10(b) to Perfection Certificate]

 

Exhibit P-1 - 18

 

Schedule 10(c)

 

Intellectual Property Filings

 

[Schedule 10(c) to Perfection Certificate]

 

Exhibit P-1 - 19

 

Schedule 11

 

Commercial Tort Claims

 

[Schedule 11 to Perfection Certificate]

 

Exhibit P-1 - 20

 

Schedule 12

 

Deposit Accounts and Securities Accounts

 

	
Owner
    	
 
    	
Type of Account
    	
 
    	
Bank or Intermediary
    	
 
    	
Account Numbers
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

[Schedule 12 to Perfection Certificate]

 

Exhibit P-1 - 21

 

Schedule 13

 

Letter of Credit Rights

 

[Schedule 13 to Perfection Certificate]

 

Exhibit P-1 - 22

 

Exhibit T-1

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Credit Agreement dated as of February 22, 2018 (as amended, restated, supplemented or otherwise modified, the “ABL Credit Agreement”), by and among the lenders identified on the signature pages thereof (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender” and, collectively, the “Lenders”), Wells Fargo Bank, National Association, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity “Agent”), FTS International Services, LLC, a Texas limited liability company (the “OpCo Borrower”), and FTS International, Inc., a Delaware corporation (the “Parent Borrower,” together with the OpCo Borrower and those additional entities that become parties thereto as Borrowers in accordance with the terms thereof by executing the form of Joinder attached thereto as Exhibit J-1, are referred to hereinafter each individually as a “Borrower”, and individually and collectively, jointly and severally, as the “Borrowers”). Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the ABL Credit Agreement.

 

Pursuant to the provisions of Section 16 of the ABL Credit Agreement, the undersigned hereby certifies that (a) it is the sole record and beneficial owner of the Loan(s) (as well as any note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (b) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (c) it is not a ten percent (10%) shareholder of any Borrower within the meaning of Section 881(c)(3)(B) of the Code and (d) it is not a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Agent and the Borrowers with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (a) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrowers and the Agent and (b) the undersigned shall have at all times furnished the Borrowers and the Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.

 

	
[NAME OF LENDER]
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
                          ,   20   
    	
 
    

 

 

Exhibit T-2

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Credit Agreement dated as of February 22, 2018 (as amended, restated, supplemented or otherwise modified, the “ABL Credit Agreement”), by and among the lenders identified on the signature pages thereof (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender” and, collectively, the “Lenders”), Wells Fargo Bank, National Association, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity “Agent”), FTS International Services, LLC, a Texas limited liability company (the “OpCo Borrower”), and FTS International, Inc., a Delaware corporation (the “Parent Borrower,” together with the OpCo Borrower and those additional entities that become parties thereto as Borrowers in accordance with the terms thereof by executing the form of Joinder attached thereto as Exhibit J-1, are referred to hereinafter each individually as a “Borrower”, and individually and collectively, jointly and severally, as the “Borrowers”). Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the ABL Credit Agreement.

 

Pursuant to the provisions of Section 16 of the ABL Credit Agreement, the undersigned hereby certifies that (a) it is the sole record and beneficial owner of the participation in respect of which it is providing this certificate, (b) it is not a bank within the meaning of Section 881(c)(3)(A) of the Code, (c) it is not a ten percent (10%) shareholder of any Borrower within the meaning of Section 881(c)(3)(B) of the Code and (d) it is not a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable. By executing this certificate, the undersigned agrees that (a) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing and (b) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.

 

	
[NAME OF   PARTICIPANT]
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
                          ,   20   
    	
 
    

 

 

Exhibit T-3

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Credit Agreement dated as of February 22, 2018 (as amended, restated, supplemented or otherwise modified, the “ABL Credit Agreement”), by and among the lenders identified on the signature pages thereof (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender” and, collectively, the “Lenders”), Wells Fargo Bank, National Association, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity “Agent”), FTS International Services, LLC, a Texas limited liability company (the “OpCo Borrower”), and FTS International, Inc., a Delaware corporation (the “Parent Borrower,” together with the OpCo Borrower and those additional entities that become parties thereto as Borrowers in accordance with the terms thereof by executing the form of Joinder attached thereto as Exhibit J-1, are referred to hereinafter each individually as a “Borrower”, and individually and collectively, jointly and severally, as the “Borrowers”). Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the ABL Credit Agreement.

 

Pursuant to the provisions of Section 16 of the ABL Credit Agreement, the undersigned hereby certifies that (a) it is the sole record owner of the participation in respect of which it is providing this certificate, (b) its direct or indirect partners/members are the sole beneficial owners of such participation, (c) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (d) none of its direct or indirect partners/members is a ten percent (10%) shareholder of any Borrower within the meaning of Section 881(c)(3)(B) of the Code and (e) none of its direct or indirect partners/members is a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (a) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or (b) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (i) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (ii) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.

 

	
[NAME OF   PARTICIPANT]
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
                          ,   20   
    	
 
    

 

 

Exhibit T-4

 

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Credit Agreement dated as of February 22, 2018 (as amended, restated, supplemented or otherwise modified, the “ABL Credit Agreement”), by and among the lenders identified on the signature pages thereof (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender” and, collectively, the “Lenders”), Wells Fargo Bank, National Association, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity “Agent”), FTS International Services, LLC, a Texas limited liability company (the “OpCo Borrower”), and FTS International, Inc., a Delaware corporation (the “Parent Borrower,” together with the OpCo Borrower and those additional entities that become parties thereto as Borrowers in accordance with the terms thereof by executing the form of Joinder attached thereto as Exhibit J-1, are referred to hereinafter each individually as a “Borrower”, and individually and collectively, jointly and severally, as the “Borrowers”). Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the ABL Credit Agreement.

 

Pursuant to the provisions of Section 16 of the ABL Credit Agreement, the undersigned hereby certifies that (a) it is the sole record owner of the Loan(s) (as well as any note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (b) its direct or indirect partners/members are the sole beneficial owners of such Loan(s) (as well as any note(s) evidencing such Loan(s)), (c) with respect to the extension of credit pursuant to this ABL Credit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (d) none of its direct or indirect partners/members is a ten percent (10%) shareholder of any Borrower within the meaning of Section 881(c)(3)(B) of the Code and (e) none of its direct or indirect partners/members is a controlled foreign corporation related to any Borrower as described in Section 881(c)(3)(C) of the Code.

 

The undersigned has furnished the Agent and the Borrowers with IRS Form W-8IMY accompanied by one of the following forms from each of its partners/members that is claiming the portfolio interest exemption: (a) an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or (b) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, the undersigned agrees that (i) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrowers and the Agent and (ii) the undersigned shall have at all times furnished the Borrowers and the Agent with a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two (2) calendar years preceding such payments.

 

	
[NAME OF LENDER]
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
                          ,   20   
    	
 
    

 

 

Schedule A-1

 

Agent’s Account

 

An account at a bank designated by Agent from time to time as the account into which Borrower shall make all payments to Agent for the benefit of the Lender Group and into which the Lender Group shall make all payments to Agent under this Agreement and the other Loan Documents; unless and until Agent notifies Administrative Borrower and the Lender Group to the contrary, Agent’s Account shall be that certain deposit account bearing account number 4124923723, reference FTS International Services, LLC, and maintained by Agent with Wells Fargo Bank, N.A., 420 Montgomery Street, San Francisco, CA, ABA  #121-000-248.

 

 

Schedule A-2

 

Authorized Persons

 

Michael J. Doss

 

Lance D. Turner

 

James T. Sutton

 

 

Schedule C-1

 

Commitments

 

	
Lender
    	
 
    	
Total Commitment
    
	
Wells Fargo Bank, National Association
    	
 
    	
$
    	
90,000,000.00
    
	
Credit Suisse AG, Cayman Islands Branch
    	
 
    	
$
    	
50,000,000.00
    
	
Morgan Stanley Bank, N.A.
    	
 
    	
$
    	
47,000,000.00
    
	
Barclays Bank PLC
    	
 
    	
$
    	
38,000,000.00
    
	
Citibank, N.A.
    	
 
    	
$
    	
25,000,000.00
    
	
All Lenders
    	
 
    	
$
    	
250,000,000.00
    

 

 

Schedule D-1

 

Designated Account

 

	
Depository
    	
 
    	
Address and Contact of Depository
    	
 
    	
Grantor
    	
 
    	
Account
   Number
    
	
Wells Fargo Bank, National Association
    	
 
    	
1000 Louisiana Street
   9th Floor
   Houston, Texas 77002
    
    Contact:
   XXX
   XXX
   XXX
    	
 
    	
FTS International, Inc.
    	
 
    	
XXXXXXXX
    

 

 

Schedule P-1

 

Permitted Investments

 

1.              Those Investments set forth on Schedule 4.1(c)

2.              FTS International Netherlands B.V. owns 45% of the Equity Interests of SinoFTS Petroleum Services Ltd.

 

 

Schedule P-2

 

Permitted Liens

 

1.              Liens on Wells Fargo Money Market — Restricted Cash Account # 4358342780, and the cash contained in such account, related to the cash collateralization of the standby letters of credit issued by Wells Fargo Bank, National Association described on Schedule 2.11.(1)

 

2.              Liens set forth in the table below.

 

	
Loan Party
    	
 
    	
Secured Party
    	
 
    	
File No. and
   Date of Filing
    
	
FTS INTERNATIONAL SERVICES, LLC
    	
 
    	
PNC Equipment Finance,   LLC
    	
 
    	
12-0019156499

6/15/2012
    
	
 
    	
 
    	
Wells Fargo Bank
    	
 
    	
14-0005239822

2/19/14
    
	
 
    	
 
    	
Wells Fargo Bank
    	
 
    	
14-0005240854

2/19/14
    
	
 
    	
 
    	
Wells Fargo Bank
    	
 
    	
14-0005273840

2/19/14
    
	
 
    	
 
    	
Wells Fargo Bank
    	
 
    	
14-0005276994

2/19/14
    
	
 
    	
 
    	
Wells Fargo Bank
    	
 
    	
14-0005277521

2/19/14
    

 

(1)  Such Liens relate to Existing Letters of Credit and are Permitted Liens pursuant to this Schedule P-2 only until such time the Issuing Bank releases such Liens after the Closing Date.

 

 

Schedule U-1

 

Unrestricted Subsidiaries

 

1.              FTS International Ventures I, LLC

 

2.              FTS International Ventures II, LLC

 

3.              FTS International Netherlands I C.V.

 

4.              FTS International Netherlands II C.V.

 

5.              FTS International Netherlands, LLC

 

6.              FTS International Netherlands Coöperatief U.A.

 

7.              FTS International Netherlands B.V.

 

 

Schedule 1.1

 

As used in the Agreement, the following terms shall have the following definitions:

 

“2014 Closing Date” means April 16, 2014.

 

“ABL Collateral” has the meaning specified therefor in the Intercreditor Agreement.

 

“Acceptable Appraisal” means, with respect to an appraisal of Inventory, the most recent appraisal of such property received by Agent (a) from an appraisal company satisfactory to Agent,  (b) the scope and methodology (including, to the extent relevant, any sampling procedure employed by such appraisal company) of which are satisfactory to Agent, and (c) the results of which are satisfactory to Agent, in each case, in Agent’s Permitted Discretion.

 

“Account” means an account (as that term is defined in the Code).

 

“Account Debtor” means any Person who is obligated on an Account, chattel paper, or a general intangible.

 

“Accounting Changes” means changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board (or successor thereto or any agency with similar functions).

 

“Acquired Indebtedness” means Indebtedness of a Person whose assets or Equity Interests are acquired by Parent Borrower or any of its Restricted Subsidiaries in a Permitted Acquisition; provided, that such Indebtedness (a) was in existence prior to the date of such Permitted Acquisition and (b) was not incurred in connection with, or in contemplation of, such Permitted Acquisition.

 

“Acquisition” means (a) the purchase or other acquisition by a Person or its Subsidiaries of all or substantially all of the assets of (or any division or business line of) any other Person, or (b) the purchase or other acquisition (whether by means of a merger, consolidation, or otherwise) by a Person or its Subsidiaries of all or substantially all of the Equity Interests of any other Person.

 

“Activation Instruction” has the meaning specified therefor in the Guaranty and Security Agreement.

 

“Additional Documents” has the meaning specified therefor in Section 5.12 of the Agreement.

 

“Administrative Borrower” has the meaning specified therefor in Section 17.13 of the Agreement.

 

“Administrative Questionnaire” has the meaning specified therefor in Section 13.1(a) of the Agreement.

 

“Affected Lender” has the meaning specified therefor in Section 2.13(c) of the Agreement.

 

 

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control,” as used with respect to any Person, will mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.  For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” will have correlative meanings.

 

“Agent” has the meaning specified therefor in the preamble to the Agreement.

 

“Agent-Related Persons” means Agent, together with its Affiliates, officers, directors, employees, attorneys, and agents.

 

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1 to this Agreement (or such other Deposit Account of Agent that has been designated as such, in writing, by Agent to Borrowers and the Lenders).

 

“Agent’s Liens” means the Liens granted by each Borrower or its Subsidiaries to Agent under the Loan Documents and securing the Obligations.

 

“Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.

 

“Anti-Corruption Laws” means the FCPA and all other applicable laws and regulations or ordinances concerning or relating to bribery, money laundering or corruption in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business.

 

“Anti-Money Laundering Laws” means the applicable laws or regulations in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.

 

“Applicable Margin” means, as of any date of determination and with respect to Base Rate Loans or LIBOR Rate Loans, as applicable, the applicable margin per annum set forth in the following table that corresponds to the Average Excess Availability of Borrowers for the then most recently ended quarter; provided, that for the period from the Closing Date through and including March 31, 2018, the Applicable Margin shall be set at the margin in the row styled “Level II”; provided  further, that any time an Event of Default has occurred and is continuing, the Applicable Margin shall be set at the margin in the row styled “Level II”:

 

	
Level
    	
 
    	
Average Excess
   Availability
    	
 
    	
Applicable Margin
   Relative to Base Rate
   Loans (the “Base Rate
   Margin”)
    	
 
    	
Applicable
   Margin Relative
   to LIBOR Rate
   Loans (the
   “LIBOR Rate
   Margin”)
    	
 
    
	
I
    	
 
    	
>   $125,000,000
    	
 
    	
0.75
    	
%
    	
1.75
    	
%
    
	
II
    	
 
    	
< $125,000,000
    	
 
    	
1.00
    	
%
    	
2.00
    	
%
    

 

 

The Applicable Margin shall be re-determined as of the first day of each fiscal quarter of Borrowers.

 

“Applicable Unused Line Fee Percentage” means 0.375%; provided, that if the Average Revolver Usage is greater than 50% of the Maximum Revolver Amount for any fiscal quarter, such Applicable Unused Line Fee Percentage shall be 0.25% for such fiscal quarter.

 

“Application Event” means (a) the occurrence of a failure by Borrowers to repay all of the Obligations (other than Contingent Surviving Obligations) in full on the Maturity Date, or (b) the occurrence and continuance of an Event of Default and the election by Agent or the Required Lenders to require that payments and proceeds of Collateral be applied pursuant to Section 2.4(b)(ii) of the Agreement.

 

“Assignee” has the meaning specified therefor in Section 13.1(a) of the Agreement.

 

“Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially in the form of Exhibit A-1 to the Agreement.

 

“Authorized Person” means any one of the individuals identified as an officer of a Borrower on Schedule A-2 to this Agreement, or any other individual identified by Administrative Borrower as an authorized person and authenticated through Agent’s electronic platform or portal in accordance with its procedures for such authentication.

 

“Available Amount Basket” means the aggregate amount of capital contributions to Borrowers made in Cash Equivalents and/or other properties (other than Disqualified Equity Interests) since the Closing Date.  The Available Amount Basket shall be available if on a pro forma basis, after giving effect to the use of any amount available under the Available Amount Basket, the Fixed Charge Coverage Ratio for the most recent 12 fiscal month period for which Parent Borrower’s interim financial statements are then required to have been delivered pursuant to Section 5.1 is at least 1.0 to 1.0, as calculated as if such use of the Available Amount Basket was made on the first day of such period.  The amount available under the Available Amount Basket shall immediately be reduced on a dollar for dollar basis upon the actual use of any amount thereunder or the entry into an agreement permitted hereunder pursuant to which an amount under such Available Amount Basket shall be utilized, in each case, without duplication of any other reduction of the Available Amount Basket in accordance with the terms of this definition.

 

“Available Increase Amount” means, as of any date of determination, an amount equal to the result of (a) $100,000,000 minus (b) the aggregate principal amount of Increases to the Revolver Commitments previously made pursuant to Section 2.14 of the Agreement.

 

“Average Excess Availability” means, with respect to any period, the sum of the aggregate amount of Excess Availability for each day in such period (calculated as of the end of each respective day) divided by the number of days in such period.

 

“Average Revolver Usage” means, with respect to any period, the sum of the aggregate amount of Revolver Usage for each day in such period (calculated as of the end of each respective day) divided by the number of days in such period.

 

 

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

 

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

“Bank Product” means any one or more of the following financial products or accommodations extended to a Borrower or a Guarantor by a Bank Product Provider:  (a) credit cards (including commercial cards (including so-called “purchase cards”, “procurement cards” or “p-cards”)), (b) payment card processing services, (c) debit cards, (d) stored value cards, (e) Cash Management Services, or (f) transactions under Hedge Agreements.

 

“Bank Product Agreements” means those agreements entered into from time to time by a Borrower or a Guarantor with a Bank Product Provider in connection with the obtaining of any of the Bank Products.

 

“Bank Product Collateralization” means providing cash collateral (pursuant to documentation reasonably satisfactory to Agent) to be held by Agent for the benefit of the Bank Product Providers (other than the Hedge Providers) in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure, operational risk or processing risk with respect to the then existing Bank Product Obligations (other than Hedge Obligations).

 

“Bank Product Obligations” means (a) all obligations, liabilities, reimbursement obligations, fees, or expenses owing by the Loan Parties to any Bank Product Provider pursuant to or evidenced by a Bank Product Agreement and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, (b) all Hedge Obligations, and (c) all amounts that Agent or any Lender is obligated to pay to a Bank Product Provider as a result of Agent or such Lender purchasing participations from, or executing guarantees or indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided by such Bank Product Provider to a Loan Party; provided that (i) in order for any item described in clauses (a), (b), or (c) above, as applicable, to constitute “Bank Product Obligations”, if the applicable Bank Product Provider is any Person other than Wells Fargo or its Affiliates, then the applicable Bank Product must have been provided on or after the Closing Date and Agent shall have received a Bank Product Provider Agreement within 10 days after the date of the provision of the applicable Bank Product to  a Borrower or its Subsidiaries, and (ii) notwithstanding the foregoing and anything to the contrary in any Loan Document, the Bank Product Obligations of a Loan Party shall not include its Excluded Hedge Obligations.

 

“Bank Product Provider” means any Lender or any of its Affiliates, including each of the foregoing in its capacity, if applicable, as a Hedge Provider; provided, that no such Person (other than Wells Fargo or its Affiliates) shall constitute a Bank Product Provider with respect to a Bank Product unless and until Agent receives a Bank Product Provider Agreement from such Person and with respect to the applicable Bank Product within 10 days after the provision of such Bank Product to a Loan Party.

 

 

“Bank Product Provider Agreement” means an agreement in substantially the form attached hereto as Exhibit B-2 to the Agreement, in form and substance reasonably satisfactory to Agent and Borrowers, duly executed by the applicable Bank Product Provider, Borrowers, and Agent.

 

“Bank Product Reserves” means, as of any date of determination, those reserves that Agent deems necessary or appropriate, in the exercise of its Permitted Discretion, to establish (based upon the Bank Product Providers’ determination of the liabilities and obligations of each Borrower and its Subsidiaries in respect of Bank Product Obligations) in respect of Bank Products then provided or outstanding.

 

“Bankruptcy Code” means title 11 of the United States Code, as in effect from time to time.

 

“Base Rate” means a per annum rate equal to the greatest of (a) the Federal Funds Rate plus 1⁄2%, (b) the LIBOR Rate (which rate shall be calculated based upon an Interest Period of 1 month and shall be determined on a daily basis), plus 1 percentage point, and (c) the rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate (and, if any such announced rate is below zero, then the rate determined pursuant to this clause (c) shall be deemed to be zero); provided that clause (b) shall not be applicable during any period in which the LIBOR Rate is unascertainable.

 

“Base Rate Loan” means each portion of the Revolving Loans that bears interest at a rate determined by reference to the Base Rate.

 

“Base Rate Margin” has the meaning set forth in the definition of Applicable Margin.

 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition.  The terms “Beneficially Owns” and “Beneficially Owned” will have a corresponding meaning.

 

“Board of Directors” means (a) with respect to a corporation, the board of directors of such corporation or, except in the context of the definitions of “Change of Control” and “Continuing Directors,” any duly authorized committee thereof; and (b) with respect to any other entity, the board of directors or similar body of the general partner of such entity or the managers of such entity, any duly authorized committee thereof or any Person, board or committee serving a similar function.

 

“Board of Governors” means the Board of Governors of the Federal Reserve System of the United States (or any successor).

 

 

“Borrower” and “Borrowers” have the respective meanings specified therefor in the preamble to the Agreement.

 

“Borrower Election Date” means the date specified by Administrative Borrower in a Borrower Election Notice given in accordance with clause (b) of Section 1.2 of the Agreement, which, in each case, such date must be on or after the Lease Accounting Change Effective Date.

 

“Borrower Election Notice” has the meaning specified therefor in clause (b) of Section 1.2 of the Agreement.

 

“Borrower Materials” has the meaning specified therefor in Section 17.9(c) of the Agreement.

 

“Borrowing” means a borrowing consisting of Revolving Loans made on the same day by the Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by Agent in the case of an Extraordinary Advance.

 

“Borrowing Base” means, as of any date of determination, the result of:

 

(a)           85% of the amount of Eligible Accounts, less the amount, if any, of the Dilution Reserve, plus

 

(b)           75% of the amount of Eligible Unbilled Accounts, plus

 

(c)           after the delivery of a field exam and inventory appraisal, each in form and substance reasonably satisfactory to the Agent, the lesser of (i) 70% of the lower of cost or fair market value (determined on a first-in/first-out basis) of Eligible Inventory and (ii) 85% of the product of (x) the Net Recovery Percentage identified in the most recent Acceptable Appraisal of Inventory multiplied by (y) Eligible Inventory, minus

 

(d)           the aggregate amount of reserves, if any, established by Agent under Section 2.1(c) of the Agreement;

 

provided, that (i) no more than 15% of the Borrowing Base may be comprised of Eligible Inventory and any amount of Eligible Inventory that would cause Eligible Inventory to exceed 15% of the Borrowing Base shall be excluded from the calculation thereof and (ii) no more than 15% of the Borrowing Base may be comprised of Eligible Unbilled Accounts and any amount of Eligible Unbilled Accounts that would cause Eligible Unbilled Accounts to exceed 15% of the Borrowing Base shall be excluded from the calculation thereof.

 

“Borrowing Base Certificate” means a certificate in the form of Exhibit B-1.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the states of New York or Texas, except that, if a determination of a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also shall exclude any day on which banks are closed for dealings in Dollar deposits in the London interbank market.

 

 

“Capital Expenditures” means, with respect to any Person for any period, the amount of all expenditures by such Person and its Subsidiaries during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed, but excluding, without duplication (a) expenditures made during such period in connection with the replacement, substitution, or restoration of assets or properties pursuant to Section 2.4(e)(ii) of the Agreement, (b) with respect to the purchase price of assets that are purchased substantially contemporaneously with the trade-in of existing assets during such period, the amount that the gross amount of such purchase price is reduced by the credit granted by the seller of such assets for the assets being traded in at such time, (c) expenditures made during such period to consummate one or more Permitted Acquisitions, (d) capitalized software development costs to the extent such costs are deducted from net earnings under the definition of EBITDA for such period, (e) expenditures during such period that, pursuant to a written agreement, are reimbursed by a third Person (excluding  any Borrower or any of its Affiliates), and (f) expenditures during such period that are made using the Available Amount Basket.

 

“Capital Lease” means (a) prior to the Borrower Election Date, any lease of Parent Borrower or any of the Restricted Subsidiaries that is (or would have been prior to the Lease Accounting Change Effective Date) required to be capitalized and recorded as a liability on the balance sheet of Parent Borrower for financial reporting purposes in accordance with GAAP as in effect on the Closing Date, and (b) on and after the Borrower Election Date, any lease of Parent Borrower or any of the Restricted Subsidiaries that is classified as a “finance lease” (as defined in the Financial Accounting Standards Board’s Accounting Standards Codification Topic 842-10-25-2) and recorded as a liability on the balance sheet of Parent Borrower for financial reporting purposes in accordance with GAAP as in effect on the Lease Accounting Change Effective Date.

 

“Capitalized Lease Obligation” means an obligation that constitutes a Capital Lease; and the amount of Indebtedness represented thereby at any time shall be the amount of the liability in respect thereof that would be required to be capitalized on a balance sheet of Parent Borrower at such time in accordance with (a) prior to the Borrower Election Date, GAAP as in effect on the Closing Date, and (b) on and after the Borrower Election Date, GAAP as in effect on the Lease Accounting Change Effective Date.

 

“Cash Equivalents” means:

 

(a)           United States dollars and such local currencies held by Parent Borrower or any Restricted Subsidiary from time to time in the ordinary course of business;

 

(b)           securities issued or directly and fully Guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof), maturing, unless such securities are deposited to defease any Indebtedness, not more than 365 days from the date of acquisition;

 

(c)           deposits, certificates of deposit and time deposits, money market accounts, bankers’ acceptances with maturities not exceeding 365 days and overnight bank deposits, in each case, with any commercial bank organized under the laws of the United States or any state, commonwealth or territory thereof or Canada or any province or territory thereof having capital

 

 

and surplus in excess of $500,000,000 and a rating at the time of acquisition thereof of P-1 or better from Moody’s or A-1 or better from S&P or a Thomson Bank Watch Rating of “B” or better;

 

(d)           repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above;

 

(e)           commercial paper having one of the two highest ratings obtainable from Moody’s or S&P and, in each case, maturing within nine months after the date of acquisition;

 

(f)            securities issued and fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, rated at least “A” by Moody’s or S&P and having maturities of not more than 365 days from the date of acquisition; and

 

(g)           money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (f) of this definition.

 

“Cash Management Services” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement,  merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, automatic clearing house transfer (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements.

 

“CFC” means a controlled foreign corporation (as that term is defined in the IRC) in which any Loan Party is a “United States shareholder” within the meaning of Section 951(b) of the IRC.

 

“Change in Law” means the occurrence, after the date of the Agreement, of any of the following:  (a) the adoption or taking effect of any law, rule, regulation, judicial ruling, judgment or treaty, (b) any change in any law, rule, regulation, judicial ruling, judgment or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law, but if not having the force of law, with respect to any Person, being of a type with which such Person customarily complies) in respect of any law, rule, regulation, judicial ruling, judgment or treaty by any Governmental Authority; provided that notwithstanding anything in the Agreement or any Loan Document to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“Change of Control” means the occurrence of any of the following:

 

(a)           the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in any Transactions, of all or substantially all of the properties or

 

 

assets of Parent Borrower and the Restricted Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than the Permitted Holders;

 

(b)           the adoption of a plan relating to the liquidation or dissolution of Parent Borrower other than in a Transaction that complies with the provisions described in Section 6.3;

 

(c)           any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Permitted Holders, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the voting power of the voting Equity Interests of Parent Borrower; and

 

(d)           the first day on which a majority of the members of the Board of Directors of Parent Borrower are not Continuing Directors.

 

“Chesapeake” means Chesapeake Energy Corporation and each of its controlled Affiliates.

 

“Closing Date” means the date of the making of the initial Revolving Loan (or other extension of credit) under the Agreement.

 

“Code” means the New York Uniform Commercial Code, as in effect from time to time.

 

“Collateral” means property subject, or purported to be subject, from time to time to a Lien pursuant to any of the Loan Documents.  For the avoidance of doubt, the Collateral shall not include the Excluded Assets.

 

“Collateral Access Agreement” means a landlord waiver, bailee letter, or acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in any Borrower’s books and records, or Inventory, in each case, in form and substance reasonably satisfactory to Agent.

 

“Collateral Reporting Trigger Event” means the occurrence of (a) a Default or Event of Default or (ii) Excess Availability is less than the greater of (1) $20,000,000 and (2) 15.0% of the Line Cap; provided that a Collateral Reporting Trigger Event shall end at such time thereafter when no Default or Event of Default exists and Excess Availability exceeds the greater of (1) $20,000,000 and (2) 15.0% of the Line Cap for a sixty (60) consecutive day period.

 

“Commitment” means, with respect to each Lender, its Revolver Commitment and, with respect to all Lenders, their Revolver Commitments, in each case, as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 to the Agreement or in the Assignment and Acceptance pursuant to which such Lender became a Lender under the Agreement, as such amounts may be reduced or increased from time to time pursuant to (x) assignments made in accordance with the provisions of Section 13.1 of the Agreement and (y) Sections 2.4(c) or 2.14 of the Agreement.

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

 

“Competitor” means any Person which is a direct competitor of Borrowers or any of their Subsidiaries and identified from time to time in writing to the Agent; provided, that in connection with any assignment or participation, the Assignee or Participant with respect to such proposed assignment or participation that is an investment bank, a commercial bank, a finance company, a fund, or other Person which merely has an economic (but not a controlling) interest in any such direct competitor, and is not itself such a direct competitor of Borrowers or their Subsidiaries, shall not be deemed to be a direct competitor for the purposes of this definition.

 

“Compliance Certificate” means a certificate substantially in the form of Exhibit C-1 to the Agreement delivered by the chief financial officer of  Administrative Borrower to Agent.

 

“Confidential Information” has the meaning specified therefor in Section 17.9(a) of the Agreement.

 

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

 

“Consolidated Cash Flow” means, for any period, the Consolidated Net Income of Parent Borrower for such period plus, without duplication:

 

(a)           provision for taxes based on income or profits of Parent Borrower and its Restricted Subsidiaries for such period, to the extent that such amounts were deducted in computing such Consolidated Net Income; plus

 

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

 

(c)           depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of Parent Borrower and the Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus or plus, as the case may be

 

(d)           any net gain or loss realized by such Person or any of its Restricted Subsidiaries in connection with any sale or disposition of assets outside the ordinary course of business, to the extent such gains or losses were added or deducted in computing Consolidated Net Income; minus or plus, as the case may be

 

(e)           all extraordinary, unusual or non-recurring items of gain (loss) or expense to the extent added or deducted in computing Consolidated Net Income; minus or plus, as the case may be

 

(f)            non-cash items increasing or decreasing such Consolidated Net Income for such period, other than the accrual of revenue or expense in the ordinary course of business; plus

 

 

(g)           any expenses or charges, to the extent deducted in computing Consolidated Net Income, related to any offering of Equity Interests, Permitted Investment, acquisition, disposition, recapitalization or the incurrence of Indebtedness pursuant to (or permitted to be incurred by) the Term Loan Facility or the Senior Notes Indenture including a refinancing thereof (whether or not successful) and any amendment or modification to the terms of any such transactions,

 

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

 

Notwithstanding the foregoing, the provision for taxes based on the income or profits of, the Fixed Charges of and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary will be added to Consolidated Net Income to compute Consolidated Cash Flow of Parent Borrower (i) in the same proportion that the Consolidated Net Income of such Restricted Subsidiary was added to compute such Consolidated Net Income of Parent Borrower and (ii) only to the extent that a corresponding amount would be permitted at the date of determination to be dividended or distributed to Parent Borrower by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter or any agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders. Notwithstanding anything to the contrary herein, Consolidated Cash Flow of Parent Borrower and its Restricted Subsidiaries for fiscal quarters ended on March 31, 2017, June 30, 2017, and September 30, 2017 shall be $19.1 million, $86.6 million and $128.4 million respectively.

 

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

 

(a)           the net income/loss of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or distributions paid in cash to Parent Borrower or a Restricted Subsidiary (subject, in the case of dividends or distributions paid to a Restricted Subsidiary, to the limitations contained in clause (b) below);

 

(b)           the net income (but not the net loss) of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that net income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its equity holders (other than any restrictions existing by reason of, or any governmental approvals necessary pursuant to, any law, rule, regulation, order or decree that is generally applicable to all Persons operating in any jurisdiction in which any Restricted Subsidiary is conducting business so long as there is in effect no specific order, decree or other prohibition pursuant to any such law, rule or regulation in such jurisdiction limiting the payment of a dividend or similar distribution by such Restricted Subsidiary);

 

 

(c)           the net income (loss) of any Person acquired during the specified period for any period prior to the date of such acquisition will be excluded;

 

(d)           any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with:  (i) any sale or disposition of assets outside the ordinary course of business of Parent Borrower or any Restricted Subsidiary; or (ii) the disposition of any securities by Parent Borrower or any Restricted Subsidiary or the extinguishment of any Indebtedness of Parent Borrower or any Restricted Subsidiary, will be excluded;

 

(e)           the effect of any non-cash items resulting from any depreciation, amortization, write-up, write-down or write-off of assets (including intangible assets, goodwill and deferred financing costs but excluding inventory) in connection with any acquisition, merger, consolidation or similar transaction or any other non-cash impairment charges incurred, in each case, prior or subsequent to the Closing Date (excluding any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in any future period except to the extent such item is subsequently reversed) will be excluded;

 

(f)            any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss, will be excluded;

 

(g)           any unrealized gain or loss included in net income due to marking Hedge Obligations to market will be excluded;

 

(h)           any non-cash compensation expense realized for grants of restricted stock units, restricted stock, performance shares, stock options or other similar rights to officers, directors and employees of Parent Borrower and any Restricted Subsidiary will be excluded; provided that such restricted stock units, restricted stock, performance shares, stock options or other similar rights can be redeemed, if at all, at the option of the holder only for Equity Interests (other than Disqualified Equity Interests) of Parent Borrower;

 

(i)            the cumulative effect of a change in accounting principles will be excluded;

 

(j)            to the extent deducted in the calculation of net income, any non-recurring charges associated with any premium or penalty paid, write-offs of deferred financing costs or other financial recapitalization charges in connection with redeeming or retiring any Indebtedness prior to its stated maturity will be added back to arrive at Consolidated Net Income;

 

(k)           any net income (loss) from the early extinguishment of Indebtedness or Hedge Obligations or other derivative instruments shall be excluded;

 

(l)            any unrealized net gain or loss (but not any realized gain or loss) resulting in such period from currency translation gains or losses related to currency remeasurements of Indebtedness, including intercompany indebtedness, shall be excluded; and

 

(m)          to the extent deducted in the calculation of net income, any restructuring or other unusual, non-operating or non-recurring loss will be added back to arrive at Consolidated Net Income.

 

 

“Consolidated Tangible Assets” means, with respect to any Person, the consolidated total assets of such Person and its Restricted Subsidiaries less all goodwill, trade names, trademarks, patents, unamortized debt issuance costs and other similar intangibles properly classified as intangibles in accordance with GAAP, all as shown on the most recent balance sheet delivered to the Agent pursuant to Schedule 5.1 to the Agreement as of the end of a fiscal quarter of such Person and computed in accordance with GAAP.

 

“Contingent Obligation” shall mean, as to any Person, any obligation, agreement, understanding or arrangement of such person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor; (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation; (d) with respect to bankers’ acceptances and letters of credit, until a reimbursement obligation arises (which obligation shall constitute Indebtedness); or (e) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term “Contingent Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or any product warranties for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such person may be liable, whether severally or jointly, pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith.

 

“Contingent Surviving Obligations” has the meaning specified therefor in Section 3.4 of the Agreement.

 

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of Parent Borrower who:  (a) was a member of such Board of Directors on the Closing Date; or (b) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of the Board of Directors at the time of such nomination or election, but excluding any such individual originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors (or comparable managers) of Parent Borrower and whose initial assumption of office resulted from such contest or the settlement thereof.

 

“Control Agreement” means a control agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by  a Borrower or a Guarantor, Agent, and the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account or blocked Deposit Account).

 

 

“Cost” means with respect to equipment, supplies and products, Parent Borrower’s good faith, reasonable estimate of the all-in cost to Parent Borrower or its applicable Restricted Subsidiary to procure or manufacture such equipment, supplies or products and, with respect to services, Parent Borrower’s good faith, reasonable estimate of the all-in cost to Parent Borrower or its applicable Restricted Subsidiaries of the cost of providing such services.

 

“Covenant Testing Period” means the period commencing on any date on which (a) Excess Availability is less than the greater of (1) $12,500,000 and (2) 10.0% of the Line Cap or (b) an Event of Default shall occur, and, in each case, ending upon a Covenant Testing Reversion Date.

 

“Covenant Testing Reversion Date” means, following the commencement of a Covenant Testing Period, (a) with respect to clause (a) of the definition of Covenant Testing Period, the last date of a sixty (60) consecutive day period during which Excess Availability is equal to or greater than the greater of (1) $12,500,000 and (2) 10.0% of the Line Cap for such sixty (60) consecutive days, and (b) with respect to clause (b) of the definition of Covenant Testing Period, the date upon which such Event of Default is cured or waived or otherwise ceases to exist.

 

“Default” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.

 

“Defaulting Lender” means any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies Agent and Administrative Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable Default or Event of Default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to Agent, Issuing Bank, or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two Business Days of the date when due, (b) has notified any Borrower, Agent or Issuing Bank in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable Default or Event of Default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by Agent or Administrative Borrower, to confirm in writing to Agent and Administrative Borrower that it will comply with its prospective funding obligations hereunder (provided, that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Agent and Administrative Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of any Insolvency Proceeding, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-in Action; provided, that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the

 

 

enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender upon delivery of written notice of such determination to Administrative Borrower, Issuing Bank, and each Lender.

 

“Defaulting Lender Rate” means (a) for the first 3 days from and after the date the relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Revolving Loans that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto).

 

“Deposit Account” means any deposit account (as that term is defined in the Code).

 

“Designated Account” means the Deposit Account of Administrative Borrower identified on Schedule D-1 to the Agreement (or such other Deposit Account of Administrative Borrower located at Designated Account Bank that has been designated as such, in writing, by Borrowers to Agent).

 

“Designated Account Bank” has the meaning specified therefor in Schedule D-1 to the Agreement (or such other bank that is located within the United States that has been designated as such, in writing, by Borrowers to Agent).

 

“Designated Non-cash Consideration” means the Fair Market Value of any non-Cash Equivalent consideration received by Parent Borrower or one of its Restricted Subsidiaries in connection with a Permitted Disposition that is designated as Designated Non-cash Consideration pursuant to an officers’ certificate.  Any particular item of Designated Non-cash Consideration will cease to be considered to be outstanding once it has been sold for Cash Equivalents (which shall be considered Net Cash Proceeds when received).

 

“Dilution” means, as of any date of determination, a percentage, based upon the experience of the twelve-month period ending as of the last day of the immediately preceding fiscal month, that is the result of dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising allowances, credits, or other dilutive items with respect to Borrowers’ Accounts during such period, by (b) Borrowers’ billings with respect to Accounts during such period.

 

“Dilution Reserve” means, as of any date of determination, an amount sufficient to reduce the advance rate against Eligible Accounts by 1 percentage point for each percentage point by which Dilution is in excess of 5%.

 

“Disinterested Member” means, with respect to any Transaction, a member of Parent Borrower’s Board of Directors:  (a) who does not have any material direct or indirect financial interest (other than as an owner of Equity Interests in Parent Borrower or as an officer, manager or employee of Parent Borrower or any Restricted Subsidiary) in or with respect to such Transaction, and (b) is not an Affiliate, or an officer, director, member of a supervisory, executive or management board or employee, of any Person (other than Parent Borrower or a Restricted Subsidiary), who has any direct or indirect financial interest in or with respect to such Transaction.

 

 

“Disqualified Equity Interests” means any Equity Interests that, that, by its terms, by the terms of any security into which it is convertible, or for which it is exchangeable, or by contract or otherwise, is, or upon the happening of any event or passage of time would be, required to be redeemed on or prior to the date that is one year after the Maturity Date, or is redeemable at the option of the holder thereof, or is convertible into or exchangeable for debt securities in any such case on or prior to such date.  The term “Disqualified Equity Interests” will also include any options, warrants or other rights that are convertible into Disqualified Equity Interests or that are redeemable at the option of the holder, or required to be redeemed, prior to the date that is one year after the Maturity Date.

 

“Dollars” or “$” means United States dollars.

 

“Domestic Subsidiary” means any Restricted Subsidiary organized under the laws of any political subdivision of the United States that is not a Subsidiary of a Foreign Subsidiary.

 

“Drawing Document” means any Letter of Credit or other document presented for purposes of drawing under any Letter of Credit, including by electronic transmission such as SWIFT, electronic mail, facsimile or computer generated communication.

 

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

 

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

 

“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

 

“Eligible Accounts” means those Accounts (including Eligible Unbilled Accounts) created by a Borrower in the ordinary course of its business, that arise out of such Borrower’s sale of goods or rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made in the Loan Documents, and that are not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, that such criteria may be revised from time to time by Agent in Agent’s Permitted Discretion to address the results of any field examination performed by (or on behalf of) Agent from time to time after the Closing Date.  In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits, unapplied cash, taxes, finance charges, service charges, discounts, credits, allowances, and rebates.  Eligible Accounts shall not include the following:

 

(a)           Accounts that the Account Debtor has failed to pay within 60 days of original due date or Accounts for which the scheduled due date is more than 90 days after the original invoice date therefor,

 

 

(b)           Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above,

 

(c)           Accounts with respect to which the Account Debtor is an Affiliate of any Borrower or an employee or agent of any Borrower or any Affiliate of any Borrower, provided, however, Accounts owed to any Borrower or its Restricted Subsidiaries by Chesapeake shall be deemed Eligible Accounts so long as they arise in connection with an arms’-length commercial transaction and satisfy all other criteria set forth in clauses (a) and (b) and (d) through (p) hereof,

 

(d)           Accounts (i) arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional, or (ii) with respect to which the payment terms are “C.O.D.”, cash on delivery or other similar terms,

 

(e)           Accounts that are not payable in Dollars,

 

(f)            Accounts with respect to which the Account Debtor either (i) does not maintain its chief executive office in the United States or Canada, or (ii) is not organized under the laws of the United States or Canada or any state or province thereof, or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (A) the Account is supported by an irrevocable letter of credit reasonably satisfactory to Agent (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and is directly drawable by Agent, or (B) the Account is covered by credit insurance in form, substance, and amount, and by an insurer, reasonably satisfactory to Agent, or (C) Agent’s Lien in the Account is perfected to its reasonable satisfaction,

 

(g)           Accounts with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with respect to which Borrowers have complied, to the reasonable satisfaction of Agent, with the Assignment of Claims Act, 31 USC §3727), or (ii) any state of the United States or any other Governmental Authority,

 

(h)           Accounts with respect to which the Account Debtor is a creditor of a Borrower, has or has asserted a right of recoupment or setoff, or has disputed its obligation to pay all or any portion of the Account, to the extent of such claim, right of recoupment or setoff, or dispute,

 

(i)            Accounts with respect to an Account Debtor whose Eligible Accounts and Eligible Unbilled Accounts, collectively, owing to the Borrowers exceed 25% (such percentage, as applied to a particular Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts and Eligible Unbilled Accounts, collectively, to the extent of the obligations owing by such Account Debtor in excess of such percentage; provided, that, in each case, the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit,

 

 

(j)            Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to which any Borrower has received notice of an imminent Insolvency Proceeding of such Account Debtor,

 

(k)           Accounts, the collection of which, Agent, in its Permitted Discretion, believes to be doubtful, including by reason of the Account Debtor’s financial condition,

 

(l)            Accounts that are not subject to a valid and perfected first priority Agent’s Lien,

 

(m)          Accounts with respect to which (i) the goods giving rise to such Account have not been shipped and billed to the Account Debtor, or (ii) the services giving rise to such Account have not been performed and billed to the Account Debtor,

 

(n)           Accounts with respect to which the Account Debtor is a Sanctioned Person or Sanctioned Country,

 

(o)           Accounts that represent the right to receive progress payments or other advance billings that are due prior to the completion of performance by the applicable Borrower of the subject contract for goods or services, or

 

(p)           Accounts owned by a target acquired in connection with a Permitted Acquisition, until the completion of a field examination with respect to such target, in each case, reasonably satisfactory to Agent (which a field examination may be conducted prior to the closing of such Permitted Acquisition).

 

“Eligible Inventory” means Inventory of a Borrower that complies with each of the representations and warranties respecting Eligible Inventory made in the Loan Documents, and that is not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, that such criteria may be revised from time to time by Agent in Agent’s Permitted Discretion to address the results of any field examination or appraisal performed by Agent from time to time after the Closing Date.  An item of Inventory shall not be included in Eligible Inventory if:

 

(a)           a Borrower does not have good, valid, and marketable title thereto,

 

(b)           a Borrower does not have actual and exclusive possession thereof (either directly or through a bailee or agent of a Borrower), unless (i) such bailee or agent has delivered to the Agent a Collateral Access Agreement in form and substance reasonably satisfactory to the Agent, (ii) the Agent has applied a Landlord Reserve in respect of such Inventory, or (iii) such Inventory is located at the site of a Guarantor or a Restricted Subsidiary,

 

(c)           it is not located at one of the locations in the continental United States set forth on Schedule 4.24 to the Agreement, in each case, except for (i) Eligible In-Transit Inventory or (ii) if such Inventory is located at the site of a Guarantor or a Restricted Subsidiary,

 

(d)           it is in-transit to or from a location of a Borrower, a Guarantor, or a Restricted Subsidiary, except for Eligible In-Transit Inventory,

 

 

(e)           it is located on real property leased by a Borrower, a Guarantor, or a Restricted Subsidiary, or in a contract warehouse, in each case, unless it is subject to a Collateral Access Agreement executed by the lessor or warehouseman, as the case may be, and unless it is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises,

 

(f)            it is the subject of a document of title within the meaning of the Code,

 

(g)           it is not subject to a valid and perfected first priority Agent’s Lien,

 

(h)           it consists of goods returned or rejected by a Borrower’s customers,

 

(i)            it consists of goods that are obsolete or slow moving, restrictive or custom items, work-in-process, raw materials, or goods that constitute spare parts, packaging and shipping materials, supplies used or consumed in Borrowers’ business, bill and hold goods, defective goods, “seconds,” or Inventory acquired on consignment (it being agreed, for the avoidance of doubt, that raw materials do not include proppants and chemicals used in the hydraulic fracturing process),

 

(j)            the aggregate amount of such Inventory does not exceed $100,000 at any location at any time, or

 

(k)           it was acquired in connection with a Permitted Acquisition, until the completion of an appraisal and field examination of such Inventory, in each case, reasonably satisfactory to Agent (which appraisal and field examination may be conducted prior to the closing of such Permitted Acquisition).

 

“Eligible In-Transit Inventory” means those items of Inventory that would not otherwise qualify as Eligible Inventory solely because they are not located in the United States or they are in transit with a common carrier from vendors or suppliers, but as to which:

 

(a)           title and risk of loss to such Inventory has passed to a Borrower,

 

(b)           such Inventory is in the possession and control of a third-party shipping company that is independent of the sellers thereof,

 

(c)           such Inventory is insured against types of loss, damage, hazards and risks, and in amounts satisfactory to Agent in its Permitted Discretion, and Agent has been named as loss payee with respect to such insurance pursuant to a loss payable endorsement acceptable to Agent in its Permitted Discretion,

 

(d)           the vendor or supplier of such Inventory is an Eligible Vendor,

 

(e)           such Inventory either:

 

(i)            is the subject of a negotiable bill of lading (x) that is consigned to Agent or one of its agents (either directly or by means of endorsements), (y) that was issued by the carrier respecting the subject Inventory, and (z) that is in the possession of Agent or a customs broker (in each case in the continental United States) acting for Agent, or

 

 

(ii)           is the subject of a negotiable cargo receipt and is not the subject of a bill of lading (other than a negotiable bill of lading consigned to, and in the possession of, a consolidator Agent, or their respective agents) and such negotiable cargo receipt (x) is consigned to Agent or one of its agents (either directly or by means of endorsements), (y) was issued by a consolidator respecting the subject Inventory, and (z) is in the possession of Agent or a customs broker (in each case in the continental United States) acting for Agent,

 

(f)            the Borrowers know of no reason why such Inventory would not be accepted by it when it arrives and the shipment as evidenced by the documents materially conforms to the related order documents, and

 

(g)           such Inventory is in transit to a location in the United States that meets the requirements for Eligible Inventory.

 

“Eligible Transferee” means (a) any Lender (other than a Defaulting Lender), any Affiliate of any Lender and any Related Fund of any Lender; (b) (i) a commercial bank organized under the laws of the United States or any state thereof, and having total assets in excess of $1,000,000,000; (ii) a savings and loan association or savings bank organized under the laws of the United States or any state thereof, and having total assets in excess of $1,000,000,000; (iii) a commercial bank organized under the laws of any other country or a political subdivision thereof; provided that (A) (x) such bank is acting through a branch or agency located in the United States or (y) such bank is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country, and (B) such bank has total assets in excess of $1,000,000,000; (c) any other entity (other than a natural person) that is an “accredited investor” (as defined in Regulation D under the Securities Act) that extends credit or buys loans as one of its businesses including insurance companies, investment or mutual funds and lease financing companies, and having total assets in excess of $1,000,000,000; and (d) during the continuation of an Event of Default, any other Person approved by Agent.

 

“Eligible Unbilled Accounts” means Accounts of a Borrower arising from the shipment of goods or provision of services to the applicable Account Debtor that qualify as Eligible Accounts except that such Accounts have not yet been billed to the applicable Account Debtor, so long as such Accounts relate to a shipment of goods or provision of services that has been completed in full and billed on or prior to the earlier of (i) the date of the delivery to Agent of the first Borrowing Base Certificate reflecting such Accounts as Eligible Unbilled Accounts and (ii) 20 days after the last day of the month to be reported on such Borrowing Base Certificate; provided that, notwithstanding the foregoing, in the case of a Collateral Reporting Trigger Event, (x) such Accounts shall have been completed in full and billed on or prior to 20 days after the last day of the prior month to be reported on such Borrowing Base and (y) such Accounts not permitted by clause (x) of this proviso shall be calculated monthly; provided further that, an Account shall cease to be an Eligible Unbilled Account upon the date such Account is billed to the applicable Account Debtor, at which time such Account shall be deemed to be an Eligible Account. In determining the amount to be included, Eligible Unbilled Accounts shall be calculated as of the last day of the month or week, as applicable, reported on such Borrowing Base Certificate, and net of customer deposits and unapplied cash.

 

 

“Eligible Vendor” means a vendor (other than an Affiliate of Parent Borrower or of a Restricted Subsidiary) of Inventory which (a) has received timely payment or performance of all liabilities and other obligations at any time owed to it by Parent Borrower and the Restricted Subsidiaries that are then due and payable in accordance with the regular payment terms between Parent Borrower and the Restricted Subsidiaries and such vendor, and (b) has not asserted (and has no right to assert) any reclamation, repossession, diversion, stoppage in transit, Lien or title retention rights in respect of such Inventory.

 

“Employee Benefit Plan” means (a) any employee pension benefit plan within the meaning of Section 3(2) of ERISA that is maintained for employees of any Loan Party or any ERISA Affiliate or (b) any Pension Plan or Multiemployer Plan that has at any time within the preceding seven (7) years been maintained, funded or administered for the employees of any Loan Party or any current or former ERISA Affiliate.

 

“Employee Plan” means an “employee benefit plan” within the meaning of Section 3(3) of ERISA which any Loan Party establishes for the benefit of its employees or for which any Loan Party has liability to make a contribution.

 

“Environmental Action” means any written complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other written communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials giving rise to liability under Environmental Laws (a) from any assets, properties, or businesses of any Borrower, any Restricted Subsidiary of any Borrower, or any of their predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by any Borrower, any Restricted Subsidiary of any Borrower, or any of their predecessors in interest.

 

“Environmental Law” means any and all federal, foreign, state, provincial and local laws, statutes, ordinances, codes, rules, standards and regulations, permits, licenses and binding orders of courts or Governmental Authorities, relating to the protection of public health (with respect to Hazardous Materials) or the environment, including, but not limited to, such requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous Materials.

 

“Environmental Liabilities” means all liabilities, monetary obligations, losses, damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand, or Remedial Action required, by any Governmental Authority or any third party, and which relate to any Environmental Action.

 

“Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities.

 

“Equipment” means equipment (as that term is defined in the Code).

 

 

“Equity Interest” of any Person means any and all shares, interests (including general or limited partnership interests, limited liability company or membership interests or limited liability partnership interests), participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock; provided, however, that equity-based compensation awards that by their terms may only be settled in cash will not be deemed to be Equity Interests.

 

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

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with Parent Borrower or any Subsidiary, is treated as a single employer under Section 414(b) or (c) of the IRC (and Sections 414(m) and (o) of the IRC for purposes of provisions relating to Section 412 or 430 of the IRC or Section 302 or 303 of ERISA).

 

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Pension Plan (other than an event for which the 30-day notice period is waived); (b) the failure to satisfy the “minimum funding standard” (as defined in Section 412 of the IRC or Section 302 of ERISA), whether or not waived, with respect to any Pension Plan; (c) the filing pursuant to Section 412(c) of the IRC or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Pension Plan; (d) the incurrence by Parent Borrower or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Pension Plan; (e) the receipt by Parent Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Pension Plan or Pension Plans or to appoint a trustee to administer any Pension Plan; (f) the incurrence by Parent Borrower or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal of Parent Borrower or any ERISA Affiliate from any Pension Plan or Multiemployer Plan; or (g) the receipt by Parent Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Parent Borrower or any ERISA Affiliate of any notice, concerning the imposition upon Parent Borrower or any ERISA Affiliate of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent, within the meaning of Title IV of ERISA.

 

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

 

“Event of Default” has the meaning specified therefor in Section 8 of the Agreement.

 

“Excess Availability” means, as of any date of determination, the amount that Borrowers are entitled to borrow as Revolving Loans under Section 2.1 of the Agreement as of such date (after giving effect to the then outstanding Revolver Usage).

 

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to time.

 

“Excluded Assets” has the meaning specified therefor in the Guaranty and Security Agreement.

 

 

“Excluded Hedge Obligation” means, with respect to any Loan Party, any Hedge Obligation constituting a Swap Obligation if, and to the extent that, all or a portion of the guaranty of such Loan Party of, or the grant by such Loan Party of a security interest to secure, such Hedge Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guaranty of such Loan Party or the grant of such security interest becomes effective with respect to such Hedge Obligation. If any Hedge Obligation constituting a Swap Obligation arises under a master agreement governing more than one such Hedge Obligation, such exclusion shall apply only to the portion of such Hedge Obligation that is attributable to swaps for which such guaranty or security interest is or becomes illegal.

 

“Excluded Subsidiary” means any of the following: (a) each Immaterial Subsidiary; (b) each Domestic Subsidiary that is not a Wholly Owned Subsidiary (for so long as such Subsidiary remains a non-Wholly Owned Subsidiary), (c) each Domestic Subsidiary that is prohibited from guaranteeing the Obligations by any applicable law or that would require consent, approval, license or authorization of a Governmental Authority to guarantee the Obligations that cannot be obtained after use of commercially reasonable efforts (unless such consent, approval, license or authorization has been received); (d) each Domestic Subsidiary that is prohibited by any applicable contractual requirement from guaranteeing the Obligations on the Closing Date or at the time such Subsidiary becomes a Subsidiary, so long as such requirement was not entered into in contemplation of the acquisition of such Subsidiary (and for so long as such restriction or any replacement or renewal thereof is in effect); (e) any CFC (or any Subsidiary thereof); (f) any Foreign Subsidiary Holdco (or any Subsidiary thereof); and (g) each Unrestricted Subsidiary.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, United States federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by Borrowers under Section 2.13(c) or Section 14.2) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 16, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 16.7 and (d) any United States federal withholding Taxes imposed under FATCA.

 

“Existing Letters of Credit” means any of the Letters of Credit listed on Schedule 2.11.

 

“Extraordinary Advances” has the meaning specified therefor in Section 2.3(d)(iii) of the Agreement.

 

 

“Fair Market Value” means, with respect to any asset or property, the sale value that would be obtained in an arm’s-length free-market Transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by (a) in the case of an asset or property with an estimated value of $20,000,000 or more, the Board of Directors of Parent Borrower, which determination will be conclusive if evidenced by a resolution or a written consent of the Board of Directors of Parent Borrower and (b) in the case of an asset or property with an estimated value of less than $20,000,000, the principal executive officer, the principal financial officer or the principal accounting officer of Parent Borrower, which determination will be conclusive if evidenced by an officer’s certificate thereof.

 

“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), and (a) any current or future regulations or official interpretations thereof, (b) any agreements entered into pursuant to Section 1471(b)(1) of the IRC, and (c) any intergovernmental agreement entered into by the United States (or any fiscal or regulatory legislation, rules, or practices adopted pursuant to any such intergovernmental agreement entered into in connection therewith).

 

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.

 

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal to, for each day during such period, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, 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 which is a Business Day, the average of the quotations for such day on such transactions received by Agent from three Federal funds brokers of recognized standing selected by it (and, if any such rate is below zero, then the rate determined pursuant to this definition shall be deemed to be zero).

 

“Fee Letter” means that certain fee letter, dated as of even date with the Agreement, among Borrowers and Agent, in form and substance reasonably satisfactory to Agent.

 

“First-Tier Foreign Subsidiary” means any CFC the Equity Interests of which are owned directly by any Loan Party.

 

“Fixed Charge Coverage Ratio” means, with respect to any fiscal period and with respect to Parent Borrower and its Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP, the ratio of (a) Consolidated Cash Flow for such period minus Unfinanced Capital Expenditures made (to the extent not already incurred in a prior period) or incurred during such period, to (b) Fixed Charges for such period.

 

For purposes of calculating the Fixed Charge Coverage Ratio:

 

(a)           in the event that Parent Borrower or any Restricted Subsidiary incurs, repays, repurchases or redeems any Indebtedness or issues, repurchases or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is

 

 

being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then (subject to the remaining clauses of this definition) the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of Preferred Stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of such period;

 

(b)           acquisitions and dispositions of business entities or property and assets constituting a division or line of business of any Person that have been made by Parent Borrower or any Restricted Subsidiary (or by any Person that has subsequently become a Restricted Subsidiary or has subsequently merged or consolidated with or into a Borrower or any Restricted Subsidiary), including through mergers or consolidations, and the designation or redesignation of an Unrestricted Subsidiary, in each case, during such period or subsequent to such period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of such period and Consolidated Cash Flow for such period will be calculated on a pro forma basis, but without giving effect to clause (c) of the proviso set forth in the definition of Consolidated Net Income;

 

(c)           the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, will be excluded;

 

(d)           the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of Parent Borrower or any Restricted Subsidiary following the Calculation Date;

 

(e)           whenever pro forma effect is to be given to an acquisition or disposition, the amount of Consolidated Cash Flow relating thereto and the amount of Fixed Charges associated with any Indebtedness incurred in connection therewith, unless otherwise specified, the pro forma calculations will be determined in good faith by a responsible financial or accounting officer of Parent Borrower;

 

(f)            Fixed Charges attributable to interest on any Indebtedness (whether existing or being incurred) computed on a pro forma basis and bearing a floating interest rate will be computed as if the rate in effect on the Calculation Date (taking into account any interest rate option, swap, cap or similar agreement applicable to such Indebtedness if such agreement has a remaining term in excess of 12 months or, if shorter, at least equal to the remaining term of such Indebtedness) had been the applicable rate for the entire period; and

 

(g)           Fixed Charges attributable to interest on any Indebtedness incurred under a revolving credit facility (including the Agreement) computed on a pro forma basis will be calculated based on the average daily balance of such Indebtedness for such period subject to the pro forma calculation.

 

“Fixed Charges” means, with respect to any fiscal period and with respect to Parent Borrower and its Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP, the sum, without duplication, of (a) Interest Expense accrued (other than interest

 

 

paid-in-kind, amortization of financing fees, and other non-cash Interest Expense) during such period, (b) principal payments in respect of Indebtedness that are required to be paid during such period, (c) all federal, state, and local income taxes paid in cash during such period, and (d) all Restricted Payments paid (whether in cash or other property, other than common Equity Interests) by Parent Borrower or any Restricted Subsidiary (but only to the extent that any Restricted Payment by a Restricted Subsidiary is not made to another Restricted Subsidiary or Parent Borrower) during such period.

 

“Flow of Funds Agreement” means a flow of funds agreement, dated as of even date herewith, in form and substance reasonably satisfactory to Agent, executed and delivered by each Loan Party and Agent.

 

“Foreign Lender” means any Lender or Participant that is not a U.S. Person.

 

“Foreign Subsidiary” means any Restricted Subsidiary of Parent Borrower that is not a Domestic Subsidiary.

 

“Foreign Subsidiary Holdco” means a Restricted Subsidiary all or substantially all of the assets of which consist of Equity Interests of one or more CFCs and/or other Foreign Subsidiary Holdcos; provided that, for the avoidance of doubt and notwithstanding anything to the contrary in this definition, OpCo Borrower shall not be considered to be a Foreign Subsidiary Holdco.

 

“Funding Date” means the date on which a Borrowing occurs.

 

“Funding Losses” has the meaning specified therefor in Section 2.12(b)(ii) of the Agreement.

 

“GAAP” means generally accepted accounting principles in the United States, consistently applied, as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements (including the Accounting Standards Codification) of the Financial Accounting Standards Board, or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States.

 

“Governing Documents” means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person.

 

“Governmental Approvals” means all authorizations, consents, approvals, permits, licenses and exemptions of, and all registrations and filings with or issued by, any Governmental Authorities.

 

“Governmental Authority” means the government of any nation or any political subdivision thereof, whether at the national, state, territorial, provincial, municipal or any other level, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government (including any supra-national bodies such as the European Union or the European Central Bank).

 

 

“Guarantee” means, as applied to any Indebtedness of another Person, (a) a guarantee (other than by endorsement of negotiable instruments for collection in the normal course of business), direct or indirect, in any manner, of any part or all of such Indebtedness, (b) any direct or indirect obligation, contingent or otherwise, of a Person guaranteeing or having the effect of guaranteeing the Indebtedness of any other Person in any manner and (c) an agreement of a Person, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment (or payment of damages in the event of non-payment) of all or any part of such Indebtedness of another Person (and “Guaranteed” and “Guaranteeing” shall have meanings that correspond to the foregoing).

 

“Guarantor” means (a) all of the Domestic Subsidiaries other than Excluded Subsidiaries as of the Closing Date and (b) each other Person that becomes a guarantor after the Closing Date pursuant to Section 5.11 of the Agreement and their respective successors and assigns until released from their obligations under the Guaranty and Security Agreement pursuant to and in accordance with the terms of Section 15.11 of the Agreement.

 

“Guaranty and Security Agreement” means a guaranty and security agreement, dated as of even date with the Agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by each of the Borrowers and each of the Guarantors to Agent.

 

“Hazardous Materials” means any substances or materials (a) which are or become defined as hazardous wastes, hazardous substances, pollutants, contaminants or toxic substances under any Environmental Law, (b) which are toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to public health or the environment and are or become regulated by any Governmental Authority, (c) the presence of which require investigation or remediation under any Environmental Law, (d) the discharge or emission or release of which requires a permit or license under any Environmental Law or other Governmental Approval, or (e) which contain, without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas.

 

“Hedge Agreement” means a “swap agreement” as that term is defined in Section 101(53B)(A) of the Bankruptcy Code.

 

“Hedge Obligations” means any and all obligations or liabilities, whether absolute or contingent, due or to become due, now existing or hereafter arising, of each Borrower and its Restricted Subsidiaries arising under, owing pursuant to, or existing in respect of Hedge Agreements entered into with one or more of the Hedge Providers.

 

“Hedge Provider” means any Lender or any of its Affiliates; provided, that no such Person (other than Wells Fargo or its Affiliates) shall constitute a Hedge Provider unless and until Agent receives a Bank Product Provider Agreement from such Person and with respect to the applicable Hedge Agreement within 10 days after the execution and delivery of such Hedge Agreement with  a Borrower or its Subsidiaries; provided further, that if, at any time, a Lender ceases to be a Lender under the Agreement, then, from and after the date on which it ceases to be a Lender thereunder, neither it nor any of its Affiliates shall constitute Hedge Providers and the obligations with respect to Hedge Agreements entered into with such former Lender or any of its Affiliates shall no longer

 

 

constitute Hedge Obligations, except to the extent that the Hedge Agreement underlying such obligations was provided by a Person who was a Lender (or an Affiliate of a Lender) at the time such Hedge Agreement was entered into.

 

“Immaterial Subsidiary” means, as of any date, any Restricted Subsidiary whose total assets, as of that date, are less than $100,000 or whose total revenues for the most recent 12-month period do not exceed $100,000.

 

“Increase” has the meaning specified therefor in Section 2.14.

 

“Increase Date” has the meaning specified therefor in Section 2.14.

 

“Increase Joinder” has the meaning specified therefor in Section 2.14.

 

“Indebtedness” means, with respect to any specified Person, without duplication:

 

(a)           all indebtedness of such Person in respect of borrowed money;

 

(b)           all obligations of such Person evidenced by bonds, notes, debentures or similar instruments;

 

(c)           all reimbursement obligations of such Person in respect of banker’s acceptances, letters of credit or similar instruments;

 

(d)           all Capitalized Lease Obligations of such Person;

 

(e)           all obligations of such Person in respect of the deferred and unpaid balance of the purchase price of any property or services, due more than 6 months after such property is acquired or such services are completed except any such balance that constitutes an expense or trade payable, whether such balance arises directly with a vendor or indirectly under corporate credit card, purchasing card or gas card arrangements;

 

(f)            all net Hedge Obligations of such Person;

 

(g)           all Disqualified Equity Interests issued by such Person, valued at the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price plus accrued dividends;

 

(h)           all Preferred Stock issued by a Subsidiary of such Person, valued at the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price plus accrued dividends;

 

(i)            all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person), provided that the amount of such Indebtedness will be the lesser of (A) the Fair Market Value of such asset at such date of determination and (B) the amount of such Indebtedness; and

 

 

(j)            to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person,

 

in each case, other than clauses (c) and (f), if and to the extent that any of the foregoing would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP.

 

For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Equity Interests or Preferred Stock which does not have a fixed repurchase price will be calculated in accordance with the terms of such Disqualified Equity Interests or Preferred Stock, as applicable, as if such Disqualified Equity Interests or Preferred Stock were repurchased on any date on which Indebtedness will be required to be determined pursuant to the Agreement.

 

Notwithstanding the foregoing, Indebtedness shall not include any indebtedness that has been defeased in accordance with GAAP or defeased pursuant to the deposit of U.S. government obligations and Cash Equivalents (sufficient to satisfy all obligations relating thereto at maturity or redemption, as applicable) in a trust or account created or pledged for the sole benefit of the holders of such indebtedness, in accordance with the terms of the instruments governing such indebtedness.

 

The amount of any Indebtedness outstanding as of any date will be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation.  The amount of any Indebtedness described in clauses (a) and (b) above will be:

 

(x)           the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and

 

(y)           the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.

 

For purposes of determining any particular amount of Indebtedness, Guarantees, Liens or obligations with respect to letters of credit supporting Indebtedness otherwise included in the determination of such particular amount shall not be included.

 

“Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of the Agreement.

 

“Indemnified Person” has the meaning specified therefor in Section 10.3 of the Agreement.

 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria,

 

 

compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

 

“Intercreditor Agreement” means that certain Intercreditor Agreement (as amended, supplemented, modified, extended, restructured, renewed, restated or replaced in whole or in part from time to time, including in connection with any Refinancing Indebtedness), dated as of April 16, 2014 between Agent (on its own behalf and on behalf of the Lenders), Wells Fargo, as administrative agent under the Term Loan Facility Credit Agreement (on its own behalf and on behalf of the lenders under the Term Loan Credit Facility), U.S. Bank National Association, as collateral agent for the Senior Notes (on its own behalf and on behalf of the trustee under the Senior Notes Indenture and the holders of the Senior Notes), Parent Borrower, OpCo Borrower, and the Guarantors.

 

“Interest Expense” means, for any period,

 

(a)           the consolidated interest expense of Parent Borrower and its Restricted Subsidiaries for such period determined in accordance with GAAP, whether paid or accrued (without duplication), including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capitalized Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made or received pursuant to Hedge Obligations relating to interest rates and excluding any non-cash interest expense imputed on any convertible debt securities in accordance with ASC 470-20; plus

 

(b)           the consolidated interest of Parent Borrower and its Restricted Subsidiaries that was capitalized during such period determined in accordance with GAAP; plus

 

(c)           any interest expense on Indebtedness of another Person that is Guaranteed by Parent Borrower or one of its Restricted Subsidiaries or secured by a Lien on assets of Parent Borrower or a Restricted Subsidiary, whether or not such Guarantee or Lien is called upon.

 

“Interest Period” means, with respect to each LIBOR Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, 3, or 6 months thereafter; provided, that (a) interest shall accrue at the applicable rate based upon the LIBOR Rate from and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (b) any Interest Period that would end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day, (c) with respect to an Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period), the Interest Period shall end on the last Business Day of the calendar month that is 1, 3 or 6 months after the date on which the Interest Period began, as applicable, and (d) Borrowers may not elect an Interest Period which will end after the Maturity Date.

 

“Inventory” means inventory (as that term is defined in the Code).

 

 

“Inventory Reserves” means, as of any date of determination, (a) Landlord Reserves,  (b) those reserves that Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c), to establish and maintain (including reserves for slow moving Inventory and Inventory shrinkage) with respect to Eligible Inventory or the Maximum Revolver Amount, and (c) with respect to Eligible In-Transit Inventory, those reserves that Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c), to establish and maintain with respect to Eligible In-Transit Inventory or the Maximum Revolver Amount (i) for the estimated costs relating to unpaid freight charges, warehousing or storage charges, taxes, duties, and other similar unpaid costs associated with the acquisition of such Eligible In-Transit Inventory, plus (ii) for the estimated reclamation claims of unpaid sellers of such Eligible In-Transit Inventory.

 

“Investment” means, with respect to any Person, all direct or indirect investments in such Person in the form of loans or other extensions of credit (including Guarantees), advances, capital contributions (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by such Person, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.

 

If Parent Borrower or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, Parent Borrower will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Investment in such Subsidiary not sold or disposed of.  The acquisition by Parent Borrower or any Restricted Subsidiary of a Person that becomes a Restricted Subsidiary and holds an Investment in a third Person will be deemed to be an Investment by Parent Borrower or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investment held by the acquired Person in such third Person at the time such Person becomes a Restricted Subsidiary unless such Investment in such third party was not made in anticipation or contemplation of the Investment by Parent Borrower or such Restricted Subsidiary and such third party Investment is incidental to the primary business of such Person in whom the Parent Borrower or such Restricted Subsidiary is making such Investment.

 

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

 

“IRS” means the United States Internal Revenue Service.

 

“ISP” means, with respect to any Letter of Credit, the International Standby Practices 1998 (International Chamber of Commerce Publication No. 590) and any version or revision thereof accepted by the Issuing Bank for use.

 

“Issuer Document” means, with respect to any Letter of Credit, a letter of credit application, a letter of credit agreement, or any other document, agreement or instrument entered into (or to be entered into) by a Borrower in favor of Issuing Bank and relating to such Letter of Credit.

 

 

“Issuing Bank” means Wells Fargo, any other Lender (or an Affiliate thereof) or, upon notice to the Agent, any other Person that, at the request of Borrowers agrees, in such Lender’s (or such Affiliate’s) sole discretion, to become an Issuing Bank under Section 2.11 of the Agreement.

 

“Book Runner” means Wells Fargo Bank, National Association, in its capacity as book runner.

 

“Joint Marketing Arrangement” means any joint venture, partnership, lease, joint marketing agreement, operating agreement or other arrangement (which may or may not include joint ownership of any Person) pursuant to which Parent Borrower or one of its Restricted Subsidiaries arrange for the marketing, lease or sale of products and services constituting a Permitted Business and share in the profits therefrom.

 

“Landlord Reserve” means, as to each location at which a Borrower has Inventory or books and records located and as to which a Collateral Access Agreement has not been received by Agent, a reserve in an amount equal to 3 months’ rent under the lease relative to such location.

 

“Lead Arranger” means Wells Fargo Bank, National Association, in its capacity as sole lead arranger.

 

“Lease Accounting Change” means an Accounting Change that requires all leases of Parent Borrower and the Restricted Subsidiaries (regardless of type) to be recorded as a liability on the balance sheet of Parent Borrower for financial reporting purposes in accordance with GAAP.

 

“Lease Accounting Change Effective Date” means the effective date of the Lease Accounting Change as prescribed by the Financial Accounting Standards Board, which date for purposes of Parent Borrower is anticipated as of the Closing Date to be January 1, 2019 (but remains subject to change).

 

“Lender” has the meaning set forth in the preamble to the Agreement, shall include Issuing Bank and the Swing Lender, and shall also include any other Person made a party to the Agreement pursuant to the provisions of Section 13.1 of the Agreement and “Lenders” means each of the Lenders or any one or more of them.

 

“Lender Group” means each of the Lenders (including Issuing Bank and the Swing Lender) and Agent, or any one or more of them.

 

“Lender Group Expenses” means (a) all costs or expenses (including insurance premiums) required to be paid by any Borrower or any of the other Loan Parties under any of the Loan Documents that are paid, advanced, or incurred by the Lender Group (other than those Taxes that are governed by Section 16), (b) reasonable, documented out-of-pocket fees or charges paid or incurred by Agent in connection with the Lender Group’s transactions with each Borrower and the other Loan Parties under any of the Loan Documents, including, photocopying, notarization, couriers and messengers, telecommunication, public record searches, filing fees, recording fees, publication, real estate surveys, real estate title policies and endorsements, and environmental audits, (c) Agent’s customary fees and charges imposed or incurred in connection with any background checks or OFAC/PEP searches related to any Borrower or any of the other Loan Parties, (d) Agent’s customary fees and charges (as adjusted from time to time) with respect to the

 

 

disbursement of funds (or the receipt of funds) to or for the account of any Borrower (whether by wire transfer or otherwise), together with any out-of-pocket costs and expenses incurred in connection therewith, (e) customary charges imposed or incurred by Agent resulting from the dishonor of checks payable by or to any Loan Party, (f) reasonable, documented out-of-pocket costs and expenses paid or incurred by the Lender Group to correct any default or enforce any provision of the Loan Documents, or during the continuance of an Event of Default, in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (g) field examination, appraisal, and valuation fees and expenses of Agent related to any field examinations, appraisals, or valuation to the extent of the fees and charges (and up to the amount of any limitation) provided in Section 2.10 of the Agreement, (h) Agent’s reasonable, documented out-of-pocket costs and expenses (including the reasonable and documented fees, charges and disbursements of two firms of counsel for the Agent and the Lenders, taken as a whole, and one firm of external local counsel for the Agent in any applicable jurisdiction as to which the Agent reasonably determined local counsel is necessary) relative to third party claims or any other lawsuit or adverse proceeding paid or incurred, whether in enforcing or defending the Loan Documents or otherwise in connection with the transactions contemplated by the Loan Documents, Agent’s Liens in and to the Collateral, or the Lender Group’s relationship with any Borrower or any of the other Loan Parties, (i) Agent’s reasonable, documented out-of-pocket costs and expenses (including the reasonable and documented fees, charges and disbursements of two firms of counsel for the Agent and the Lenders, taken as a whole, and one firm of external local counsel for the Agent in any applicable jurisdiction as to which the Agent reasonably determined local counsel is necessary) and due diligence expenses incurred in advising, structuring, drafting, reviewing, administering (including travel, meals, and lodging), syndicating (including reasonable costs and expenses relative to the rating of the Loans, CUSIP, DXSyndicateTM, SyndTrak or other communication costs incurred in connection with a syndication of the loan facilities), or amending, waiving, or modifying the Loan Documents, and (j) Agent’s and each Lender’s reasonable and documented costs and expenses (including reasonable and documented attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants, consultants, and other advisors fees and expenses incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning any Borrower or any of the other Loan Parties or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether a lawsuit or other adverse proceeding is brought, or in taking any enforcement action or any Remedial Action with respect to the Collateral.

 

“Lender Group Representatives” has the meaning specified therefor in Section 17.9 of the Agreement.

 

“Lender-Related Person” means, with respect to any Lender, such Lender, together with such Lender’s Affiliates, officers, directors, employees, attorneys, and agents.

 

“Letter of Credit” means a letter of credit (as that term is defined in the Code) issued by Issuing Bank (including any Existing Letter of Credit).

 

“Letter of Credit Collateralization” means either (a) providing cash collateral (pursuant to documentation reasonably satisfactory to Agent, including provisions that specify that the Letter of Credit Fees and all commissions, fees, charges and expenses provided for in Section 2.11(k) of

 

 

the Agreement (including any fronting fees) will continue to accrue while the Letters of Credit are outstanding) to be held by Agent for the benefit of the Revolving Lenders in an amount equal to 105% of the then existing Letter of Credit Usage, (b) delivering to Agent documentation executed by all beneficiaries under the Letters of Credit, in form and substance reasonably satisfactory to Agent and Issuing Bank, terminating all of such beneficiaries’ rights under the Letters of Credit, or (c) providing Agent with a standby letter of credit, in form and substance reasonably satisfactory to Agent, from a commercial bank acceptable to Agent (in its sole discretion) in an amount equal to 105% of the then existing Letter of Credit Usage (it being understood that the Letter of Credit Fee and all fronting fees set forth in the Agreement will continue to accrue while the Letters of Credit are outstanding and that any such fees that accrue must be an amount that can be drawn under any such standby letter of credit).

 

“Letter of Credit Disbursement” means a payment made by Issuing Bank pursuant to a Letter of Credit.

 

“Letter of Credit Exposure” means, as of any date of determination with respect to any Lender, such Lender’s Pro Rata Share of the Letter of Credit Usage on such date.

 

“Letter of Credit Fee” has the meaning specified therefor in Section 2.6(b) of the Agreement.

 

“Letter of Credit Indemnified Costs” has the meaning specified therefor in Section 2.11(f) of the Agreement.

 

“Letter of Credit Related Person” has the meaning specified therefor in Section 2.11(f) of the Agreement.

 

“Letter of Credit Usage” means, as of any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit.

 

“LIBOR Deadline” has the meaning specified therefor in Section 2.12(b)(i) of the Agreement.

 

“LIBOR Notice” means a written notice in the form of Exhibit L-1 to the Agreement.

 

“LIBOR Option” has the meaning specified therefor in Section 2.12(a) of the Agreement.

 

“LIBOR Rate” means the rate per annum as published by ICE Benchmark Administration Limited (or any successor page or other commercially available source as the Agent may designate from time to time) as of 11:00 a.m., London time, two Business Days prior to the commencement of the requested Interest Period, for a term, and in an amount, comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrowers in accordance with this Agreement (and, if any such published rate is below zero, then the rate determined pursuant to this clause (b) shall be deemed to be zero). Each determination of the LIBOR Rate shall be made by the Agent and shall be conclusive in the absence of manifest error.

 

 

“LIBOR Rate Loan” means each portion of a Revolving Loan that bears interest at a rate determined by reference to the LIBOR Rate.

 

“LIBOR Rate Margin” has the meaning set forth in the definition of Applicable Margin.

 

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Code (or equivalent statutes) of any jurisdiction.

 

“Line Cap” means, at any time of determination, the lesser of (a) the Maximum Revolver Amount and (b) the Borrowing Base, in each case, as of such date of determination.

 

“Liquid Securities” means securities (a) of an issuer that is not an Affiliate of Parent Borrower, (b) that are publicly traded on the New York Stock Exchange or the Nasdaq Global Select Market with a minimum market capitalization of $500.0 million at the time of acquisition and (c) as to which Parent Borrower is not subject to any restrictions on sale or transfer (including any volume restrictions under Rule 144 under the Securities Act or any other restrictions imposed by the Securities Act) or as to which a registration statement under the Securities Act covering the resale thereof is in effect for as long as the securities are held; provided that securities meeting the requirements of clauses (a), (b) and (c) above shall be treated as Liquid Securities from the date of receipt thereof until and only until the earlier of (i) the date on which such securities are sold or exchanged for cash or Cash Equivalents and (ii) 180 days following the date of receipt of such securities.  If such securities are not sold or exchanged for cash or Cash Equivalents within 180 days of receipt thereof, for purposes of determining whether the transaction pursuant to which Parent Borrower or a Restricted Subsidiary received the securities was in compliance with the provisions of Section 6.4, such securities shall be deemed not to have been Liquid Securities at any time.

 

“Loan” means any Revolving Loan, Swing Loan or Extraordinary Advance made (or to be made) hereunder.

 

“Loan Account” has the meaning specified therefor in Section 2.9 of the Agreement.

 

“Loan Documents” means the Agreement, the Control Agreements, the Copyright Security Agreement, any Borrowing Base Certificate, the Fee Letter, the Guaranty and Security Agreement, any Issuer Documents, the Letters of Credit, the Trademark Security Agreement, any note or notes executed by Borrowers in connection with the Agreement and payable to any member of the Lender Group, and any other instrument or agreement entered into, now or in the future, by  any Borrower or any of its Subsidiaries and any member of the Lender Group in connection with the Agreement.

 

“Loan Party” means any Borrower or any Guarantor.

 

“Margin Stock” as defined in Regulation U of the Board of Governors as in effect from time to time.

 

 

“Material Adverse Effect” means (a) a material adverse effect on the business, assets, results of operations or financial condition of Parent Borrower and its Restricted Subsidiaries taken as a whole or that would materially adversely affect the ability of the Loan Parties, taken as a whole, to perform their material obligations under the Loan Documents, (b) a material impairment of the Lender Group’s ability to enforce the Obligations or realize upon the Collateral (other than as a result of as a result of an action taken or not taken that is solely in the control of Agent), or (c) a material impairment of the enforceability or priority of Agent’s Liens with respect to all or a material portion of the Collateral.

 

“Maturity Date” means, as of any date of determination the earlier of (a) five years after the Closing Date, (b) 90 days prior to the stated maturity date of the Term Loan Facility as in effect at such date and (c) 90 days prior to the stated maturity date of the Senior Notes as in effect at such date.

 

“Maximum Revolver Amount” means $250,000,000, decreased by the amount of reductions in the Revolver Commitments made in accordance with Section 2.4(c) of the Agreement or increased by the amount of Increases made in accordance with Section 2.14 of the Agreement.

 

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any ERISA Affiliate is making, or is accruing an obligation to make, or has accrued an obligation to make contributions within the preceding seven (7) years.

 

“Net Cash Proceeds” means the aggregate proceeds, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not the interest component, thereof), received in Cash Equivalents by Parent Borrower or any Restricted Subsidiary in respect of any sale or disposition by Parent Borrower or any Restricted Subsidiary of assets (including, without limitation, any Cash Equivalents received upon the sale or other disposition of any non-cash consideration received in any sale or disposition of assets), net of (a) the direct costs relating to such sale or disposition of assets, including, without limitation, legal, accounting, investment banking and brokerage fees, and sales commissions, and any relocation expenses incurred as a result thereof, (b) Taxes paid or reasonably estimated to be payable as a result thereof, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, (c) in the case of any sale or disposition of assets by a Restricted Subsidiary, payments to holders of Equity Interests in such Restricted Subsidiary in such capacity (other than such Equity Interests held by Parent Borrower or any Restricted Subsidiary) to the extent that such payment is required to permit the distribution of such proceeds in respect of the Equity Interests in such Restricted Subsidiary held by Parent Borrower or any Restricted Subsidiary and (d) appropriate amounts to be provided by Parent Borrower or the Restricted Subsidiaries as a reserve against liabilities associated with such sale or disposition of assets, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such sale or disposition of assets, all as determined in accordance with GAAP, provided that (i) excess amounts set aside for payment of Taxes pursuant to clause (b) above remaining after

 

 

such Taxes have been paid in full or the statute of limitations therefor has expired and (ii) amounts initially held in reserve pursuant to clause (d) no longer so held, will, in the case of each of subclause (i) and (ii), at that time become Net Cash Proceeds.

 

(a)           with respect to the issuance or incurrence of any Indebtedness by Parent Borrower or any of its Restricted Subsidiaries, or the issuance by Parent Borrower or any of its Restricted Subsidiaries of any Equity Interests, the aggregate amount of cash received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of Parent Borrower or such Restricted Subsidiary in connection with such issuance or incurrence, after deducting therefrom only (i) reasonable and customary out-of-pocket legal, underwriting and other fees and expenses incurred in connection therewith, (ii) Taxes paid or reasonably estimated to be payable by Parent Borrower or any of its Restricted Subsidiaries as a result thereof in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid or payable to a Person that is not an Affiliate of Parent Borrower or any of its Restricted Subsidiaries, and are properly attributable to such transaction.

 

“Net Recovery Percentage” means, as of any date of determination, the percentage of the book value of Borrowers’ Eligible Inventory that is estimated to be recoverable in an orderly liquidation of such Inventory net of all associated costs and expenses of such liquidation, such percentage to be determined as to each category of Inventory and to be as specified in the most recent appraisal received by Agent from an appraisal company selected by Agent.

 

“Non-Consenting Lender” has the meaning specified therefor in Section 14.2(a) of the Agreement.

 

“Non-Defaulting Lender” means each Lender other than a Defaulting Lender.

 

“Notes Collateral” has the meaning specified therefor in the Intercreditor Agreement.

 

“Obligations” means (a) all loans (including the Revolving Loans (inclusive of Extraordinary Advances and Swing Loans)), debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), reimbursement or indemnification obligations with respect to Letters of Credit (irrespective of whether contingent), premiums, liabilities (including all amounts charged to the Loan Account pursuant to the Agreement), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), Lender Group Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, and all covenants and duties of any other kind and description owing by any Loan Party arising out of, under, pursuant to, in connection with, or evidenced by the Agreement or any of the other Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all other expenses or other amounts that Borrowers are required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents,

 

 

and (b) all Bank Product Obligations; provided that, anything to the contrary contained in the foregoing notwithstanding, the Obligations shall exclude any Excluded Hedge Obligation.  Without limiting the generality of the foregoing, the Obligations of Borrowers under the Loan Documents include the obligation to pay (a) the principal of the Revolving Loans, (b) interest accrued on the Revolving Loans, (c) the amount necessary to reimburse Issuing Bank for amounts paid or payable pursuant to Letters of Credit, (d) Letter of Credit commissions, fees (including fronting fees) and charges, (e) Lender Group Expenses, (f) fees payable under the Agreement or any of the other Loan Documents, and (g) indemnities and other amounts payable by any Loan Party under any Loan Document; provided that, in each case, notwithstanding the foregoing and anything to the contrary in any Loan Document, the Obligations of any Loan Party shall not include its Excluded Hedge Obligations.  Any reference in the Agreement or in the Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

 

“OFAC” means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

 

“OpCo Borrower” has the meaning specified therefor in the preamble to the Agreement.

 

“Originating Lender” has the meaning specified therefor in Section 13.1(e) of the Agreement.

 

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

 

“Other Taxes” means all present or future stamp, court, documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.13(c) or Section 14.2).

 

“Overadvance” means, as of any date of determination, that the Revolver Usage is greater than any of the limitations set forth in Section 2.1 or Section 2.11.

 

“Parent Borrower” has the meaning specified therefor in the preamble to the Agreement.

 

“Participant” has the meaning specified therefor in Section 13.1(e) of the Agreement.

 

“Participant Register” has the meaning set forth in Section 13.1(i) of the Agreement.

 

“Patriot Act” has the meaning specified therefor in  Section 4.13 of the Agreement.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.

 

 

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the IRC and which (a) is maintained, funded or administered for the employees of any Loan Party or any ERISA Affiliate or (b) has at any time within the preceding seven (7) years been maintained, funded or administered for the employees of any Loan Party or any current or former ERISA Affiliates.

 

“Perfection Certificate” means a certificate in the form of Exhibit P-1 to the Agreement.

 

“Permitted Acquisition” means any Acquisition so long as:

 

(a)           no Default or Event of Default shall have occurred and be continuing or would result from the consummation of the proposed Acquisition,

 

(b)           no Indebtedness will be incurred, assumed, or would exist with respect to Parent  Borrower or its Restricted Subsidiaries as a result of such Acquisition, other than Permitted Indebtedness and no Liens will be incurred, assumed, or would exist with respect to the assets of Parent Borrower or its Restricted Subsidiaries as a result of such Acquisition other than Permitted Liens,

 

(c)           Borrowers have provided Agent with written notice of the proposed Acquisition at least 10 days prior to the anticipated closing date of the proposed Acquisition and, not later than 2 Business Days prior to the anticipated closing date of the proposed Acquisition, copies of the acquisition agreement and other material documents relative to the proposed Acquisition, which agreement and documents must be reasonably acceptable to Agent,

 

(d)           the assets being acquired (other than a de minimis amount of assets in relation to Parent Borrower’s and its Restricted Subsidiaries’ total assets), or the Person whose Equity Interests are being acquired, are useful in or engaged in, as applicable, a Permitted Business,

 

(e)           the subject assets or Equity Interests, as applicable, are being acquired directly by a Borrower or one of its Restricted Subsidiaries, and, in connection therewith, the applicable Loan Party shall have complied with Section 5.11 or 5.12 of the Agreement, as applicable, of the Agreement and, in the case of an acquisition of Equity Interests, the applicable Loan Party or Restricted Subsidiary shall have demonstrated to Agent that any new Loan Parties (if any) have received consideration sufficient to make the joinder documents binding and enforceable against such new Loan Parties (if any); and

 

(f)            on a pro forma basis, after giving effect to each such acquisition and any Revolving Loans made in connection therewith, either (A) Excess Availability shall not be less than the greater of (1) 20% of the Line Cap and (2) $25,000,000 at any time during the period from the 30th day prior to and including the date of the closing of the acquisition (measured as if such Investment and any Revolving Loans made in connection therewith had been made on the first day of such 30 day period) or (B) (x) Excess Availability shall not be less than the greater of (1) 15% of the Line Cap and (2) $20,000,000 at any time during the period from the 30th day prior to and including the date of the closing of the acquisition (measured as if such Investment and any Revolving Loans made in connection therewith had been made on the first day of such 30 day period) and (y) the Fixed Charge Coverage Ratio for the most recent 12 fiscal month period for which Parent Borrower’s interim financial statements are then required to have been delivered pursuant to

 

 

Section 5.1 is at least 1.0 to 1.0, as calculated on a pro forma basis as if such Investment and any Revolving Loans made in connection therewith were made on the first day of such period.

 

“Permitted Business” means any business conducted or proposed to be conducted by Parent Borrower and the Restricted Subsidiaries on the Closing Date, any other business or businesses in the oilfield services industry and other businesses reasonably related or ancillary thereto or that are reasonable extensions thereof.

 

“Permitted Discretion” means a determination made in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment.

 

“Permitted Dispositions” means:

 

(a)           sales, abandonment, or other dispositions of Equipment that is substantially worn, damaged, or obsolete or no longer used or useful in the ordinary course of business and leases or subleases of Real Property not useful in the conduct of the business of Parent Borrower and its Restricted Subsidiaries,

 

(b)           sales of Inventory to buyers or other sales or dispositions of assets in the ordinary course of business,

 

(c)           the use or transfer of Cash Equivalents in a manner that is not prohibited by the terms of the Agreement or the other Loan Documents,

 

(d)           the licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business,

 

(e)           the granting of Permitted Liens,

 

(f)            the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof,

 

(g)           any involuntary loss, damage or destruction of property,

 

(h)           any involuntary condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, or confiscation or requisition of use of property,

 

(i)            the leasing or subleasing of assets of Parent Borrower or its Restricted Subsidiaries in the ordinary course of business,

 

(j)            the sale or issuance of Equity Interests (other than Disqualified Equity Interests) of  Parent Borrower,

 

(k)           (i) the lapse of registered patents, trademarks, copyrights and other intellectual property of Parent Borrower or any of its Restricted Subsidiaries to the extent not economically desirable in the conduct of its business or (ii) the abandonment of patents, trademarks, copyrights, or other intellectual property rights in the ordinary course of business so long as (in each case

 

 

under subclauses (i) and (ii)), (A) with respect to copyrights, such copyrights are not material revenue generating copyrights, and (B) such lapse is not materially adverse to the interests of the Lender Group,

 

(l)            the making of Restricted Payments that are expressly permitted to be made pursuant to the Agreement,

 

(m)          the making of payments that are expressly permitted to be made pursuant to Section 6.6 of the Agreement,

 

(n)           the making of Permitted Investments,

 

(o)           sales, transfers or dispositions of assets not constituting ABL Collateral by Parent Borrower or any of its Restricted Subsidiaries to any other Restricted Subsidiaries or Parent Borrower,

 

(p)           dispositions of assets acquired by Parent Borrower and its Restricted Subsidiaries pursuant to a Permitted Acquisition consummated within 12 months of the date of the proposed disposition so long as (i) the consideration received for the assets to be so disposed is at least equal to the fair market value of such assets, (ii) the assets to be so disposed are not necessary or economically desirable in connection with the business of Parent Borrower and its Restricted Subsidiaries, and (iii) the assets to be so disposed are readily identifiable as assets acquired pursuant to the subject Permitted Acquisition,

 

(q)           any surrender or waiver of contract rights or the settlement, release or surrender of any contract, tort or other claim of any kind,

 

(r)            any disposition of an asset manufactured or constructed by Parent Borrower or a Restricted Subsidiary for sale to a third party (including a direct or indirect joint venture of Parent Borrower or one or more Restricted Subsidiary) within 90 days of the completion of such manufacture or construction, if (i) Parent Borrower or any Restricted Subsidiary receives value equal to the Fair Market Value of the asset and (ii) the asset is then leased back by Parent Borrower or any Restricted Subsidiary for use in a Permitted Business,

 

(s)            direct or indirect sales of equipment, products and services by Parent Borrower or any of its Restricted Subsidiaries to any direct or indirect joint venture of Parent Borrower or one of its Restricted Subsidiaries at or above the lower of Cost or Fair Market Value;

 

(t)            sales, transfers or dispositions of assets (other than ABL Collateral) not otherwise permitted in clauses (a) through (s) above so long as:

 

(i)            Parent Borrower (or such Restricted Subsidiary, as the case may be) receives consideration at the time of such sale or at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and

 

(ii)           at least 75% of the consideration therefor received by Parent Borrower or such Restricted Subsidiary is in the form of:

 

 

(A)          Cash Equivalents (including any Cash Equivalents received from the conversion within 60 days of such sale, transfer or disposition of any securities, notes or other obligations received in consideration of such sale, transfer or disposition) or Liquid Securities;

 

(B)          Replacement Assets;

 

(C)          any liabilities of Parent Borrower or any Restricted Subsidiary as shown on the most recent balance sheet of Parent Borrower or such Restricted Subsidiary (other than contingent liabilities, Indebtedness that is by its terms subordinated in right of payment to the Loans and liabilities to the extent owed to Parent Borrower or any Affiliate of Parent Borrower) that are assumed by the transferee of any such assets or Equity Interests and for which Parent Borrower and all of the Restricted Subsidiaries have been validly released by all creditors in writing;

 

(D)          any Designated Non-cash Consideration received by Parent Borrower or any of its Restricted Subsidiaries in such sale, transfer or disposition having an aggregate Fair Market Value, taken together with all other Designated Non-cash Consideration received since the Closing Date does not exceed 10.0% of Consolidated Total Assets at the time of the receipt of such Designated Non-cash Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value); and/or

 

(E)           any combination of the consideration specified in clauses (A)-(D); and

 

(u)           sales, transfers or dispositions of assets constituting ABL Collateral not otherwise permitted in clauses (a) through (t) above in an aggregate amount not to exceed $10,000,000 for each calendar year.

 

“Permitted Holder” means Temasek and Chesapeake.

 

“Permitted Indebtedness” means:

 

(a)           Indebtedness evidenced by the Agreement or the other Loan Documents,

 

(b)           (i) Indebtedness incurred by Parent Borrower under the Term Loan Facility on the 2014 Closing Date in an aggregate principal amount of $550,000,000 and the related Guarantees by the relevant guarantors thereof, (ii) additional Indebtedness incurred by Parent Borrower in the form of one or more Incremental Term Loans (as such term is defined and used in the Term Loan Facility) under the Term Loan Facility and the related Guarantees by the relevant guarantors thereof; provided, that, with respect to the incurrence of each such Incremental Term Loan, (A) the aggregate original principal amount of such Incremental Term Loan, when added to the original principal amount of all other Incremental Term Loans, shall not exceed $300,000,000 unless, at the time such Incremental Term Loan is incurred, the Senior Secured Net Leverage Ratio (determined on a pro forma basis for the most recently ended four fiscal quarter period ending at

 

 

least 45 days before the date such Incremental Term Loan is incurred and giving effect to such Incremental Term Loan as if it were incurred on the last day of such period) is less than or equal to 4.00 to 1.00; (B) such Incremental Term Loan is incurred in accordance with the terms and provisions of the Term Loan Facility Credit Agreement; and (C) such Incremental Term Loan is subject to the Intercreditor Agreement to the same extent and manner as the original loans made under the Term Loan Facility and (iii) Refinancing Indebtedness in respect of the Indebtedness in subclauses (i) and (ii) of this clause (b) whether in a single tranche or multiple tranches of Refinancing Indebtedness,

 

(c)           Indebtedness under the Senior Notes and the Senior Notes Indenture incurred by Parent Borrower and the related Guarantees by the relevant guarantors thereof, in each case incurred under and in accordance with the provisions of the Senior Notes Indenture, so long as (i) the aggregate principal amount of the Senior Notes does not exceed (A) the $500,000,000 aggregate principal amount of Senior Notes issued on the 2014 Closing Date plus (B) an unlimited additional amount of Senior Notes, so long as, on the date of issuance, the Senior Secured Net Leverage Ratio (determined on a pro forma basis for the most recently ended four fiscal quarter period ending at least 45 days before the date such additional Senior Notes are issued and giving effect to such additional Senior Notes as if they were incurred on the last day of such period) is less than or equal to 4.00 to 1.00 and (ii) all such Senior Notes are subject to the Intercreditor Agreement to the same extent and manner as the original Senior Notes issued on the 2014 Closing Date, and Refinancing Indebtedness in respect of all such Indebtedness described in this clause (c) whether in a single tranche or multiple tranches of Refinancing Indebtedness,

 

(d)           Indebtedness of each Loan Party and each of its Restricted Subsidiaries outstanding immediately prior to the Closing Date that is to remain outstanding immediately after giving effect to the closing hereunder on the Closing Date and set forth on Schedule 6.1 to the Agreement, and any Refinancing Indebtedness in respect of such Indebtedness,

 

(e)           Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in respect of such Indebtedness, in an aggregate outstanding principal amount not to exceed the greater of (i) $100,000,000 or (ii) 5.0% of Consolidated Tangible Assets of Parent Borrower at the time of the incurrence of such Indebtedness, provided, that the aggregate outstanding principal amount of Indebtedness incurred under this clause (e), when taken together with the principal amount of all other Indebtedness incurred under clause (p) of this definition then outstanding, shall not exceed the greater of (x) $125,000,000 or (y) 5.0% of Consolidated Tangible Assets of Parent Borrower at the time of the incurrence of such Indebtedness,

 

(f)            endorsement of instruments or other payment items for deposit in the ordinary course of business,

 

(g)           Indebtedness in respect of workers’ compensation claims, self-insurance obligations or the financing of insurance premiums or participation in insurance pools, or in respect of performance, surety, completion, and similar bonds and guarantees in the ordinary course of business, and appeal and similar bonds and guarantees provided or obtained by Parent Borrower or a Restricted Subsidiary in connection with its business,

 

 

(h)           Indebtedness arising from agreements of Parent Borrower or a Restricted Subsidiary providing for indemnification, earn-outs, adjustment of purchase price or similar obligations (including Indebtedness in respect of letters of credit or bonds securing the foregoing), in each case, Incurred or assumed in connection with a Permitted Acquisition or Permitted Disposition with respect to a Restricted Subsidiary (other than Guarantees of Indebtedness incurred by any person acquiring all or any portion of such business, assets or Equity Interests of a Restricted Subsidiary for the purpose of financing such acquisition); provided that, in the case of a disposition, the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by Parent Borrower and its Restricted Subsidiaries in connection with such disposition,

 

(i)            Indebtedness consisting of unsecured guarantees with respect to Indebtedness of any Borrower or one of its Subsidiaries, to the extent that the Person that is obligated under such guaranty could have incurred such underlying Indebtedness,

 

(j)            Acquired Indebtedness; provided, however, that at the time such Person is acquired in a Permitted Acquisition, either:

 

(i)            Parent Borrower would have been able to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of Section 9.1 of the Term Loan Facility Credit Agreement as in effect on the Closing Date after giving effect to the incurrence or such Indebtedness pursuant to this clause (j), or

 

(ii)           the Fixed Charge Coverage Ratio of Parent Borrower and its Restricted Subsidiaries after giving effect to the incurrence of such Indebtedness pursuant to this clause (j) would have been higher than such ratio immediately prior to such Permitted Acquisition,

 

(k)           Indebtedness for Hedge Obligations that are entered into for the purpose of fixing, hedging or swapping interest rate risk, commodity price or basis risk, or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purpose) and not for speculative purposes; provided that in the case of Hedge Obligations relating to interest rates, (i) such Hedge Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred under this definition, and (ii) the notional principal amount of such Hedge Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedge Obligations relate,

 

(l)            Indebtedness incurred in the ordinary course of business in respect of credit cards, credit card processing services, debit cards, stored value cards, commercial cards (including so-called “purchase cards”, “procurement cards” or “p-cards”), or Cash Management Services,

 

(m)          Indebtedness comprising Permitted Investments,

 

(n)           Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five business days after incurrence,

 

 

(o)           Indebtedness constituting reimbursement obligations with respect to letters of credit; provided that such obligations under any letter of credit are reimbursed within 30 days after the drawing of such letter of credit,

 

(p)           Indebtedness not secured by a Lien on ABL Collateral incurred by Parent Borrower or any of its Restricted Subsidiaries in an aggregate outstanding principal amount not to exceed the greater of (i) $100,000,000 or (ii) 5.0% of Consolidated Tangible Assets of Parent Borrower at the time of the incurrence of such Indebtedness, provided, that the aggregate outstanding principal amount of Indebtedness incurred under this clause (p), when taken together with the principal amount of all other Indebtedness incurred under clause (e) of this definition then outstanding, shall not exceed the greater of (x) $125,000,000 or (y) 5.0% of Consolidated Tangible Assets of Parent Borrower at the time of the incurrence of such Indebtedness,

 

(q)           other Indebtedness (not secured by a Lien on ABL Collateral) not described in the foregoing clauses (a) through (p) and (r) through (t), so long as (i) no Default or Event of Default exists at the time such Indebtedness is incurred or after giving effect thereto; (ii) the stated maturity date of such Indebtedness is at least 181 days after the Maturity Date stated in the Agreement on the date such Indebtedness was incurred; (iii) such Indebtedness has nominal amortization (similar to the amortization of the original Indebtedness incurred under the Term Loan Facility and otherwise acceptable to the Agent) through the period ending with the date which is 181 days after the Maturity Date stated in the Agreement on the date such Indebtedness was incurred; (iv) no Persons are obligated with respect to such Indebtedness (whether as a co-borrower, a guarantor, a grantor or pledgor, or otherwise), unless such Persons become (substantially simultaneously with such Person’s becoming so obligated with respect to such Indebtedness or at such a later time as Agent may permit in its sole discretion) obligated with respect to the Obligations in the same manner in which such Person is obligated with respect to such Indebtedness or in such other manner and to such extent as Agent may require; (v) the terms and provisions relating to such Indebtedness are, on the whole, no more restrictive than the terms and provisions of the Agreement and the other Loan Documents (as applicable); and (vi) Parent Borrower would have been able to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of Section 9.1 of the Term Loan Facility Credit Agreement as in effect on the Closing Date after giving effect to the incurrence or such Indebtedness pursuant to this clause (q);

 

(r)            Indebtedness, including Guarantees, incurred by Foreign Subsidiaries to fund working capital requirements in an aggregate principal amount that when taken together with the principal amount of all other Indebtedness, including all Permitted Refinancing Indebtedness incurred to Refinance any Indebtedness incurred pursuant to this clause (r), will not exceed 10.0% of Consolidated Tangible Assets attributable to Foreign Subsidiaries;

 

(s)            Indebtedness of Parent Borrower owing to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by Parent Borrower or any other Restricted Subsidiary; provided, however, that:

 

(i)            if a Borrower is the obligor on such Indebtedness, such Indebtedness is unsecured and expressly subordinated to the prior payment in full of all Obligations;

 

 

(ii)           if a Guarantor is the obligor on such Indebtedness and a Borrower or a Guarantor is not the obligee, such Indebtedness is unsecured and subordinated in right of payment to the prior payment in full in cash of all Obligations; and

 

(iii)          any event that results in any such Indebtedness being held by a Person other than Parent Borrower or a Restricted Subsidiary (except for any pledgee of Indebtedness whose Lien is a Permitted Lien until the pledgee commences action to foreclose on such Indebtedness) will be deemed to constitute an Incurrence of such Indebtedness by Parent Borrower or such Restricted Subsidiary, as the case may be, that is not permitted by this clause (s); and

 

(t)            Contingent Obligations of Parent Borrower and the Restricted Subsidiaries in respect of Indebtedness otherwise permitted under clauses (a) through (s).

 

“Permitted Intercompany Advances” means loans made by a Loan Party or any Restricted Subsidiary to another Loan Party or any Restricted Subsidiary.

 

“Permitted Investments” means:

 

(a)           Investments in Cash Equivalents,

 

(b)           Investments in negotiable instruments deposited or to be deposited for collection in the ordinary course of business,

 

(c)           advances made in connection with purchases of goods or services in the ordinary course of business,

 

(d)           Investments received in settlement of amounts due to any Loan Party or any of its Subsidiaries effected in the ordinary course of business or owing to any Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings involving an account debtor or upon the foreclosure or enforcement of any Lien in favor of a Loan Party or its Subsidiaries,

 

(e)           Investments owned by any Loan Party or any of its Subsidiaries on the Closing Date and set forth on Schedule P-1 to the Agreement, and any Investment that replaces, refinances or refunds any existing Investment, provided that the new Investment is in an amount that does not exceed the amount replaced, refinanced or refunded, and is made in the same Person as the Investment being replaced, financed or refunded,

 

(f)            Guarantees permitted under the definition of Permitted Indebtedness,

 

(g)           Permitted Intercompany Advances,

 

(h)           Equity Interests or other securities acquired in connection with the satisfaction or enforcement of Indebtedness or claims due or owing to a Loan Party or its Subsidiaries (in bankruptcy of customers or suppliers or otherwise outside the ordinary course of business) or as security for any such Indebtedness or claims,

 

 

(i)            deposits of Cash Equivalents made in the ordinary course of business to secure performance of operating leases,

 

(j)            (i) non-cash loans and advances to employees, officers, and directors of  Parent Borrower or any of its Restricted Subsidiaries for the purpose of purchasing Equity Interests in  Parent Borrower so long as the proceeds of such loans are used in their entirety to purchase such Equity Interests in  Parent Borrower, and (ii) loans and advances to employees and officers of Parent Borrower or any of its Restricted Subsidiaries in the ordinary course of business for any other business purpose,

 

(k)           Permitted Acquisitions,

 

(l)            Investments in the form of capital contributions and the acquisition of Equity Interests made by any Loan Party or any Restricted Subsidiary in any other Loan Party or other Restricted Subsidiary (other than capital contributions to or the acquisition of Equity Interests of Parent Borrower),

 

(m)          Investments resulting from entering into (i) Bank Product Agreements, or (ii) agreements relative to Indebtedness that is permitted under clause (k) of the definition of Permitted Indebtedness,

 

(n)           Investments held by a Person acquired in a Permitted Acquisition to the extent that such Investments were not made in contemplation of or in connection with such Permitted Acquisition and were in existence on the date of such Permitted Acquisition,

 

(o)           Permitted Joint Venture Investments and Joint Marketing Arrangements entered into by Parent Borrower and its Restricted Subsidiaries in an aggregate amount (measured on the date on which each such Investment was made and without giving effect to subsequent changes of value) that, when taken together with all other Investments pursuant to this clause (o), do not exceed $50,000,000 outstanding at any time,

 

(p)           Investments acquired in exchange for, or out of the proceeds from the issuance or sale of, Equity Interests in Parent Borrower (excluding Disqualified Equity Interests),

 

(q)           any Investment made as a result of the receipt of non-cash consideration from a Permitted Disposition,

 

(r)            Investments consisting of advances or deposits in the ordinary course of business that are, in conformity with GAAP, recorded as accounts receivable, prepaid expenses or deposits on the balance sheet of Parent Borrower or any of the Restricted Subsidiaries and endorsements for collection or deposit arising in the ordinary course of business,

 

(s)            other Investments, so long as (i) each such Investment is permitted by law and no Default or Event of Default shall have occurred and be continuing or would result therefrom, (ii) on a pro forma basis, after giving effect to each such Investment and any Revolving Loans made in connection therewith, either (A) Excess Availability shall not be less than the greater of (x) $25,000,000 and (y) 20.0% of the Line Cap at any time during the period from the 30th day prior to the making of such Investment through and including the date of the making of such Investment

 

 

(measured as if such Investment and any Revolving Loans made in connection therewith had been made on the first day of such 30 day period), or (B)(1) Excess Availability shall not be less than the greater of (x) $20,000,000 and (y) 15.0% of the Line Cap at any time during the period from the 30th day prior to the making of such Investment through and including the date of the making of such Investment (measured as if such Investment and any Revolving Loans made in connection therewith had been made on the first day of such 30 day period), and (2) the Fixed Charge Coverage Ratio for the most recent 12 fiscal month period for which Parent Borrower’s interim financial statements are then required to have been delivered pursuant to Section 5.1 is at least 1.0 to 1.0, as calculated on a pro forma basis as if such Investment and any Revolving Loans made in connection therewith were made on the first day of such period, and (iii) on or prior to the date of each such Investment, Borrowers shall have delivered to Agent an officer’s certificate from an Authorized Person as to the satisfaction of all conditions set forth above, and

 

(t)            so long as no Event of Default has occurred and is continuing or would result therefrom, in each case, at the time such Investment is made, any other Investments in an aggregate amount not to exceed $25,000,000 outstanding at any time.

 

“Permitted Joint Venture Investment” means a direct or indirect Investment by Parent Borrower or a Restricted Subsidiary in any other Person engaged in a Permitted Business (a) over which Parent Borrower or a Restricted Subsidiary is responsible (either directly or indirectly through Unrestricted Subsidiaries or a services agreement) for day-to-day operations or otherwise has operational and managerial control of such Permitted Business, or veto power over significant management decisions affecting such Permitted Business, and (b) of which at least 30% of the outstanding Equity Interests of such other Person are at the time owned directly or indirectly by Parent Borrower or a Restricted Subsidiary.

 

“Permitted Liens” means:

 

(a)           Liens granted to, or for the benefit of, Agent to secure the Obligations,

 

(b)           Liens securing Indebtedness permitted to be incurred pursuant to clauses (b) and (c) of the definition of “Permitted Indebtedness” and Refinancing Indebtedness in respect thereof; provided that any such Indebtedness secured by a Lien on Collateral must be expressly subject to the terms of the Intercreditor Agreement to the same extent and manner as the original loans made under the Term Loan Facility or Senior Notes made under the Senior Notes Indenture or another intercreditor agreement on terms satisfactory to the Agent in its Permitted Discretion,

 

(c)           Liens for unpaid Taxes, assessments, or other governmental charges or levies that either (i) are not yet delinquent or (ii) are the subject of Permitted Protests,

 

(d)           judgment Liens arising solely as a result of the existence of judgments, orders, or awards that do not constitute an Event of Default under Section 8.3 of the Agreement and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made,

 

(e)           Liens set forth on Schedule P-2 to the Agreement; provided, that to qualify as a Permitted Lien, any such Lien described on Schedule P-2 to the Agreement shall only secure the

 

 

Indebtedness that it secures on the Closing Date and any Refinancing Indebtedness in respect thereof,

 

(f)            leases, licenses, subleases and sublicenses of assets (including, without limitation, real property, mineral rights and intellectual property rights) which do not materially interfere with the ordinary conduct of the business of Parent Borrower or any of its Restricted Subsidiaries, and Liens created by Persons who are lessors of property to Parent Borrower or any of its Restricted Subsidiaries,

 

(g)           purchase money Liens or the interests of lessors under Capital Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as (i) such Lien attaches only to the asset purchased or acquired and the proceeds thereof, and (ii) such Lien only secures the Indebtedness that was incurred to acquire the asset purchased or acquired or any Refinancing Indebtedness in respect thereof,

 

(h)           Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests,

 

(i)            Liens on amounts deposited to secure Parent Borrower’s and its Restricted Subsidiaries’ obligations in connection with worker’s compensation or other unemployment insurance,

 

(j)            Liens on amounts deposited to secure Parent Borrower’s and its Restricted Subsidiaries’ obligations in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money,

 

(k)           Liens on amounts deposited to secure Parent Borrower’s and its Restricted Subsidiaries’ reimbursement obligations with respect to surety or appeal bonds obtained in the ordinary course of business,

 

(l)            with respect to any Real Property, survey exceptions, encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not individually or in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person,

 

(m)          Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is the subject of permitted Refinancing Indebtedness and so long as the replacement Liens only encumber those assets that secured the original Indebtedness,

 

(n)           rights of setoff or bankers’ liens upon deposits of funds in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such Deposit Accounts in the ordinary course of business,

 

 

(o)           Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance premiums to the extent the financing is permitted under the definition of Permitted Indebtedness,

 

(p)           Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods,

 

(q)           Liens solely on any cash earnest money deposits made by  Parent Borrower or any of its Restricted Subsidiaries in connection with any letter of intent or purchase agreement with respect to a Permitted Acquisition,

 

(r)            Liens securing Indebtedness permitted to be incurred pursuant to clause (k) of the definition of Permitted Indebtedness,

 

(s)            Liens arising from Code financing statement filings regarding operating leases, bailments and other transactions that do not involve security interests or that are not intended to perfect a security interest securing any Indebtedness,

 

(t)            Liens securing Indebtedness or other obligations of Parent Borrower or a Restricted Subsidiary owing to a Loan Party,

 

(u)           Liens on the Equity Interests of Unrestricted Subsidiaries,

 

(v)           any encumbrance or restriction (including put and call arrangements) with respect to Equity Interests of any joint venture or similar arrangement pursuant to any joint venture or similar agreement,

 

(w)          Liens securing reimbursement obligations with respect to commercial letters of credit that encumber documents and other property or assets relating to such letters of credit and products and proceeds thereof,

 

(x)           Environmental Liens that are subject of Permitted Protests,

 

(y)           Liens assumed by Parent Borrower or its Restricted Subsidiaries in connection with a Permitted Acquisition that secure Acquired Indebtedness in an aggregate principal amount outstanding at any one time not to exceed $50,000,000; provided, that such Liens are not first-priority Liens on assets constituting ABL Collateral, and

 

(z)           Liens on assets not constituting ABL Collateral securing Indebtedness in an aggregate principal amount outstanding at any one time not to exceed the greater of (i) $50,000,000 and (ii) 5.0% of Consolidated Tangible Assets of Parent Borrower (with the Fair Market Value of each item of designated non-cash consideration being measured at the time received and without giving effect to subsequent changes in value).

 

“Permitted Protest” means the right of Parent Borrower or any of its Restricted Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), Taxes, or rental payment, provided that (a) a reserve with respect to such obligation is established on Parent Borrower’s or its Restricted Subsidiaries’ books and records in such amount as is required under GAAP, (b) any

 

 

such protest is conducted through appropriate proceedings by Parent Borrower or such Restricted Subsidiary, as applicable, in good faith, and (c) Agent is satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of Agent’s Liens on the ABL Collateral.

 

“Permitted Purchase Money Indebtedness” means, as of any date of determination, Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.

 

“Person” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.

 

“Platform” has the meaning specified therefor in Section 17.9(c) of the Agreement.

 

“Post-Increase Revolver Lenders” has the meaning specified therefor in Section 2.14 of the Agreement.

 

“Pre-Increase Revolver Lenders” has the meaning specified therefor in Section 2.14 of the Agreement.

 

“Preferred Stock” means, with respect to any Person, any Equity Interests of such Person that has preferential rights to any other Equity Interests of such Person with respect to dividends or redemptions upon liquidation.

 

“Pro Rata Share” means, as of any date of determination:

 

(a)           with respect to a Lender’s obligation to make all or a portion of the Revolving Loans, with respect to such Lender’s right to receive payments of interest, fees, and principal with respect to the Revolving Loans, and with respect to all other computations and other matters related to the Revolver Commitments or the Revolving Loans, the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of all Lenders,

 

(b)           with respect to a Lender’s obligation to participate in the Letters of Credit, with respect to such Lender’s obligation to reimburse Issuing Bank, and with respect to such Lender’s right to receive payments of Letter of Credit Fees, and with respect to all other computations and other matters related to the Letters of Credit, the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender by (ii) the aggregate Revolving Loan Exposure of all Lenders; provided, that if all of the Revolving Loans have been repaid in full and all Revolver Commitments have been terminated, but Letters of Credit remain outstanding, Pro Rata Share under this clause shall be the percentage obtained by dividing (A) the Letter of Credit Exposure of such Lender, by (B) the Letter of Credit Exposure of all Lenders, and

 

(c)           with respect to all other matters and for all other matters as to a particular Lender (including the indemnification obligations arising under Section 15.7 of this Agreement), the

 

 

percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender, by (ii) the aggregate Revolving Loan Exposure of all Lenders, in any such case as the applicable percentage may be adjusted by assignments permitted pursuant to Section 13.1; provided, that if all of the Loans have been repaid in full and all Commitments have been terminated, Pro Rata Share under this clause shall be the percentage obtained by dividing (A) the Letter of Credit Exposure of such Lender, by (B) the Letter of Credit Exposure of all Lenders.

 

“Projections” means Parent Borrower’s forecasted consolidated (a) balance sheets, (b) income statements, and (c) cash flow statements, all prepared on a basis consistent with Parent Borrower’s historical financial statements, together with appropriate supporting details and a statement of underlying assumptions.

 

“Protective Advances” has the meaning specified therefor in Section 2.3(d)(i) of the Agreement.

 

“Public Lender” has the meaning specified therefor in Section 17.9(c) of the Agreement.

 

“Purchase Price” means, with respect to any Acquisition, an amount equal to the aggregate consideration, whether cash, property or securities (including the Fair Market Value of any Equity Interests of Parent Borrower issued in connection with such Acquisition and including the maximum amount of earn-outs), paid or delivered by a Borrower or one of its Restricted Subsidiaries in connection with such Acquisition (whether paid at the closing thereof or payable thereafter and whether fixed or contingent), but excluding therefrom (a) any cash of the seller and its Affiliates used to fund any portion of such consideration and (b) any Cash Equivalents acquired in connection with such Acquisition.

 

“Qualified Cash” means, as of any date of determination, the amount of unrestricted, domestic cash of the Loan Parties that is in Deposit Accounts and which such Deposit Account is the subject of a Control Agreement and is maintained by a branch office of the Agent located within the United States.

 

“Real Property” means any estates or interests in real property now owned or hereafter acquired by  any Borrower or one of its Restricted Subsidiaries and the improvements thereto.

 

“Receivable Reserves” means, as of any date of determination, those reserves that Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c), to establish and maintain (including reserves for rebates, discounts, warranty claims, and returns) with respect to the Eligible Accounts, Eligible Unbilled Accounts or the Maximum Revolver Amount.

 

“Recipient” means (a) Agent, (b) any Lender, (c) any Issuing Bank, and (d) any Swing Lender, as applicable.

 

“Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

 

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, replace, repay, prepay, purchase, redeem, defease or retire, or to issue other Indebtedness in

 

 

exchange or replacement for, such Indebtedness.  “Refinanced” and “Refinancing” shall have correlative meanings.

 

“Refinancing Indebtedness” means any Indebtedness of Parent Borrower or any Restricted Subsidiary issued in exchange for, or the net cash proceeds of which are used to Refinance other Indebtedness of Parent Borrower or any Restricted Subsidiary (other than Indebtedness owed to the Issuer or to any Subsidiary of the Issuer); provided that:

 

(a)           the amount of such Refinancing Indebtedness does not exceed the amount of the Indebtedness so Refinanced (plus all accrued and unpaid interest thereon and the amount of any reasonably determined premium necessary to accomplish such Refinancing and such reasonable expenses incurred in connection therewith);

 

(b)           such Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being Refinanced;

 

(c)           if the Indebtedness being Refinanced is subordinated in right of payment to the Obligations, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Obligations on terms at least as favorable, taken as a whole, to the Lender Group as those contained in the documentation governing the Indebtedness being Refinanced;

 

(d)           such Indebtedness is incurred by either (i) the Restricted Subsidiary that is the obligor on the Indebtedness being Refinanced or (ii) a Borrower or a Guarantor; and

 

(e)           if the Indebtedness being Refinanced is secured by a Lien on the Collateral, such Refinancing Indebtedness is secured by a Lien that is equal to or junior in priority to the Lien on the Collateral securing the Indebtedness being Refinanced.

 

“Register” has the meaning set forth in Section 13.1(h) of the Agreement.

 

“Registered Loan” has the meaning set forth in Section 13.1(h) of the Agreement.

 

“Related Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

 

“Remedial Action” means all actions required by Environmental Laws to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) restore or reclaim natural resources or

 

 

the environment, (d) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (e) conduct any other actions with respect to Hazardous Materials.

 

“Replacement Assets” means (a) assets (other than Cash Equivalents and securities) that will be used or useful in a Permitted Business, (b) substantially all the assets of a Permitted Business, or (c) a majority of the voting Equity Interests of any Person engaged in a Permitted Business that will become on the date of acquisition thereof a Restricted Subsidiary.

 

“Replacement Lender” has the meaning specified therefor in Section 2.13(c) of the Agreement.

 

“Report” has the meaning specified therefor in Section 15.16 of the Agreement.

 

“Required Lenders” means, at any time, Lenders having or holding, collectively, more than 50% of the aggregate Revolving Loan Exposure of all Lenders; provided, that (a) the Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the determination of the Required Lenders and (b) at any time there are 2 or more Lenders, “Required Lenders” must include at least 2 Lenders (who are not Affiliates of one another).

 

“Rescission” has the meaning specified therefor in the Guaranty and Security Agreement.

 

“Reserves” means, as of any date of determination, those reserves (other than Receivable Reserves, Bank Product Reserves, and Inventory Reserves) that Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c), to establish and maintain with respect to the Borrowing Base or the Maximum Revolver Amount (including, but not limited to, reserves with respect to (a) sums that any Borrower are required to pay under any Section of the Agreement or any other Loan Document (such as Taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed to pay, (b) amounts owing by any Borrower to any Person to the extent secured by a Lien on, or trust over, any of the Collateral (other than a Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent likely would have a priority superior to the Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other Taxes where given priority under applicable law) in and to such item of the Collateral, and (c) any other factors that change in any material respect the credit risk of lending to Borrowers on the security of the Eligible Accounts, Eligible Unbilled Accounts and Eligible Inventory).

 

“Restricted Payment” means to:

 

(a)                                 declare or pay any dividend or make any other payment or distribution with respect to any of the Equity Interests of Parent Borrower or the Restricted Subsidiaries (including, without limitation, any payment in connection with any merger or consolidation involving Parent Borrower or any Restricted Subsidiary) or to the direct or indirect holders of the Equity Interests of Parent Borrower or the Restricted Subsidiaries in their capacity as such (other than dividends, payments or distributions (i) payable in Equity Interests (other than Disqualified Equity Interests) of Parent Borrower, (ii) to Parent Borrower or a Restricted Subsidiary or (iii) made by a Restricted Subsidiary on a pro-rata basis to holders of Equity Interests in such Restricted Subsidiary), or

 

 

(b)                                 purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving Parent Borrower or any Restricted Subsidiary) any Equity Interests of Parent Borrower held by any Person (other than by Parent Borrower or a Restricted Subsidiary) or any Equity Interests of any Restricted Subsidiary held by any Person other than by Parent Borrower or another Restricted Subsidiary.

 

“Restricted Subsidiary” means any Subsidiary of Parent Borrower that has not been designated as an “Unrestricted Subsidiary” in accordance with this Agreement.

 

“Revolver Commitment” means, with respect to each Revolving Lender, its Revolver Commitment, and, with respect to all Revolving Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Revolving Lender’s name under the applicable heading on Schedule C-1 to the Agreement or in the Assignment and Acceptance pursuant to which such Revolving Lender became a Revolving Lender under the Agreement, as such amounts may be reduced or increased from time to time pursuant to (x) assignments made in accordance with the provisions of Section 13.1 of the Agreement and (y) Sections 2.4 or 2.14 of the Agreement.

 

“Revolver Usage” means, as of any date of determination, the sum of (a) the amount of outstanding Revolving Loans (inclusive of Swing Loans and Protective Advances), plus (b) the amount of the Letter of Credit Usage.

 

“Revolving Lender” means a Lender that has a Revolving Loan Commitment, an outstanding Revolving Loan or Letter of Credit Exposure.

 

“Revolving Loan Exposure” means, with respect to any Revolving Lender, as of any date of determination (a) prior to the termination of the Revolver Commitments, the amount of such Lender’s Revolver Commitment, and (b) after the termination of the Revolver Commitments, the aggregate outstanding principal amount of the Revolving Loans of such Lender.

 

“Revolving Loans” has the meaning specified therefor in Section 2.1(a) of the Agreement.

 

“Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, or (d) a Person resident in or determined to be resident in a country, in each case of clauses (a) through (d) that is a target of Sanctions, including a target of any country sanctions program administered and enforced by OFAC.

 

“Sanctioned Person” means (a) a Person named on the list of “Specially Designated Nationals and Blocked Persons” maintained by OFAC, OFAC’s consolidated Non-SDN list or any other Sanctions-related list maintained by any Governmental Authority, (b) a Person or legal entity that is a target of Sanctions, (c) any Person operating, organized or resident in a Sanctioned Entity, or (d) any Person directly or indirectly owned or controlled (individually or in the aggregate) by or acting on behalf of any such Person or Persons described in clauses (a) through (c) above.

 

“Sanctions” means individually and collectively, respectively, any and all economic sanctions, trade sanctions, financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes anti-terrorism laws and other sanctions laws, regulations or embargoes, including those

 

 

imposed, administered or enforced from time to time by:  (a) the United States of America, including those administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future executive order, (b) the United Nations Security Council, (c) the European Union or any European Union member state, (d) Her Majesty’s Treasury of the United Kingdom, or (e) any other Governmental Authority with jurisdiction over any member of Lender Group or any Loan Party or any of their respective Subsidiaries or Affiliates.

 

“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of McGraw Hill Financial, Inc. and any successor thereto.

 

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

 

“Securities Account” means a securities account (as that term is defined in the Code).

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

 

“Senior Notes” means the 6.250% Senior Notes due 2022 (including any “Additional Notes” as defined in the Senior Notes Indenture) issued by Parent Borrower pursuant to the Senior Notes Indenture or any supplemental indenture thereto.

 

“Senior Notes Indenture” means the Indenture dated as of April 16, 2014 among Parent Borrower, as issuer, the guarantors party thereto, and US Bank National Association, as indenture trustee.

 

“Senior Secured Net Leverage Ratio” means, with respect to any Person, as of the date of any determination, the ratio of (i)(a) senior Indebtedness of such Person and its Restricted Subsidiaries that is secured by a Lien as of such date of determination (determined in accordance with GAAP) minus (b) cash and cash equivalents of such Person and its Restricted Subsidiaries up to a maximum of $50,000,000 to (ii) Consolidated Cash Flow of such Person for the four full fiscal quarters for which Parent Borrower’s internal financial statements are available immediately preceding such date of determination.  In the event that Parent Borrower or any of its Restricted Subsidiaries incurs, repays, repurchases or redeems any senior Indebtedness that is secured by a Lien subsequent to the commencement of the period for which the Senior Secured Net Leverage Ratio is being calculated but prior to the event for which the calculation of the Senior Secured Net Leverage Ratio is made, then the Senior Secured Net Leverage Ratio shall be calculated giving pro forma effect to such incurrence, repayment, repurchase or redemption of senior Indebtedness secured by a Lien.

 

“Settlement” has the meaning specified therefor in Section 2.3(e)(i) of the Agreement.

 

“Settlement Date” has the meaning specified therefor in Section 2.3(e)(i) of the Agreement.

 

“Solvent” means, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of

 

 

such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business.  The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“Standard Letter of Credit Practice” means, for Issuing Bank, any domestic or foreign law or letter of credit practices applicable in the city in which Issuing Bank issued the applicable Letter of Credit or, for its branch or correspondent, such laws and practices applicable in the city in which it has advised, confirmed or negotiated such Letter of Credit, as the case may be, in each case, (a) which letter of credit practices are of banks that regularly issue letters of credit in the particular city, and (b) which laws or letter of credit practices are required or permitted under ISP or UCP, as chosen in the applicable Letter of Credit.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned by such Person.  Unless otherwise indicated, when used herein the term “Subsidiary” shall refer to a Subsidiary of Parent Borrower.

 

“Supermajority Lenders” means, at any time, Lenders having or holding more than 66 2/3% of the aggregate Revolving Loan Exposure of all Lenders; provided, that (a) the Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the determination of the Required Lenders, and (b) at any time there are 2 or more Lenders, “Supermajority Lenders” must include at least 2 Lenders (who are not Affiliates of one another).

 

“Swap Obligation” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

 

“Swing Lender” means Wells Fargo.

 

“Swing Loan” has the meaning specified therefor in Section 2.3(b) of the Agreement.

 

“Swing Loan Exposure” means, as of any date of determination with respect to any Lender, such Lender’s Pro Rata Share of the Swing Loans on such date.

 

“Tax Lender” has the meaning specified therefor in Section 14.2(a) of the Agreement.

 

“Taxes” means all present or future taxes, levies, imposts, duties, fees, deductions, withholdings (including backup withholding), assessments or other charges of whatever nature

 

 

now or hereafter imposed by any Governmental Authority, including any interest, fines, additions to tax or penalties applicable thereto.

 

“Temasek” means Temasek Holdings (Private) Limited and each of its Affiliates but not including any of its portfolio companies.

 

“Term Loan Facility” means the term loans made pursuant to the Term Loan Facility Credit Agreement.

 

“Term Loan Facility Credit Agreement” means the Term Loan Agreement, dated as of April 16, 2014, by and among, Parent Borrower, as borrower, the lenders from time to time a party thereto, Wells Fargo Bank, National Association, as sole administrative agent, together with the related documents thereto (including the term loans thereunder, any guarantees and security documents), as amended, extended, renewed, restated, supplemented, refunded, replaced, refinanced or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time by one or more credit facilities, and any agreement (and related document) entered into in substitution for any credit agreement, in which case, the credit agreement or similar agreement together with all other documents and instruments related thereto shall constitute the “Term Loan Facility,” whether with the same or any other agent, lender or group of lenders.

 

“Term Loan Facility Documents” means the Term Loan Facility Credit Agreement and other documents evidencing or governing the Term Loan Facility Credit Agreement or providing for any Guarantee or other right in respect thereof.

 

“Trademark Security Agreement” has the meaning specified therefor in the Guaranty and Security Agreement.

 

“Transaction” means any transaction; provided that if such transaction is part of a series of related transactions, “Transaction” refers to such related transactions as a whole.

 

“UCP” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits 2007 Revision, International Chamber of Commerce Publication No. 600 and any version or revision thereof accepted by Issuing Bank for use.

 

“Unfinanced Capital Expenditures” means, with respect to the Loan Parties for any period, Capital Expenditures made during such period that are not financed with the proceeds of Indebtedness (other than Loans).

 

“United States” means the United States of America.

 

“Unrestricted Subsidiary” means, a Subsidiary designated as an Unrestricted Subsidiary pursuant to this definition, in each case, until such Person ceases to be Unrestricted Subsidiary in accordance with this definition or ceases to be a Subsidiary.  Notwithstanding the foregoing, in no event shall any Borrower be designated as an Unrestricted Subsidiary.  As of the Closing Date, notwithstanding the provisions below of this definition, the Subsidiaries of Parent Borrower set forth on Schedule U-1 are hereby designated as Unrestricted Subsidiaries.

 

 

The Board of Directors of Parent Borrower may designate any Restricted Subsidiary to be an Unrestricted Subsidiary; provided that:

 

(a)                                 any Guarantee by Parent Borrower or any Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated will be deemed to be an Incurrence of Indebtedness by Parent Borrower or such Restricted Subsidiary, as the case may be, at the time of such designation, and such incurrence of Indebtedness would be permitted under Section 6.1 of the Agreement

 

(b)                                 the aggregate Fair Market Value of all outstanding Investments owned by Parent Borrower and other Restricted Subsidiaries in the Subsidiary being so designated (including any Guarantee by Parent Borrower or any Restricted Subsidiary of any Indebtedness of such Subsidiary) will be deemed to be an Investment made as of the time of such designation, and such Investment would be permitted under Section 6.9 of the Agreement;

 

(c)                                  such Subsidiary does not hold any Equity Interests or Indebtedness of, or own or hold any Lien on any property or assets of, or have any Investment in, Parent Borrower or any Restricted Subsidiary that is not simultaneously being designated an Unrestricted Subsidiary;

 

(d)                                 the Subsidiary being so designated:

 

(i)                                     is not party to any agreement, contract, arrangement or understanding with Parent Borrower or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to Parent Borrower or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Issuer (or, if this condition is not satisfied, the value of such agreement, contract, arrangement or understanding to such Unrestricted Subsidiary shall be deemed to be, and must be permitted as, a Restricted Payment); and

 

(ii)                                  is a Person with respect to which neither Parent Borrower nor any Restricted Subsidiary has any direct or indirect obligation (i) to subscribe for additional Equity Interests or (ii) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

 

(iii)                               has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of Parent Borrower or any Restricted Subsidiary, except to the extent such Guarantee or credit support would be released upon such designation;

 

(e)                                  on a pro forma basis, after giving effect to such designation and any Incurrence of Indebtedness or Investment made in connection therewith, (i) Excess Availability shall not be less than 20.0% of the Line Cap at any time during the period from the 30th day prior to and including the date of the such designation (measured as if such designation, Incurrence of Indebtedness, and Investment had been made on the first day of such 30 day period), and (ii) the Fixed Charge Coverage Ratio for the most recent 12 fiscal month period for which Parent Borrower’s interim financial statements are then required to have been delivered pursuant to Section 5.1 is at least 1.0 to 1.0; and

 

(f)                                   no Default or Event of Default would be in existence following such designation.

 

 

Any designation of a Restricted Subsidiary as an Unrestricted Subsidiary shall be evidenced to the Agent by filing with the Agent the Board Resolution giving effect to such designation and an officers’ certificate certifying that such designation complied with the preceding conditions and was permitted by the Agreement.

 

For purposes of the foregoing, the designation of a Subsidiary of Parent Borrower as an Unrestricted Subsidiary shall be deemed to be the designation of all of the Subsidiaries of such Subsidiary as Unrestricted Subsidiaries.  Unless so designated as an Unrestricted Subsidiary, any Person that becomes a Subsidiary of Parent Borrower will be classified as a Restricted Subsidiary.

 

The Board of Directors of Parent Borrower may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that:

 

(a)                                 such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if the incurrence of such Indebtedness is permitted under Section 6.1 of the Agreement at the date when such Unrestricted Subsidiary is designated as a Restricted Subsidiary;

 

(b)                                 all outstanding Investments owned by such Unrestricted Subsidiary shall be deemed to be made as of the time of such designation and such designation shall only be permitted if such Investments would be permitted under Section 6.7 of the Agreement at the date when such Unrestricted Subsidiary is designated as a Restricted Subsidiary;

 

(c)                                  all Liens upon property or assets of such Unrestricted Subsidiary existing at the time of such designation shall be deemed to be incurred at the date of such designation and at such date would be permitted under Section 6.2 of the Agreement; and

 

(d)                                 no Default or Event of Default would be in existence immediately following such designation.

 

“Unused Line Fee” has the meaning specified therefor in Section 2.10(b) of the Agreement.

 

“U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the IRC.

 

“U.S. Tax Compliance Certificate” has the meaning assigned thereto in Section 16.7.

 

“Voidable Transfer” has the meaning specified therefor in Section 17.8 of the Agreement.

 

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

 

 

(a)                                 the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

 

(b)                                 the then outstanding principal amount of such Indebtedness.

 

“Wells Fargo” means Wells Fargo Bank, National Association, a national banking association.

 

“Wholly Owned Subsidiary” means, with respect to any specified Person, a Restricted Subsidiary of such Person all of the outstanding Equity Interests or other ownership interests of which (other than directors’ qualifying shares) are owned by such Person or by one or more Wholly Owned Subsidiaries of such Person.

 

“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.

 

“Withholding Agent” means any Loan Party and Agent.

 

 

Schedule 2.11

 

Existing Letters of Credit

 

	
Applicant
    	
 
    	
Beneficiary
    	
 
    	
Bank
    	
 
    	
Amount
    	
 
    
	
FTS   International Services, LLC
    	
 
    	
Liberty Mutual Insurance Company
    	
 
    	
Wells Fargo Bank, National Association
    	
 
    	
$
    	
5,400,000.00
    	
 
    
	
FTS International   Services, LLC
    	
 
    	
Argonaut Insurance
    	
 
    	
Wells Fargo Bank, National Association
    	
 
    	
$
    	
150,000.00
    	
 
    
	
FTS   International Services, LLC
    	
 
    	
WEX Bank
    	
 
    	
Wells Fargo Bank, National Association
    	
 
    	
$
    	
300,000.00
    	
 
    

 

 

Schedule 3.1

 

The obligation of each Lender to make its initial extension of credit provided for in the Agreement is subject to the fulfillment, to the satisfaction of each Lender (the making of such initial extension of credit by any Lender being conclusively deemed to be its satisfaction or waiver of the following), of each of the following conditions precedent (capitalized terms used herein without definition have the meanings set forth in the Agreement to which this Schedule is attached):

 

(a)                                 [Reserved.]

 

(b)                                 Agent shall have received copies of appropriate UCC-1 financing statements to be filed on the Closing Date in such office or offices as may be necessary or, in the Permitted Discretion of Agent, desirable to perfect the Agent’s Liens in and to the Collateral under the UCC, and Agent shall have received searches reflecting the financing statements of each Loan Party;

 

(c)                                  Agent shall have received each of the following documents, in form and substance reasonably satisfactory to Agent, duly executed and delivered, and each such document shall be in full force and effect:

 

(i)                           a completed Borrowing Base Certificate as of December 31, 2017;

 

(ii)                        the Amendments to Control Agreements,

 

(iii)                     the Fee Letter,

 

(iv)                    the Flow of Funds Agreement,

 

(v)                       the Guaranty and Security Agreement,

 

(vi)                    a completed Perfection Certificate for the Loan Parties,

 

(vii)                 the Trademark Security Agreement,

 

(viii)              the Joinder to Intercreditor Agreement;

 

(d)                                 Agent shall have received a certificate from the Secretary or Vice Secretary of each Loan Party (i) attesting to the resolutions of such Loan Party’s Board of Directors authorizing its execution, delivery, and performance of the Loan Documents to which it is a party, (ii) authorizing specific officers of such Loan Party to execute the same, and (iii) attesting to the incumbency and signatures of such specific officers of such Loan Party;

 

(e)                                  Agent shall have received copies of each Loan Party’s Governing Documents, as amended, modified, or supplemented to the Closing Date, which Governing Documents shall be (i) certified by the Secretary or Vice Secretary of such Loan Party, and (ii) with respect to Governing Documents that are charter documents, certified as of a recent date (not more than 30 days prior to the Closing Date) by the appropriate governmental official;

 

(f)                                   Agent shall have received a certificate of status with respect to each Loan Party, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of such Loan Party, which certificate shall indicate that such Loan Party is in good standing in such jurisdiction;

 

 

(g)                                  Agent shall have received certificates of status with respect to each Loan Party, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of such Loan Party) in which its failure to be duly qualified or licensed would constitute a Material Adverse Effect, which certificates shall indicate that such Loan Party is in good standing in such jurisdictions;

 

(h)                                 Agent shall have received certificates of insurance, together with the endorsements thereto, as are required by Section 5.6 of the Agreement, the form and substance of which shall be reasonably satisfactory to Agent;

 

(i)                                     Agent shall have received an opinion of Jones Day, counsel to the Loan Parties, in form and substance reasonably satisfactory to Agent;

 

(j)                                    Administrative Borrower shall have certified (which certification may be included as part of the Borrowing Base Certificate specified in clause (d)(i) hereof) that Excess Availability plus Qualified Cash as of the Closing Date, after giving effect to the initial use of proceeds of the Loans and the Letters of Credit and the payment of all fees, costs and expenses to occur on the Closing Date (including the payment of all fees and expenses required to be paid by the Borrowers on the Closing Date under the Agreement or the other Loan Documents), is not less than $100,000,000;

 

(k)                                 Agent shall have completed its business, legal, and collateral due diligence, including (i) a collateral audit and review of Parent Borrower’s and its Restricted Subsidiaries’ books and records and verification of Borrowers’ representations and warranties to Lender Group, and (ii) a review of Parent Borrower’s and its Restricted Subsidiaries’ material agreements, in each case, the results of which shall be satisfactory to Agent;

 

(l)                                     Agent shall have completed (i) Patriot Act searches and OFAC/PEP searches and customary individual background checks for each Loan Party, and (ii) OFAC/PEP searches and customary individual background searches for each Loan Party’s senior management and key principals,  the results of which shall be reasonably satisfactory to Agent;

 

(m)                             Agent shall have received an appraisal of the Net Liquidation Percentage applicable to Borrowers and its Restricted Subsidiaries, the results of which shall be satisfactory to Agent;

 

(n)                                 Agent shall have received a set of Projections of Parent Borrower and its Subsidiaries, on a consolidated basis, for the four fiscal quarter period following the Closing Date (on a quarter by quarter basis) and on an annual basis for each year thereafter through 2021, giving effect to the transactions contemplated by the Loan Documents to occur on the Closing Date prepared by management of Parent Borrower, including balance sheets, income statements and cash flow statements, in form and substance (including as to scope and underlying assumptions) reasonably satisfactory to Agent;

 

(o)                                 Borrowers shall have paid or will pay on the Closing Date all Lender Group Expenses incurred in connection with the transactions evidenced by the Agreement and the other Loan Documents;

 

(p)                                 Agent shall have received a solvency certificate, in form and substance reasonably satisfactory to it, certifying as to the solvency of the Loan Parties taken as a whole after giving effect to the transactions contemplated by this Agreement and the other Loan Documents to occur on the Closing Date;

 

(q)                                 Immediately after giving effect to the transactions contemplated by this Agreement and the other Loan Documents on the Closing Date, Parent Borrower and its Restricted Subsidiaries shall

 

 

have outstanding no Indebtedness other than (a) Indebtedness outstanding under this Agreement, (b) the Term Loan Facility, (c) Senior Notes and the Senior Notes Indenture, (d) Indebtedness set forth on Schedule 6.1 and (e) Indebtedness permitted by Section 6.1;

 

(r)                                    Lenders shall have received audited financial statements with respect to Parent Borrower’s fiscal years ended December 31, 2014, 2015 and 2016;

 

(s)                                   No Material Adverse Effect shall have occurred since December 31, 2016;

 

(t)                                    The Borrowers and each of their Restricted Subsidiaries shall have received all governmental and third party approvals (including shareholder approvals, landlords’ consents and other consents) necessary or, in the reasonable opinion of Agent, advisable in connection with the Agreement or the transactions contemplated by the Loan Documents, which shall all be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose materially adverse conditions on the Credit Agreement or the transactions contemplated by the Loan Documents; and there shall not be any pending or threatened litigation, governmental, administrative or judicial action that could reasonably be expected to restrain, prevent or otherwise impose materially adverse conditions on the transactions contemplated by the Loan Documents.  Parent Borrower and each of its Restricted Subsidiaries shall have received all licenses, approvals or evidence of other actions required by any Governmental Authority in connection with the execution and delivery by Parent Borrower or its Restricted Subsidiaries of the Loan Documents or with the consummation of the transactions contemplated thereby;

 

(u)                                 Agent shall have received a certificate, dated the Closing Date and signed by an officer of Parent Borrower on behalf of the Borrowers, confirming compliance with the conditions precedent in this Schedule 3.1, to the extent compliance with any such condition precedent is within the determination of Borrowers; and

 

(v)                                 All other documents and legal matters in connection with the transactions contemplated by the Agreement and reasonably requested by Agent shall have been delivered, executed, or recorded and shall be in form and substance reasonably satisfactory to Agent.

 

 

Schedule 4.1(c)

 

Capitalization of Parent Borrower’s Subsidiaries

 

	
Entity
    	
 
    	
Owner
    	
 
    	
Authorized
   Shares
    	
 
    	
Outstanding
   Shares
    	
 
    	
Percentage
   Ownership
    
	
FTS International Services, LLC
    	
 
    	
FTS International, Inc.
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
100%
    
	
FTS International Manufacturing, LLC
    	
 
    	
FTS International Services, LLC
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
100%
    
	
FTS International Ventures I, LLC
    	
 
    	
FTS International, Inc.
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
100%
    
	
FTS International Ventures II, LLC
    	
 
    	
FTS International, Inc.
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
100%
    
	
FTS International Netherlands I C.V.
    	
 
    	
FTS International Ventures I, LLC
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
99%
   General Partner
    
	
 
    	
FTS International Ventures II, LLC
    	
 
    	
 
    	
N/A
    	
 
    	
1%
   Limited Partner
    
	
FTS International Netherlands II C.V.
    	
 
    	
FTS International Netherlands I C.V.
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
99%
   General Partner
    
	
 
    	
FTS International Ventures II, LLC
    	
 
    	
 
    	
N/A
    	
 
    	
1%
   Limited Partner
    
	
FTS International Netherlands, LLC
    	
 
    	
FTS International Netherlands II C.V.
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
100%
    
	
FTS International Netherlands Coöperatief U.A.
    	
 
    	
FTS International Netherlands II C.V.
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
99%
    
	
 
    	
FTS International Netherlands, LLC
    	
 
    	
 
    	
N/A
    	
 
    	
1%
    
	
FTS International Netherlands B.V.
    	
 
    	
FTS International Netherlands Coöperatief U.A.
    	
 
    	
N/A
    	
 
    	
N/A
    	
 
    	
100%
    

 

 

Schedule 4.1(d)

 

Subscriptions, Options, Warrants, Calls

 

None.

 

 

Schedule 4.11

 

Environmental Matters

 

1.                             Odessa, Texas Facility — Impact to soil from historic chemical use or storage

 

As a result of an environmental site assessment, soil and groundwater contamination was discovered at the Odessa, Texas facility that is unrelated to operations performed by FTSI at that facility.  The impacts are contained within the property boundary and are not likely to migrate from the property.  In 2013, FTSI was accepted into a voluntary clean-up program administered by the Texas Commission on Environmental Quality (“TCEQ”).  FTSI is currently awaiting TCEQ approval on a proposed remediation plan.

 

 

Schedule 4.24

 

Location of Inventory

 

FTS INTERNATIONAL SERVICES, LLC

 

117 Nu Energy Road, Aledo, TX 76008

119 Nu Energy Road, Aledo, TX 76008

906 S. Eastern, Elk City, OK 73644

1704 E. Whaley Street, Longview, TX 75601

986 S. Maurice Street, Odessa, TX 79763

3201 W. Murphy Street, Odessa, TX 79763

602 S. Highway 163, Ozona, TX 76943

3195 Coughran Road, Pleasanton, TX 78064

6921 F.M. 1784, Pleasanton, TX 78064

2459 F.M. 190, Asherton, TX 78827

7248 John Petterway Jr. Blvd, Shreveport, LA 71129

1432 Route 519, Eighty Four, PA 15330

 

FTS INTERNATIONAL MANUFACTURING, LLC

 

117 Nu Energy Road, Aledo, TX 76008

119 Nu Energy Road, Aledo, TX 76008

4700 S. Edgewood Terrace, Fort Worth, TX 76119

4651 S. Edgewood Terrace, Fort Worth, TX 76119

4608 Fairlane, Fort Worth, TX 76109

 

 

Schedule 5.1

 

Deliver to Agent (and if so requested by Agent, with copies for each Lender) each of the financial statements, reports, or other items set forth below at the following times listed opposite each such item (if applicable) in form reasonably satisfactory to Agent (capitalized terms used herein without definition have the meanings set forth in the Agreement to which this Schedule is attached):

 

	
Deadline
    	
 
    	
Deliverable
    
	
 
    	
 
    	
 
    
	
within 45 days after the end of each of the   first three fiscal quarters during each of Parent Borrower’s fiscal years,   commencing with the fiscal quarter ended March 31, 2018,
    	
 
    	
(b) an unaudited consolidated balance sheet of   Parent Borrower and its Subsidiaries as of the close of such fiscal quarter   and unaudited consolidated statements of income, retained earnings and cash   flows for such fiscal quarter and a report containing management’s discussion   and analysis of such financial statements for such fiscal quarter and that   portion of the fiscal year then ended, including the notes thereto, all in   reasonable detail setting forth in comparative form the corresponding figures   as of the end of and for the corresponding period in the preceding fiscal   year and prepared by Parent Borrower in accordance with GAAP and, if   applicable, containing disclosure of the effect on the financial position or   results of operations of any change in the application of accounting   principles and practices during the period, and certified by an Authorized   Person of Parent Borrower to present fairly in all material respects the   financial condition of Parent Borrower and its Subsidiaries on a consolidated   basis as of their respective dates and the results of operations of Parent   Borrower and its Subsidiaries for the respective periods then ended, subject   to normal year-end adjustments and the absence of footnotes, and

 

(c) a Compliance Certificate along with the   underlying calculations, including the calculations to arrive at Consolidated   Cash Flow, the Fixed Charge Coverage Ratio, and, if a Covenant Testing Period   has occurred and is continuing, demonstrating compliance with the covenant   set forth in Section 7.1 of the Agreement;
    
	
 
    	
 
    	
 
    
	
within 90 days after the end of each of Parent Borrower’s   fiscal years, commencing with the fiscal year ended December 31, 2017,
    	
 
    	
(d) an audited consolidated balance sheet of Parent   Borrower and its Subsidiaries as of the close of such fiscal year and audited   consolidated statements of income, retained earnings and cash flows for such   fiscal year and a report containing management’s discussion and analysis of   such financial statements for such fiscal year, including the notes thereto,   all in reasonable detail setting forth in comparative form the corresponding   figures as of the end of and for the preceding fiscal year and prepared in   accordance with GAAP and, if applicable, containing disclosure of the effect   on the financial position or results of operations of any change in the   application of accounting principles and practices during the year. Such   annual financial statements shall be audited by Grant Thornton LLP or any   other independent certified public accounting firm of recognized national   standing reasonably acceptable to Agent, and accompanied by a report and   opinion thereon by such certified public accountants prepared in accordance   with generally accepted auditing standards that is not subject to any   qualifications (including any (i) “going concern” or like qualification   or exception, (ii) qualification or exception as to the scope of such   audit, or (iii) qualification which relates to the treatment or   classification of any item and which, as a condition to the removal of such
    

 

 

	
 
    	
 
    	
qualification, would require an adjustment to, such   item, the effect of which would be to cause any noncompliance with the   provisions of Section 7) or exception or any qualification as to   the scope of such audit, and

 

(e) a Compliance Certificate along with the   underlying calculations, including the calculations to arrive at Consolidated   Cash Flow, the Fixed Charge Coverage Ratio, and, if a Covenant Testing Period   has occurred and is continuing, demonstrating compliance with the covenant   set forth in Section 7.1 of the Agreement;
    
	
 
    	
 
    	
 
    
	
within 60 days after the end of each of Parent   Borrower’s fiscal years,
    	
 
    	
(f) copies of Parent’s Borrowers’ Projections, in   form and substance (including as to scope and underlying assumptions)   satisfactory to Agent, in its Permitted Discretion, for the forthcoming three   years, year by year, and for the forthcoming fiscal year, fiscal quarter by   fiscal quarter;
    
	
 
    	
 
    	
 
    
	
if filed by any Loan Party with the SEC after the   Closing Date, promptly after the same becomes publicly available or Parent   Borrower notifies the Agent of the filing or public availability thereof,
    	
 
    	
(g) copies of any Form 10-Q quarterly reports,   Form 10-K annual reports, and Form 8-K current reports of any Loan   Party, and

 

(h) copies of any other filings made by Parent   Borrower with the SEC after the Closing Date;
    
	
 
    	
 
    	
 
    
	
promptly, but in any event within 5 Business Days,   after any Loan Party has knowledge that a Default or an Event of Default has   occurred and is continuing,
    	
 
    	
(i) notice of such Default or Event of Default and a   statement of any action that the Borrowers propose to take with respect   thereto;
    
	
 
    	
 
    	
 
    
	
promptly after the commencement thereof, but in any   event within 5 Business Days after any Authorized Person has knowledge of the   filing or commencement thereof, or the service of process with respect   thereto on a Loan Party or any of its Restricted Subsidiaries, in each case,   after the Closing Date,
    	
 
    	
(j) the filing or commencement of any action, suit   or proceeding, whether at law or in equity or by or before any Governmental   Authority, against any Loan Party or a Restricted Subsidiary thereof that   would reasonably be expected to result in a Material Adverse Effect;
    
	
 
    	
 
    	
 
    
	
promptly after an Authorized Person obtains   knowledge thereof,
    	
 
    	
(k) any notice of any violation received by any Loan   Party or any Restricted Subsidiary thereof from any Governmental Authority   including, without limitation,

 
    

 

 

	
 
    	
 
    	
any notice of violation of Environmental Laws,   which, in each case would reasonably be expected to have a Material Adverse   Effect, and

 

(l) any development that has resulted in, or would   reasonably be expected to result in, a Material Adverse Effect;
    
	
 
    	
 
    	
 
    
	
promptly after the request therefor by Agent or any   Lender after the Closing Date,
    	
 
    	
(m) such other information and documentation   required by bank regulatory authorities under applicable “know your customer”   and Anti-Money Laundering Laws (including, without limitation, the Patriot   Act); and
    
	
 
    	
 
    	
 
    
	
from time to time, within a reasonable time period   after the reasonable request therefor by Agent or any Lender after the   Closing Date,
    	
 
    	
(n) other information regarding the operations,   business affairs and financial condition of any Loan Party or any Restricted   Subsidiary thereof.
    

 

If Parent Borrower has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by this Schedule 5.1 will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in the accompanying management’s discussion and analysis, of the financial condition and results of operations of Parent Borrower and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of Parent Borrower; provided, however, that no such information will be required to the extent any Unrestricted Subsidiaries collectively meet the definition of “minor” under Rule 3-10 of Regulation S-X, using 6% instead of 3%.

 

 

Schedule 5.2

 

Provide Agent (and if so requested by Agent, with copies for each Lender) with each of the documents set forth below at the following times in form reasonably satisfactory to Agent (capitalized terms used herein without definition have the meanings set forth in the Agreement to which this Schedule is attached):

 

	
Timing

 

Quarterly (no later than the 25th day after the end of each fiscal quarter of   Parent Borrower, commencing with the fiscal quarter ending December 31,   2017, prepared as of the end of such fiscal quarter), so long as no Loans are   outstanding and otherwise the Revolver Usage is less than $25,000,000, or

 

Monthly (no later than the 25th day after the end of each fiscal month,   prepared as of the end of such fiscal month), if either (x) any Loans   are outstanding or (y) Revolver Usage is greater than or equal to   $25,000,000, or

 

Weekly (no later than the 5th Business Day after the end of each week), if   a Collateral Reporting Trigger Event has occurred and is continuing,
    	
 
    	
(a)           Deliverable

 

(b)                                 (a) an   executed Borrowing Base Certificate,

 

(c)                                  (b) a   detailed aging, by total, of the Borrowers’ Accounts included in the   Borrowing Base reflected in the then most recent Borrowing Base Certificate   delivered to Agent (delivered electronically in a format acceptable to Agent   in the exercise of its Permitted Discretion, if Parent Borrower has   implemented electronic reporting),

(d)                                 (c) a   detailed Inventory report with regard to Inventory included in the Borrowing   Base reflected in the then most recent Borrowing Base Certificate delivered   to Agent (delivered electronically in a format acceptable to Agent in the exercise   of its Permitted Discretion, if Parent Borrower has implemented electronic   reporting),

 

(e)                                  (d) a   summary aging, by vendor, of each Borrower’s accounts payable and any book   overdraft (delivered electronically in a format acceptable to Agent in the exercise   of its Permitted Discretion, if Parent Borrower has implemented electronic   reporting) and an aging, by vendor, of any held checks,

 

(f)                                   (e) [Reserved],

 

(g)                                  (f) [Reserved],

 

(h)                                 (g) a   detailed report of the Borrowers’ Accounts that are Eligible Unbilled   Accounts; and

 

(i)                                     provided   that for so long as any monthly or weekly, if applicable, reports and   deliverables required to be delivered (x) are not delivered when   required or (y) do not, with respect to a Borrowing Base Certificate,   include the items of information specified in Exhibit B-1 to the   Agreement (with such changes, if any, agreed to by Agent in its Permitted   Discretion) or in the preceding clauses (b), (c) and (g), in each case,   for such month or week, if applicable, for Accounts and/or Inventory included   in the Borrowing Base, Agent shall have the
    

 

 

	
 
    	
 
    	
right to establish such Reserves that it deems   appropriate in its Permitted Discretion.

 

(j)                                    The   Borrowers may, at their election, deliver Borrowing Base Certificates and the   other reports set forth in items (a) through (g) hereof on a more   frequent basis than the periods required above.
    
	
 
    	
 
    	
 
    
	
Annually (to be delivered when Parent Borrower   delivers the financial statements required by clause (c) of Schedule   5.1 to the Agreement to which this Schedule is attached),
    	
 
    	
(k)                                 (h) a   Perfection Certificate or a supplement to a previously-delivered Perfection   Certificate, as Parent Borrower may elect, and

 

(l)                                     (i) a   detailed list of each Borrower’s customers, with address and contact   information, the Accounts of which are included in the then most recent   Borrowing Base Certificate delivered to Agent.
    
	
 
    	
 
    	
 
    
	
Within a reasonable period of time after reasonable   request by Agent,
    	
 
    	
(m)                             (j) copies   of purchase orders and invoices for Inventory included in the then most   recent Borrowing Base Certificate delivered to Agent, and

 

(n)                                 (k) such   other reports regarding the Collateral as Agent may reasonably request.
    

 

 

Schedule 6.1

 

Permitted Indebtedness

 

1.              Indebtedness related to the cash collateralization of the standby letters of credit issued by Wells Fargo Bank, National Association described on Schedule 2.11.(2)

2.              Indebtedness related to the liens set forth on Part 2 of Schedule P-2.

 

(2)  Such Indebtedness is pursuant to Existing Letters of Credit and is Permitted Indebtedness pursuant to this Schedule 6.1 only until such time the Issuing Bank releases such Indebtedness after the Closing Date.

 

 

Schedule 6.10

 

Transactions with Affiliates

 

1.              Master Service Agreement, dated as of July 9, 2012, between Chesapeake Operating, Inc. and FTS International Services, LLC.

2.              Master Commercial Agreement, dated as of December 19, 2016, between Chesapeake Operating, L.L.C. and FTS International Services, LLC.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00279-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00279-of-00352.parquet"}]]