Document:

Exhibit 10.17

 

JOHN DEERE

 

ERISA SUPPLEMENTARY PENSION BENEFIT PLAN

 

 

AS AMENDED AND RESTATED EFFECTIVE: 1 NOVEMBER 1992

 

AS AMENDED 8 DECEMBER 1993: EFFECTIVE 1 JULY 1993

 

AS AMENDED: 7 DECEMBER 1994

 

AS AMENDED MAY 1995 – EFFECTIVE 1 JANUARY 1995

 

AS AMENDED 4 DECEMBER 1996 – EFFECTIVE 1 JANUARY 1997

 

AS AMENDED 26 MAY 1999 – EFFECTIVE 26 MAY 1999

 

AS AMENDED 19 JULY 1999 – EFFECTIVE 1 JULY 1999

 

AS AMENDED 12 JANUARY 2000 – EFFECTIVE 1 JANUARY 2000

 

AS AMENDED 31 JULY 2000 – EFFECTIVE 1 JANUARY 2000

 

AMENDED: 29 JANUARY 2002 – EFFECTIVE 1 JANUARY 2002

 

AMENDED: 1 DECEMBER 2005 – EFFECTIVE 1 JANUARY 2005

 

AMENDED: 13 DECEMBER 2007 – EFFECTIVE 1 JANUARY 2007

 

AMENDED: 29 OCTOBER 2008 – EFFECTIVE 1 NOVEMBER 2008

 

AMENDED: 30 June 2009 – EFFECTIVE: 1 July 2010

 

AMENDED: DECEMBER 2011 – EFFECTIVE: 1 OCTOBER 2011

 

 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I   ESTABLISHMENT, PURPOSE AND CONSTRUCTION
    	
1
    
	
 
    	
 
    
	
 
    	
1.1
    	
Establishment
    	
1
    
	
 
    	
1.2
    	
Purpose
    	
1
    
	
 
    	
1.3
    	
Effective Date and Plan Year
    	
1
    
	
 
    	
1.4
    	
Application of Plan
    	
2
    
	
 
    	
1.5
    	
Construction
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE II   PARTICIPATION
    	
3
    
	
 
    	
 
    
	
 
    	
2.1
    	
Eligibility to Participate
    	
3
    
	
 
    	
2.2
    	
Effect of Transfer
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE III   SUPPLEMENTARY BENEFITS
    	
4
    
	
 
    	
 
    
	
 
    	
3.1
    	
Eligibility for Benefit
    	
4
    
	
 
    	
3.2
    	
Amount of Benefit
    	
4
    
	
 
    	
3.3
    	
Form of Payment and Commencement   Date
    	
4
    
	
 
    	
3.4
    	
Death Prior to Receipt of Lump Sum
    	
5
    
	
 
    	
3.5
    	
Qualified Domestic Relations Order
    	
6
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IV   ADMINISTRATION OF PLAN
    	
7
    
	
 
    	
 
    
	
 
    	
4.1
    	
Administration
    	
7
    
	
 
    	
4.2
    	
Amendment, Modification or   Termination
    	
7
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE V   MISCELLANEOUS
    	
9
    
	
 
    	
 
    
	
 
    	
5.1
    	
Employment Rights
    	
9
    
	
 
    	
5.2
    	
Applicable Law
    	
9
    
	
 
    	
5.3
    	
Non-Alienation
    	
9
    
	
 
    	
5.4
    	
Withholding of Taxes
    	
9
    
	
 
    	
5.5
    	
Funding and Rights Against Assets
    	
9
    
	
 
    	
5.6
    	
Effect on Other Benefit Plans
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
APPENDIX   A
    	
 
    
	
 
    	
Article A-1   APPLICATION; PAYMENT OF PLAN BENEFIT AFTER 2006
    	
A-1
    
	
 
    	
A-1.1    Application of this Article
    	
A-1
    
	
 
    	
A-1.2    Retirement During Calendar Year 2007   or Later
    	
A-1
    
	
 
    	
A-1.3    Termination During Calendar Year 2005   or Later
    	
A-1
    
	
 
    	
A-1.4    Termination Prior to 1   January 2005
    	
A-1
    
	
 
    	
A-1.5    One-Time Lump Sum
    	
A-1
    
	
 
    	
Article A-2   DEATH and DISABILITY BENEFITS
    	
A-2
    
	
 
    	
A-2.1    Application of Article A-2
    	
A-2
    
	
 
    	
A-2.2    No Additional Rights Because of Death
    	
A-2
    
	
 
    	
A-2.3    Rules Based on Timing of Death
    	
A-3
    
	
 
    	
A-2.4    Separation from Service Due to   Disability
    	
A-3
    
	
 
    	
A-2.5    Return to Work Following Disability
    	
A-4
    

 

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Revised Oct 2011

 

	
 
    	
 
    	
 
    
	
APPENDIX   B
    	
 
    
	
 
    	
Article B-1   MISCELLANEOUS PROVISIONS
    	
B-1
    
	
 
    	
B-1.1    Application of this Article
    	
B-1
    
	
 
    	
B-1.2    Impact of Vacation
    	
B-1
    
	
 
    	
B-1.3    Impact of Leave of Absence and Special   Paid Leave of Absence
    	
B-1
    
	
 
    	
B-1.4    No Acceleration or Delay
    	
B-2
    
	
 
    	
Article B-2   AMENDMENT AND TERMINATION
    	
B-2
    
	
 
    	
B-2.1    Amendment and Termination
    	
B-2
    
	
 
    	
B-2.2    Plan Benefit in the Event of   Termination
    	
B-2
    
	
 
    	
Article B-3   DEFINITIONS
    	
B-2
    
	
 
    	
B-3.1    Section References
    	
B-2
    
	
 
    	
B-3.2    Terms Defined
    	
B-2
    
				

 

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JOHN DEERE ERISA SUPPLEMENTARY

PENSION BENEFIT PLAN

 

ARTICLE I ESTABLISHMENT, PURPOSE AND CONSTRUCTION

 

	
1.1
    	
Establishment.   Effective 1 November 1985, Deere & Company established the John   Deere Supplementary Pension Benefit Plan (the “Former Plan”) for the benefit   of the salaried employees on its United States payroll and the salaried   employees of its United States subsidiaries or affiliates that chose to adopt   the John Deere Pension Plan for Salaried Employees (“Salaried Pension Plan”).   Deere & Company and its United States subsidiaries and affiliates   that have adopted the Salaried Pension Plan (jointly the “Company”) are also   deemed to have adopted the Former Plan. The Company amended and restated the   Former Plan, and divided it into two separate plans, effective 1   November 1992. This John Deere ERISA Supplementary Pension Benefit Plan   (the “Plan”) is one of the two plans which replaced the Former Plan.   Effective as of 1 January, 2007, the Plan is amended pursuant to   Section 409A of the Code as set forth in Appendices A and B, which form   part of the Plan. Amendments to the Plan adopted in 2006 and 2007 are   intended to align Plan provisions with prior operational changes and avoid   the imposition on any Participant of taxes and interest pursuant to   Section 409A of the Code.
    
	
 
    	
 
    
	
1.2
    	
Purpose.   The Company maintains a defined benefit pension plan, known as the John Deere   Pension Plan for Salaried Employees (“Salaried Pension Plan”), which is   intended to be a qualified defined benefit pension plan which meets the   requirements of section 401(a) of the Internal Revenue Code of 1986   (“Code”). Section 415 of the Code limits the benefit which may be paid   under a qualified defined benefit pension plan. This Plan is intended to   provide benefits which, when combined with the benefit actually payable under   the Salaried Pension Plan, are reasonably comparable to the benefits which   participants in the Salaried Pension Plan would have received under such plan   if there were no limitations imposed by section 415 of the Code. This Plan is   intended to qualify as an unfunded “excess benefit plan,” as defined in   section 3(36) of the Employee Retirement Income Security Act of 1974   (“ERISA”).
    
	
 
    	
 
    
	
1.3
    	
Effective Date and Plan Year.   This Plan shall be effective 1 November 1992. Participants in the Former   Plan who were receiving benefits under the Former Plan as of 31   October 1992, and who are eligible employees as defined in section 2.1   below, shall receive the same benefit payments under this Plan as they were   receiving under the Former Plan as of 31 October 1992. Participants in   the Former Plan who were not receiving benefits as of 31 October 1992,   and who are eligible employees as defined in section 2.1 below, shall have no   further rights under the Former Plan, but shall be entitled to supplementary   pension benefits, if any, only under the terms of this Plan. The Plan Year   shall be the twelve-month period beginning on 1 November of each year   and ending on 31 October of the following year.
    

 

Revised Oct 2011

 

	
1.4
    	
Application of Plan.   The terms of this Plan are applicable only to eligible employees as described   in Section 2.1 below who (i) become eligible to receive benefit   payments hereunder on or after 1 November 1992, or (ii) were   receiving benefit payments under the Former Plan as of 31 October 1992.
    
	
 
    	
 
    
	
 
    	
Notwithstanding any provision of this   Plan to the contrary, the provisions of Appendices A and B shall apply to   payment of benefits on or after 31 December 2006 and such appendices   shall supersede the other provisions of the Plan to the extent necessary to   eliminate inconsistencies between such Appendices and such other provisions   of the Plan.
    
	
 
    	
 
    
	
1.5
    	
Construction.   Unless the context clearly indicates otherwise or unless specifically defined   herein, all operative terms used in this Plan shall have the meanings   specified in the Salaried Pension Plan, and words in the masculine gender   shall be deemed to include the feminine and neuter genders and the singular   shall be deemed to include the plural and vice versa.
    

 

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Revised Oct 2011

 

ARTICLE II PARTICIPATION

 

	
2.1
    	
Eligibility to Participate.   Any employee participating in the Salaried Pension Plan (or a surviving   spouse of such employee) whose retirement benefit upon termination from   employment or death under such plan is reduced by application of   Article I, Section 14, of the Salaried Pension Plan (or any other   provision of the Salaried Pension Plan which limits benefits under such plan   as required by Section 415 of the Code) and who is not a participant in   the John Deere Senior Supplementary Pension Benefit Plan shall be eligible to   participate in this Plan (each such eligible employee referred to herein as a   “Participant”).
    
	
 
    	
 
    
	
2.2
    	
Effect of Transfer.   Any employee who is a Participant in this Plan and who becomes eligible to   participate in the John Deere Senior Supplementary Pension Benefit Plan shall   cease to be a Participant in this Plan upon becoming a participant in the   John Deere Senior Supplementary Pension Benefit Plan.
    

 

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Revised Oct 2011

 

ARTICLE III SUPPLEMENTARY BENEFITS

 

	
3.1
    	
Eligibility for Benefit. An   eligible employee shall be entitled to a benefit under this Plan in the event   that such eligible employee’s employment with the Company terminates by   reason of death or retirement, including deferred vested retirement, under   the terms of the Salaried Pension Plan.
    
	
 
    	
 
    
	
3.2
    	
Amount of Benefit.   The amount of the supplementary benefit payable under this Plan shall be the   amount by which (A) exceeds (B) where:
    
	
 
    	
 
    
	
 
    	
(A)
    	
equals the amount of an employee’s   monthly pension benefit or survivor benefit payable under the terms of the   Salaried Pension Plan as in effect on the date of the employee’s termination,   retirement or death, but determined without regard to any limitation on such   benefit imposed in order to comply with the limitation on benefits contained   in section 415 of the Code; and
    
	
 
    	
 
    	
 
    
	
 
    	
(B)
    	
equals such employee’s actual monthly   pension benefit or survivor benefit payable under the Salaried Pension Plan   as in effect on the date of such employee’s termination, retirement or death.
    
	
 
    	
 
    
	
 
    	
The determinations of the amount of   (A) and (B) above shall be made using a single life annuity form.
    
	
 
    	
 
    
	
 
    	
Notwithstanding the foregoing,   effective 1 January 2007, an eligible employee pursuant to   Section 3.1 above shall become entitled to the monthly retirement   benefit described in this Section 3.2 upon his or her Separation from   Service (as defined in Article B-3 of Appendix B); provided, however,   that Section B-1.2, if applicable, shall apply in calculating the amount   of the Participant’s benefit under the Plan, and the time and form of payment   shall be determined in accordance with Appendix A.
    
	
 
    	
 
    
	
3.3
    	
Form of Payment and Commencement   Date. The supplementary benefit payable under this Plan shall   be payable in the same manner and form as the benefit paid to or with respect   to an employee under the Salaried Pension Plan, and shall automatically   commence on or about the same date as payments under the Salaried Pension   Plan. Such benefits payable under this Plan shall continue as long as   benefits are payable under the Salaried Pension Plan.
    
	
 
    	
 
    
	
 
    	
Alternatively, the Participant may   elect to receive a lump sum payment for all or a portion (in 10% increments   from 10% to 90%) of the Retirement benefits payable under this Plan including   the 55% joint and survivor annuity equal to 11% of the supplementary benefit   payable, adjusted for service accrued through 30 June 1993, or 31   December 1993 in the case of employees of John Deere Credit Company,   John Deere Health Care, Inc., or John Deere Insurance Group. Written   notice of the Participant’s election to receive a lump sum payment shall be   irrevocable, and must be received by the Company within the twelve (12)
    

 

4

Revised Oct 2011

 

	
 
    	
months prior to payment, but in no   event subsequent to the Participant’s date of retirement. The lump sum   payment shall be made to Participant twelve (12) months after receipt of   notice by the Company but in no event prior to the Participant’s retirement.
    
	
 
    	
 
    
	
 
    	
Effective beginning 1   January 2002 and thereafter, the lump sum will be calculated using an   interest rate assumption equal to the average yield in September of the   preceding Plan Year on 30-year Treasury Constant Maturities (as published in   October by the Internal Revenue Service) and the mortality table shall   be based upon a fixed blend of 50% male mortality rates and 50% female   mortality rates from the Group Annuity Reserving Table (“GAR”), as set forth   in Revenue Ruling 2001-62, in effect at the beginning of the plan year in   which payment is made. The age used in the calculation will be the age of the   Participant.
    
	
 
    	
 
    
	
 
    	
Effective beginning 1   November 2008 and thereafter, the lump sum will be calculated using an   interest rate assumption equal to the average yield in September of the   preceding Plan Year of 30-year Treasury Constant Maturities (as published in   October by the Internal Revenue Service) and the mortality table shall   be based upon such mortality table as may be prescribed by the IRS pursuant   to Code section 417(e)(3), and which the IRS shall publish from time to time.   For the Plan Year beginning 1 November 2008 and, until modified, such   mortality table will be the table published in Revenue Ruling 2007-67.   Effective 1 November 2008, in no event will the lump sum paid be less   than the present value determined by using the “applicable interest rate” and   the “applicable mortality table” with such terms having the meaning provided   under Section 417(e) of the Code, as in effect from time to time.   The age used in the calculation will be the age of the Participant.
    
	
 
    	
 
    
	
3.4
    	
Death Prior to Receipt of Lump Sum.
    
	
 
    	
 
    
	
 
    	
If an active Participant or a   Participant on Permanent and Total Disability dies after receipt of notice by   the Company pursuant to Section 3.3 of Participant’s irrevocable   election to receive a lump sum payment, but before the expiration of twelve   (12) months after receipt by the Company of such election, a surviving spouse   of the Participant who is eligible for a survivor benefit under the Salaried   Pension Plan will receive a lump sum survivor’s benefit under this Plan. The   55% surviving spouse lump sum benefit will be payable no earlier than twelve   (12) months following receipt of notice by the Company of the deceased   Participant’s irrevocable election but not before the first day of the month   following eligibility for a surviving spouse benefit under the Salaried   Pension Plan.
    

 

5

Revised Oct 2011

 

	
 
    	
If a retired Participant or a   Participant on Permanent and Total Disability subsequently retires under   Normal Retirement and dies after receipt of notice by the Company pursuant to   Section 3.3 of Participant’s irrevocable election to receive a lump sum   payment, but before the expiration of twelve (12) months after receipt by the   Company of such election, a surviving spouse of the Participant who is   eligible for a survivor benefit under the Salaried Pension Plan will receive   the Participant’s full lump sum benefit under Section 3.3 of this Plan.   In the event the retired Participant is unmarried at the date of death or the   surviving spouse of the deceased Participant is not eligible for survivor   benefits under the Salaried Pension Plan, the Participant’s full lump sum   benefit will be paid to the deceased Participant’s estate. The lump sum   benefit will be payable no earlier than twelve (12) months following receipt   of notice by the Company of the deceased Participant’s irrevocable election.
    
	
 
    	
 
    
	
3.5
    	
Qualified Domestic Relations Order.
    
	
 
    	
 
    
	
 
    	
Distribution is prohibited under this   Plan prior to the Participant’s retirement and, in the event of a Qualified   Domestic Relations Order, the Alternate Payee must take distribution as a   single lump sum payment within 180 days following the Participant’s   retirement under this Plan.
    

 

6

Revised Oct 2011

 

ARTICLE IV ADMINISTRATION OF PLAN

 

	
4.1
    	
Administration.   This Plan shall be administered by the Company (the “Administrator”). The   Administrator shall have the power to construe and interpret this Plan,   decide questions of eligibility and determine the amount, manner and time of   payment of any benefits hereunder. All determinations of the Administrator   shall be final, binding and conclusive on all persons.
    
	
 
    	
 
    
	
4.2
    	
Amendment, Modification or   Termination. The Board of Directors of the Company, or, the Pension   Plan Oversight Committee of the Board may at any time amend or modify this   Plan in their sole discretion. In addition, the Deere & Company   Management Compensation Committee (“Compensation Committee”) shall have the   authority to approve all amendments or modifications that:
    
	
 
    	
 
    
	
 
    	
a.
    	
in the Compensation Committee’s   judgment are procedural, technical or administrative, but do not result in   changes in the control and management of the Plan assets; or
    
	
 
    	
 
    	
 
    
	
 
    	
b.
    	
in the Compensation Committee’s   judgment are necessary or advisable to comply with any changes in the laws or   regulations applicable to this Plan; or
    
	
 
    	
 
    	
 
    
	
 
    	
c.
    	
in the Compensation Committee’s   judgment are necessary or advisable to implement provisions conforming to a   collective bargaining agreement which has been approved by the Board of   Directors; or
    
	
 
    	
 
    	
 
    
	
 
    	
d.
    	
in the Compensation Committee’s   judgment will not result in changes to benefit levels exceeding $5 million dollars   per amendment or modification during the first full fiscal year that such   changes are effective for this Plan; or
    
	
 
    	
 
    	
 
    
	
 
    	
e.
    	
are the subject of a specific   delegation of authority from the Board of Directors;
    
	
 
    	
 
    	
 
    
	
 
    	
provided, however,   that this Plan shall not be amended or modified so as to reduce or diminish   the benefit then currently being paid to any employee or surviving spouse of   any former employee without such person’s consent. The power to terminate   this Plan shall be reserved to the Board of Directors of Deere &   Company. The procedure for amendment or modification of this Plan by either   the Board of Directors, or, to the extent so authorized, the Pension Plan   Oversight Committee, as the case may be, shall consist of: the lawful adoption   of a written amendment or modification to this Plan by majority vote at a   validly held meeting or by unanimous written consent, followed by the filing   of such duly adopted amendment or modification by the Secretary with the   official records of the Company. If a subsidiary or affiliate of   Deere & Company that has adopted this Plan ceases to be a subsidiary   or affiliate, the participation in this Plan by the employees of such   subsidiary or affiliate shall terminate, and no employees of such former   affiliate or subsidiary shall accrue or be entitled to a benefit under
    

 

7

Revised Oct 2011

 

	
 
    	
this Plan on and after the date such company ceases to be   a subsidiary or affiliate of Deere & Company (other than former   employees who were receiving benefit payments as of such date).
    

 

8

Revised Oct 2011

 

ARTICLE V MISCELLANEOUS

 

5.1                          Employment Rights. Nothing under this Plan shall be construed to give any employee the right to continue in employment with the Company or to any benefits not specifically provided herein.

 

5.2                          Applicable Law. This Plan, to the extent it is not exempt therefrom, shall be governed and construed in accordance with the applicable provisions of ERISA. To the extent not governed by ERISA, this Plan shall be governed and construed in accordance with the laws of the State of Illinois, exclusive of conflict laws.

 

5.3                          Non-Alienation. Except as provided in Article VIII, Section 8 of the John Deere Pension Plan for Salaried Employees no right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be null and void. No right or benefit under this Plan shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefits except for such claims as may be made by the Company.

 

5.4                          Withholding of Taxes. The Company, or its designee, may withhold from any payment of benefits under this Plan any income, employment or other taxes required to be withheld, including any taxes for which the Company or its designee may be liable with respect to the payment of such benefits.

 

5.5                          Funding and Rights Against Assets. The Company shall make all payments due under this Plan in cash from its general assets and benefits payable under this Plan shall not be funded through the use of a trust, insurance contracts or otherwise. All expenses of administering this Plan shall also be borne by the Company. Neither participating employees, nor their surviving spouses, shall have any interest whatsoever in any specific assets of the Company on account of any benefits payable under this Plan and their rights to receive such benefits shall be no greater than the rights of any other unsecured creditor of the Company.

 

5.6                          Effect on Other Benefit Plans. Amounts credited or payable under this Plan shall not be considered compensation for purposes of any qualified retirement plan maintained by the Company. The treatment of such amounts under any other plan of the Company shall be determined under the provisions of such plan.

 

9

Revised Oct 2011

 

APPENDIX A

 

ARTICLE A-1

APPLICATION; PAYMENT OF PLAN BENEFIT AFTER 2006

 

A-1.1          Application of this Article. Notwithstanding anything in the Plan to the contrary, the rules applicable to payment of Plan Benefits for Participants who, as of 31 December 2006, have not commenced payment are set forth in this Appendix A.

 

A-1.2          Retirement During Calendar Year 2007 or Later. If a Participant Retires after 31 December 2006, his Vested Plan Benefit shall be distributed in a Lump Sum with a Payment Date that is the 15th day of the month following the date that is (a) six months and one day following (b) the date of his Retirement plus one day for every day of Vacation. Such Lump Sum shall be calculated using lump sum equivalency factors for a lump sum which is actuarially equivalent to an immediate Single Life Annuity payable on the date determined in accordance with clauses (a) and (b) of this Section A-1.2 and shall be based on the Participant’s age on the date the Participant Retires plus one day for every day of Vacation.

 

A-1.3          Termination During Calendar Year 2005 or Later. If a Participant incurs a Termination during calendar year 2005 or thereafter, his Vested Plan Benefit shall be distributed in the form of a Lump Sum with a Payment Date that is the later of (a) 31 January 2007 and (b) the 15th day of the month following the date that is six months and one day after the date on which the Participant incurred a Termination. Such Lump Sum shall be calculated using lump sum equivalency factors for a lump sum which is actuarially equivalent to a deferred Single Life Annuity payable on the earliest date the Participant would be eligible to receive unreduced benefits under the Salaried Pension Plan and based on the Participant’s age on the Payment Date.

 

A-1.4          Termination Prior to 1 January 2005. If a Participant incurred a Termination prior to 1 January 2005, but as of 31 December 2006 had not yet commenced payment of his Vested Plan Benefit, such Vested Plan Benefit shall be paid in a Lump Sum on or before 30 November 2007. The amount of the Participant’s Plan Benefit shall be determined in accordance with Sections 3.2 and 3.3.

 

A-1.5          One-Time Lump Sum. Effective 1 January 2008, Participants shall receive an amount equal to the interest that would be credited on their Account for the period beginning on the date of Separation from Service and ending on the sixth-month anniversary thereof, determined by using an interest rate equal to the average yield in September of the preceding Plan Year on 30-year Treasury Constant Maturities (as published in October by the Internal Revenue Service). This one-time lump sum payment shall be paid at the same time as the first distribution of the Participant’s Vested Plan Benefit under the Plan.

 

Participants who Separated from Service after 31 December 2004 and before 1 January 2008 shall also receive a one-time lump sum cash payment equal to the amount that such Participants would have been paid had the preceding paragraph been effective on

 

A-1

Revised Oct 2011

 

the date of their Separation from Service, provided that the average yield in September 2007 on 30-year Treasury Constant Maturities (as published in October 2007 by the Internal Revenue Service) shall be used in determining the amount of such one-time lump sum payment. This one-time lump sum payment shall be paid on or before 29 February 2008, but in no event earlier than the date that is six months and one day after the date of the Participant’s Separation from Service.

 

ARTICLE A-2

DEATH AND DISABILITY BENEFITS

 

A-2.1          Application of Article A-2.

 

(A)                           Death. This Article A-2 addresses the survivor benefit or death benefit (in each case, if any) under this Plan with respect to a Participant who incurs a Separation from Service due to his death on or after 1 January 2007.

 

(B)                           Disability. This Article A-2 addresses the Payment Date and the Plan Benefit of a Participant who incurs a Separation from Service due to his Disability on or after 1 January 2007.

 

A-2.2          No Additional Rights Because of Death. No survivor or death benefit shall be payable to any person under this Article A-2 in respect of a Participant unless the Participant had a Vested Plan Benefit on the date of death.

 

A-2.3          Rules Based on Timing of Death.

 

(A)                           Survivor or Death Benefits to Unmarried Participants. If a Participant is not married to a surviving spouse or has not been married to a surviving spouse for at least one year immediately prior to the date of death:

 

(i)                                  as of the date of his Separation from Service and (a) he is an active employee (i.e., has not incurred a Separation from Service) of the Company as of the date immediately preceding his Separation from Service and (b) such Separation from Service is by reason of the Participant’s death, no survivor benefit or death benefit with respect to such Participant’s Vested Plan Benefit, if any, shall be payable to any person and such Plan Benefit shall be forfeited as of the date of death; or

 

(ii)                              as of the date of his death and his Separation from Service occurs prior to the date of death, the survivor benefit or death benefit with respect to such Participant’s Vested Plan Benefit, if any, shall be payable to such Participant’s estate in accordance with the time and form of payment set forth in Section A-1.2 or A-1.3, as applicable.

 

(B)                           Separation From Service Due to Death.

 

(i)                                  If an active Participant (i.e., a Participant who has not incurred a Separation from Service) who is Retirement Eligible incurs a Separation from Service

 

A-2

Revised Oct 2011

 

due to his death and, as of the date of death, has been married to a Spouse for at least one year immediately prior to the date of death, the surviving spouse shall be paid a single lump sum equal to 55% of the Lump Sum payable to the Participant had the Participant Retired on the date of his death. Such Lump Sum shall be calculated using lump sum equivalency factors for a Single Life Annuity payable immediately based on the Participant’s age at the date of death. Notwithstanding anything in Section A-1.1, A-1.2 or A-1.3 to the contrary regarding the time or form of payment, such lump sum distribution to the surviving spouse shall be made on the 15th day of the month following the month in which the Participant dies. Effective for Participant dates of death on or after 01 July 2010, such lump sum distribution to the surviving spouse shall be made on the 15th day of January of the year following the Participant’s death.

 

(ii)                              If an active Participant who is not Retirement Eligible incurs a Separation from Service by reason of his death and, as of the date of death, has been married to a Spouse for at least one year immediately prior to the date of death, the surviving spouse shall be paid a single lump sum equal to 55% of the Lump Sum payable to the Participant had the Participant lived until the earliest date on which he would be eligible for an unreduced benefit under the Salaried Pension Plan and then Retired. Such lump sum payable to the surviving spouse shall be calculated using the lump sum equivalency factors for a Lump Sum which is actuarially equivalent to a deferred Single Life Annuity payable on the earliest unreduced benefits date under the Salaried Pension Plan had the Participant lived to Retire and based on the Participant’s age at the date of death. The Lump Sum payable pursuant to this Section A-2.3(B)(ii) shall be paid on the 15th day of the month following the month in which the Participant dies, notwithstanding anything to the contrary in Section A-1.1, A-1.2 or A-1.3 regarding the time or form of payment. Effective for Participant dates of death on or after 01 July 2010, such lump sum distribution to the surviving spouse shall be made on the 15th day of January of the year following the Participant’s death.

 

(C)                          One-Time Lump Sum. Effective 1 July 2010, the surviving spouses of Participants shall receive an amount equal to the interest that would be credited on their Account for the period beginning on the date of Separation from Service and ending on the 15th of January in the year following the Participant’s death, determined by using an interest rate equal to the average yield in September of the preceding Plan Year on 30-year Treasury Constant Maturities (as published in October by the Internal Revenue Service). This one-time lump sum payment shall be paid at the same time as the first distribution of the Participant’s Vested Plan Benefit under the Plan.

 

(D)         Death After Separation from Service and Prior to Payment of Lump Sum. If a Participant dies after his Separation from Service but prior to the receipt of the Lump Sum distribution, such Lump Sum shall be determined and paid in accordance with Section A-1.2 or A-1.3, as applicable.

 

A-2.4   Separation from Service Due to Disability.

 

(A)         Separation from Service on or After 1 January 2007. A Participant who incurs a Separation from Service due to a Disability on or after 1 January 2007

 

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Revised Oct 2011

 

shall receive a distribution of his Plan Benefit in a Lump Sum paid in accordance with Section A-1.2 or A-1.3. The Participant’s immediate Single Life Annuity, which is then converted into a Lump Sum in accordance with Section 3.3, shall be determined in accordance with Section 3.2 as though the Participant (i) had remained employed with the Company until the first day of the calendar month following his or her 65th birthday, (ii) received pay, determined as of the end of the elimination period under the John Deere Long-Term Disability Plan for Salaried Employees, until the date in (i) above, and (iii) then incurred a Separation from Service with the Company.

 

(B)                           Separation From Service Prior to 1 January 2005. If a Participant incurred a Separation from Service due to Disability prior to 1 January 2005, is entitled to a Plan Benefit based in part on credit for service with the Company after 31 December 2004 and, as of 1 January 2005, has not commenced payment of his Plan Benefit, such Plan Benefit shall be paid in a Lump Sum in accordance with Section A- 1.2 or A-1.3; provided however, that if the date specified for payment under Section A- 1.2 or A-1.3 is prior to 30 November 2007, such Lump Sum shall be paid on or before 30 November 2007. The amount of the Participant’s Plan Benefit shall be determined in accordance with Section 3.2 and Section A-2.4(A).

 

(C)                          The provisions of this Section A-2.4 shall be superseded by Section A-2.3 in the event that a Participant’s death occurs prior to payment of his entire Plan Benefit.

 

A-2.5     Return to Work Following Disability. If a Participant who has commenced payment of his Plan Benefit returns to work with the Company following his Separation from Service due to Disability and is eligible to become a Participant upon such return to work, such Participant shall begin accruing a new Plan Benefit. The determination of such Participant’s new Plan Benefit shall include the period beginning on the date of such Participant’s initial Separation from Service and ending on his subsequent Separation from Service following his return to work. Upon such Participant’s subsequent Separation from Service, the Participant’s new Plan Benefit shall equal his or her (i) Aggregate Plan Benefit, less (ii) the Lump Sum value of the Plan Benefit which the Participant previously received with interest credited from the date of receipt through the date of subsequent payment using the interest rate described in Section 3.3, and shall be paid to the Participant in a Lump Sum in accordance with Section A-1.2 or A-1.3, as applicable, based on the date of such subsequent Separation from Service. For purposes of this Section A-2.5, the Participant’s Aggregate Plan Benefit means the Plan Benefit the Participant would be entitled to receive had he or she remained continuously employed with the Company from his initial date of hire through the date of the Participant’s subsequent Separation from Service, recalculated pursuant to Section 3.2 based on all service with the Company and all compensation paid by the Company, solely to the extent that such service and compensation are considered under the Salaried Pension Plan.

 

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Revised Oct 2011

 

APPENDIX B

 

ARTICLE B-1

MISCELLANEOUS PROVISIONS

 

B-1.1          Application of this Article. For purposes of clarification, the provisions in this Appendix B supplement the provisions in Appendix A, and are effective 1 January 2007 unless otherwise provided.

 

B-1.2          Impact of Vacation. If a Participant’s Retirement occurs immediately prior to or during such Participant’s Vacation, then, solely for purposes of determining the amount of the Plan Benefit for a Participant, such Participant’s Separation from Service shall be determined in accordance with the Prior Plan and the Participant shall be eligible to accrue benefits in accordance with the Plan until such Separation from Service; provided, however, that solely for purposes of this Section B- 1.2, Vacation shall exclude any day of vacation not used by the Participant to extend his service under the Salaried Pension Plan. Determinations under this Plan which provide for one day to be added for each day of Vacation shall be made using the same rules and principles applied to count days of Vacation used by active employees. (For example, weekends, holidays and scheduled shutdowns are not counted as Vacation days.)

 

B-1.3          Impact of Leave of Absence and Special Paid Leave of Absence.

 

(A)         Leave of Absence. If a Participant who has commenced payment of his Plan Benefit returns to work with the Company following his Separation from Service due to an approved Leave of Absence and is eligible to become a Participant upon such return to work, such Participant shall begin accruing a new Plan Benefit. Upon such Participant’s subsequent Separation from Service, the Participant’s new Plan Benefit shall equal his or her (i) Aggregate Plan Benefit, less (ii) the Plan Benefit which the Participant previously received with interest credited annually using the interest rate described in Section 3.3, and shall be paid to the Participant in a Lump Sum in accordance with Section A-1.2 or A-1.3, as applicable, based on the date of such subsequent Separation from Service. For purposes of this Section B-1.3, the Participant’s Aggregate Plan Benefit means the Participant’s Plan Benefit determined as though the Participant had never commenced payment of his Plan Benefit upon the original Separation from Service, recalculated pursuant to Section 3.2 based on all service with the Company and all compensation paid by the Company, solely to the extent that such service and compensation are considered under the Salaried Pension Plan.

 

(B)         Special Paid Leave of Absence. Solely for purposes of determining the amount of such Participant’s Vested Plan Benefit, a Participant who incurs a Separation from Service by reason of a Special Paid Leave of Absence shall receive a distribution of his Plan Benefit in a Lump Sum paid in accordance with Section A-1.3. The Participant’s immediate Single Life Annuity, which is then converted into a Lump

 

5

Revised Oct 2011

 

Sum in accordance with Section 3.3, shall be determined in accordance with Section 3.2 as though the Participant (i) had remained employed with the Company until expiration of such Participant’s Special Paid Leave of Absence (ii) received pay, determined as of the date of the Participant’s commencement of the Special Paid Leave of Absence, until the date in (i) above, and (iii) then incurred a Separation from Service with the Company.

 

B-1.4          No Acceleration or Delay. The Administrator shall not accelerate or delay payment under the Plan except to the extent that such acceleration or delay shall not cause any person to incur additional taxes, interest or penalties under Section 409A (“Section 409A Compliance”).

 

B-1.5          Interpretation Consistent with Section 409A Compliance. To the extent interpretation of the Plan is required, such interpretation shall be consistent with Section 409A Compliance.

 

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Revised Oct 2011

 

ARTICLE B-2

AMENDMENT AND TERMINATION

 

B-2.1   Amendment and Termination. Notwithstanding any provision in this Plan to the contrary, the Board of Directors, the Committee, or the Deere & Company Management Compensation Committee shall have the unilateral right to amend, modify or terminate the Plan at any time. The Vice President of Human Resources of the Company shall have the unilateral right to amend or modify the Plan to the extent the Vice President of Human Resources of the Company deems such action to be necessary or advisable to avoid the imposition on any person of adverse or unintended tax consequences under Section 409A. Any determinations made by the Board of Directors, the Committee, the Management Compensation Committee, or the Vice President of Human Resources of the Company under this Section B-2.1 shall be final, conclusive and binding on all persons.

 

B-2.2   Plan Benefit in the Event of Termination. With respect to a Participant’s Plan Benefit, if the Plan is terminated, Plan Benefits shall be paid in accordance with Appendix A, unless the Board of Directors or the Committee, in its discretion and in full and complete settlement of the Company’s obligations under this Plan, causes the Company to distribute the full amount of a Participant’s then accrued and Vested Plan Benefit to the Participant in a Lump Sum; provided, that such distribution may be effected in a manner that will result in Section 409A Compliance.

 

 

ARTICLE B-3

DEFINITIONS

 

B-3.1   Section References. All references to sections are, unless otherwise indicated, references to sections of the Plan, including the appendices.

 

B-3.2   Terms Defined. Except as otherwise provided, whenever used in Appendix A, the following terms shall have the meanings set forth below:

 

“Annuity” means a Single Life Annuity or a Joint and Survivor Annuity.

 

“Committee” means the Company’s Pension Plan Oversight Committee.

 

“Disability” shall have the same meaning as under the Salaried Pension Plan or the John Deere Long-Term Disability Plan for Salaried Employees.

 

“Joint and Survivor Annuity” shall have the meaning set forth in the Salaried Pension Plan.

 

“Lump Sum” means the actuarial equivalent of a Participant’s Plan Benefit payable in a single cash lump sum on the Payment Date.

 

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Revised Oct 2011

 

“Payment Date” means the date the Participant receives his Plan Benefit, in all cases in accordance with the applicable provisions of the Plan.

 

“Plan Benefit” means, as of a given date, the total benefit payable under the Plan to a Participant, expressed as a Single Life Annuity in accordance with the rules of Section 3.2, commencing on the Participant’s Normal Retirement Date or Postponed Retirement Date, as applicable, that a Participant has accrued under the Plan.

 

“Prior Plan” means the terms of the Plan in effect immediately prior to 1 January 2005, as set forth in the Company’s written documents, rules, practices and procedures applicable to this Plan.

 

“Retirement” or “Retire” means a Separation from Service by a Participant who is then Retirement Eligible.

 

“Retirement Eligible” means eligible for a normal retirement benefit or an early retirement benefit within the meaning of the terms of the Salaried Pension Plan in effect as of 1 January 2007.

 

“Section 409A” means Section 409A of the Code and the applicable rulings and regulations promulgated thereunder.

 

“Section 409A Compliance” has the meaning set forth in Section B-1.4.

 

“Separation from Service” means, with respect to a Participant, a separation from service within the meaning of the default rules of Section 409A; provided that:

 

for purposes of determining which entities are treated as a single “service recipient” with the Company, the phrase “at least 20 percent” shall be substituted for the phrase “at least 80 percent” each place it appears in Sections 1563(a)(1), (2) and (3) of the Code and Section 1.414(c)-2 of the Treasury Regulations, as permitted under Section 1.409A-1(h)(3) of the Treasury Regulations; and

 

a Participant absent from work due to Disability shall incur a Separation from Service 29 months after the date on which the Participant was first Disabled.

 

“Single Life Annuity” means a Participant’s Plan Benefit payable in monthly installments over the life of the Participant, commencing as of the Payment Date and ending with the payment due for the month in which the Participant dies, with no further payments on his behalf after his death.

 

“Special Paid Leave of Absence” has the meaning set forth in the Deere & Company Policy for Special Paid Leave of Absence for Salaried Employees.

 

B-2

Revised Oct 2011

 

“Termination” means a Separation from Service by a Participant who is not Retirement Eligible.

 

“Vacation” means one or more days, as the case may be, of such vacation to which the Participant is entitled pursuant to the policies and practices of the Company then in effect and (i) as of the date of the Participant’s Separation from Service, deferred from a prior anniversary year and unused as of such Separation from Service, (ii) earned in the current anniversary year and unused as of such Separation from Service and (iii) if a Participant’s Vacation described in clause (i) or (ii) of this definition is used in the anniversary year following the anniversary year in which such Separation from Service occurs, earned in such following anniversary year, whether or not used by the Participant.

 

“Vested Plan Benefit” means the portion of the Participant’s Plan Benefit that has vested in accordance with Article 3.

 

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Revised Oct 2011Exhibit 10.11

 

	
CITIGROUP GLOBAL MARKETS INC.

390 Greenwich Street

New York, NY 10013
    	
 
    	
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

BANK OF AMERICA, N.A.

One Bryant Park

New York, NY 10036
    
	
 
    	
 
    	
 
    
	
WF INVESTMENT HOLDINGS, LLC

WELLS FARGO SECURITIES, LLC

550 S. Tryon Street, 6th Floor

Charlotte, NC 28202
    	
 
    	
JPMORGAN CHASE BANK, N.A.

270 Park Avenue

New York, NY 10017

 
    
	
 
    	
 
    	
 
    
	
WELLS FARGO BANK, NATIONAL ASSOCIATION

1000 Louisiana St., 9th Floor

Houston, TX 77002
    	
 
    	
J. P. MORGAN SECURITIES LLC

383 Madison Avenue

New York, NY 10179
    

 

July 15, 2014

 

C&J Energy Services, Inc.

3900 Rogerdale

Houston, TX 77042

Attention:  Randall C. McMullen, Jr.

 

PROJECT NAVY

AMENDED AND RESTATED COMMITMENT LETTER

 

Ladies and Gentlemen:

 

Reference is made to the commitment letter dated as of June 25, 2014 (the “Original Commitment Letter”) between C&J Energy Services, Inc., a Delaware corporation (the “Company” or “you”), and Citigroup Global Markets Inc. (“CGMI”).  This Amended and Restated Commitment Letter amends and restates the Original Commitment Letter in its entirety.

 

You have advised Citi (as defined below), Bank of America, N.A. (“BofA”), Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”), Wells Fargo Bank, National Association (“WF”), WF Investment Holdings, LLC (“WF Investment”), Wells Fargo Securities, LLC (“WFS”), JPMorgan Chase Bank, N.A. (“JPMCB”) and J.P. Morgan Securities LLC (“JPMS” and, together with Citi, BofA, MLPFS, WF, WF Investment, WFS and JPMCB, each a “Commitment Party” and collectively, the “Commitment Parties”, “we” or “us”) that a newly-formed Delaware corporation (“Merger Sub”) that is a wholly-owned subsidiary of Nabors Red Lion Limited, a Bermuda exempted company (“Red Lion”), which is a wholly-owned subsidiary of Nabors Industries Ltd., a Bermuda exempted company (“Navy”) intends to merge

 

 

(the “Merger”) with the Company pursuant to the Merger Agreement (as defined in Exhibit A attached hereto).

 

You have further advised us that, in connection with the Merger, Red Lion and/or a newly-formed Delaware corporation that is an indirect wholly-owned subsidiary of Red Lion (“USAcq”), intends to establish the Term B Facility, the Revolving Credit Facility and the Bridge Facility described herein and you intend to consummate the other Transactions described in the Transaction Description attached hereto as Exhibit A (the “Transaction Description”).  Capitalized terms used but not defined herein shall have the meanings assigned to them in the Transaction Description or the Summaries of Principal Terms and Conditions attached hereto as Exhibits B, C and D (the “Term Sheets”; this commitment letter, the Transaction Description, the Term Sheets, the Summary of Additional Conditions attached hereto as Exhibit E and the Fee Letter, collectively, the “Commitment Letter”).

 

Subject to the terms and conditions of this Commitment Letter:

 

(a)                                 Citigroup Global Markets Inc. (“CGMI”), on behalf of itself, Citibank, N.A., Citicorp USA, Inc., Citicorp North America, Inc. and/or any of their affiliates as may be appropriate to consummate the transactions contemplated hereby (collectively, “Citi”), is pleased to inform the Company of Citi’s several, but not joint, commitment to provide (i) $300,000,000 of the Revolving Credit Facility, (ii) 50% of the Term B Facility and (iii) 50% of the Bridge Facility (the Bridge Facility, together with the Revolving Credit Facility and the Term B Facility, the “Facilities”);

 

(b)                                 BofA is pleased to inform the Company of BofA’s several, but not joint, commitment to provide (i) $120,000,000 of the Revolving Credit Facility, (ii) 20% of the Term B Facility and (iii) 20% of the Bridge Facility;

 

(c)                                  WF is pleased to inform the Company of WF’s several, but not joint, commitment to provide (i) $90,000,000 of the Revolving Credit Facility and (ii) 15% of the Term B Facility, and WF Investment is pleased to inform the Company of WF Investment’s several, but not joint, commitment to provide 15% of the Bridge Facility; and

 

(d)                                 JPMCB is pleased to inform the Company of JPMCB’s several, but not joint, commitment to provide (i) $90,000,000 of the Revolving Credit Facility, (ii) 15% of the Term B Facility and (iii) 15% of the Bridge Facility.

 

Upon the receipt by Red Lion or USAcq of gross cash proceeds from the issuance of any Notes (as defined below), and to the extent the proceeds of such Notes are available to consummate the Transactions (as defined below), the commitments of the Commitment Parties under the Bridge Facility shall automatically be reduced on a pro rata basis by an amount equal to the gross cash proceeds received by Red Lion or USAcq from such issuance.

 

Section 1.  Conditions Precedent.  Each Commitment Party’s commitments and other obligations hereunder are subject solely to the satisfaction of the conditions set forth in this Section 1 and (a) the conditions set forth in the section entitled “Closing Conditions” in Exhibit B hereto, solely in the case of the commitments with respect to the Revolving Credit Facility and the Term B Facility (collectively, the “Senior Secured Facilities”), (b) the conditions set forth in

 

2

 

the section entitled “Closing Conditions” in Exhibit C hereto, solely in the case of the commitments with respect to the Bridge Facility, and (c) the conditions set forth in Exhibit D hereto and, upon satisfaction (or waiver by the Commitment Parties) of such conditions, the initial funding of the Facilities shall occur.

 

In addition, the Commitments of each Commitment Party hereunder are subject to the execution and delivery of the Facilities Documentation by the Borrowers and the Guarantors party thereto subject in each case to the Certain Funds Provisions set forth below.

 

“Facilities Documentation” shall mean definitive documentation with respect to each of the Revolving Credit Facility, the Term B Facility and the Bridge Facility, including without limitation credit agreements, security agreements, guarantees and other agreements incorporating substantially the terms and conditions outlined in this Commitment Letter and Term Sheets and otherwise reasonably satisfactory to the Commitment Parties and you.

 

Notwithstanding anything in this Commitment Letter (including the Term Sheets), the Fee Letter, the Facilities Documentation or any other letter agreement or other undertaking concerning the financing of the Transactions to the contrary, (i) the only representations or warranties the accuracy of which shall be a condition to the availability of the Facilities on the Closing Date shall be (A) such of the representations made by Navy in the Merger Agreement as are material to the interests of the Commitment Parties or the Lenders, but only to the extent that you (or your affiliate) have the right to terminate your (or its) obligations under the Merger Agreement (or decline to consummate the Merger pursuant to the Merger Agreement) as a result of a breach of such representations in the Merger Agreement (to such extent, the “Specified Merger Agreement Representations”) and (B) the Specified Representations (as defined below) in the Facilities Documentation and (ii) the terms of the Facilities Documentation shall be in a form such that they do not impair the availability of the Facilities on the Closing Date if the relevant conditions set forth in this Section 1, under the heading “Closing Conditions” in Exhibit B, under the heading “Closing Conditions” in Exhibit C and the conditions set forth in Exhibit D are satisfied or otherwise waived, it being understood that, (x) to the extent any lien search or Collateral (including the creation or perfection of any security interest) is not or cannot be provided on the Closing Date after your use of commercially reasonable efforts to do so or without undue burden or expense (other than, to the extent required under the Term Sheets, (1) creation and perfection of a lien on Collateral that may be perfected solely by the filing of a financing statement under the UCC (or similar provisions of foreign law) or filings with the United States Patent and Trademark Office or United States Copyright Office and (2) a pledge of certificated equity interests owned by any Credit Party, along with stock (or similar) powers endorsed in blank) with respect to which a lien may be perfected on the Closing Date by the delivery of a stock (or similar) certificate), then the provision of any such lien search and/or the provision and/or perfection of such Collateral shall not constitute a condition precedent to the availability and initial funding and/or availability of the Facilities on the Closing Date but may instead be delivered and/or perfected within 90 days after the Closing Date pursuant to arrangements to be mutually agreed by the parties hereto acting reasonably (or such longer period or extensions as the administrative agent under the Senior Secured Facilities may reasonably agree in its reasonable discretion), and (y) without limitation of clause (x), with respect to guarantees and security to be provided by any subsidiary that is otherwise required to become a Guarantor, if such guarantees and security cannot be provided as a condition precedent solely because the directors or managers of such entities have not authorized such guarantees and

 

3

 

security and the election of new directors or managers to authorize such guarantees and security has not taken place prior to the funding of the Facilities, such guarantees and security may be provided not later than 11:59 p.m. (New York City time) on the Closing Date.  For purposes hereof, “Specified Representations” means, with respect to the Facilities, the representations and warranties of USAcq, the Company and the other Guarantors relating to corporate or other organizational existence of USAcq, the Company and the other Guarantors, power and authority of USAcq, the Company and the other Guarantors with respect to the relevant Facilities Documentation, due authorization, execution and delivery by USAcq, the Company and the other Guarantors of the relevant Facilities Documentation, enforceability of the relevant Facilities Documentation against USAcq, the Company and the other Guarantors, no violation of, or conflict with USAcq’s, the Company’s or any other Guarantor’s organizational documents related to the entering into and performance of the relevant Facilities Documentation, validity, priority and perfection of security interests (subject to the foregoing provisions of this paragraph), solvency as of the Closing Date (after giving effect to the Transactions) of USAcq and its subsidiaries on a consolidated basis (with solvency to be defined in a manner consistent with the solvency certificate to be delivered in the form set forth in Annex I attached to Exhibit E hereto), Federal Reserve margin regulations, the Investment Company Act, the Patriot Act, OFAC and use of proceeds not in violation of FCPA.  The provisions of this paragraph are referred to as the “Certain Funds Provisions”.

 

Section 2.  Commitment Termination.  Each Commitment Party’s commitments and other obligations set forth in this Commitment Letter with respect to the Facilities will terminate on the earlier of (a) the fifth business day following the earlier of (i) termination of the Merger Agreement pursuant to Section 8.1 of the Merger Agreement as in effect on June 25, 2014 and (ii) December 31, 2014, if the Merger shall not have been consummated on or prior to that date; provided that if the “End Date” (as defined in the Merger Agreement) is extended beyond December 31, 2014 pursuant to Section 8.1(c) of the Merger Agreement (as in effect on June 25, 2014), such date shall be, upon written notice of such extension to the Commitment Parties, automatically extended for such period (but in any event not beyond March 31, 2015), and (b) the consummation of the Merger with or without the funding of the Facilities, unless in either case the Commitment Parties shall agree to an extension in writing.  In addition, each Commitment Party’s commitments and other obligations set forth in this Commitment Letter with respect to the Bridge Facility will terminate upon the issuance by the Company of Notes to the extent the gross cash proceeds therefrom received by the Company equals or exceeds the aggregate amount of commitments to the Bridge Facility hereunder and to the extent the proceeds of such Notes are available to consummate the Transactions.  Notwithstanding the foregoing, the termination of the Commitment Parties’ commitment and other obligations hereunder will not affect Sections 4 through 13, which provisions will survive any such termination; provided that your obligations under this Commitment Letter (other than your obligations with respect to (a) assistance to be provided in connection with the syndication thereof (including supplementing and/or correcting Information and Projections), (b) confidentiality of the Fee Letter and the contents thereof and (c) the Fee Letter) shall automatically terminate and be superseded by the provisions of the Facilities Documentation to the extent covered thereby upon the initial funding thereunder, and you shall automatically be released from all liability in connection therewith at such time.  You may terminate this Commitment Letter and/or the Commitment Parties’ commitments and other obligations set forth in this Commitment Letter with respect to the Facilities (or a portion thereof) hereunder at any time subject to the provisions of the preceding sentence.

 

4

 

Each of the parties hereto agrees that this Commitment Letter is a binding and enforceable agreement with respect to the subject matter contained herein (except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law)), it being acknowledged and agreed that the commitments provided hereunder are subject solely to the conditions expressly stated herein.  The Facilities Documentation shall be negotiated in good faith.

 

Section 3.  Syndication.  Each Commitment Party reserves the right, before or after the execution of the Facilities Documentation, to syndicate all or a portion of each Facility (including all or part of such Commitment Party’s commitments thereunder) to one or more other financial institutions acceptable to the Company (which acceptance (x) will not be unreasonably withheld or delayed and (y) will not be required after the execution of the Facilities Documentation if there is an event of default thereunder or in connection with any assignment to other Lenders (or to affiliates or certain approved funds thereof)) that will become parties to the applicable Facilities Documentation pursuant to a syndication to be managed by the Lead Arrangers (as defined below) (the financial institutions becoming parties to the Facilities Documentation being collectively referred to herein as the “Lenders”); it being understood that the Lead Arrangers will not syndicate to any Disqualified Institutions (as defined below).  “Disqualified Institution” means (i) any person identified by name in writing to the Lead Arrangers on or prior to the date of the Original Commitment Letter, (ii) any other person identified in writing to the Lead Arrangers after the date of the Original Commitment Letter to the extent such person is or becomes a competitor or is or becomes an affiliate of a competitor of you, your subsidiaries, Navy or Navy’s subsidiaries, which designations shall be in the form of a list provided to the Lead Arrangers and the Lenders but which designations shall not apply retroactively to disqualify any persons that have previously acquired an assignment or participation interest in any Facilities and (iii) any affiliate of any person referred to in clauses (i) or (ii) above that is readily identifiable as such based on its name.

 

Citi, MLPFS, WFS and JPMS will act as lead arrangers (collectively, the “Lead Arrangers”) with respect to the Facilities and, in such capacity, will manage all aspects of the syndication of the Facilities in consultation with the Company, including the timing of all offers to potential Lenders, the determination of the amounts offered to potential Lenders, the acceptance of commitments of the Lenders, the assignment of any titles and the compensation to be provided to the Lenders.  Notwithstanding the Commitment Parties’ right to syndicate the Facilities and receive commitments with respect thereto, it is agreed that neither the commencement nor completion of the syndication of, nor receipt of commitments in respect of, all or any portion of the commitments hereunder shall be a condition to the Commitment Parties’ commitments and, unless you otherwise agree in writing, (i) each Commitment Party shall retain exclusive control over all rights and obligations with respect to its commitments, including all rights with respect to consents, modifications and amendments, until the Closing Date has occurred and (ii) except as set forth in the following paragraph, no Commitment Party shall be relieved, released or novated from its obligations hereunder (including its obligation to fund the Facilities on the date of the consummation of the Merger) until and after the Closing Date has occurred.

 

Notwithstanding the foregoing, not later than August 9, 2014, you may (x) arrange for additional financial institutions (each, an “Additional Co-Manager”) selected by you in consultation with us to assume (pursuant to customary joinder documentation reasonably

 

5

 

satisfactory to you and us) a ratable portion of the commitments of the Commitment Parties with respect to the Term B Facility and the Bridge Facility (in which case the commitments of the Commitment Parties hereunder will be reduced on a pro rata basis by the amount of the commitments assumed by such Additional Co-Managers); provided that, (1) in no event shall the aggregate commitments in respect of the Term B Facility and the Bridge Facility allocated to the Additional Co-Managers exceed 12.5% of the aggregate commitments of the Commitment Parties under the Term B Facility and the Bridge Facility on the date hereof and (2) any such allocation of commitments to any Additional Co-Manager shall reduce the commitments of the Commitment Parties on a pro rata basis, and (y) appoint any Additional Co-Manager as non-bookrunning co-agent or confer other titles (other than bookrunner) in respect of the Facilities in a manner determined by you in consultation with the Lead Arrangers; provided that (i) the portion of the fees payable to each Additional Co-Manager shall be in proportion to its commitments and (ii) no Additional Co-Manager shall receive economics greater than the economics received by any Commitment Party party hereto on the date hereof.  It is understood and agreed that Citi will have “left” placement in all marketing materials and other documentation used in connection with the Facilities; provided that to the extent any other Commitment Party (or one of its affiliates) is designated as Administrative Agent under the Revolving Credit Facility, such Commitment Party may have “left” placement solely with respect to marketing materials and other documentation used in connection with the Revolving Credit Facility.  Each party hereto agrees to execute such joinders, amendments and other documents as are required to give effect to this paragraph.  From and after the execution by any financial institution of such joinder documentation, such financial institution (and any relevant affiliate) shall constitute, with respect to each Facility, a “Lead Arranger” and/or a “Commitment Party”, as applicable, hereunder.

 

Until the earlier of (x) the date of completion of a Successful Syndication (as defined in the Fee Letter) and (y) the date that is 60 days after the Closing Date (in either case, the “Syndication Date”), the Company will take all action, as the Lead Arrangers may reasonably request, to assist the Lead Arrangers in forming a syndicate reasonably acceptable to the Lead Arrangers and the Company (which acceptance will not be unreasonably withheld or delayed).  The Company’s assistance in forming such a syndicate will include, without limitation (a) making senior management and representatives of the Company available (and your using commercially reasonable efforts to cause Navy and Red Lion to make their respective senior management and representatives available) to participate in information meetings with potential Lenders and rating agencies at such times and, to the extent applicable, places, to be mutually agreed; (b) using commercially reasonable efforts to ensure that the syndication efforts benefit from the Company’s existing lending relationships and, to the extent practical and appropriate, the existing lending relationships of Navy and Red Lion; (c) assisting (including your using commercially reasonable efforts to cause your affiliates and advisors and Navy and Red Lion to assist) in the preparation of a confidential information memorandum for each Facility and other marketing and rating agency materials to be used in connection with the syndication of each Facility; (d) promptly preparing and providing all financial and other information as we may reasonably request with respect to you, Red Lion (to the extent that such information is available to you through the exercise of commercially reasonable efforts without a breach of any applicable confidentiality agreements), your and its respective subsidiaries and the Transactions, including, but not limited to, financial projections relating to the foregoing; (e) hosting, with the Lead Arrangers, a reasonable number of meetings with prospective Lenders at such times and places to be mutually agreed; and (f) using commercially reasonable efforts to obtain, at your expense, monitored public corporate

 

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credit/family ratings (but not a specific rating) of USAcq and ratings (but not a specific rating) of the Notes that are used to take out the Bridge Facility from Moody’s Investors Service and Standard & Poor’s Ratings Group and participate actively in the process of securing such ratings.

 

The Company acknowledges that (a) the Lead Arrangers may make available any Information and Projections (each as defined in Section 8) (collectively, the “Company Materials”) to potential Lenders by posting the Company Materials on IntraLinks, Debtdomain, the Internet or another similar password-protected electronic system (the “Platform”) and (b) certain of the potential Lenders may be public side Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Company, Navy or their respective securities) (each, a “Public Lender”).  The Company agrees that: (i) at the request of the Lead Arrangers, it will prepare a version of the information package and presentation to be provided to potential Lenders that does not contain material non-public information concerning the Company, Navy or their respective securities for purposes of United States federal and state securities laws; (ii) all Company Materials that are to be made available to Public Lenders will be clearly and conspicuously marked “PUBLIC” which, at a minimum, will mean that the word “PUBLIC” will appear prominently on the first page thereof; (iii) by marking Company Materials “PUBLIC,” the Company will be deemed to have authorized the Lead Arrangers and the proposed Lenders to treat such Company Materials as not containing any material non-public information (although they may be confidential or proprietary) with respect to the Company, Navy or their respective securities for purposes of United States federal and state securities laws; (iv) all Company Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Lender”; and (v) the Lead Arrangers will be entitled to treat any Company Materials that are not marked “PRIVATE” as being suitable for posting on a portion of the Platform designated “Public Lender.”

 

It is understood that in connection with your assistance described above, you will provide customary authorization letters (in the case of a public-side version of the Company Materials, containing a representation as to the absence of material non-public information therefrom), reasonably satisfactory to the Lead Arrangers, authorizing the distribution of the Company Materials to prospective Lenders, which letters shall include a customary 10b-5 representation.

 

To ensure an effective syndication of each Facility, until the Syndication Date, the Company will not, and will not permit any of its affiliates to, syndicate or issue, attempt to syndicate or issue, or announce or authorize the announcement of, the syndication or issuance of, any debt facility or debt security (including any renewals thereof) that could reasonably be expected to materially impair syndication of the Facilities other than (i) the Bridge Facility (including (a) the Notes and (b) any securities issued under a related securities demand), (ii) the Revolving Credit Facility, (iii) the Term B Facility, (iv) ordinary course capital leases and (v) any Permitted Surviving Debt, in each case without the prior written consent of the Lead Arrangers.

 

Notwithstanding anything to the contrary contained in this Commitment Letter, the Fee Letter or any other agreement or undertaking concerning the financing of the Transactions to the contrary, (i) none of the foregoing (including your compliance with the terms of this Section 3) shall constitute a condition to the commitments of any Commitment Party to the Facilities hereunder or the funding or availability of the Facilities on the Closing Date and (ii) neither the commencement nor the completion of the syndication of the Facilities shall constitute a

 

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condition to the commitments of any Commitment Party to the Facilities hereunder or the funding or availability of the Facilities on the Closing Date.

 

Section 4.  Fees.  In addition to the fees described in this Commitment Letter, the Company will pay (or cause to be paid) the non-refundable fees set forth in the letter agreement dated the date hereof (as amended or otherwise modified from time to time, the “Fee Letter”) between the Company and the Commitment Parties delivered herewith.  The terms of the Fee Letter are an integral part of the Commitment Parties’ commitments and other obligations hereunder and constitute part of this Commitment Letter for all purposes hereof.

 

Section 5.  Indemnification.  The Company will indemnify and hold harmless each Commitment Party and each of its affiliates and each of their respective officers, partners, directors, employees, advisors, agents and representatives (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities and out-of-pocket expenses, including reasonable and documented out-of-pocket legal expenses (limited to one counsel for all Indemnified Parties taken as a whole and, if necessary, a single local counsel for all Indemnified Parties taken as a whole in each relevant jurisdiction and, solely in the case of an actual or perceived conflict of interest (in which case, such Indemnified Party shall endeavor to notify the Company of such conflict of interest, but the failure to so notify the Company shall not affect the Company’s obligations under this Section 5), one additional counsel in each relevant jurisdiction to each group of affected Indemnified Parties taken as a whole, but in each case, excluding costs of in-house counsel), that may be incurred by or asserted or awarded against any Indemnified Party (including without limitation, in connection with any investigation, litigation or proceeding or the preparation of a defense in connection therewith (any of the foregoing, a “Proceeding”)), in each case, arising out of or in connection with or by reason of this Commitment Letter or the Facilities Documentation or the transactions contemplated hereby or thereby or any actual or proposed use of the proceeds of any Facility, except (i) to the extent resulting from the willful misconduct, bad faith or gross negligence of such Indemnified Party or any of its Related Indemnified Parties (as defined below), as determined by a court of competent jurisdiction in a non-appealable, final judgment, (ii) to the extent arising from a material breach of the obligations of such Indemnified Party or any of its Related Indemnified Parties under this Commitment Letter, as determined by a court of competent jurisdiction in a non-appealable, final judgment or (iii) to the extent arising from any dispute solely among Indemnified Parties and not arising out of any act or omission of you or any of your respective subsidiaries or affiliates (other than any claims against any Commitment Party in its capacity or in fulfilling its role as Administrative Agent or Lead Arranger under any Facility).  In the case of a Proceeding to which the indemnity in this paragraph applies, such indemnity will be effective whether or not such Proceeding is brought by the Company, USAcq, Navy, Red Lion, any of their respective affiliates, directors, security holders or creditors, an Indemnified Party or any other person or an Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated.  The reimbursement and indemnity obligations of the Company under this paragraph will be in addition to any liability which the Company may otherwise have, will extend upon the same terms and conditions to any affiliate of any Commitment Party and the partners, directors, agents, employees and controlling persons (if any), as the case may be, of such Commitment Party and any such affiliate, and will be binding upon and inure to the benefit of any successors and assigns of the Company, such Commitment Party, any such affiliate and any such person.  No Indemnified Party will have any liability (whether direct or indirect, in contract, tort or otherwise) to the Company or any of its affiliates or any of their respective

 

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security holders or creditors for or in connection with the transactions contemplated hereby, except to the extent such liability is determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted primarily from such Indemnified Party’s willful misconduct, bad faith or gross negligence.  In no event will any party hereto be liable on any theory of liability for any special, indirect, consequential or punitive damages (including without limitation, any loss of profits, business or anticipated savings); provided that, nothing contained in this sentence shall limit your indemnity and reimbursement obligations to the extent such special, indirect, consequential or punitive damages are included in any third-party claim in connection with which an Indemnified Person is entitled to indemnification hereunder.  It is further agreed that each Commitment Party shall have liability (if any) only to you and shall have no third party liability to any other person (including, without limitation, USAcq, Navy, Red Lion and security holders of Navy).

 

The Company acknowledges that information and other materials related to the Facilities and the transactions contemplated hereby may be transmitted through the Platform.  No Indemnified Party will be liable to the Company or any of its affiliates or any of their respective security holders or creditors for any damages arising from the use by unauthorized persons of information or other materials sent through the Platform that are intercepted by such persons, except to the extent resulting from the willful misconduct, bad faith or gross negligence of such Indemnified Party or any of its Related Indemnified Parties as determined by a court of competent jurisdiction in a non-appealable, final judgment.

 

The Company shall not be liable for any settlement of any Proceeding effected without its written consent (which consent shall not be unreasonably withheld, conditioned or delayed), but if settled with the Company’s written consent or if there is a final and non-appealable judgment by a court of competent jurisdiction for the plaintiff in any such Proceeding, in each case, you agree to indemnify and hold harmless each Indemnified Party from and against any and all claims, damages, losses, liabilities and out-of-pocket expenses by reason of such settlement or judgment in accordance with and to the extent provided in the other provisions of this Section 5.

 

For purposes hereof, a “Related Indemnified Party” of an Indemnified Party means (1) any controlling person or controlled affiliate of such Indemnified Party and (2) the respective directors, officers, partners, employees or agents of such Indemnified Party or any of its controlling persons or controlled affiliates, in the case of this clause (2), acting at the instructions of such Indemnified Party, controlling person or such controlled affiliate.

 

Section 6.  Costs and Expenses.  The Company will pay, or reimburse each Commitment Party within a reasonable period of time of demand for, all reasonable and invoiced out-of-pocket costs and expenses incurred by it (whether incurred before or after the date hereof) in connection with the Facilities and the preparation, negotiation, execution and delivery of this Commitment Letter and the Facilities Documentation, limited, in respect of legal costs and expenses, to the reasonable fees and out-of-pocket expenses of (x) a single counsel to each Administrative Agent identified in the Term Sheets, and (y) if reasonably necessary, of a single local counsel to the Commitment Parties in each relevant jurisdiction), but excluding allocated costs of in-house counsel; provided that, other than with respect to the reasonable fees and out-of-pocket expenses of counsel described above, no such payments or reimbursements shall be required unless the Closing Date occurs.  The Company will also pay all out-of-pocket costs and expenses of each Commitment Party (including, without limitation, the reasonable fees and disbursements of

 

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counsel) incurred in connection with the enforcement of any of its rights and remedies under this Commitment Letter.

 

Section 7.  Confidentiality.  By accepting delivery of this Commitment Letter, the Company agrees that this Commitment Letter is for the Company’s confidential use only and that neither its existence nor its terms will be disclosed by the Company, except (a) to your affiliates and your and their respective officers, directors, agents, employees, attorneys, accountants, controlling persons or equity holders (the “Company Representatives”) who are informed of the confidential nature hereof and thereof (and, in each case, each of their attorneys) on a confidential and need to know basis, (b) if the Commitment Parties consent in writing to such proposed disclosure (it being understood the Commitment Parties consent to the announcement of the Transactions (including the financing) in a customary press release issued in connection with the signing of the Merger Agreement)  or (c) pursuant to the order of any court or administrative agency or in any pending legal, judicial or administrative proceeding, or otherwise as required by applicable law or legal process or to the extent requested or required by governmental and/or regulatory authorities, in each case based on the reasonable advice of your legal counsel (in which case you agree, to the extent practicable and not prohibited by applicable law, to inform us promptly thereof prior to disclosure); provided that (i) you may disclose this Commitment Letter, the Term Sheets and other exhibits and annexes to the Commitment Letter and the contents thereof (but not the Fee Letter) to Navy, its subsidiaries and affiliates and their respective officers, directors, agents, employees, attorneys, accountants, controlling persons or equity holders (and each of their attorneys), on a confidential and need to know basis, (ii) you may disclose the Commitment Letter, the Term Sheets and other exhibits and annexes to the Commitment Letter and the contents thereof (but not the Fee Letter) in any syndication or other marketing materials in connection with the Facilities, in any offering memoranda relating to the Notes or in connection with any public release or filing relating to the Transactions, (iii) you may disclose the Commitment Letter, Term Sheets and other exhibits and annexes to the Commitment Letter, the Fee Letter and in each case the contents thereof, to potential Lenders (provided that disclosure of the Fee Letter to potential Lenders shall only be permitted to the extent in contemplation of adding such Lenders as additional agents, co-agents or bookrunners pursuant to Section 3 hereof) and to rating agencies in connection with obtaining ratings for the Company and the Facilities and Notes (provided that the Fee Letter shall not be disclosed to rating agencies without the Commitment Parties’ consent), (iv) you may disclose the aggregate fee amounts contained in the Fee Letter as part of the Projections, pro forma information or a generic disclosure of aggregate sources and uses related to fee amounts related to the Transactions to the extent customary or required in offering and marketing materials for the Facilities and/or the Notes or to the extent customary or required in any public release or filing relating to the Transactions, (v) you may disclose this Commitment Letter, the Term Sheets and other exhibits and annexes to the Commitment Letter, and the contents thereof (but not the Fee Letter) to the extent that such information becomes publicly available other than by reason of improper disclosure by you in violation of any confidentiality obligations hereunder and (vi) to the extent portions thereof relating to fees, pricing caps and economic flex terms have been redacted in a manner reasonably satisfactory to us, you may disclose the Fee Letter and the contents thereof to Navy, its subsidiaries and affiliates and their respective officers, directors, agents, employees, attorneys, accountants, controlling persons or equity holders (and each of their attorneys), on a confidential basis.  The obligations under this paragraph with respect to the Commitment Letter (but not the Fee Letter) shall terminate automatically after the Facilities Documentation shall have been executed and delivered by the parties thereto.  To the extent not earlier terminated, the

 

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provisions of this paragraph with respect to the Commitment Letter (but not the Fee Letter) shall automatically terminate on the second anniversary hereof.

 

Each Commitment Party and its affiliates will use all information provided to it or such affiliates by or on behalf of you hereunder or in connection with the Transactions and the related Transactions solely for the purpose of providing the services which are the subject of this Commitment Letter and shall treat confidentially all such information and shall not publish, disclose or otherwise divulge, such information; provided that nothing herein shall prevent any Commitment Party and its affiliates from disclosing any such information (a) pursuant to the order of any court or administrative agency or in any pending legal, judicial or administrative proceeding, or otherwise as required by applicable law or compulsory legal process based on the advice of legal counsel (in which case such Commitment Party agrees (except with respect to any audit or examination conducted by bank accountants or any governmental bank regulatory authority exercising examination or regulatory authority), to the extent practicable and not prohibited by applicable law, to inform you promptly thereof prior to disclosure), (b) upon the request or demand of any regulatory authority having jurisdiction over such Commitment Party or any of its affiliates (in which case such Commitment Party agrees, to the extent practicable and not prohibited by applicable law, to inform you promptly thereof prior to disclosure (except with respect to any audit or examination conducted by bank accountants or any governmental bank regulatory authority exercising examination or regulatory authority)), (c) to the extent that such information becomes publicly available other than by reason of improper disclosure by such Commitment Party or any of its affiliates or any of its related parties and their affiliates (including any of the parties referred to in clause (f) below) in violation of any confidentiality obligations owing to you, Navy or any of your or their respective affiliates or any of your or their respective related parties (including those set forth in this paragraph), (d) to the extent that such information is received by such Commitment Party from a third party that is not, to such Commitment Party’s knowledge, subject to contractual or fiduciary confidentiality obligations owing to you, Navy or any of your or their respective affiliates or any of your or their respective related parties, (e) to the extent that such information is independently developed by such Commitment Party, (f) to such Commitment Party’s affiliates and to the respective officers, directors, employees, legal counsel, independent auditors, professionals and other experts or agents of such Commitment Party and its affiliates who need to know such information in connection with the Transactions and who are informed of the confidential nature of such information and are or have been advised of their obligation to keep information of this type confidential, (g) to potential or prospective Lenders, participants or assignees and to any direct or indirect contractual counterparty to any swap or derivative transaction relating to USAcq, the Company or any of their respective subsidiaries, subject to the proviso below, (h) for purposes of establishing a “due diligence” defense in connection with any proceeding related to the offering of the Notes, (i) to ratings agencies, in connection with obtaining the ratings described in Section 3 hereof, in consultation and coordination with you or (j) to the extent you shall have consented to such disclosure in writing; provided that the disclosure of any such information to any Lender or prospective Lender or participant or prospective participant referred to above shall be made subject to the acknowledgment and acceptance by such Lender or prospective Lender or participant or prospective participant that such information is being disseminated on a confidential basis (on substantially the terms set forth in this paragraph or as is otherwise reasonably acceptable to you and the Lead Arrangers, including, without limitation, as agreed in any marketing materials) in accordance with the standard syndication processes of the Lead Arrangers or customary market standards for dissemination of such type of information, which

 

11

 

shall in any event require “click through” or other affirmative actions on the part of the recipient to access such information.  Each Commitment Party’s and its affiliates’, if any, obligations under this paragraph shall terminate automatically and be superseded by the confidentiality provisions in the Facilities Documentation upon the initial funding thereunder.  Notwithstanding anything to the contrary, this paragraph shall automatically terminate on the second anniversary hereof.

 

Notwithstanding any other provision in this Commitment Letter, each Commitment Party hereby confirms that the Company and the Company Representatives will not be limited from disclosing the U.S. tax treatment or U.S. tax structure of any Facility.

 

Section 8.  Representations and Warranties of the Company.  The Company represents and warrants that (a) all written information (with respect to information provided by Navy or concerning Red Lion and the other members of the Red Lion Group prior to the Closing Date, to the best of your knowledge), other than (i) Projections (as defined below), (ii) financial estimates, forecasts, forward looking information and (iii) information of a general economic or industry nature, that has been or will hereafter be made available to the Commitment Parties by or on behalf of the Company, any Company Representatives acting on your behalf, Navy or any affiliate thereof in connection with the transactions contemplated hereby (such written information and data other than set forth in clauses (i), (ii) and (iii) above, the “Information”) is and will be, when taken as a whole, complete and correct in all material respects and does not and will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements were or are made (in each case after giving effect to all supplements and updates thereto) and (b) all financial projections and forward-looking information (which information, to the extent provided prior to the Closing Date, shall be to the best of your knowledge in the case of Navy, Red Lion or the other members of the Red Lion Group) that have been or will be prepared by the Company or any Company Representatives acting on your behalf and made available to the Commitment Parties, any Lender or any potential Lender (the “Projections”) have been or will be prepared in good faith based upon assumptions that are or were believed by you to be reasonable as of the date of the preparation of such Projections (it being understood that the Projections are predictions as to future events, are not to be viewed as facts and are subject to significant uncertainties and contingencies, many of which are beyond the Company’s control, that no assurance can be given that the Projections will be realized, and that actual results may differ significantly from the projected results, and such differences may be material).  If, at any time from the date hereof until the Syndication Date, any of the representations and warranties in the preceding sentence would not be accurate and complete in any material respect if the Information or Projections were being furnished, and such representations and warranties were being made, at such time, then the Company agrees to (and, prior to the Closing Date, with regard to Navy, Red Lion or the other members of the Red Lion Group, agrees to use commercially reasonable efforts to) cure such inaccuracy and incompleteness promptly by supplementing the Information and/or Projections from time to time so that the representations and warranties contained in this paragraph remain accurate and complete in all material respects under those circumstances.  Notwithstanding anything to the contrary, the accuracy of the foregoing representations, whether or not cured, shall not be a condition to the obligations of any Commitment Party or the funding of the commitments of such Commitment Party hereunder.

 

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In providing this Commitment Letter and in arranging the Facilities, each Commitment Party is relying on the accuracy of the Information furnished to it by or on behalf of the Company or any Company Representatives without independent verification thereof.

 

Section 9.  No Third Party Reliance, Not a Fiduciary, Etc.  The agreements of each Commitment Party hereunder and of any Lender that issues a commitment to provide financing under any Facility are made solely for the benefit of the Company and may not be relied upon or enforced by any other person.  The Company may not assign or delegate any of its rights or obligations hereunder without the Commitment Parties’ prior written consent (not to be unreasonably withheld or delayed) except to Red Lion or USAcq simultaneously with, or immediately prior to, the consummation of the Merger.  This Commitment Letter may not be amended or modified, or any provision hereof waived, except by a written agreement signed by all parties hereto.

 

The Company hereby acknowledges that each Commitment Party is acting pursuant to a contractual relationship on an arm’s length basis, and the parties hereto do not intend that any Commitment Party act or be responsible as a fiduciary to the Company, its management, stockholders, creditors or any other person.  The Company and each Commitment Party hereby expressly disclaim any fiduciary relationship and agrees they are each responsible for making their own independent judgments with respect to any transactions entered into between them.  The Company also hereby acknowledges that no Commitment Party has advised or is advising the Company as to any legal, accounting, regulatory or tax matters, and that the Company is consulting its own advisors concerning such matters to the extent it deems appropriate.

 

The Company understands that each Commitment Party and its affiliates (such Commitment Party, together with its affiliates, being collectively, a “Group”) are engaged in a wide range of financial services and businesses (including investment management, financing, securities trading, corporate and investment banking and research).  Members of each Group and businesses within each Group generally act independently of each other, both for their own account and for the account of clients.  Accordingly, there may be situations where parts of a Group and/or their clients either now have or may in the future have interests, or take actions, that may conflict with the Company’s interests.  For example, a Group may, in the ordinary course of business, engage in trading in financial products or undertake other investment businesses for their own account or on behalf of other clients, including without limitation, trading in or holding long, short or derivative positions in securities, loans or other financial products of the Company or its affiliates or other entities connected with the Facilities or the transactions contemplated hereby.

 

In recognition of the foregoing, the Company agrees that no Group is required to restrict its activities as a result of this Commitment Letter and that each Group may undertake any business activity without further consultation with or notification to the Company.  Neither this Commitment Letter nor the receipt by any Commitment Party of confidential information nor any other matter will give rise to any fiduciary, equitable or contractual duties (including without limitation, any duty of trust or confidence) that would prevent or restrict a Group from acting on behalf of other customers or for its own account.  Furthermore, the Company agrees that no Group nor any member or business of any Group is under a duty to disclose to the Company or use on behalf of the Company any information whatsoever about or derived from those activities or to account for any revenue or profits obtained in connection with such activities.  However,

 

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consistent with each Group’s long-standing policy to hold in confidence the affairs of its customers, no Group will not use confidential information obtained from the Company except in connection with its services to, and its relationship with, the Company; provided, that each Group will be free to disclose information as provided in Section 7 hereof.

 

Section 10.  Governing Law, Etc.  This Commitment Letter and any right, remedy, obligation, claim, controversy, dispute or cause of action (whether in contract, tort or otherwise) based upon, arising out of or relating to this Commitment Letter and the transactions contemplated hereby will be governed by, and construed in accordance with, the law of the State of New York without regard to conflicts of law principles that would lead to the application of laws other than the law of the State of New York.  This Commitment Letter sets forth the entire agreement between the parties with respect to the matters addressed herein and supersedes all prior communications, written or oral, with respect hereto.  This Commitment Letter may be executed in any number of counterparts, each of which, when so executed, will be deemed to be an original and all of which, taken together, will constitute one and the same Commitment Letter.  Delivery of an executed counterpart of a signature page to this Commitment Letter by telecopier will be as effective as delivery of an original executed counterpart of this Commitment Letter.

 

Section 11.  Waiver of Jury Trial.  Each party hereto irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Commitment Letter or the transactions contemplated hereby or the actions of the parties hereto in the negotiation, performance or enforcement hereof.

 

Section 12.  Consent to Jurisdiction, Etc.  Each of the parties hereto irrevocably and unconditionally (i) agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or in equity, whether in contract, tort or otherwise, against any person arising out of or in any way relating to this Commitment Letter or the transactions contemplated hereby in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court for the Southern District of New York, and any appellate court from any thereof, (ii) to the fullest extent permitted by applicable law, submits to the exclusive jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or in such federal court, (iii) waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any such action, litigation or proceeding arising out of or relating to this Commitment Letter in any court referred to in this Section, (iv) waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action, litigation or proceeding in any such court and (v) consents to the service of any process, summons, notice or document in any such action, litigation or proceeding by registered mail addressed to such person at its address specified on the first page of this Commitment Letter.  A final judgment in any such action, litigation or proceeding will be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

Section 13.  Patriot Act Compliance.  Each Commitment Party hereby notifies the Company that pursuant to the requirements of the USA PATRIOT ACT (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow such Commitment Party to

 

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identify the Company in accordance with the Patriot Act.  In that connection, each Commitment Party may also request corporate formation documents, or other forms of identification, to verify information provided.

 

Please indicate the Company’s acceptance of the provisions hereof by signing the enclosed copy of this Commitment Letter and the Fee Letter and returning them to Mohammed Baabde, Citigroup Global Markets Inc., 390 Greenwich Street, New York, New York 10013 (fax: (646) 441-4554) at or before 11:59 p.m.  (New York City time) on July 15, 2014, the time at which the commitments and other obligations of the Commitment Parties hereunder (if not so accepted or extended by the Commitment Parties prior thereto) will terminate.  If the Company elects to deliver this Commitment Letter by telecopier, please arrange for the executed original to follow by next-day courier.

 

[Remainder of page intentionally left blank; signature pages follow.]

 

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Very   truly yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
CITIGROUP   GLOBAL MARKETS INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
/s/   Kirkwood Roland
    
	
 
    	
 
    	
Name: Kirkwood   Roland
    
	
 
    	
 
    	
Title: Director
    

 

[Signature Page to Amended and Restated Commitment Letter]

 

 

	
 
    	
 
    	
BANK OF AMERICA, N.A.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Gerard P. Rooney
    
	
 
    	
 
    	
Name: Gerard P. Rooney
    
	
 
    	
 
    	
Title: Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
MERRILL LYNCH, PIERCE, FENNER & SMITH   INCORPORATED
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Gerard P. Rooney
    
	
 
    	
 
    	
Name: Gerard P. Rooney
    
	
 
    	
 
    	
Title: Managing Director
    

 

[Signature Page to Amended and Restated Commitment Letter]

 

 

	
 
    	
 
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Michael Janak
    
	
 
    	
 
    	
Name: Michael Janak
    
	
 
    	
 
    	
Title: Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
WELLS FARGO SECURITIES, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Whitney Wall
    
	
 
    	
 
    	
Name: Whitney Wall
    
	
 
    	
 
    	
Title: Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
WF INVESTMENT HOLDINGS, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Whitney Wall
    
	
 
    	
 
    	
Name: Whitney Wall
    
	
 
    	
 
    	
Title: Director
    

 

[Signature Page to Amended and Restated Commitment Letter]

 

 

	
 
    	
 
    	
JPMORGAN   CHASE BANK, N.A.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
/s/   Correne S. Loeffler
    
	
 
    	
 
    	
Name: Correne   S. Loeffler
    
	
 
    	
 
    	
Title: Authorized   Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
J.P.   MORGAN SECURITIES LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
/s/   Correne S. Loeffler
    
	
 
    	
 
    	
Name: Correne   S. Loeffler
    
	
 
    	
 
    	
Title: Authorized   Officer
    

 

[Signature Page to Amended and Restated Commitment Letter]

 

 

	
ACCEPTED   AND AGREED:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
C&J   ENERGY SERVICES, INC.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By
    	
/s/ Randall C. McMullen, Jr.
    	
 
    	
 
    
	
 
    	
Name:   Randall C. McMullen, Jr.
    	
 
    	
 
    
	
 
    	
Title:   Chief   Financial Officer and Treasurer
    	
 
    	
 
    

 

[Signature Page to Amended and Restated Commitment Letter]

 

 

EXHIBIT A

 

Project Navy

Transaction Description

 

Capitalized terms used but not defined in this Exhibit A shall have the meanings set forth in the Commitment Letter.  In the case of any such capitalized term that is subject to multiple and differing definitions, the appropriate meaning thereof in this Exhibit A shall be determined by reference to the context in which it is used.

 

You intend to consummate the Merger (the date of the consummation of the Merger, the “Closing Date”) pursuant to the Merger Agreement (as defined below).

 

In connection with the foregoing, it is intended that:

 

(a)                                 Pursuant to the Separation Agreement (together with all exhibits and schedules thereto, collectively, the “Separation Agreement”), entered into between Navy and Red Lion on June 25, 2014, Navy and Red Lion will cause Red Lion to undergo a restructuring (the “Red Lion Restructuring”), pursuant to which Red Lion and certain members of the Red Lion Group (as defined in the Separation Agreement) will engage in the transactions more fully described in the Separation Agreement.

 

(b)                                 Pursuant to the Agreement and Plan of Merger (together with all exhibits and schedules thereto, collectively, the “Merger Agreement” and, together with the Separation Agreement, the “Transaction Documents”) entered into among Navy, Red Lion and the Company on June 25, 2014, the Company and Merger Sub will consummate the Merger and, if applicable, the other transactions described therein or related thereto.  Immediately after giving effect to the Merger, the Company will be the surviving corporation and will become a wholly-owned indirect subsidiary of Red Lion, and the issued and outstanding shares of the Company’s common stock will be converted into the right to receive common stock of Red Lion.

 

(c)                                  Red Lion and/or USAcq will obtain the senior secured revolving credit facility described in Exhibit B to the Commitment Letter in an aggregate principal amount of up to $600.0 million (the “Revolving Credit Facility”) and the senior secured term loan facility described in Exhibit B to the Commitment Letter in an aggregate principal amount of $675.0 million (the “Term B Facility”).

 

(d)                                 Red Lion or USAcq will issue and sell senior unsecured notes (the “Notes”) in a Rule 144A or other private placement on or prior to the Closing Date yielding up to $600.0 million in gross cash proceeds; provided, however, if and to the extent that less than $600.0 million of proceeds of Notes are issued and/or received by you on or prior to the Closing Date, or to the extent that the proceeds of such Notes are not available to consummate the Transactions, Red Lion or USAcq may borrow up to $600.0 million of senior unsecured bridge loans (less the gross cash proceeds received by USAcq from the sale of Notes on or prior to the Closing Date the proceeds of which are available to consummate the Transactions) (the “Bridge Loans”) under a senior

 

A-1

 

unsecured credit facility described in Exhibit C to the Commitment Letter (the “Bridge Facility”).

 

(e)                                  The Company will repay in full and permanently terminate all commitments under its existing Credit Agreement (as amended, amended and restated or otherwise modified up to and including the Closing Date, the “Existing Company Credit Agreement”) (other than obligations in respect of any letters of credit outstanding thereunder and issued by lenders thereunder which are “rolled” or “grandfathered” into the Revolving Credit Facility). The transactions described in this paragraph (e) are referred to herein as the “Existing Revolver Termination”.

 

(f)                                   The proceeds of borrowings under the Facilities and the Notes, if any, will be applied (i) to fund the repayment of certain intercompany notes (the “Intercompany Notes”) and certain other payments to be made pursuant to the Separation Agreement in connection with the Red Lion Restructuring (the “Restructuring Costs”), (ii) to effect the Existing Revolver Termination, (iii) to pay the fees, costs and expenses incurred in connection with the Transactions (such fees and expenses, the “Transaction Costs”), and (iv) to the extent any excess proceeds are available, such proceeds will be used for general corporate purposes.

 

(g)                                  After giving effect to the Red Lion Restructuring, the Merger and the other transactions described above, approximately 53.04% of the outstanding capital stock of Red Lion will be held by Navy.

 

The transactions described above (including the payment of Transaction Costs) are collectively referred to herein as the “Transactions”.

 

A-2

 

EXHIBIT B

 

Project Navy

 

Senior Secured Facilities
  Summary of Principal Terms and Conditions(1)

 

[Superseded.]

 

(1)                                 All capitalized terms used but not defined herein shall have the meanings given to them in the Commitment Letter to which this term sheet is attached, including the exhibits thereto.

 

B-I-1

 

EXHIBIT C

 

Bridge Facility

Summary of Principal Terms and Conditions(1)

 

	
Parent:
    	
 
    	
Nabors Red Lion Limited, a Bermuda exempted company   (“Parent”).
    
	
 
    	
 
    	
 
    
	
Holdings:
    	
 
    	
A newly-formed Luxembourg limited liability company   and direct wholly-owned subsidiary of Parent (“Holdings”).
    
	
 
    	
 
    	
 
    
	
Bridge Borrower:
    	
 
    	
(i) Parent or (ii) USAcq (the “Bridge Borrower”).
    
	
 
    	
 
    	
 
    
	
Administrative Agent:
    	
 
    	
Citibank, N.A., or one of its affiliates.
    
	
 
    	
 
    	
 
    
	
Syndication Agents and Documentation Agents:
    	
 
    	
To be determined in accordance with the Commitment   Letter.
    
	
 
    	
 
    	
 
    
	
Lead Arrangers and Bookrunners:
    	
 
    	
Citi, MLPFS, WFS and JPMS will act as joint lead   arrangers and joint bookrunners (in such capacity, the “Joint Lead   Arrangers”) for the Bridge Facility and will perform the duties   customarily associated with such roles.
    
	
 
    	
 
    	
 
    
	
Bridge Loans:
    	
 
    	
The Lenders under the Bridge Facility (the “Bridge Lenders”) will make Bridge Loans to the Bridge   Borrower (the “Bridge Loans”) in an aggregate   principal amount of up to $600.0 million, plus, at the Bridge Borrower’s   election, an amount sufficient to fund any OID or upfront fees in connection   with the Facilities payable pursuant to the market flex provisions of the Fee   Letter and to fund any OID or upfront fees in connection with the issuance of   the Notes, minus any gross cash proceeds from any Notes issued by the   Bridge Borrower on or prior to the Closing Date to the extent the proceeds of   such Notes are available to consummate the Transactions.
    
	
 
    	
 
    	
 
    
	
Issue Price:
    	
 
    	
The Bridge Loans will be issued at par.
    
	
 
    	
 
    	
 
    
	
Availability:
    	
 
    	
The Bridge Lenders will make Bridge Loans to the   Bridge Borrower on the Closing Date.
    

 

(1)           All capitalized terms used but not defined herein shall have the meanings given to them in the Commitment Letter to which this term sheet is attached, including the exhibits thereto.

 

C-1

 

	
Purpose:
    	
 
    	
The proceeds of borrowings of the Bridge Loans will   be used by the Bridge Borrower to fund the Restructuring Costs and the other   Transactions as set forth in the Transaction Description. Amounts borrowed   under the Bridge Facility and repaid or prepaid may not be reborrowed.
    
	
 
    	
 
    	
 
    
	
Bridge Documentation:
    	
 
    	
The Facilities Documentation with respect to the   Bridge Facility (the “Bridge Documentation”)   will (i) contain the terms set forth in this Exhibit C,   (ii) except as expressly set forth in this Exhibit C, contain terms   no less favorable to Parent and its subsidiaries than those applicable to the   Company and its subsidiaries under the Existing Company Credit Agreement and,   to the extent appropriate, baskets contained therein will be increased to   reflect the increased size of the business, (iii) take into account additional   flexibility provided for in recent precedent of similarly situated borrowers   with creditworthiness (and credit ratings) substantially similar to the   creditworthiness (and credit ratings) of the Bridge Borrower and reasonably   acceptable to the Bridge Borrower and the Joint Lead Arrangers and   (iv) be negotiated in good faith giving due regard to the business of   Parent and its subsidiaries and reflecting the operational and strategic   requirements and limitations of Parent and its subsidiaries in light of their   size, the proposed business plan and industries, businesses and business   practices (collectively, the “Documentation Principles”).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
To the extent applicable, the words and phrases “to   be agreed,” “customary” and similar words and phrases used herein will be   interpreted in light of the Documentation Principles.
    
	
 
    	
 
    	
 
    
	
Ranking:
    	
 
    	
The Bridge Loans will constitute senior unsecured   indebtedness of the Bridge Borrower and will rank pari passu in right of   payment with the Senior Secured Facilities and the other senior indebtedness   of the Bridge Borrower.
    
	
 
    	
 
    	
 
    
	
Guarantees:
    	
 
    	
The obligations of the Bridge Borrower in respect of   the Bridge Loans will be unconditionally and irrevocably guaranteed on a   senior unsecured basis (such guarantees, the “Guarantees”)   by Parent and all of the subsidiaries of Parent that guarantee the Senior   Secured Facilities. The Guarantees will automatically be released upon the   release
    

 

C-2

 

	
 
    	
 
    	
of the corresponding guarantees of the Senior   Secured Facilities (except for any such release of guarantees under the   Senior Secured Facilities in connection with the repayment and termination of   the Senior Secured Facilities). The Guarantees will rank pari passu with the   guarantees of the Senior Secured Facilities.
    
	
 
    	
 
    	
 
    
	
Maturity:
    	
 
    	
All Bridge Loans will have an initial maturity date   that is the one-year anniversary of the date of funding thereof (the “Initial Bridge Loan Maturity Date”), which shall be   extended as provided below. If any of the Bridge Loans have not been   previously repaid in full on or prior to the Initial Bridge Loan Maturity   Date, such Bridge Loans shall automatically be extended into senior unsecured   term loans (each, an “Extended Term Loan”)   due on the date that is eight years after the Closing Date (the “Extended Maturity Date”) having the terms set forth on   Annex C-1 hereto. The date on which Bridge Loans are extended as Extended   Term Loans is referred to as the “Extension Date.”   At any time or from time to time after the Extension Date, at the option of   the Bridge Lenders, the Extended Term Loans may be exchanged in whole or in   part for senior unsecured exchange notes (the “Exchange   Notes”) having an equal principal amount and having the terms set   forth in Annex C-II hereto; provided that   the Bridge Borrower may defer the first issuance of Exchange Notes until such   time as the Bridge Borrower shall have received requests to issue an   aggregate of at least $150.0 million in principal amount of Exchange Notes   and shall not be required to issue Exchange Notes more than a number of times   to be agreed in any calendar year.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Extended Term Loans will be governed by the   provisions of the Bridge Documentation and will have the same terms as the   Bridge Loans except as set forth on Annex C-1 hereto. The Exchange Notes will   be issued pursuant to an indenture that will have the terms set forth on   Annex C-2 hereto.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Bridge Loans, the Extended Term Loans and the   Exchange Notes shall be pari passu   for all purposes.
    
	
 
    	
 
    	
 
    
	
Interest Rates:
    	
 
    	
Prior to the Initial Bridge Loan Maturity Date, the   Bridge Loans will accrue interest at a rate per annum equal to one, two or   three-month LIBOR (as selected by the Bridge Borrower) plus 5.75% per   annum (the “Initial Margin”).   The Initial Margin will increase by an additional 50 basis
    

 

C-3

 

	
 
    	
 
    	
points on the date that is three months after the   Closing Date and an additional 50 basis points for each additional three-month   period thereafter; provided that   at no time shall the interest rate in effect on the Bridge Loans (excluding   interest at the default rate as described below) exceed the Total Cap (as   defined in the Fee Letter).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Calculation of interest shall be on the basis of   actual days elapsed in a year of 360 days.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
LIBOR will at all times include statutory reserves.   In no event will LIBOR be deemed to be less than 1.00%.
    
	
 
    	
 
    	
 
    
	
Interest Payments:
    	
 
    	
Interest will be payable (or shall accrue) in   arrears at the last day of the applicable LIBOR period but in any event no   later than at the end of each fiscal quarter of the Bridge Borrower following   the Closing Date and on the Initial Bridge Loan Maturity Date.
    
	
 
    	
 
    	
 
    
	
Default Rate:
    	
 
    	
Upon the occurrence and during the continuance of a   payment event of default, overdue principal, interest and other overdue   amounts will accrue interest at the applicable interest rate plus   2.00% per annum.
    
	
 
    	
 
    	
 
    
	
Mandatory Prepayment:
    	
 
    	
The Bridge Borrower will be required to prepay the   Bridge Loans on a pro rata basis from the net proceeds (after deduction of,   among other things, mandatory prepayments and certain permitted reinvestments   under the Senior Secured Facilities), subject to exceptions and baskets no   less favorable than those applicable to the Senior Secured Facilities,   (1) from the incurrence of any debt by Parent or any of its subsidiaries   or (2) from all non-ordinary course asset sales by Parent or any of its   subsidiaries in excess of amounts permitted to be reinvested in the business.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Bridge Borrower will also be required to offer   to prepay the Bridge Loans following the occurrence of a change of control at   100% of the outstanding principal amount thereof, plus accrued and unpaid interest   to the date of repayment.
    
	
 
    	
 
    	
 
    
	
Optional Prepayment:
    	
 
    	
The Bridge Loans may be prepaid at any time, in   whole or in part, at par plus accrued and unpaid interest to the date of   prepayment but without premium or penalty (but with breakage costs related to   prepayments not made on the last day of the relevant interest period), upon   not less than one
    

 

C-4

 

	
 
    	
 
    	
business days’ prior written notice, at the option   of the Bridge Borrower at any time.
    
	
 
    	
 
    	
 
    
	
Closing Conditions:
    	
 
    	
The availability of the Bridge Loans on the Closing   Date will be subject only to the conditions precedent set forth in   Section 1 of the Commitment Letter or on Exhibit D.
    
	
 
    	
 
    	
 
    
	
Representations and Warranties:
    	
 
    	
The Bridge Documentation will contain   representations and warranties that are substantially similar to those in the   Senior Secured Facilities, with additional representations and warranties   usual and customary for bridge financings or as may reasonably be required by   the Joint Lead Arrangers.
    
	
 
    	
 
    	
 
    
	
Covenants:
    	
 
    	
The Bridge Documentation will contain affirmative   and negative covenants with respect to the Bridge Borrower and its   subsidiaries that are usual and customary for bridge financings, as   consistent with the Documentation Principles (it being understood and agreed   that the covenants applicable to the Bridge Loans (and the Extended Term   Loans and the Exchange Notes) will be incurrence based covenants and shall be   less restrictive than the corresponding covenants in the Senior Secured   Facilities), as well as compliance with the Securities Demand (as defined in   the Fee Letter) and related obligations described in the Fee Letter and   payment of the Exchange Fee (as defined in the Fee Letter) on the Initial   Bridge Loan Maturity Date.
    
	
 
    	
 
    	
 
    
	
Financial Maintenance Covenants:
    	
 
    	
None.
    
	
 
    	
 
    	
 
    
	
Events of Default:
    	
 
    	
The Bridge Documentation will contain events of   default with respect to the Bridge Borrower and its restricted subsidiaries   that are substantially similar to those in the Senior Secured Facilities, as   consistent with the Documentation Principles; provided   that, the Bridge Facility shall not contain a change of control event of   default.
    
	
 
    	
 
    	
 
    
	
Cost and Yield Protection:
    	
 
    	
The Bridge Documentation will include tax gross-up,   increased cost and yield protection provisions substantially similar to those   contained in the Senior Secured Documentation, with such changes as are   necessary or reasonably appropriate for the term loan nature and structure of   the Bridge Facility.
    

 

C-5

 

	
Assignments and Participation:
    	
 
    	
Each Lender may assign all or, subject to minimum   amounts to be agreed, a portion of its loans and commitments under the Bridge   Facility after the Closing Date in consultation with, but without the consent   of, the Bridge Borrower (other than any Disqualified Institution); provided, however, that prior to the Initial Bridge Loan   Maturity Date, unless a payment or bankruptcy event of default has occurred   and is at such time continuing or the assignment is to an affiliate of the   assigning Lender, the consent of the Bridge Borrower (not to be unreasonably   withheld or delayed) shall be required with respect to any assignment if,   subsequent thereto, the Lenders under the Bridge Facility as of the Closing   Date would hold, in the aggregate, less than 51% of the outstanding Bridge   Loans. Each assignment will be in an amount of an integral multiple of $1.0   million or, if less, all of such Lender’s remaining Bridge Loans. Assignments   will require payment of an administrative fee to the Administrative Agent. In   addition, each Lender may sell participations in all or a portion of its   loans and commitments under the Bridge Facility; provided   that no purchaser of a participation shall have the right to exercise or   cause the selling Lender to exercise voting rights in respect of the Bridge   Facility (except for (a) increases in commitments participated to such   participants, (b) reductions of principal, interest or fees and   (c) extensions of the final maturity).
    
	
 
    	
 
    	
 
    
	
Voting:
    	
 
    	
Amendments and waivers of the Bridge Documentation   will require the approval of Bridge Lenders holding more than 50% of the   outstanding Bridge Loans, except that (a) the consent of each directly   and adversely affected Bridge Lender will be required for (i) reductions   of principal, interest rates or the applicable margin (provided   that waiver of a default or change to financial ratios shall not constitute a   reduction of interest for this purpose) or fees or extensions of the dates   for scheduled payment of principal or interest, (ii) extensions of the   Initial Bridge Loan Maturity Date (except as provided under “Maturity” above)   or the Extended Maturity Date and (iii) releases of all or substantially   all the Bridge Guarantors (other than in connection with any release or sale   of the relevant Bridge Guarantor permitted by the Bridge Documentation) and   (b) the consent of 100% of the Bridge Lenders will be required with   respect to modifications to any of the voting percentages.
    

 

C-6

 

	
Expenses and Indemnification:
    	
 
    	
The Bridge Borrower shall pay all reasonable,   documented and invoiced out-of-pocket costs and expenses of the   Administrative Agent and the Commitment Parties (without duplication) in   connection with the syndication of the Bridge Loans and the preparation,   execution, delivery, administration, amendment, waiver or modification and   enforcement of the Bridge Documentation (limited, in the case of legal   expenses, to the reasonable fees, disbursements and other charges of one counsel   to the Administrative Agent and the Commitment Parties and, if necessary, a   single local counsel for the Administrative Agent and the Commitment Parties   in each relevant jurisdiction).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Bridge Borrower and the Bridge Guarantors,   jointly and severally, will indemnify the Commitment Parties and the Bridge   Lenders and their affiliates, and the partners, members, officers, directors,   employees, advisors, agents and other representatives of the foregoing and   hold them harmless from and against all reasonable, documented and invoiced   out-of-pocket costs, expenses (including reasonable fees, disbursements and   other charges of one firm of counsel for all indemnified persons and, if   necessary, one firm of local counsel in each appropriate jurisdiction) (and,   in the case of an actual or perceived conflict of interest, where the   indemnified person affected by such conflict informs the Bridge Borrower of   such conflict and thereafter retains its own counsel, of another firm of   counsel (and local counsel) for such affected indemnified person) and all   losses, claims, damages and liabilities of the indemnified persons arising   out of or relating to any claim or any litigation or other proceeding,   (regardless of whether such indemnified person is a party thereto) that   relates to the Transactions, including the financing contemplated hereby, the   Merger or any transactions connected therewith; provided   that no indemnified person will be indemnified for (a) any loss, claim,   damage, cost, expense or liability (i) to the extent resulting from the   willful misconduct, bad faith or gross negligence of such indemnified person   or any of its related indemnified persons (as defined below), as determined   by a court of competent jurisdiction in a non-appealable, final judgment), (ii) to   the extent arising from a material breach of the obligations of such   indemnified person under the Bridge Documentation, as determined by a court   of competent jurisdiction in a non-appealable, final judgment or   (iii) to the extent arising from any dispute solely among
    

 

C-7

 

	
 
    	
 
    	
indemnified persons and not arising out of any act   or omission of you or any of your respective subsidiaries or affiliates   (other than any claims against any Commitment Party in its capacity or in   fulfilling its role as Administrative Agent or Joint Lead Arranger under the   Bridge Facility) or (b) any settlement entered into by such person   without the Bridge Borrower’s written consent (such consent not to be unreasonably   withheld or delayed).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
For purposes hereof, a “related indemnified person”   of an indemnified person means (1) any controlling person or controlled   affiliate of such indemnified person, (2) the respective directors,   officers, partners or employees of such indemnified person or any of its   controlling persons or controlled affiliates and (3) the respective   agents of such indemnified person or any of its controlling persons or   controlled affiliates, in the case of this clause (3), acting at the   instructions of such indemnified person, controlling person or such   controlled affiliate.
    
	
 
    	
 
    	
 
    
	
Governing Law and Forum:
    	
 
    	
State of New York.
    
	
 
    	
 
    	
 
    
	
Counsel to the Administrative Agent:
    	
 
    	
Baker Botts L.L.P.
    

 

C-8

 

ANNEX C-I

 

	
 
    	
 
    	
Extended Term Loans
    
	
 
    	
 
    	
 
    
	
Maturity:
    	
 
    	
The Extended Term Loans will mature on the Extended   Maturity Date.
    
	
 
    	
 
    	
 
    
	
Interest Rate:
    	
 
    	
The Extended Term Loans will bear interest at an   interest rate per annum equal to the Total Cap (excluding interest at the   default rate as described below).
    
	
 
    	
 
    	
 
    
	
Interest Payment:
    	
 
    	
Interest shall be payable in arrears semi-annually   commencing on the date that is six months following the Initial Bridge Loan   Maturity Date and ending on the Extended Maturity Date, computed on the basis   of a 360-day year.
    
	
 
    	
 
    	
 
    
	
Default Rate:
    	
 
    	
Upon the occurrence and during the continuance of a   payment event of default, overdue principal, interest and other overdue   amounts will accrue interest at the applicable interest rate plus 2.00% per   annum.
    
	
 
    	
 
    	
 
    
	
Ranking:
    	
 
    	
Same as the Bridge Loans.
    
	
 
    	
 
    	
 
    
	
Guarantees:
    	
 
    	
Same as the Bridge Loans.
    
	
 
    	
 
    	
 
    
	
Covenants, Defaults, Offers to Repurchase and Voting:
    	
 
    	
Upon and after the Extension Date, the covenants,   offers to repurchase (other than with respect to a change of control, which   shall be at 100% of the aggregate principal amount), defaults and voting   provisions that would be applicable to the Exchange Notes, if issued, will   also be applicable to the Extended Term Loans in lieu of the corresponding   provisions of the Bridge Documentation.
    
	
 
    	
 
    	
 
    
	
Optional Prepayment:
    	
 
    	
The Extended Term Loans may be prepaid, in whole or   in part, at par without premium or penalty, plus accrued and unpaid interest   upon not less than one business days’ prior written notice, at the option of   the Bridge Borrower at any time.
    
	
 
    	
 
    	
 
    
	
Conditions to Extension:
    	
 
    	
None.
    
	
 
    	
 
    	
 
    
	
Governing Law and Forum:
    	
 
    	
State of New York.
    

 

C-I-1

 

ANNEX C-II

 

	
 
    	
 
    	
Exchange Notes
    
	
 
    	
 
    	
 
    
	
Issuer:
    	
 
    	
The Bridge Borrower, in its capacity as the issuer   of the Exchange Notes, is referred to as the “Issuer.”
    
	
 
    	
 
    	
 
    
	
Issue:
    	
 
    	
The Exchange Notes will be issued under an indenture   to be entered into between the Bridge Borrower and a trustee that is   reasonably acceptable to the Bridge Borrower and the Joint Lead Arrangers,   which shall have the same material terms as the Bridge Loans except as set   forth in this annex.
    
	
 
    	
 
    	
 
    
	
Principal Amount:
    	
 
    	
The Exchange Notes will be available only in   exchange for the Extended Term Loans on or after the Extension Date. The   principal amount of any Exchange Note will equal 100% of the aggregate   principal amount of the Extended Term Loans for which it is exchanged. The   Bridge Borrower may defer any issuance of Exchange Notes until such time as   the Bridge Borrower shall have received requests to issue an aggregate of at   least $150.0 million in principal amount of Exchange Notes and shall not be   required to issue Exchange Notes more than a number of times to be agreed in   any calendar year.
    
	
 
    	
 
    	
 
    
	
Maturity:
    	
 
    	
The Exchange Notes will mature on the date that is   eight years after the Closing Date.
    
	
 
    	
 
    	
 
    
	
Interest Rate:
    	
 
    	
The Exchange Notes will bear interest payable   semi-annually, in arrears, at a rate equal to the Total Cap.
    
	
 
    	
 
    	
 
    
	
Default Rate:
    	
 
    	
Overdue principal, interest and other overdue   amounts will accrue interest at the applicable interest rate plus 2.00% per   annum.
    
	
 
    	
 
    	
 
    
	
Ranking:
    	
 
    	
Same as Bridge Loans and Extended Term Loans.
    
	
 
    	
 
    	
 
    
	
Guarantees:
    	
 
    	
Same as Bridge Loans and Extended Term Loans.
    
	
 
    	
 
    	
 
    
	
Offer to Purchase from Asset Sale Proceeds:
    	
 
    	
After making any payment required to be made to   repay the Senior Secured Facilities, the Issuer will be required to make an   offer to repurchase the Exchange Notes on a pro rata basis, which offer shall   be at 100% of the principal amount thereof plus accrued and unpaid interest   to the date of repurchase, with a portion of the net cash proceeds from any   non-ordinary course asset sales or dispositions by
    

 

C-II-1

 

	
 
    	
 
    	
Parent and its subsidiaries in excess of amounts   either reinvested or required to be paid to the lenders under the Senior   Secured Facilities, subject to other baskets and exceptions to be agreed.
    
	
 
    	
 
    	
 
    
	
Offer to Purchase upon Change of Control:
    	
 
    	
The Issuer will be required to make an offer to   repurchase the Exchange Notes following the occurrence of a change of control   at a price in cash equal to 101% of the outstanding principal amount thereof,   plus accrued and unpaid interest to the date of repurchase unless the Issuer   shall redeem such Exchange Notes pursuant to the “Optional Redemption”   section below.
    
	
 
    	
 
    	
 
    
	
Optional Redemption:
    	
 
    	
In the case of Exchange Notes held by the Commitment   Parties under the Bridge Facility or any affiliate of any Commitment Party   (other than an asset management affiliate purchasing securities in the   ordinary course of its business (an “Asset Management   Affiliate”), and excluding Exchange Notes acquired pursuant to   bona fide open market purchases from third parties or market making   activities), the Issuer may redeem such Exchange Notes in whole or in part at   par plus accrued and unpaid interest at any time after the issuance thereof.   The redemption provisions of the Exchange Notes will provide for non-ratable   voluntary redemptions of Exchange Notes held by the Commitment Parties and   their respective affiliates (other than Asset Management Affiliates) at such   prices for so long as such Exchange Notes are held by them.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Exchange Notes will be non-callable until the   third anniversary of the Closing Date. Thereafter, each such Exchange Note   will be callable at par plus accrued interest plus a premium equal to 3⁄4 of   the coupon on such Exchange Note, which premium shall decline ratably on each   subsequent anniversary of the Closing Date thereafter to zero at two years   prior to maturity.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Prior to the third anniversary of the Closing Date,   the Issuer may redeem such Exchange Notes at a make-whole price based on U.S.   Treasury notes with a maturity closest to the fourth anniversary of the   Closing Date plus 50 basis points.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Prior to the third anniversary of the Closing Date,   the Issuer may redeem up to 40% of such Exchange Notes with proceeds from an   equity offering at a price equal to par plus the coupon on such Exchange   Notes so long as 60% of the
    

 

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original aggregate principal amount thereof remains   outstanding.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The optional redemption provisions will be otherwise   customary for high yield debt securities.
    
	
 
    	
 
    	
 
    
	
Defeasance and Discharge Provisions:
    	
 
    	
Customary for high yield debt securities.
    
	
 
    	
 
    	
 
    
	
Modification:
    	
 
    	
Customary for high yield debt securities.
    
	
 
    	
 
    	
 
    
	
Registration Rights:
    	
 
    	
None.
    
	
 
    	
 
    	
 
    
	
Right to Transfer Exchange Notes:
    	
 
    	
The holders of the Exchange Notes shall have the   absolute and unconditional right to transfer such Exchange Notes in   compliance with applicable law to any third parties.
    
	
 
    	
 
    	
 
    
	
Covenants:
    	
 
    	
Customary for high yield debt securities (including   in respect of baskets and carveouts to such covenants); provided   that such covenants shall in no event be more restrictive than the   corresponding covenants in the Bridge Facility (including, without limitation,   with respect to acquisitions, dispositions and restricted payments). For the   avoidance of doubt, there shall be no financial maintenance covenants.
    
	
 
    	
 
    	
 
    
	
Events of Default:
    	
 
    	
Customary for high yield debt securities (and in any   event no more restrictive than the corresponding provisions in the Bridge   Facility).
    
	
 
    	
 
    	
 
    
	
Governing Law and Forum:
    	
 
    	
State of New York.
    

 

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EXHIBIT D

 

Project Navy

Summary of Additional Conditions(3)

 

Subject to the Certain Funds Provision, each Commitment Party’s commitments with respect to the Facilities and any borrowings thereunder shall be subject to the following conditions:

 

1.                                      The Red Lion Restructuring and the Merger shall have been consummated, or substantially simultaneously with the initial borrowing under the Senior Secured Facilities and, if applicable, the Bridge Facility shall be consummated, in accordance with the terms of the Transaction Documents, without giving effect to any modifications, amendments, consents or waivers thereto that are materially adverse to the Lenders or the Lead Arrangers without the prior consent of the Lead Arrangers.  For purposes of the foregoing condition, it is hereby understood and agreed that any change in the payments to be made in connection with the Transactions shall not be deemed to be materially adverse to the interests of the Lenders or the Lead Arrangers if (a) any decrease in the purchase price is allocated to reduce the Facilities on a pro rata, dollar-for-dollar basis or (b) any increase in purchase price is not funded by any incurrence of indebtedness.  The Specified Merger Agreement Representations and the Specified Representations shall be true and correct in all material respects (except (i) in the case of any Specified Merger Agreement Representation or Specified Representation which expressly relates to a given date or period, such representation and warranty shall be true and correct in all material respects as of the respective date or for the respective period, as the case may be and (ii) to the extent any Specified Merger Agreement Representation or Specified Representation is qualified by materiality, such Specified Merger Agreement Representation or Specified Representation shall be true and correct in all respects).

 

2.                                      (a) The Lead Arrangers shall have received reasonably satisfactory evidence that all loans outstanding under, and all other amounts due in respect of, the Existing Company Credit Agreement shall have been repaid in full, the commitments thereunder shall have been permanently terminated and all liens thereunder shall have been released (other than obligations in respect of any letters of credit outstanding thereunder and issued by lenders thereunder which are “rolled” or “grandfathered” into the Revolving Credit Facility) and (b) subject to the foregoing clause (a) and to the Certain Funds Provisions, the Lenders under the Senior Secured Facilities shall have a valid and perfected lien on and security interest in the Collateral, all filings, recordations and searches necessary or desirable in connection with such liens and security interests shall have been duly made, and all filings and recording fees and taxes shall have been duly paid.

 

3.                                      On the Closing Date, after giving effect to the Transactions, none of USAcq, the Company, any other Guarantor, or any of their respective subsidiaries shall have any

 

(3)                                 Capitalized terms used in this Exhibit D shall have the meanings set forth in the Commitment Letter to which this Exhibit D is attached (the “Commitment Letter”) and the other Exhibits attached to the Commitment Letter.  In the case of any such capitalized term that is subject to multiple and differing definitions, the appropriate meaning thereof in this Exhibit D shall be determined by reference to the context in which it is used.

 

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indebtedness for borrowed money (including any of the Intercompany Notes) other than (i) the Notes (if any), the Revolving Credit Facility, the Term B Facility and the Bridge Facility, and (ii) indebtedness permitted to be incurred or outstanding under the Revolving Credit Facility, the Term B Facility and the Bridge Facility (including ordinary course capital leases, purchase money indebtedness, equipment financings, letters of credit and surety bonds in amounts to be agreed) (the indebtedness described in this clause (i), including any replacements, extensions and renewals of any of the foregoing indebtedness that matures or will be terminated on or prior to the Closing Date, collectively, the “Permitted Surviving Debt”).

 

4.                                      The Lenders shall have received customary legal opinions (including, among other things, customary non-contravention opinions with respect to the existing material debt facilities of the Company, the Target and their respective subsidiaries), customary evidence of authorization, customary officers’ certificates, borrowing notices, good standing certificates (to the extent applicable) of USAcq, the Company, and the other Guarantors in their respective jurisdictions of organization and a solvency certificate of Parent’s chief financial officer in substantially the form of Annex I hereto.

 

5.                                      The Lead Arrangers shall have received (a) audited consolidated balance sheets of the Company, and related statements of operations, stockholders’ equity and cash flows for the three (3) most recently completed fiscal years ended at least 90 days before the Closing Date and (b) unaudited consolidated balance sheets and related statements of operations, stockholders’ equity and cash flows of the Company for each subsequent fiscal quarter after December 31, 2013, in each case ended at least 45 days before the Closing Date (other than the final quarter of any fiscal year); provided that this condition shall be deemed satisfied to the extent such financial statements have been publicly filed with the Securities and Exchange Commission.

 

6.                                      The Lead Arrangers shall have received (a) audited consolidated balance sheets of the Red Lion Business (as defined in the Merger Agreement) (or, at the request of the Company, Blue and Royal (each as defined in the Merger Agreement)), and related statements of operations, stockholders’ equity and cash flows for the three (3) most recently completed fiscal years ended at least 90 days before the Closing Date and (b) unaudited consolidated balance sheets and related statements of operations, stockholders’ equity and cash flows of the Red Lion Business (or, at the request of the Company, Blue and Royal) for each subsequent fiscal quarter after December 31, 2013, in each case ended at least 45 days before the Closing Date (other than the final quarter of any fiscal year); provided that this condition shall be deemed satisfied to the extent such financial statements have been publicly filed on the relevant Form S-4.

 

7.                                      The Lead Arrangers shall have received a pro forma consolidated balance sheet and related pro forma consolidated statement of operations of Parent and its subsidiaries based on the financial statements referred to in paragraphs 5 and 6 above as of and for the twelve-month period ending on the last day of the most recently completed four-fiscal quarter period ended at least 45 days prior to the Closing Date (or, if the most recently completed fiscal period is the end of a fiscal year, ended at least 90 days before the Closing Date), prepared after giving effect to the Transactions as if the Transactions had occurred as of such date (in the case of such balance sheet) or at the beginning of such period (in the case of such other financial statements); provided that no such pro forma financial statement shall be required to include adjustments for purchase accounting (including adjustments of the type contemplated by Financial Accounting Standards Board Accounting Standards Codification 805, Business Combinations (formerly

 

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SFAS 141R)).

 

8.                                      The Lenders shall have received at least three business days prior to the Closing Date all documentation and other information about you, USAcq, the Guarantors and your respective subsidiaries as has been reasonably requested in writing at least ten days prior to the Closing Date by such Lenders that they reasonably determine is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act.

 

9.                                      All fees required to be paid on or prior to the Closing Date pursuant to the Term Sheets and Fee Letter and out-of-pocket expenses and reasonable legal fees required to be paid on or prior to the Closing Date pursuant to the Commitment Letter shall, concurrently with the Closing Date, have been paid (which amounts may be offset against the proceeds of the Facilities).

 

10.                               As a condition to the Senior Secured Facilities, the Lead Arrangers shall have received, not later than 15 business days prior to the Closing Date, such information relating to the Senior Secured Facilities as is suitable for use in a customary syndication of bank financing (other than information customarily provided by the Lead Arrangers); provided that the entirety of such period shall occur prior to August 16, 2014 or after September 2, 2014 or prior to December 15, 2014 or after January 2, 2015 and each of (i) July 2, 2014 through July 7, 2014, and (ii) November 24, 2014 through November 30, 2014 shall not be deemed a business day for purposes of calculating such period. If the Company reasonably believes in good faith that it has delivered the Confidential Information Memorandum required to be delivered pursuant to this paragraph, the Company may deliver to the Lead Arrangers written notice to that effect (stating when it believes it completed any such delivery), in which case the Company shall be deemed to have satisfied its requirements under this paragraph on the date specified in such notice and the 15 business day period referenced above shall be deemed to have commenced on the date specified in such notice, unless any Lead Arranger in good faith reasonably believes that the Company has not delivered the Confidential Information Memorandum and, within three business days after receipt of the notice from the Company, such Lead Arranger delivers a written notice to the Company to that effect (stating with specificity which information is required to satisfy the Company’s requirement to provide a Confidential Information Memorandum).

 

11.                               If the commitments in respect of the Bridge Facility have not terminated in accordance with Section 2 of the Commitment Letter, you shall have provided the Investment Banks (as defined in the Fee Letter) with a preliminary offering memorandum suitable for use in a customary (for high yield debt securities) “high yield road show” relating to offering of the Notes in a form customary for offerings under Rule 144A by USAcq, including financial statements, pro forma financial statements, business and other financial data of the type required in a registered offering by Regulation S-X and Regulation S-K under the Securities Act (other than Item 402 of Regulation S-K, Rules 3-10 and 3-16 of Regulation S-X and subject to exceptions customary for private placements pursuant to Rule 144A promulgated under the Securities Act of 1933, including only three years of selected financial data and limited, in the case of financial statements and other financial data to that required to be included in the proxy statement included in the registration statement on Form S-4 filed for the Merger) and in form and substance necessary for the Investment Banks to receive customary “comfort” (including

 

D-I-3

 

“negative assurance” comfort) from independent accountants in connection with the offering of such Notes (which, for the avoidance of doubt, need not include information or financial data customarily excluded from a Rule 144A offering memorandum); provided that this condition shall be deemed satisfied if such offering memorandum excludes sections that would customarily be provided by the Investment Banks (including a “Description of Notes”), but is otherwise complete (collectively, the “Offering Memorandum”).  If the commitments in respect of the Bridge Facility have not terminated in accordance with Section 2 of the Commitment Letter, you shall have afforded the Investment Banks a period of 15 consecutive business days (or less if mutually agreed upon between you and us; provided that the entirety of such period shall occur prior to August 16, 2014 or after September 2, 2014 or prior to December 15, 2014 or after January 2, 2015 and each of (i) July 2, 2014 through July 7, 2014 and (ii) November 24, 2014 through November 30, 2014 shall not be deemed a business day for purposes of calculating such period and shall be deemed to toll such period following the satisfaction of the condition set forth in the immediately preceding sentence (and throughout which such condition remains satisfied (it being understood that the Offering Memorandum may be updated during such period with more recent financial statements and related financial data in order to ensure such condition remains satisfied throughout such period and such period shall not restart as a result of such update)) to seek to offer and sell or privately place the Notes with qualified purchasers thereof.  If the Company reasonably believes in good faith that it has delivered the preliminary offering memorandum required to be delivered pursuant to this paragraph, the Company may deliver to the Investment Banks written notice to that effect (stating when it believes it completed any such delivery), in which case the Company shall be deemed to have satisfied its requirements under this paragraph on the date specified in such notice and the 15 consecutive business day period referenced above shall be deemed to have commenced on the date specified in such notice, unless any Investment Bank in good faith reasonably believes that the Company has not delivered the preliminary offering memorandum and, within three business days after receipt of the notice from the Company, such Investment Bank delivers a written notice to the Company to that effect (stating with specificity which information is required to satisfy the Company’s requirement to provide a preliminary offering memorandum).

 

12.                               Since December 31, 2013, there has not been any event, occurrence, state of facts, circumstance, condition, effect or change that has had, or would be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on Red Lion that would result in a failure of a condition precedent for the benefit of the Company.

 

“Material Adverse Effect” means, with respect to Red Lion and the Red Lion Business on the one hand, or Penny, on the other hand, any event, occurrence, state of facts, circumstance, condition, effect or change (an “Event”), that is material and adverse to the financial condition, businesses or results of operations of the Red Lion Business (with respect to Red Lion) or Penny and its Subsidiaries taken as a whole (with respect to Penny); provided that, a “Material Adverse Effect” shall be deemed not to include any Event to the extent resulting from one or more of the following:  (A) changes in prevailing economic or market conditions of the securities, credit or financial markets in the United States or elsewhere (except to the extent those changes have a materially disproportionate effect on the Red Lion Business (with respect to Red Lion) or Penny and its Subsidiaries taken as a whole (with respect to Penny) relative to other similarly situated participants in the industries in which they operate), (B) changes or events, affecting the industries in which it or they operate generally, including changes in market 

 

D-I-4

 

prices (except to the extent those changes or events have a materially disproportionate effect on the Red Lion Business (with respect to Red Lion) or Penny and its Subsidiaries taken as a whole (with respect to Penny) relative to other similarly situated participants in the industries in which they operate), (C) changes in generally accepted accounting principles (“GAAP”) applicable to the Red Lion Business (with respect to Red Lion) or Penny and its Subsidiaries taken as a whole (with respect to Penny), (D) changes in laws, rules or regulations of general applicability or interpretations thereof by any Governmental Entity, (E) the announcement or pendency of this Agreement, including termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, suppliers, distributors, partners, employees or other business relations of the Red Lion Business (with respect to Red Lion) or Penny and its Subsidiaries taken as a whole (with respect to Penny), (F) any weather-related or other force majeure event, including any outbreak of major hostilities in which the United States is involved or any act of terrorism within the United States or directed against its facilities or citizens wherever located (except to the extent those events have a materially disproportionate effect on the Red Lion Business (with respect to Red Lion) or Penny and its Subsidiaries taken as a whole (with respect to Penny) relative to other similarly situated participants in the industries in which they operate), (G) any failure, in and of itself, by the Red Lion Business (with respect to Red Lion) or Penny and its Subsidiaries taken as a whole (with respect to Penny) to meet any internal or published projections or forecasts in respect of revenues, earnings or other financial or operating metrics (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, and may be taken into account in determining whether there has been or would reasonably be expected to be, a Material Adverse Effect), (H) compliance by Navy or Red Lion (with respect to Red Lion) or Penny and its Subsidiaries (with respect to Penny) with the terms of this Agreement or (J) changes in the trading prices or trading volume of Penny’s capital stock or its debt instruments (with respect to Penny) (it being understood that the facts or occurrences giving rise to or contributing to such change in trading prices or trading volume may be deemed to constitute, and be taken into account in determining whether there has been or would reasonably be expected to be, a Material Adverse Effect).  Capitalized terms used in this definition shall have the meanings assigned to such terms in the Merger Agreement.

 

D-I-5

 

ANNEX I to

EXHIBIT D

 

SOLVENCY CERTIFICATE

 

To the Administrative Agent and each of the Lenders party to the Credit Agreement referred to below:

 

I, the undersigned chief financial officer of Nabors Red Lion Limited, a Bermuda exempted company ( “Parent”), in that capacity only and not in my individual capacity (and without personal liability), do hereby certify as of the date hereof, and based upon facts and circumstances as they exist as of the date hereof (and disclaiming any responsibility for changes in such facts and circumstances after the date hereof), that:

 

1.                                      This certificate is furnished to the Administrative Agent and the Lenders pursuant to Section      of the Credit Agreement, dated as of                         , among                    (the “Credit Agreement”).  Unless otherwise defined herein, capitalized terms used in this certificate shall have the meanings set forth in the Credit Agreement.

 

2.                                      For purposes of this certificate, the terms below shall have the following definitions:

 

(a)                                 “Fair Value”

 

The amount at which the assets (both tangible and intangible), in their entirety, of Parent and its subsidiaries taken as a whole would change hands between a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.

 

(b)                                 “Present Fair Salable Value”

 

The amount that could be obtained by an independent willing seller from an independent willing buyer if the assets of Parent and its subsidiaries taken as a whole are sold in an arm’s-length transaction under present conditions for the sale of comparable business enterprises insofar as such conditions can be reasonably evaluated.

 

(c)                                  “Liabilities”

 

The recorded liabilities (including contingent liabilities that would be recorded in accordance with GAAP) of Parent and its subsidiaries taken as a whole, as of the date hereof after giving effect to the consummation of the Transactions, determined in accordance with GAAP consistently applied.

 

(d)                                 “Will be able to pay their Liabilities as they mature”

 

For the period from the date hereof through the Maturity Date, Parent and its subsidiaries taken as a whole will have sufficient assets and cash flow to pay their Liabilities as those liabilities mature or (in the case of contingent Liabilities) otherwise become payable, in 

 

D-I-1

 

light of business conducted or anticipated to be conducted by the Loan Parties as reflected in the projected financial statements and in light of the anticipated credit capacity.

 

(e)                                  “Do not have Unreasonably Small Capital”

 

Parent and its Subsidiaries taken as a whole after consummation of the Transactions is a going concern and has sufficient capital to reasonably ensure that it will continue to be a going concern for the period from the date hereof through the Maturity Date.  I understand that “unreasonably small capital” depends upon the nature of the particular business or businesses conducted or to be conducted, and I have reached my conclusion based on the needs and anticipated needs for capital of the business conducted or anticipated to be conducted by Parent and its subsidiaries as reflected in the projected financial statements and in light of the anticipated credit capacity.

 

3.                                      For purposes of this certificate, I, or officers of Parent under my direction and supervision, have performed the following procedures as of and for the periods set forth below.

 

(a)                                 I have reviewed the financial statements (including the pro forma financial statements) referred to in Section      of the Credit Agreement.

 

(b)                                 I have knowledge of and have reviewed to my satisfaction the Credit Agreement.

 

(c)                                  As chief financial officer of Parent, I am familiar with the financial condition of Parent and its subsidiaries.

 

4.                                      Based on and subject to the foregoing, I hereby certify on behalf of Parent that after giving effect to the consummation of the Transactions, it is my opinion that (i) the Fair Value of the assets of Parent and its subsidiaries taken as a whole exceeds their Liabilities, (ii) the Present Fair Salable Value of the assets of Parent and its subsidiaries taken as a whole exceeds their Liabilities; (iii) Parent and its subsidiaries taken as a whole do not have Unreasonably Small Capital; and (iv) Parent and its subsidiaries taken as a whole will be able to pay their Liabilities as they mature.

 

* * *

 

D-I-2

 

IN WITNESS WHEREOF, Parent has caused this certificate to be executed on its behalf by chief financial officer as of the date first written above.

 

	
 
    	
NABORS   RED LION LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

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