Document:

EXHIBIT 10.5

 

COMMERCIAL LEASE

 

THIS COMMERCIAL LEASE (this “Lease”) is made effective as of the 11th day of January, 2013 (the “Effective Date”), between LIBERTY PROPERTY HOLDINGS, INC., a Delaware corporation (“Landlord”), and STARZ, LLC, a Delaware limited liability company (“Tenant”).

 

1.                                      Premises.  In consideration of the payment of Rent (defined below) and the keeping and performance by Tenant of the covenants and agreements hereinafter set forth, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Leased Premises (defined below), together with a nonexclusive right in common with Landlord and its designees to use the Common Areas (defined below).  The “Leased Premises” is the entirety of the office building, with the exception of the Reserved Premises (defined in Paragraph 21.A below) (excluding the Reserved Premises, the “Building”), parking garage (the “Parking Garage”) and other improvements located on the real property and the real property more particularly described on Exhibit A-1 and generally depicted on Exhibit A-2, attached hereto and by this reference incorporated herein (the “Property”), and located at 8900 Liberty Circle, Englewood, Colorado 80112. The Common Areas means the areas, property, improvements, facilities and other amenities more particularly described on Exhibit B, attached hereto and by this reference incorporated herein (the “Common Areas”).

 

2.                                      Term.

 

A.                                    Initial Term.  The term of this Lease will be for approximately 10 years, commencing on January 11, 2013 (the “Commencement Date”), and ending on December 31, 2023 (the “Expiration Date”), unless extended or sooner terminated pursuant to this Lease (the “Lease Term”).

 

B.                                    Extension Terms.  Tenant will have the right to extend the Lease Term (each, an “Extension Option”) for four additional periods of five years each commencing on the day following the last day of the initial Lease Term or any Extension Term (defined below) and ending on the day before the fifth anniversary of such date (each, an “Extension Term”), if:

 

(1)                                 Landlord receives notice of exercise (“Initial Extension Notice”) not less than 12 full calendar months prior to the expiration of the initial Lease Term or any then applicable Extension Term and not more than 18 full calendar months prior to the expiration of the initial Lease Term or any then applicable Extension Term; and

 

(2)                                 Tenant is not in material default under this Lease beyond any applicable notice and cure periods at the time that Tenant delivers its Extension Notice or at the time Tenant delivers its Binding Notice (as defined below); and

 

 

(3)                                 Except with respect to a Permitted Transfer (defined below), no part of the Leased Premises is sublet at the time that Tenant delivers its Initial Extension Notice or at the time Tenant delivers its Binding Notice; and

 

(4)                                 Except with respect to a Permitted Transfer, the Lease has not been assigned prior to the date that Tenant delivers its Initial Extension Notice or prior to the date Tenant delivers its Binding Notice.

 

The initial Base Annual Rent rate per rentable square foot for the Leased Premises during each Extension Term will be the lesser of (a) the Prevailing Market (hereinafter defined) rate per rentable square foot for the Building or (b) the Base Annual Rent in effect for the last year of the then applicable Lease Term plus the CPI Increase (defined below).  Base Annual Rent during the Extension Term will increase in accordance with the increases assumed in the determination of Prevailing Market rate.  Base Annual Rent attributable to the Leased Premises will be payable in monthly installments in accordance with the terms and conditions of Article 3 of this Lease.

 

The “Prevailing Market” rate will be determined as set forth below.  Within 15 days after receipt of Tenant’s Initial Extension Notice, Landlord will advise Tenant of the applicable Base Annual Rent rate for the Leased Premises for the Extension Term.  Tenant, within 15 days after the date on which Landlord advises Tenant of the applicable Base Annual Rent rate for the Extension Term, will either (i) give Landlord final binding written notice (“Binding Notice”) of Tenant’s exercise of its Extension Option, or (ii) if Tenant disagrees with Landlord’s determination, provide Landlord with written notice of rejection (the “Rejection Notice”).  If Tenant fails to provide Landlord with either a Binding Notice or Rejection Notice within such 15-day period, Tenant’s Extension Option will be null and void and of no further force and effect.  If Tenant provides Landlord with a Binding Notice, Landlord and Tenant will enter into the Extension Amendment (as defined below) upon the terms and conditions set forth herein.  If Tenant provides Landlord with a Rejection Notice, Landlord and Tenant will work together in good faith to agree upon the Prevailing Market rate for the Leased Premises during the Extension Term.  Upon agreement, Tenant will provide Landlord with Binding Notice and Landlord and Tenant will enter into the Extension Amendment in accordance with the terms and conditions hereof.

 

C.                                    Market Rate. If Landlord and Tenant have not agreed on the Prevailing Market rate within 30 days after Tenant’s Initial Extension Notice, then the Prevailing Market rate will be 100% of the then-fair market rental value of the Leased Premises as determined below.  The “then-fair market rental value of the Leased Premises” means the amount that a landlord under no compulsion to lease the Leased Premises and a tenant under no compulsion to lease the Leased Premises would determine as rent for the Extension Term as of the commencement of such Extension Term, taking into consideration the uses permitted under this Lease, the quality, size, design, tenant finish, brokerage commissions, and location of the Leased Premises, and the rent for comparable office buildings located in the area.  Landlord and Tenant will each appoint a real estate appraiser with at least 10 years’ full time commercial appraisal experience in the area in which the Leased Premises are located to appraise the then-fair market rental value of the Leased Premises.  If either Landlord or Tenant does not appoint an appraiser within 10 days after the other has given notice of the name of its appraiser, the single

 

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appraiser appointed will be the sole appraiser and will set the then-fair market rental value of the Leased Premises.  If two appraisers are appointed pursuant to this paragraph, they will meet promptly and attempt to set the then-fair market rental value of the Leased Premises.  If they are unable to agree within 30 days after the second appraiser has been appointed, they will attempt to elect a third appraiser meeting the qualifications stated in this paragraph within 10 days after the last day the two appraisers are given to set the then-fair market rental value of the Leased Premises.  If they are unable to agree on the third appraiser, either Landlord or Tenant, by giving 10 days’ prior notice to the other, can apply to the then presiding Judge of the County Court in which the Leased Premises is located for the selection of a third appraiser who meets the qualifications stated in this paragraph.  Landlord and Tenant will bear one-half of the cost to appoint a third appraiser and one-half of the cost of the third appraiser’s fee.  The third appraiser, however selected, must be a person who has not previously acted in any capacity for either Landlord or Tenant.  Within 30 days after the selection of the third appraiser, the majority of the appraisers will set the then-fair market rental value of the Leased Premises.  If a majority of the appraisers are unable to set the then-fair market rental value of the Leased Premises within 30 days after selection of the third appraiser, the two appraisals that are closest in value will be averaged and the average will be the then-fair market rental value of the Leased Premises.

 

D.                                    Extension Amendment.  If Tenant is entitled to and properly exercises its Extension Option, Landlord will prepare an amendment (the “Extension Amendment”) to reflect changes in the Base Annual Rent, the Lease Term and other appropriate terms.  The Extension Amendment will be sent to Tenant within a reasonable time after receipt of the Binding Notice and Tenant will execute and return the Extension Amendment to Landlord within 15 days after Tenant’s receipt of same, but, upon final determination of the Prevailing Market rate applicable during the Extension Term as described herein, an otherwise valid exercise of the Extension Option will be fully effective whether or not the Extension Amendment is executed.

 

E.                                     Definition of Prevailing Market.  For purposes of this Lease, “Prevailing Market” will mean the arms length fair market annual rental rate per rentable square foot under leases, renewal leases and amendments entered into on or about the date on which the Prevailing Market is being determined hereunder for space comparable to the Leased Premises in the Building or similar buildings in the area operated in substantially the same manner as the Leased Premises.  The determination of Prevailing Market will take into account any material economic differences between the terms of this Lease and any comparison lease or amendment, such as rent abatements, construction costs, tenant improvement allowances, brokerage commissions, age of the Building, existing tenant finishes and construction standards of the Building and other concessions and factors and the manner in which operating expenses, maintenance, repair, replacement, insurance and taxes are allocated under this Lease as compared to similar leases used in such calculation.  The determination of Prevailing Market will also take into consideration any reasonably anticipated changes in the Prevailing Market rate from the time such Prevailing Market rate is being determined and the time such Prevailing Market rate will become effective under this Lease.

 

3.                                      Base Annual Rent.  Tenant will pay base annual rent, payable in advance in equal monthly installments on the first day of each and every month of the Lease Term, in an amount equal to $12 per rentable square foot for the Building, which rentable area of the

 

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Building is, for all purposes under this Lease, presumed and deemed to be 280,000 rentable square feet, resulting in a base annual rent during the first year of the Lease Term of $3,360,000 payable in equal monthly installments of $280,000 (“Base Annual Rent”).  The installment of Base Annual Rent for any partial month of the Lease Term hereof will be prorated based upon the number of days during such month.

 

Base Annual Rent will be automatically increased on the first day of the first month following each anniversary date of the Commencement Date in an amount equal to the percentage increase in the U.S. Department of Labor Consumer Price Index All Items, All Urban Consumers Denver-Boulder-Greeley (“CPI”) for the same period (the “CPI Increase”).  Base Annual Rent will not decrease, notwithstanding any decrease in CPI for the same period.  The installment of Base Annual Rent for any partial month of the Lease Term hereof will be prorated based upon the number of days during such month.  All Base Annual Rent, Additional Rent (defined below) and other rentals or sums due hereunder (collectively, “Rent”) will be paid in advance without notice, abatement, deduction or set-off at the office of Landlord or to such other person or at such other place as Landlord may designate in writing.

 

4.                                      Payment of Operating Expenses and Common Area Expenses.  Tenant understands that this is an absolutely “triple-net” lease to Landlord, and, except as expressly set forth in this Lease, Tenant will be solely responsible for all costs and expenses, maintenance, repairs, replacements and alterations in any way, directly or indirectly, relating to the Leased Premises, excluding the Common Areas.

 

A.                                    Operating Expenses. Tenant will be responsible for operating, maintaining, repairing and replacing the Leased Premises (except as otherwise expressly allocated to Landlord under this Lease) and for the timely payment of all Operating Expenses, defined below, relating to the Leased Premises, including without limitation the Building, the Parking Garage, and the Property, and the parties agree that except as otherwise expressly set forth herein, Landlord will have no obligation regarding payment of all or any portion of the Operating Expenses.  For purposes of this Lease, “Operating Expenses” will mean all expenses of any kind or nature which are necessary, ordinary or customarily incurred, directly or indirectly, in connection with the use, operation, maintenance, replacement or repair of all or any portion of the Leased Premises and all improvements located thereon.  Operating Expenses will also include without limitation:

 

(1)                                 All applicable real property and personal property taxes and assessments by any governmental or quasi-governmental authority and all association general and special assessments in each case attributable to the Leased Premises, including without limitation the Building, the Parking Garage, the Property and any personal property located therein or thereon.  The foregoing will include any taxes, assessments, surcharges, or service or other fees of a nature not presently in effect which will hereafter be levied on the Leased Premises as a result of the use, ownership or operation of the Leased Premises or for any other reason, whether in lieu of or in addition to any current real estate taxes and assessments.  Expenses incurred for tax consultants and in contesting the amount or validity of any such taxes or assessments will be included in such computations.  Assessments will include any and all so-called special assessments, license tax, business license fee, business license tax, commercial rental tax, levy, charge or tax, imposed by any authority having the direct power to tax, including

 

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any city, county, state or federal government, or any school, agricultural, lighting, water, drainage or other improvement or special district thereof, against the Leased Premises, or the Building, or against any legal or equitable interest of Landlord therein.  (All of the foregoing will be collectively referred to herein as “Taxes”.)  Taxes and assessments will exclude, without limitation, any net income, franchise, gift, estate, inheritance, payroll, gross receipts, corporation, capital levy, excess profits or similar taxes by any taxing authority, any taxes related to Landlord’s business interests by any taxing authority, and any taxes associated with valuation of Landlord by any taxing authority.

 

(2)                                 Costs of maintenance, repairs and replacements to the Leased Premises, including without limitation the Building, the Parking Garage, the Property and all improvements thereon, including without limitation capital repairs and replacements, costs under mechanical and maintenance contracts, and maintenance, repairs and replacements of equipment used in connection with such maintenance and repair work, and costs of maintenance, repair and replacement of landscaping, trees, drives, signs, snow removal, paving and lighting, and costs of maintenance, repairs and replacements of the Building (including without limitation the roof, foundation and structure), all Building systems, the Parking Garage (including without limitation the roof, foundation and structure) and all parking areas.

 

(3)                                 Insurance premiums, including commercial general liability and all-risk property damage coverage for the Building, the Parking Garage and all other improvements on the Property, pollution coverage for the UST (defined below) and any other insurance carried by Tenant or Landlord on the Leased Premises or any component parts thereof in accordance with Paragraph 14 below.

 

(4)                                 The costs of capital improvements, repairs and replacements and structural repairs and replacements to the Leased Premises, including without limitation the Building, the Parking Garage and other improvements.

 

B.                                    Common Area Expenses.  Landlord will be responsible for operating, repairing and replacing the Common Areas, at Landlord’s sole cost and expense, and for the timely payment of all Common Area Expenses (defined below) relating to the Common Areas.  For purposes of this Lease “Common Area Expenses” will mean all expenses of any kind or nature which are necessary, ordinary or customarily incurred, directly or indirectly, in connection with the use, operation, maintenance, replacement or repair of all or any portion of the Common Areas and all improvements located thereon.  Common Area Expenses will also include without limitation:

 

(1)                                 All Taxes attributable to the Common Areas and any improvements thereon.

 

(2)                                 Costs of maintenance, repairs and replacements to the Common Areas, including without limitation any improvements thereon, including without limitation capital repairs and replacements, costs under maintenance contracts, and maintenance, repairs and replacements of equipment used in connection with such maintenance and repair work, and costs of maintenance and replacement of landscaping, snow removal, trees, drives, signs, paving and lighting.

 

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(3)                                 Insurance premiums, including commercial general liability and all-risk property damage coverage for any improvements on the Common Areas, pollution coverage and any other insurance carried by Landlord on the Common Areas or any component parts thereof.

 

(4)                                 The costs of all services and utilities, including without limitation the cost of maintenance, services and utilities related to the “fiber loop” to the extent located in the Common Areas.

 

(5)                                 The costs of capital improvements and structural repairs and replacements to the Common Areas and other improvements within the Common Areas.

 

C.                                    Payment of Taxes.  During the Term, Landlord shall promptly pay all Taxes incurred in connection with the Leased Premises when due, so as to avoid any fine, lien or other penalty for late payment.  Promptly following the receipt of the actual bill for the Taxes, Landlord shall provide a true and correct copy of the tax bill to Tenant and shall notify Tenant of the amount of the Taxes payable by Tenant for its proportionate share attributable to the Leased Premises which will be allocated between the parties in an equitable manner consistent with past practices.  An example of the allocation of Taxes is set forth on Exhibit F, attached hereto and by this reference incorporation herein.  Tenant shall pay to Landlord, as Additional Rent, the amount payable by Tenant no later than the later of (i) 30 days after receipt of the tax bill from Landlord, or (ii) 30 days prior to the date such Taxes are due.  Landlord shall reimburse Tenant for any Taxes paid by Tenant covering any period of time after the Lease Term.  The parties agree to reasonably and equitably adjust the Taxes calculations if any additional improvements, alterations, or buildings are built on the tax lot or the tax lot is subdivided or otherwise changed.

 

D.                                    Payment of Property Insurance.  During the Term, unless otherwise mutually agreed between Landlord and Tenant, Landlord shall promptly pay all insurance as provided in Paragraph 14.B below.  Landlord shall furnish to Tenant applicable documentation and computations of the cost of such insurance allocated to the Building, the Parking Garage and any other improvements and other property of Landlord on the Leased Premises, prepared by Landlord’s insurance agents or advisors.  Tenant shall pay to Landlord, as Additional Rent, the amount payable by Tenant for such insurance within 30 days after receipt of sufficient documentation from Landlord of the amount due from Tenant.  Landlord shall reimburse Tenant for any such insurance paid by Tenant covering any period of time after the Lease Term.

 

5.                                      Additional Rent.  In addition to Base Annual Rent, Tenant will pay Additional Rent (defined below), which will also be Rent under this Lease and will be due and payable in the same manner as Base Annual Rent under this Lease.  “Additional Rent” means all monetary amounts payable under this Lease from Tenant to Landlord, including without limitation Tenant’s share of Taxes and insurance in accordance with Paragraph 4 above.  Any unforeseen expenses that benefit the Leased Premises and that are not addressed in this Lease will be allocable to and paid for by Tenant.

 

6.                                      Parking.  Except as described in the following sentence, Tenant will have the nonexclusive right, in common with Landlord, to use (a) the surface and visitor parking

 

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spaces and (b) the Parking Garage on the Property.  Landlord will be allocated five contiguous-assigned parking spaces in the Parking Garage for its exclusive use, all of which will be in a location as reasonably agreed by Tenant and Landlord.  Tenant will have the non-exclusive right to use, in common with Landlord, all other parking spaces in the Parking Garage.  Both Landlord’s and Tenant’s personnel and invitees will have access to the Parking Garage and the surface and visitor parking spaces through the Leased Premises.  There will be no charge for parking to either Landlord or Tenant.

 

7.                                      Character of Occupancy.  The Leased Premises are to be used only for general office purposes and broadcast operations and related and ancillary purposes (including but not limited to cafeterias, exercise facilities, executive kitchens, infrastructure for broadcast operations, such as satellite dishes, data, telecommunications and computer rooms, broadcast booths, generators, and underground storage tanks) and such other uses which are consistent with Tenant’s use of the Leased Premises immediately prior to the date of this Lease.  The Leased Premises must at all times be used as a single-tenant building serving only Tenant and any Permitted Transferees (defined in Paragraph 16 below).  The Leased Premises may not be used as a multi-tenant building or multi-tenant facility occupied by unrelated Affiliates (defined in Paragraph 16 below).  The Leased Premises may be used for no other purposes without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.  Tenant will not commit waste or suffer or permit waste to be committed, nor will Tenant permit any nuisance in or on the Leased Premises.  Tenant will not use the Leased Premises or permit anything to be done in or on the Leased Premises which will in any way conflict with any, and Tenant will at all times comply with all, applicable laws, statutes, ordinances or governmental rules or regulations now in force or hereafter enacted or promulgated and all matters of record.

 

8.                                      Quiet Enjoyment.  On the condition Tenant is not in material default under this Lease beyond applicable notice and cure periods, Landlord agrees to warrant and defend Tenant in the quiet enjoyment and possession of the Leased Premises during the Lease Term against all matters arising by, through or under Landlord, subject to all matters of record on the date hereof and as otherwise provided in this Lease.

 

9.                                      Services and Utilities.  Tenant, at its sole cost and expense, will provide, arrange and pay for (a) janitorial, security and reception area services to the Leased Premises, and (b) telephone, electricity, gas, water, heating, air-conditioning, lighting, power, elevator, trash disposal, other utilities, services and ventilation to the Leased Premises, and (c) landscaping, window washing, snow removal and other services to the Leased Premises, for which Tenant will arrange to be billed separately and in all cases above in such a manner, condition and at such times (y) consistent with the manner in which the Leased Premises have been maintained prior to the date of this Lease as a “Class A” property, and (z) in accordance with any applicable covenants, rules, guidelines, requirements or policies of all applicable governmental or quasi-governmental bodies, including without limitation the Meridian International Business Center design guidelines, covenants and other requirements (collectively, the “Building Standard”).  Any such expenses that are not the subject of separate billing will be reasonably allocated between the parties based on usage.  Tenant agrees that Landlord will not be liable to Tenant for the failure of any heating, air conditioning, elevator, electrical, janitorial, lighting or other services at any time except to the extent of the gross negligence or willful

 

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misconduct of Landlord, its agents or employees, and that, except as expressly provided above, all such services and obligations rest solely with Tenant.  In the event of any interruption, reduction or discontinuance of services (either temporarily or permanently), Landlord will not be liable for damages to persons or property as a result thereof, except to the extent of the gross negligence or willful misconduct of Landlord, its agents or employees, nor will the occurrence of any such event in any way be construed as an eviction of Tenant.

 

10.                               Maintenance, Repairs, Alterations and Additions.

 

A.                                    Tenant Repairs.  Tenant, at its sole cost and expense, will be responsible for all repairs, maintenance and replacements to the Leased Premises, including without limitation the Building, the Parking Garage and the Property and further including without limitation any structural repairs, the roof and the foundation (collectively all such maintenance, repairs and replacements, “Repairs”), except to the extent of the gross negligence or willful misconduct of Landlord, its agents or employees.  Landlord and Tenant acknowledge and agree that Tenant’s obligations and responsibilities for Repairs includes without limitation (i) any and all pre-existing conditions and past problems at the Leased Premises, (ii) all structural issues, construction defects, improper drainage issues and any and all other conditions of the Leased Premises, and (iii) those matters more particularly set forth on Exhibit C, attached hereto and by this reference incorporated herein.  Tenant will be responsible for all repairs, maintenance and replacements of Tenant’s personal property and betterments and Tenant’s fixtures installed or located in the Leased Premises.  Tenant will, at Tenant’s sole cost and expense, maintain the Leased Premises in good order, condition and repair, including, without limitation, all ceilings, walls and floors, all doors and plate glass windows, furnishings installed within or on the Leased Premises, and all equipment installed by or at the expense of Tenant or Landlord, all elevators, plumbing, heating, ventilating, electrical and lighting facilities and fixtures, all landscaping, parking lots, fences and signs located within or on the Leased Premises and all signs of Tenant located on the Common Areas, and all structural components of the Leased Premises, the foundations, all parking lots and garages, and the roof of the Building and the Parking Garage and other improvements, normal wear and tear and damage by insured casualty or condemnation excepted.  Tenant understands and acknowledges that except as expressly provided in Paragraph 14.D below (a) Tenant is absolutely and solely responsible for all maintenance, repair and replacements to the Leased Premises, including without limitation all components thereof (including without limitation the Building and the Parking Garage and other improvements), and (b) this Lease is a net lease to Landlord and Landlord has no maintenance, repair, restoration, alteration or reconstruction obligations hereunder in any way whatsoever, except as expressly set forth and allocated to Landlord in this Lease.  Any Repairs that (i) affect any Building systems (including without limitation, electrical, gas, plumbing, HVAC and elevators) (“Building Systems”), the roof of the Building or the Parking Garage, the foundation of the Building or the Parking Garage or are structural in nature or (ii) cost $250,000 or more in any one instance or in a series of instances related to the same Repair can only be made after first receiving the prior written consent of Landlord, and Tenant will immediately notify Landlord of any such matter, which consent will be granted or withheld in Landlord’s reasonable discretion, and which consent may be conditioned upon such requirements as Landlord may deem necessary in its reasonable discretion, including without limitation the insurance carried by such contractor.  The Leased Premises will at all times be maintained and all Repairs will at all times be equal to or

 

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better than the Building Standard.  All Repairs made to the Leased Premises by Tenant will become the property of Landlord.

 

B.                                    Tenant’s Failure to Repair.  In the event that Tenant fails to maintain the Leased Premises in good order, condition and make Repairs as required in Paragraph A above, Landlord will give Tenant prior written notice to do such acts as are reasonably required to so maintain the Leased Premises.  In the event that Tenant fails to commence such work within 30 days after written notice from Landlord, and diligently prosecute it to completion, then, upon an additional five days’ written notice to Tenant and Tenant’s continued failure to commence such work, Landlord will have the right, but will not be obligated, to do such acts and expend such funds at the expense of Tenant as are reasonably required to perform such work and shall use commercially reasonable efforts to not damage, inconvenience or interfere with Tenant’s use of the Leased Premises as a result of performing any such work.  Provided that Landlord complies with the foregoing and except to the extent of the gross negligence or willful misconduct of Landlord, its agents or employees, Landlord will have no liability to Tenant for any damage, inconvenience or interference with Tenant’s use of the Leased Premises as a result of performing any such work.

 

C.                                    Alterations.  Tenant will have the limited right to make alterations, additions and installations to the Leased Premises (collectively all such alterations, additions and installations, “Alterations”) at its own expense, from time to time during the Lease Term, provided that Tenant has received the prior written consent of Landlord for any Alterations that (i) affect any Building Systems, the roof of the Building or the Parking Garage, the foundation of the Building or the Parking Garage or (ii) cost $250,000 or more in any one instance or in a series of instances related to the same Alterations, which consent will be granted or withheld in Landlord’s reasonable discretion;  provided, however, that Tenant may install trade fixtures, including infrastructure necessary for broadcast operations, racking, security and telecommunication systems, without reference to such monetary limits or consent requirements; and provided, further, that Tenant complies with the reasonable and customary requirements of Landlord as provided in Paragraph D below.  Tenant will immediately notify Landlord of any such matter.  Notwithstanding anything herein to the contrary, Tenant will make no structural Alterations to the Leased Premises without obtaining the prior written consent of Landlord, which consent will be in Landlord’s sole discretion, which consent may be granted, withheld or conditioned upon such requirements as Landlord may deem necessary in its sole discretion.  All Alterations will at all times be made to a standard that is equal to or better than the Building Standard.  All Alterations made to the Leased Premises by Tenant will become the property of Landlord upon surrender of the Leased Premises unless Landlord elects, by written notice to Tenant prior to the expiration of the Lease Term, to require Tenant to remove such items upon Tenant’s surrender of the Leased Premises, in which case Tenant will, at its sole expense, prior to surrender of the Leased Premises, remove such items and restore any damage to the Leased Premises unless otherwise agreed to in writing by Landlord.

 

D.                                    Requirements for Repairs and Alterations.  All Repairs and Alterations will be performed only by licensed and bonded contractors or mechanics who have previously performed work at the Leased Premises or who are reasonably approved by Landlord, and in a good and workmanlike manner, and Tenant shall, at its expense, obtain all permits, approvals and certificates required by any governmental or quasi-governmental bodies.  In

 

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addition, with respect to Repairs and Alterations that require Landlord’s consent, Tenant (i) shall submit to Landlord detailed plans and specifications for such proposed Repairs or Alterations and shall not commence any such Repairs or Alterations without first obtaining Landlord’s written approval of such plans and specifications, and (ii) shall furnish to Landlord copies of such certificates issued by insurance companies qualified to do business in the State of Colorado, evidencing that worker’s compensation and commercial general liability insurance, all in amounts, with companies and on forms reasonably satisfactory to Landlord, are in full force and effect and maintained by all contractors and subcontractors engaged by Tenant to perform such Repairs or Alterations.  All such policies will name Landlord and any lenders or ground lessors of Landlord of which Landlord has given Tenant written notice as insured and loss payee.  Each such policy and certificate will provide that the insurance policy may not be canceled or modified without 30 days’ prior written notice to Landlord.  Further, Tenant will post notices in the Leased Premises and on the Building (for the benefit of Landlord) in locations which will be visible by persons performing any work on the Leased Premises stating that Landlord is not responsible for the payment for such work and setting forth such other information as Landlord may deem necessary.

 

E.                                     Compliance with Laws.  From and after the Commencement Date, Tenant will, at its sole cost and expense, (1) comply with all applicable laws, ordinances, rules, regulations or requirements of any municipal or other governing body or other lawful authorities having jurisdiction over the Leased Premises and all covenants and other agreements of record, including without limitation all environmental laws, rules, regulations and ordinances and the Americans with Disabilities Act (“ADA”) and the rules and regulations promulgated thereunder (collectively, “Governmental Requirements”), and with any certificate of occupancy issued for the improvements on the Leased Premises, in any way relating to or affecting the condition, use or occupancy of the Leased Premises; and (2) take all proper and necessary action to cause the Leased Premises, including all Repairs, Alterations and improvements thereto, to be maintained, constructed, used and occupied in compliance with applicable Governmental Requirements, and to ensure continued compliance with all applicable Governmental Requirements of the Leased Premises throughout the Lease Term.  Tenant, at its sole cost and expense, will also perform any work required under any applicable Governmental Requirements to be performed in the Building, the Parking Garage and the Leased Premises, and the same shall be treated as Repairs under Paragraph A above.

 

F.                                      Landlord Repairs.  Landlord, at its sole cost and expense, shall operate, repair, maintain and replace the Common Areas and Reserved Premises, including without limitation any capital repairs and replacements, structural repairs to the Common Areas and snow removal (but expressly excluding any signage of Tenant located on the Common Areas) (collectively all such maintenance, repairs and replacements, “Landlord Repairs”), except to the extent arising from the gross negligence or willful misconduct of Tenant, its agents or employees.  Landlord will, at Landlord’s sole cost and expense, maintain the Common Areas and Reserved Premises in good order, condition and repair, including, without limitation, all furnishings and equipment installed within or on the Common Areas and Reserved Premises, and all roadways, landscaping, trees, drives, signs (but expressly excluding Tenant’s signs), paving and lighting located within or on the Common Areas.

 

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11.                               Entry by Landlord.  In addition to Landlord’s reserved rights set forth in Paragraph 21 below, Landlord and its agents will have the right to enter the Leased Premises at all reasonable times from 7:00 a.m. to 6:00 p.m., Monday through Friday excluding holidays, and when accompanied by an employee of Tenant, in such manner as to cause as little disturbance to Tenant as reasonably practicable (a) upon not less than two business days’ notice in the absence of an emergency in order to inspect the Leased Premises, (b) upon not less than two business days’ notice to show the Leased Premises to prospective purchasers, lenders or ground lessors, (c) upon not less than two business days’ notice to show the Leased Premises to prospective tenants during the last year of the Lease Term (provided Tenant has not exercised an Extension Option), and (d) in connection with the rights reserved by Landlord elsewhere in this Lease.  Landlord and its agents will have the right to enter the Leased Premises at any time in the case of emergency, in which case Landlord shall notify Tenant thereof as soon as practicable, including as contemplated by the emergency procedures in place between Landlord and Tenant prior to execution of this Lease, as such procedures may be modified from time to time as reasonably agreed between Landlord and Tenant.  If Tenant is not personally present to open and permit entry into the Leased Premises at any time when such entry by Landlord is necessary or permitted hereunder, Landlord may enter by means of a master key without liability to Tenant, except for any failure to exercise due care for Tenant’s property or except for Landlord’s gross negligence, and without affecting this Lease.  In connection with any such entry, Landlord will show proper credentials to Tenant’s building security personnel and abide by Tenant’s reasonable security requirements. Such entry will not be construed as a manifestation by the Landlord of an intent to terminate this Lease.  Tenant will not, without the prior consent of Landlord, change the locks or install additional locks on any entry doors to the Building.

 

12.                               Mechanics’ Liens.  Tenant will pay or cause to be paid all costs for Repairs, Alterations and any work done by Tenant or caused to be done by Tenant on or in the Leased Premises of a character which will or may result in liens on Landlord’s interest therein or the Landlord’s interest in the Building, the Parking Garage or the Property.  Tenant will keep the Leased Premises, Building, the Parking Garage and Property free and clear of all mechanics’ liens and other liens.  Tenant hereby agrees to indemnify, defend and hold harmless Landlord from and against all liability, loss, damage, costs or expenses, including reasonable attorneys’ fees and interest incurred on account of any claims of any nature whatsoever, including lien claims of laborers, materialmen, or others, for work actually performed for, or for materials or supplies actually furnished to, Tenant or persons claiming under Tenant.  Should any liens be filed or recorded against the Leased Premises, Building, Parking Garage or Property or should any action affecting the title thereto be commenced, as a result of Tenant’s actions, Tenant will cause such liens to be removed of record within 30 days after notice from Landlord.  If Tenant desires to contest any claim of lien, Tenant will furnish to Landlord adequate security equal to 150% of the amount of the claim and, if a final judgment establishing the validity or existence of any lien for any amount is entered, Tenant will pay and satisfy the same and thereafter Landlord shall promptly refund Tenant’s security.  If Tenant is in default in paying any charge for which a mechanic’s lien or suit to foreclose the lien has been recorded or filed, and has not caused the same to be released of record or has not given Landlord security as above required, Landlord may (but without being required to do so) pay such lien or claim and any costs or obtain a bond or title insurance protection against such lien and the amount so paid, together with reasonable attorneys’ fees incurred in connection therewith, will be immediately due from Tenant to Landlord.

 

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13.                               Damage to Property, Injury to Persons.

 

A.                                    Indemnification Obligations.  Tenant shall indemnify and hold Landlord harmless from and defend Landlord against any and all claims of liability for any injury (including death) or damage to any person or property whatsoever occurring in, on or about the Leased Premises or any part thereof arising from the negligence or willful misconduct of Tenant, or its agents, contractors or employees.  Tenant further indemnifies and agrees to hold Landlord harmless from and to defend Landlord against any and all claims arising from any breach or default in the performance of any obligation on Tenant’s part to be performed under the terms of this Lease, or arising from any act or omission of Tenant, or any of its agents, contractors, or employees, and from and against all costs, attorneys’ fees and liabilities incurred as a result of any such claim or any action or proceeding brought thereon. Tenant will pay for all damage to the Leased Premises caused by Tenant’s misuse or neglect of the Leased Premises. Landlord shall indemnify and hold Tenant harmless from and defend Tenant against any and all claims of liability for any injury (including death) or damage to any person or property whatsoever occurring in, on or about the Reserved Premises or Reserved Spaces or any part thereof arising from the negligence or willful misconduct of Landlord, its agents, contractors or employees.  Landlord further indemnifies and agrees to hold Tenant harmless from and to defend Tenant against any and all claims arising from any breach or default in the performance of any obligation on Landlord’s part to be performed under the terms of this Lease, or arising from any act or omission of Landlord, or any of its agents, contractors, or employees, and from and against all costs, attorneys’ fees and liabilities incurred as a result of any such claim or any action or proceeding brought thereon. Landlord will pay for all damage to the Reserved Premises and the Reserved Spaces caused by Landlord’s misuse or neglect of the Reserved Premises and the Reserved Spaces.

 

B.                                    Limitation of Liability.  Neither Landlord nor its agents will be liable for any damage to property entrusted to Landlord, its agents or employees, nor for the loss or damage to any property by theft or otherwise, by any means whatsoever, nor for any injury (including death) or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, or rain which may leak from any part of the Building or from the pipes, appliances or plumbing works therein or from the roof, street or subsurface, or from any other place, or resulting from dampness or any other cause whatsoever, except to the extent of the gross negligence or willful misconduct of Landlord, its agents or employees.

 

C.                                    Defense Obligations.  In case any action or proceeding is brought against Landlord by reason of any obligation on Tenant’s part to be performed under the terms of this Lease, or arising from any act or negligence of Tenant, or of its agents or employees, Tenant upon reasonable prior written notice from Landlord, will defend the same at Tenant’s expense.  In case any action or proceeding is brought against Tenant by reason of any obligation on Landlord’s part to be performed under the terms of this Lease, or arising from any act or negligence of Landlord, or of its agents or employees, Landlord upon reasonable prior written notice from Tenant, will defend the same at Landlord’s expense.  The provisions of this Paragraph 13 will survive the expiration or sooner termination of this Lease for a period of one year.

 

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14.                               Insurance, Casualty and Restoration of Leased Premises.

 

A.                                    Tenant Liability Insurance.  Tenant agrees to carry and maintain for the benefit of Landlord and Tenant during the Lease Term and any extension hereof, comprehensive commercial general liability insurance providing coverage which includes, but is not limited to, liability arising from the Leased Premises including, but not limited to, Tenant’s use or occupancy thereof (including Tenant’s operations), independent contractors, personal and advertising injury, products completed operations, and bodily injury and property damage liability to the limit of not less than $2,000,000 for any occurrence, $10,000,000 general aggregate.  Limits of liability may be satisfied by a combination of primary liability and umbrella or excess liability policies.  The insurance will provide coverage for Tenant’s and Landlord’s indemnity obligations hereunder, and will contain no exclusions or limitations eliminating or limiting coverage for Tenant’s and Landlord’s indemnity obligations hereunder.  Tenant will name Landlord and Landlord’s lenders and ground lessors of which Landlord has given Tenant written notice as additional insureds.  The insurance will not include any insured versus insured exclusion or similar provision which precludes coverage for any claim asserted by Landlord or Landlord’s lenders and ground lessors against Tenant solely by virtue of Landlord or Landlord’s lenders and ground lessors being an insured or additional insured under the policy.  Tenant shall be solely responsible for any deductible or self-insured retention and that neither Landlord nor Landlord’s lenders nor ground lessors shall have any liability or responsibility for any deductible or self-insured retention.  All such insurance will be procured from an insurance company or companies authorized to do business in the State of Colorado, and will be otherwise reasonably satisfactory to Landlord with an AM Best Rating of at least “A-VIII”.  Tenant will provide copies of all policies and applicable endorsements thereto and certificates of such insurance to Landlord upon request from time to time and such documents will disclose that such insurance names Landlord and its lenders and ground lessors of which Landlord has given Tenant written notice as additional insureds.  All such insurance will be on an “occurrence basis”.  The limits of the insurance will not, under any circumstances, limit the liability of Tenant hereunder.

 

B.                                    Landlord Insurance.  Landlord, subject to reimbursement and payment from Tenant, shall maintain (1) commercial property insurance in the amount of the full replacement value with reasonable adjustments for inflation, on the Building, the Parking Garage and any other improvements and other property of Landlord on the Leased Premises from such companies and on such other terms and conditions, as is commercially reasonable for comparable buildings and (2) pollution coverage insurance on the UST.  Landlord may, at its sole cost and expense, maintain (i) commercial property insurance in the amount of the full replacement value with reasonable adjustments for inflation, on the Common Areas, (ii) commercial general liability insurance, and (iii) any other insurance as Landlord may from time to time determine appropriate.

 

C.                                    Other Tenant Insurance.  Tenant will maintain commercial property insurance, in the amount of the full replacement value with reasonable adjustments for inflation, on Tenant’s alterations, improvements and betterments in or on the Leased Premises and Tenant’s trade fixtures, furniture, furnishings and other property of Tenant in or on the Leased Premises and on all fixtures and equipment removable by Tenant under the provisions of this Lease.  Tenant will also maintain worker’s compensation insurance satisfying Tenant’s

 

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obligations and liabilities under the worker’s compensation laws of the state where the Leased Premises is located.

 

D.                                    Casualty.  In the event that the Leased Premises or Building are damaged by fire or other casualty, Tenant will promptly notify Landlord.  Landlord shall at its expense promptly commence the repair of the damage to the extent of available insurance proceeds.  Landlord will not be responsible to repair or reconstruct any alterations or improvements made to the Leased Premises by Tenant.  Until such repairs and restoration are completed the Base Annual Rent will be abated in proportion to the part of the Leased Premises that is unusable by Tenant in the conduct of its business.  Landlord agrees to notify Tenant within 30 days after such casualty if it reasonably estimates that it will be unable to repair and restore the Leased Premises or Building within one year after the occurrence of such damage.  Such notice will set forth the approximate length of time Landlord estimates will be required to complete such repairs and restoration.  If Landlord estimates it cannot make such repairs and restoration within the one-year period, then either party, by written notice to the other, may terminate this Lease as of the date of occurrence of such damage, provided that such notice is given to the other party within 15 days after Landlord notifies Tenant of the estimated time for completion of such repairs and restoration.  If no notice is given by either party to terminate this Lease, this Lease will continue in effect and the Base Annual Rent will be apportioned in the manner provided above.

 

E.                                     Waiver of Subrogation.  Landlord and Tenant hereby waive any and all rights of recovery against one another and their officers, agents and employees for any loss or damage to such waiving party arising from any cause covered by any insurance required to be carried by such party pursuant to this Lease or any other insurance actually carried by such party but only to the extent of the net insurance proceeds payable under such policies.  Landlord and Tenant each agree that all policies of insurance obtained by them pursuant to the provisions of this Lease will contain endorsements or provisions waiving the insurer’s rights of subrogation with respect to claims against the other, and each will notify its insurance companies of the existence of the waiver and indemnity provisions set forth in this Lease, and each party will deliver to the other appropriate endorsements to all such policies to reflect the foregoing.

 

15.                               Condemnation.  If any portion of the Leased Premises that materially affects or interferes with Tenant’s ability to continue to use the remainder thereof for the purposes set forth herein, or that renders the Building untenantable, is taken by right of eminent domain or by condemnation, or is conveyed in lieu of any such taking, then this Lease may be terminated at the option of Tenant.  Such option will be exercised by Tenant giving notice to Landlord of such termination within 30 days after such taking or conveyance; whereupon this Lease will terminate and the Base Annual Rent will be duly apportioned as of the date of such taking or conveyance.  Upon such termination, Tenant will surrender to Landlord the Leased Premises and all of Tenant’s interest therein under this Lease.  If any portion of the Leased Premises is taken that does not materially affect or interfere with Tenant’s ability to continue to use the remainder of the Leased Premises for the purposes set forth herein, this Lease will continue in full force and effect and Tenant, at sole cost and expense, will promptly perform any repair or restoration work required to restore the Leased Premises, insofar as possible, to its former condition, and the rental owing hereunder will be adjusted, if necessary, in such just manner and proportion as the part so taken (and its effect on Tenant’s ability to continue to use

 

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the remainder of the Leased Premises) bears to the whole.  In the event of a taking or conveyance as described herein, Landlord will receive the award or consideration for the lands and improvements so taken; provided, however, that Landlord will have no interest in any separate award made to Tenant for the taking of Tenant’s trade fixtures or personal property, or for Tenant’s relocation expenses.  Landlord and Tenant will cooperate with one another in making claims for condemnation awards.  Tenant will have no rights to any such condemnation award made to Landlord, but Tenant will be entitled to claim a separate award for loss of any of its separate property.

 

16.                               Assignment and Subletting.  Except as set forth in this Paragraph 16, Tenant may not transfer, assign, mortgage or encumber any part of Tenant’s interest in this Lease or sublet the Leased Premises or allow any other party to use or occupy the Leased Premises (collectively, a “Transfer”) without the prior written consent of Landlord, which may be withheld in Landlord’s sole discretion. Notwithstanding anything in this Lease to the contrary, other than as provided in this Paragraph 16, (i) any Transfer (other than a sublease to an Affiliate) must be for the entirety of the Leased Premises and may not be a partial assignment or similar structure intended to circumvent the single-tenant requirements of this Lease; and (ii) subleases to third parties that are not Affiliates are not allowed.  If a Change in Control (defined in Paragraph 26 below) of Tenant occurs, then Landlord may, at its option, exercise its termination rights pursuant to Paragraph 26 below.  Notwithstanding the foregoing restrictions, Tenant may (a) assign this Lease or sublet the Leased Premises, without Landlord’s consent but with prior written notice to Landlord, to any entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with (within the meaning of Rule 405 under the Securities Act of 1933, as amended, an “Affiliate”) Tenant, provided that such entity thereafter ceasing to be an affiliate of Tenant shall be deemed to be a non-permitted Transfer as of the date such entity so ceases to be an Affiliate of Tenant, or (b) sublease up to 20% of the rentable square feet of the Building to Liberty Global, Inc., Liberty Media Corporation (“LMC”) or Liberty Interactive Corporation, or any Affiliate of any of the foregoing entities (each of (a) and (b), a “Permitted Transfer” and each such party a “Permitted Transferee”).  Tenant will not be required to obtain Landlord’s approval of any Permitted Transfer, but Tenant will notify Landlord in advance of any Permitted Transfer and will provide Landlord with a copy of each applicable sublease or assignment or other agreement with such Affiliate.  Tenant will  remain primarily liable for all obligations under this Lease, notwithstanding any Transfer.  Other than as provided herein, no Transfer (other than a sublease to a Permitted Transferee) may be made that would change the single-tenant nature of the Leased Premises or result in a multi-tenancy of the Leased Premises.  In all cases upon any Transfer, (1) the proposed subtenant or assignee must be engaged in a business and the Leased Premises will be used in a manner which is in keeping with the then standards of the Building and the single-tenant nature of this Lease and the permitted use of the Leased Premises; (2) the proposed subtenant or assignee must be a reputable party of reasonable financial worth in light of the responsibilities involved (including without limitation the single-tenant nature of this Lease), and Tenant will have provided Landlord with reasonable proof thereof and Landlord will have the right to condition its consent on the receipt of additional security, either in the form of additional or a new security deposit, letter of credit or guaranties; (3) Tenant must not be in material default hereunder at the time it makes its request for such consent and at the time of the proposed effective date of such transfer; and (4) there are no deferred maintenance or Repair obligations of Tenant under this Lease at the time it makes its request for such consent and at the time of the

 

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proposed effective date of such transfer.  Consent of the Landlord to any Transfer will not in any way be construed to relieve the Tenant from obtaining the consent of the Landlord to any further assignment or subletting or other Transfer.  Upon any Transfer (except for a Permitted Transfer) or if the Leased Premises are sublet or if this Lease is assigned, any rights and options of Tenant to extend this Lease will be extinguished thereby and of no further force or effect.

 

17.                               Estoppel Certificate.  Tenant and Landlord agree, at any time and from time to time, upon not less than 10 business days’ prior written request by the other party, to execute, acknowledge and deliver to the requesting party an accurate and acceptable estoppel certificate certifying that (i) this Lease is unmodified and in full force and effect (or if there have been modifications, that it is in full force and effect as modified, and stating the modifications), (ii) there are no existing defaults thereunder by Landlord or Tenant (or if there are any existing defaults, setting forth the nature thereof), (iii) the date to which the Base Annual Rent and other charges have been paid in advance, if any, and (iv) such other factual matters as are reasonably requested by the requesting party, it being intended that any such statement delivered pursuant to this paragraph may be relied upon by any prospective purchaser or lender on all or any portion of the requesting party’s interest herein, or a holder of any mortgage or deed of trust encumbering the Leased Premises.

 

18.                               Default.  The happening of any one or more of the following events will constitute an “Event of Default”:

 

A.                                    Tenant fails to pay when due any installment of Rent, and such default continues for 10 business days after written notice from Landlord; provided, however, that Tenant will not be entitled to more than three notices of a delinquency in a monetary obligation during any 12 month period, and if within 12 months after the third such notice any Rent or other amounts owing hereunder are not paid when due, a default will be considered to have occurred even though no notice thereof is given; notwithstanding anything in this Lease to the contrary, the parties acknowledge and agree that the non-payment of any installment of Rent, after notice to the extent required above, will be deemed a material default and an Event of Default under this Lease;

 

B.                                    Tenant fails to materially perform any of the other agreements, terms, covenants or conditions hereof on Tenant’s part to be performed, and such non-performance continues for a period of 30 days after written notice from Landlord, provided, however, that if the nature of such failure is such that the same cannot reasonably be cured within such 30 day period, Tenant shall not be deemed to be in default if Tenant shall within such period commence such cure and thereafter diligently prosecute the same to completion;

 

C.                                    Tenant will vacate or abandon the Leased Premises and fail to pay Rent when due;

 

D.                                    The Transfer of this Lease or the Leased Premises or any part thereof except in a manner permitted herein;

 

E.                                     This Lease or the Leased Premises or any part thereof will be taken upon execution or by other process of law directed against Tenant, or will be taken upon or

 

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subject to any attachment at the instance of any creditor or claimant against Tenant, and the attachment will not be discharged or disposed of within 60 days after the levy thereof;

 

F.                                      Tenant files a petition in bankruptcy or insolvency or for reorganization under the bankruptcy laws of the United States or under any insolvency act of any state, or voluntarily takes advantage of any such law or act by answer or otherwise, or is dissolved, or in anticipation of filing a petition in bankruptcy, makes an assignment for the benefit of creditors; or

 

G.                                    Involuntary proceedings under any such bankruptcy law or insolvency act or for the dissolution of Tenant are instituted against Tenant, or a receiver or trustee of all or substantially all of the property of Tenant is appointed, and such proceeding is not dismissed or such receivership or trusteeship vacated within 60 days after such institution or appointment.

 

19.                               Remedies for Default.

 

A.                                    Termination of Lease Term.  Upon an Event of Default under this Lease, Landlord will have the right to give Tenant 15 days’ written notice of intention to terminate and end the term of this Lease, and thereupon, at the expiration of such 15 days, if the condition giving rise to the Event of Default remains uncured by Tenant, the term of this Lease will expire as fully and completely as if that day were the day herein definitely fixed for the expiration of the Lease Term, and Tenant will then quit and surrender the Leased Premises to Landlord, but Tenant will remain liable as hereinafter provided.  If Tenant fails to so quit and surrender the Leased Premises as aforesaid, Landlord will have the right, without notice, to lawfully re-enter the Leased Premises either by force or otherwise and dispossess Tenant and the legal representatives of Tenant and all other occupants of the Leased Premises by unlawful detainer or other summary proceedings, or otherwise, and remove their effects and regain possession of the Leased Premises (but Landlord will not be obligated to effect such removal), and Tenant hereby waives service of notice of intention to re-enter or to institute legal proceedings to that end.

 

B.                                    Remedies without Termination of Lease Term.  Upon an Event of Default under this Lease (and regardless of whether Tenant has abandoned the Leased Premises), this Lease will not terminate unless Landlord, at Landlord’s option, gives written notice terminating this Lease.  For so long as this Lease so continues in effect, Landlord may enforce all of Landlord’s rights and remedies under this Lease, including the right to recover all Rent as it becomes due hereunder.  For the purposes of this subparagraph B, the following will not constitute termination of this Lease:  (1) acts of maintenance or preservation or efforts to relet the Leased Premises, or (2) the appointment of a receiver upon initiative of Landlord to protect Landlord’s interest under this Lease, or (3) service of a statutory notice by Landlord upon Tenant requiring payment of Rent or possession of the Leased Premises.

 

C.                                    Remedies upon Default and Abandonment.  Upon an Event of Default under this Lease and Tenant’s abandonment of the Leased Premises, Landlord may, but will be under no obligation to, at any time and from time to time, re-enter and relet the Leased Premises in whole or in part without terminating this Lease.  Such reletting may be either in its

 

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own name or as agent of Tenant, for a term or terms that, at the option of Landlord, may be for the remainder of the term of this Lease, or for any longer or shorter period, and at its option Landlord may make such alterations, repairs, and/or decorations in the Leased Premises as in its reasonable judgment it considers advisable and necessary in connection with such reletting, and the making of such alterations, repairs, and/or decorations will not operate or be construed to release Tenant from liability under this Lease.  Landlord will in no event be liable in any way whatsoever for failure to collect rent under such reletting, and in no event will Tenant be entitled to receive any excess of rent under such reletting over the sums payable by Tenant to Landlord under this Lease.  Upon an Event of Default and abandonment of the Leased Premises, and if Landlord elects not to terminate this Lease, Tenant will be liable to Landlord for rental payments (payable in monthly installments, in advance, as set forth in this Lease and continuing thereafter until the date originally fixed herein for the expiration of the term of this Lease) in an amount or amounts equal to the excess, if any, of the amount of aggregate expenses paid or incurred by Landlord during the immediately preceding month (1) for all such items as, by the terms of this Lease, are required to be paid by Tenant and (2) for legal expenses, reasonable attorneys’ fees, court costs, expenses of reletting (including but not limited to such alterations and repairs as may be made), and all costs (including but not limited to attorneys’ and receivers’ fees) incurred in connection with the appointment of and performance by any receiver, plus an amount equal to the amount of the installment of Rent which would have been payable by Tenant hereunder in respect of such month period had an Event of Default not occurred and Tenant not abandoned the Leased Premises, over the rents, if any, collected by Landlord in respect of such month period pursuant to any reletting.  Any suit or action brought to collect the amount of the deficiency for any month or months period will not prejudice in any way the rights of Landlord to collect rents from time to time for any month or months period in subsequent proceedings.

 

D.                                    Remedies upon Lease Termination.  In the event of termination of this Lease as a result of Tenant’s breach of this Lease, Landlord will have the right:

 

(1)                                 To lawfully remove any and all persons and property from the Leased Premises, with or without legal process, and pursuant to such rights and remedies as the laws of the State of Colorado will then provide or permit, but Landlord will not be obligated to effect such removal.  Such property may, at Landlord’s option, be stored or otherwise dealt with as provided in this Lease or as such laws may then provide or permit, including but not limited to the right of Landlord to sell or otherwise dispose of the same or to store the same, or any part thereof, in a warehouse or elsewhere at the expense and risk of and for the account of Tenant.

 

(2)                                 To lawfully recover from Tenant damages, which will include but will not be limited to:  (a) such reasonable and customary expenses as Landlord may incur for legal expenses, reasonable attorneys’ fees, court costs, for reletting (including but not limited to advertising and brokerage), for putting the Leased Premises in the condition required to be maintained by Tenant under this Lease, and for keeping the Leased Premises in the condition required to be maintained by Tenant under this Lease (before and after Landlord has prepared the same for reletting), and all costs (including but not limited to reasonable attorneys’ and receivers’ fees) incurred in connection with the appointment of and performance by any receiver; (b) the equivalent of the amount of Rent and other charges which would be payable under this Lease by Tenant if this Lease were still in effect, less the net proceeds of any reletting,

 

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after deducting all Landlord’s reasonable and customary expenses in connection with such reletting, including, without limitation, expenses for advertising, brokerage, putting the Leased Premises in the condition required to be maintained by Tenant under this Lease, and keeping the Leased Premises in the condition required to be maintained by Tenant under this Lease (before and after Landlord has prepared the same for reletting).  Tenant will pay the amount of such damages to Landlord monthly on the days on which the Rent would have been payable under this Lease if this Lease were still in effect, and which Landlord will be entitled to recover from Tenant as each monthly deficiency arises.

 

(3)                                 In lieu of collecting any or further monthly deficiencies as set forth in subparagraph (b) of Paragraph (D)(2) above, Landlord will be entitled to recover from Tenant, as liquidated damages for such breach, in addition to any damages becoming due under subparagraph (a) of subparagraph (D)(2), an amount equal to the difference between the present value of the Rent and all other sums due Landlord hereunder, from the date of such breach to the date of the expiration of the original term demised and the present reasonable rental value of the Leased Premises for the same period, both discounted to the date of such breach at a rate of not more than the discount rate of the Federal Reserve Bank at the time of the award, plus four percent.

 

(4)                                 To enforce, to the extent permitted by the laws of the State of Colorado then in force and effect, any other rights or remedies set forth in this Lease or otherwise applicable hereto by operation of law or contract.

 

E.                                     Injunction.  In the event of any Event of Default by Tenant of any of the terms, covenants, conditions, provisions or agreements of this Lease, Landlord will additionally have the right of injunction, and Tenant agrees to pay the premium for any bond required in connection with such injunction.  Mention in this Lease of any particular remedy will not preclude Landlord from any other remedy, at law or in equity.

 

F.                                      Mitigation of Damages.  Upon any Event of Default under this Lease, Landlord agrees to use commercially reasonable efforts to mitigate its damages.

 

20.                               Holding Over.  Should Tenant hold over after the termination of this Lease and continue to pay Rent, without any express written agreement as to such holding over, Tenant will become a tenant from month-to-month upon each and all of the terms herein provided as may be applicable to such month-to-month tenancy, except as otherwise set forth in this paragraph.  During such holding over, if Tenant has given Landlord written notice of its desire to so hold over, which notice must be given not less than 12 months prior to the termination of the Lease Term (the “Holdover Notice”), then Tenant may remain in possession of the Leased Premises for a period of up to six months (the “Six Month Holdover Period”) at a Rent equal to 100% plus the applicable CPI adjustment of the last monthly installment of Rent paid hereunder.  If Tenant has not given the Holdover Notice or following the Six Month Holdover Period, Rent will increase to 150% plus the applicable CPI adjustment of the last monthly installment of Rent paid hereunder.

 

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21.                               Landlord’s Reserved Rights.

 

A.                                    Scope of Reserved Rights.  Notwithstanding anything in this Lease to the contrary, Landlord reserves to itself and its Affiliates, employees, tenants, invitees and designees (collectively, the “Landlord Parties”) the following rights, at no cost or charge to the Landlord Parties, except as provided below, and Tenant will provide services to such described premises in the same manner as is provided to similar portions of the Leased Premises, including without limitation janitorial, lighting, electricity, water, sewer, HVAC, maintenance and repair, as applicable:

 

(1)                                 the exclusive right to use the garden-level exercise facility depicted in Exhibit D, attached hereto and by this reference incorporated herein (the “Exercise Facility Premises”), which Landlord and Tenant acknowledge and agree is not included in the Leased Premises;

 

(2)                                 the nonexclusive right to use the conference rooms in the Building during normal business hours (i.e., Monday through Friday, 7:00 am to 6:00 pm, excluding holidays), which use will be upon prior notice to, and coordination with, Tenant, each party acting reasonably and in good faith and consistent with past practices of the parties; Landlord may use the conference rooms for up to 20 days per year without any cost or charge; any additional use thereof will be subject to the prior reasonable mutual consent and agreement of the parties as to cost;

 

(3)                                 the nonexclusive right to use the risers, cables, electrical rooms and security equipment used in common by Landlord and Tenant as of the Effective Date in the Building and outside of the Building as currently located on, in, over, and under the Leased Premises and the Common Areas;

 

(4)                                 the exclusive right to use the premises located on the garden level of the Building more particularly depicted on Exhibit G, attached hereto and by this reference incorporated herein (the “Landlord Service Premises”), which may be used and occupied by certain independent contractors or other parties (including without limitation the Internal Revenue Service) with respect to the business of Landlord; which occupancy may be terminated by Landlord at any time upon not less than 10 days’ prior written notice to Tenant; (collectively, the Landlord Service Premises and the Exercise Facility Premises will be referred to herein as the “Reserved Premises”); upon any partial or full termination by Landlord of its rights to use and occupy the Reserved Premises, Landlord will deliver such portion (or all, as the case may be) of the Reserved Premises to Tenant in accordance with the terms and provisions of Paragraph 10F above;

 

(5)                                 the parking rights more particularly described in Paragraph 6 above; and

 

(6)                                 the nonexclusive right (at such Landlord Parties’ own cost) to access and use the employee cafeteria located on the first floor of the Building during such hours and at such cost that Tenant makes such cafeteria available to its own employees, which hours and cost shall be determined in Tenant’s sole and absolute discretion.

 

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B.                                    Restrictions and Limitations.  The Landlord Parties may use the Reserved Premises and parking 24 hours per day seven days per week, provided that access to the Reserved Premises during normal business hours may, and after normal business hours shall, be subject to Tenant’s security requirements, including but not limited to, requirements for the Landlord Parties to show proper credentials and identification cards.  Subject to the other provisions of this Lease, and except to the extent of the gross negligence or willful misconduct of Tenant or its agents or employees, (i) Landlord agrees that Tenant will not be liable to Landlord for the temporary failure of any heating, air conditioning, elevator, electrical, janitorial, lighting or other services to the Reserved Premises or Reserved Parking at any time, and (ii) in the event of any interruption, temporary reduction or temporary discontinuance of services, Tenant will not be liable for damages to persons or property as a result thereof.

 

22.                               Broker’s Fee.  Tenant and Landlord each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder in connection with the negotiation of this Lease and/or the consummation of the transaction contemplated hereby, and that no broker or other person, firm or entity is entitled to any commission or finder’s fee in connection with this transaction.  Tenant and Landlord do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying party, including any costs, expenses, attorneys’ fees reasonably incurred with respect thereto.

 

23.                               Surrender.

 

A.                                    Surrender.  Upon the expiration or other termination of the term of this Lease, subject to Paragraph 20 above and Paragraph 31 below, Tenant will promptly quit the Leased Premises and surrender the Leased Premises to Landlord broom clean, in good order and condition, except ordinary wear and tear and damage by insured casualty or condemnation, and in accordance and compliance with the Building Standard and the terms and provisions of this Lease.  Tenant will remove all of its trade fixtures, equipment, movable furniture and other effects and such Alterations as required pursuant to Paragraph 10 hereof, as required under this Lease, including without limitation Tenant’s personal property set forth on Exhibit E, attached hereto and by this reference incorporated herein.  All trade fixtures, equipment, movable furniture and personal effects of Tenant not removed from the Leased Premises within the time period required under this Lease for any cause whatsoever may be, at Landlord’s sole option, conclusively be deemed to have been abandoned and may be appropriated, sold, stored, destroyed or otherwise disposed of by Landlord without notice to Tenant or any other person, and without an obligation by Landlord to account therefor.  Tenant will pay Landlord for all reasonable expenses for such removal and the disposition of such property.  In the event that Tenant fails to vacate the Leased Premises in a timely manner as required under this Lease, Tenant will be responsible to Landlord for all reasonable costs incurred by Landlord as a result of such failure.

 

B.                                    Inspection.  At Landlord’s option from time to time during the last 12 months of the Lease Term (but not to exceed four times), Landlord and Tenant shall conduct joint walk-through(s) and inspection(s) of the Leased Premises to confirm Tenant’s compliance with the requirements of this Lease with respect to the condition of the Leased Premises, and

 

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identify any deferred maintenance or repair items that Tenant will correct prior to surrender of the Leased Premises.  Neither Landlord nor Tenant shall unreasonably withhold its agreement on such items.  Notwithstanding any such walkthrough or discussion of needed maintenance, repairs, alterations or replacements, no such conduct, agreement or discussions will constitute a waiver of Landlord’s rights under this Lease.

 

24.                               Acceptance of Leased Premises by Tenant.  Taking possession of the Leased Premises by Tenant will be conclusive evidence as against Tenant that the Leased Premises were in the condition agreed upon between Landlord and Tenant.  Tenant accepts the Leased Premises on the Commencement Date “AS IS, WHERE IS, without any warranty of quality, condition or usefulness, including, without limitation, any WARRANTY OF MERCHANTABILITY, any WARRANTY OF HABITABILITY or any WARRANTY OF FITNESS FOR THE PARTICULAR PURPOSE OF TENANT.”  The parties acknowledge that Tenant and its Affiliates were the original constructors of the improvements on the Leased Premises and have had sole and exclusive possession and control of the Leased Premises in the past.  Tenant acknowledges that as of the Commencement Date, Tenant is aware of all zoning regulations, other governmental requirements, site and physical conditions (including without limitation any construction defects) and other matters affecting the use, occupancy, operation and condition of the Leased Premises and all improvements thereon, and Tenant agrees to lease the Leased Premises and all improvements thereon in the condition existing as of the Commencement Date, and Tenant agrees to assume the risks and liabilities associated with and relating to the Repair obligations under this Lease, at Tenant’s sole cost and expense.  Tenant acknowledges that it had sufficient time to obtain and review any and all information, documents, agreements, and studies and to conduct any and all tests and investigations relating to the Leased Premises that Tenant elected to obtain, review and conduct.  Tenant undertook such investigations as Tenant deemed necessary or desirable to make Tenant fully aware of the condition of the Leased Premises as well as all facts, circumstances and information which affect the use and operation of the Leased Premises and any liabilities potentially arising from past or current uses of the Leased Premises.  Tenant hereby leases the Leased Premises in the condition that it is in at the Commencement Date.  The provisions of this paragraph will survive the expiration or sooner termination of this Lease.

 

25.                               Subordination and Attornment.  Subject to the provisions of this paragraph, this Lease will be subordinate to any mortgage or deed of trust or ground lease (now or hereafter placed upon the Leased Premises), and to any and all advances made under any mortgage or deed of trust or ground lease and to all renewals, modifications, consolidations, replacements and extensions thereof, provided that, notwithstanding any default of Landlord thereunder, Tenant’s quiet possession of the Leased Premises shall not be disturbed and Tenant shall have the right to remain in possession of the Leased Premises in accordance with the terms and provisions of this Lease for so long as Tenant is not in default under this Lease beyond any applicable notice and cure periods.  Tenant agrees to execute such commercially reasonable documents as may be further required to evidence such subordination or to make this Lease prior to the lien of any mortgage or deed of trust, as the case may be, provided that any such documents do not amend this Lease, are accurate and provide for the foregoing non-disturbance of Tenant, and Tenant has the ability to make the representations contained therein.

 

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26.                               Early Termination. Notwithstanding anything in this Lease to the contrary, upon a Change in Control of Tenant, Landlord may terminate the Lease Term upon 24 months’ prior written notice to Tenant, which notice must be given no later than 45 days after the date of the Change in Control, without any termination payment due to or from Landlord or Tenant.  Within 45 days after the date of Landlord’s notice of termination, Tenant must advise Landlord of the termination date of the Lease Term, which termination date (the “Early Termination Date”) must be (a) no sooner than 12 months after the date of Landlord’s notice to Tenant and (b) no later than 24 months after the date of the Change in Control.  If Tenant fails to respond to Landlord within such 45-day period, then the Early Termination Date will be deemed to be 12 months after the date of Landlord’s notice to Tenant, without the necessity of any further act of the parties. On or before the Early Termination Date, Tenant must vacate and surrender the Premises to Landlord in the condition as required under this Lease. Upon exercise of the rights in this paragraph, the Lease Term will expire and come to an end on the Early Termination Date. For purposes of this Lease, “Change in Control” means the occurrence of any of the following events: (a) approval by the stockholders of Liberty Media Corporation, which is the parent entity of Tenant (and which substantially simultaneously with the execution of this Lease will be renamed “Starz”) or any successor parent entity of Tenant (“Parent”) of any consolidation or merger involving Parent in which the holders of Parent’s common stock immediately prior to the consolidation or merger will not immediately after such consolidation or merger have more than 50% of the combined voting power of the outstanding voting securities of the surviving entity in the consolidation or merger entitled to vote generally in the election of directors, (b) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) acquires, after the date of this Lease, beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of the combined voting power of the then-outstanding voting securities of Parent entitled to vote generally in the election of directors (“Parent Voting Securities”) if, or at any time that, the percentage of combined voting power of Parent Voting Securities held by such Person is greater than the percentage of combined voting power of Parent Voting Securities held by the group composed of any of the Malones and/or any of the Future Affiliates; provided, however, that for purposes of this subparagraph (b), the following acquisitions shall not constitute a Change in Control:  (i) any acquisition by Parent, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Parent or any entity controlled by Parent, or (iii) any acquisition by any of John C. Malone, his wife, Leslie A. Malone, two trusts for the benefit of their children, The Tracy L. Neal Trust A and The Evan D. Malone Trust A, the John C. Malone June 2003 Charitable Remainder Unitrust and the Malone Family Foundation and the current or future Affiliates (as defined in Paragraph 16 above) of each such person (collectively, the “Malones”) or any of the beneficiaries, heirs, distributees or devisees of the Malones, including, without limitation, any trust or other investment vehicle for the primary benefit of any of the foregoing (collectively, the “Future Affiliates”), as well as any acquisition by any group composed of any of the Malones and/or any of the Future Affiliates, (c) a sale or other transfer (in one transaction or a series of related transactions) of (i) 50% or more of either the economic value or the voting power of the then outstanding equity interests in Tenant or (ii) the assets of Tenant that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all the assets of Tenant immediately prior to such transfer; provided, however, that any transfer of the equity interests in Tenant or the assets of Tenant to any Permitted Transferee or to an entity of which

 

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more than 50% of the voting power in the election of directors or equivalent governing body is directly or indirectly owned by Tenant or Parent immediately after such transfer shall not constitute a Change in Control; provided that, in the event Tenant or Parent thereafter cease to own and control more than 50% of such voting power in such entity, a Change in Control will be deemed to have occurred, or (d) a change in the majority of the members of the Board of Directors of Parent within a 24-month period, provided that a director whose election or nomination for election was approved by a majority vote of the Board of Directors of Parent prior to his or her election will be deemed to have been serving as a member of the Board of Directors of Parent at the beginning of such 24-month period.

 

27.                               Authorities for Action and Notice.

 

A.                                    Except as herein otherwise provided, Landlord may act in any matter provided for herein by and through any person who will from time to time be designated by Landlord in writing to Tenant.

 

B.                                    All notices or demands required or permitted to be given to Landlord hereunder will be in writing, and will be deemed duly served (i) three business days after deposit in the United States Mail, with proper postage prepaid, certified or registered, return receipt requested or (ii) upon personal delivery or (iii) one business day after deposit with a reputable overnight courier or (iv) upon telecopy, but such notice will only be effective upon a follow-up confirming telephone conversation, in each case (i) through (iv) above, addressed to Landlord at its address specified below its signature, or at the most recent address of which Landlord has notified Tenant in writing.  All notices or demands required to be given to Tenant hereunder will be in writing, and will be deemed duly served (i) three business days after deposit in the United States Mail, with proper postage prepaid, certified or registered, return receipt requested, or (ii) upon personal delivery, or (iii) one business day after deposit with a reputable overnight courier, addressed to Tenant at its address specified below its signature, or (iv) upon telecopy, but such notice will only be effective upon a follow-up confirming telephone conversation, in each case (i) through (iv) above, addressed to Tenant at its addresses specified below its signature, or at the most recent address(es) of which Tenant has notified Landlord in writing.  Either party will have the right to designate in writing, served as above provided, a different address to which notice is to be mailed.

 

28.                               Signage.  All signage of Tenant existing on the Leased Premises and on the Common Areas are hereby approved by Landlord and Tenant, and such signs may continue to be maintained, and will be maintained, repaired and replaced at the sole cost and expense of Tenant, in their current locations and in their current conditions during the Lease Term. Subject to the foregoing, Tenant will not install, place, inscribe, paint or otherwise attach and will not permit any sign, advertisement, notice, marquee or awning on any part of the outside of the Building or on any part of the inside of the Building, other than the Building’s atrium, which is visible from outside of the Building or on any other part of the exterior of the Building without the prior written consent of Landlord in each instance, which consent shall not be unreasonably withheld, conditioned or delayed.  Any permitted sign will comply with all applicable Governmental Requirements and the applicable requirements of any other organization having jurisdiction over the Leased Premises, as well as the Building Standard, and Tenant will be solely responsible for such compliance and all installation, maintenance and repair of such signs.

 

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Tenant will, at its own expense, maintain in first-class condition all existing and permitted signs and will, on the expiration or termination of this Lease, and at its own expense, remove all such existing and permitted signs and repair any damage caused by such removal.  Tenant’s obligation under this paragraph will survive the expiration or termination of this Lease.  Tenant will not install, use or permit on or about the Leased Premises any advertising medium that may be heard or seen outside the Leased Premises, such as flashing lights, searchlights, loudspeakers, phonographs or radios.

 

29.                               Hazardous Activities; Underground Storage Tank.

 

A.                                    Indemnification Obligations.  Tenant will comply with all Environmental Laws (defined below).  Tenant will be solely responsible for (at its sole cost and expense) and will indemnify, defend and hold harmless Landlord, its directors, officers, members, partners, employees, and agents and assignees or successors to Landlord’s interest in the Leased Premises, their directors, officers, members, partners, employees, and agents from and against any and all losses, claims, suits, damages, judgments, penalties and liability including, without limitation, (i) all out-of-pocket litigation costs and reasonable attorneys’ fees, (ii) all damages (including consequential damages), directly or indirectly arising out of the use, generation, storage, release or threatened release or disposal of Hazardous Materials by Tenant, its Affiliates, its agents, contractors or invitees, and (iii) the cost of and the obligation to perform any required or necessary repair, clean-up, investigation, removal, remediation or abatement, and the preparation of any closure or other required plans to the full extent that such action is attributable, directly or indirectly, to the use, generation, storage, release or threatened release or disposal of Hazardous Materials by Tenant, its Affiliates, employees, agents, contractors, subcontractors, independent contractors, guests, licensees or invitees (collectively, “Tenant’s Activities”).  This indemnification obligation of Tenant extends to any repair, clean-up, investigation, removal, remediation or abatement of Hazardous Materials which were present on, under or in the Leased Premises before or on the Commencement Date arising from Tenant’s Activities prior to the Commencement Date.  Landlord will be solely responsible for (at its sole cost and expense) and will indemnify, defend and hold harmless Tenant, its directors, officers, members, partners, employees, and agents and assignees or successors to Tenant’s interest in the Leased Premises, their directors, officers, members, partners, employees, and agents from and against any and all losses, claims, suits, damages, judgments, penalties and liability including, without limitation, (i) all out-of-pocket litigation costs and reasonable attorneys’ fees, (ii) all damages (including consequential damages), directly or indirectly arising out of the use, generation, storage, release or threatened release or disposal of Hazardous Materials by Landlord, its agents, contractors or invitees, and (iii) the cost of and the obligation to perform any required or necessary repair, clean-up, investigation, removal, remediation or abatement, and the preparation of any closure or other required plans to the full extent that such action is attributable, directly or indirectly, to the use, generation, storage, release or threatened release or disposal of Hazardous Materials by Landlord, its employees, agents, contractors, subcontractors, independent contractors, guests, licensees or invitees (collectively, “Landlord’s Activities”).  This indemnification obligation of Landlord extends to any repair, clean-up, investigation, removal, remediation or abatement of Hazardous Materials which were present on, under or in the Leased Premises or the Building before or on the Commencement Date arising from Landlord’s Activities prior to the Commencement Date.

 

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B.                                    “Hazardous Materials” will include but not be limited to substances defined as “hazardous substances,” “hazardous materials,” or “toxic substances” in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.; the common law; and any and all state, local or federal laws, rules, regulations and orders pertaining to environmental, public health or welfare matters, as the same may be amended or supplemented from time to time (collectively, the “Environmental Laws”).  Any terms mentioned in this Lease which are defined in any applicable Environmental Laws will have the meanings ascribed to such terms in such laws; provided, however, that if any such laws are amended so as to broaden any term defined therein, such broader meaning will apply subsequent to the effective date of such amendment. The provisions of this Paragraph 29 will survive the expiration or sooner termination of this Lease.

 

C.                                    Permitted UST.  Landlord grants Tenant the right to use, operate and maintain the currently existing back-up generator (the “Generator”) and underground storage tanks(s) of Tenant located on or otherwise serving the Leased Premises (collectively or individually, together with all ancillary and supplemental equipment, facilities, lines and connections and other property in any way, directly or indirectly, relating thereto, the “UST”) (collectively, the Generator and the UST, the “Power Facility”), where such Power Facility is currently located.  All use, operation, maintenance and removal of the UST is subject to the conditions, provisions and requirements of all applicable Governmental Requirements. Notwithstanding the foregoing, the parties acknowledge that the Power Facility constitutes Tenant’s personal property and trade fixtures under this Lease during the Lease Term, and Tenant and its licensees have exclusive use and control of the Power Facility. All maintenance, repair, alteration and removal of the Power Facility may only be made with the prior written consent of and written notice to Landlord, which may be withheld, conditioned or qualified in Landlord’s sole discretion. Landlord approves Tenant’s current maintenance and repair agreements for the Power Facility listed on Exhibit H, attached hereto and by this reference incorporated herein.

 

D.                                    Operation and Maintenance of UST.  Tenant agrees that the operation and maintenance of the Power Facility shall be in accordance with the following:

 

(1)                                 All matters relating to the operation and maintenance of the Power Facility shall be at the sole cost and expense of Tenant;

 

(2)                                 The Power Facility will be operated and maintained by or for Tenant in a good and workmanlike manner and in full compliance with applicable Governmental Requirements;

 

(3)                                 Tenant shall be responsible, at its sole cost, to obtain all required permits and approvals for the operation and maintenance of the Power Facility;

 

(4)                                 Tenant will pay all charges for electric current utilized in connection with the installation, operation and maintenance of the Power Facility.  Landlord

 

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shall have no responsibility or liability by reason of the interruption or suspension of electric service to the Power Facility; and

 

(5)                                 All sales taxes, use and occupancy taxes and taxes and charges in the nature thereof with respect to the Power Facility is the responsibility of and shall be paid by the Tenant.

 

E.                                     General.

 

(1)                                 Should it be required by any applicable Governmental Requirements that the location of the Power Facility be changed, such change shall be effected promptly and with diligence by Tenant and at its sole cost and expense.

 

(2)                                 Landlord shall not be liable or responsible hereunder for any malfunction or nonfunctioning, actual or alleged, of the Power Facility or for its repair, maintenance, alteration or removal or for any loss of or damage to the Power Facility or any surrounding properties.

 

(3)                                 On the Expiration Date or the earlier termination of this Lease, the UST and the Generator will (i) become the property of Landlord, (ii) remain on the Leased Premises and (iii) be delivered to Landlord in good order and condition, in compliance with all Governmental Requirements and the provisions of this Lease.  At Landlord’s request, Tenant will deliver a bill of sale or such other documents as Landlord may request from time to time regarding the UST and the Generator.

 

30.                               LGI Sublease. Starz Entertainment, LLC (“STE”), formerly known as Starz Entertainment Group, LLC, as landlord, entered into that certain Lease Agreement dated March 17, 2006 (as amended on July 27, 2006, and October 11, 2007, the “LGI Lease”), with LGI International, Inc. (“LGI”), formerly known as Liberty Media International, Inc., as tenant, for certain premises in the Building more particularly described in the LGI Lease.  Immediately prior to entering into this Lease, STE transferred any ownership interest it had in the Leased Premises to Tenant, as owner, and thereafter any such ownership interest in the Leased Premises was transferred from Tenant to LMC and then from LMC to Landlord, all as owner (collectively all of the foregoing, the “Property Transfers”).  STE, Tenant and Landlord all covenant and agree that the LGI Lease was excluded from the Property Transfers and that the LGI Lease is hereby assigned directly from STE to Tenant, as landlord under the LGI Lease.  Accordingly, the LGI Lease hereby becomes a sublease under and subordinate to this Lease, whereby Tenant will be the sublandlord and LGI will be the subtenant.  Landlord hereby consents to the LGI Lease, in its current form.  Tenant may not, without Landlord’s prior written consent, which will be in Landlord’s sole discretion, amend, extend or otherwise modify the LGI Lease, and any consent to an assignment, sublease or other transfer of or under the LGI Lease will also require the consent of Landlord to the extent that Landlord’s consent is required pursuant to Paragraph 16 above.

 

31.                               Satellite Dishes.

 

A.                                    Permitted Dishes.  Landlord grants Tenant the right to use, operate and maintain the Dishes (defined below) on the Property, where such dishes are currently located

 

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(but not on the roof of the Building) pursuant to the currently existing configuration.  The “Dishes” means telecommunications antennae, microwave dishes, satellite dishes and other communications equipment and all ancillary equipment and facilities in any way, directly or indirectly, relating thereto.  All use, operation, maintenance and configuration of the Dishes is subject to the conditions, provisions and requirements of all applicable Governmental Requirements.  Notwithstanding the foregoing, the parties acknowledge that the Dishes constitute Tenant’s personal property and trade fixtures under this Lease, and Tenant and its licensees have exclusive use and control of the Dishes.  Subject to Landlord’s prior consent, which consent shall not be unreasonably withheld, conditioned or delayed, and subject to all applicable Governmental Requirements, Tenant may install additional dishes.

 

B.                                    Operation and Maintenance of Dishes.  Tenant agrees that the operation and maintenance of the Dishes shall be in accordance with the following:

 

(1)                                 All matters relating to the operation and maintenance of the Dishes shall be at the sole cost and expense of Tenant;

 

(2)                                 The Dishes will be operated and maintained by or for Tenant in a good and workmanlike manner and in full compliance with applicable Governmental Requirements;

 

(3)                                 Tenant shall be responsible, at its sole cost, to obtain all required permits and approvals for the operation and maintenance of the Dishes;

 

(4)                                 Tenant will pay all charges for electric current utilized in connection with the installation, operation and maintenance of the Dishes.  Landlord shall have no responsibility or liability by reason of the interruption or suspension of electric service to the Dishes; and

 

(5)                                 All sales taxes, use and occupancy taxes and taxes and charges in the nature thereof with respect to the Dishes are the responsibility of and shall be paid by the Tenant.

 

C.                                    General.

 

(1)                                 Should it be required by any applicable Governmental Requirements that the location of any or all of the Dishes be changed, such change shall be effected promptly and with diligence by Tenant and at its sole cost and expense.

 

(2)                                 Landlord shall not be liable or responsible hereunder for any malfunction or nonfunctioning, actual or alleged, of the Dishes or for their repair or maintenance or for any loss of or damage to the Dishes.

 

(3)                                 On or before the Removal Date, Tenant, at its sole cost and expense, shall remove the Dishes from the Property and restore and repair any damage resulting from such removal.  The “Removal Date” means (a) the Expiration Date or (b) the Early Termination Date (if applicable pursuant to Paragraph 26 above) or (c) 180 days after any other termination of the Lease Term, whether as a result of (by way of example and not limitation)

 

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default, condemnation, casualty or other unexpected event (such extended 180-day period will be referred to herein as the “Transition Period”). If Tenant does not remove the Dishes on or before the Removal Date, following written notice and expiration of applicable cure and grace periods, Landlord may do so and charge Tenant with the reasonable cost thereof, inclusive of the cost of repairing and replacing any damage caused thereby and Tenant agrees promptly to pay the same to Landlord.  Alternatively, after the Removal Date, if Tenant has not commenced removal, following written notice to Tenant and the expiration of applicable cure and grace periods, Landlord may elect, at its sole option, to conclusively deem the Dishes abandoned by Tenant for all purposes and to treat the same as Landlord’s property without any responsibility, obligation or liability to Tenant by reason thereof.  If Landlord elects to remove the Dishes, at its option, it may dispose of or discard of the Dishes, without liability to Tenant, store such Dishes and charge reasonable storage fees to Tenant.

 

(4)                                 If applicable, Tenant is granted the additional rights set forth in this subparagraph (4) during any Transition Period. All of the terms and provisions of this Lease applicable to the maintenance and operation of the Dishes during the Lease Term shall be fully applicable to the Transition Period within which Tenant is required to effect the removal of the Dishes as set forth in subparagraph (3) above. Notwithstanding anything in this Lease to the contrary, during the Transition Period, Tenant also shall have the right to (a) utilize the Dishes for the purposes of orderly transition, broadcast services, back-up and replacement telecommunications infrastructure and shut-down activities (collectively, the “Transition Activities”) and (b) use portions of the Building and Parking Garage solely to the extent necessary for personnel to carry out the Transition Activities (the “Transition Premises”) on the conditions that (x) Tenant pays Transition Rent (defined below) to Landlord for the use and occupancy of the Transition Premises during the Transition Period, (y) Tenant performs all of its obligations under this Lease as applicable to the Transition Premises and the Dishes and (z) all other terms and provisions of this Lease will remain in full force and effect during the Transition Period but the Leased Premises will be deemed to be only the Transition Premises and the Dishes and the term of this Lease will fully come to an end upon the expiration of the Transition Period.  “Transition Rent” means (i) base rent equal to 150% of the then applicable per square foot Base Annual Rent rate that is payable at a monthly rate multiplied by the number of square feet in the Transition Premises plus the applicable CPI adjustment and (ii) Tenant’s Transition Share (defined below) of Operating Expenses.  Transition Rent will be deemed Rent during the Transition Period and will be due and payable on or before the first day of each month during the Transition Period and otherwise in the same manner as Rent under this Lease.  “Tenant’s Transition Share” means the number of rentable square feet in the Transition Premises divided by 280,000 square feet. Any portion of the Leased Premises not part of the Transition Premises will be surrendered to Landlord on the Expiration Date as required by this Lease.

 

32.                               Miscellaneous.

 

A.                                    The term “Landlord,” as used in this Lease, so far as covenants or obligations on the part of Landlord are concerned, will be limited to mean and include only the owner or owners of the Leased Premises at the time in question.  In the event of any transfer or transfers of the title to the Leased Premises, the Landlord herein named (and in the case of any subsequent transfers or conveyances, the then grantor) will be automatically released, from and after the date of such transfer or conveyance, from all liability with respect to the performance of

 

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any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed; provided that the grantee assumes in writing the duty to perform Landlord’s covenants and obligations hereunder and a copy of such written assumption is promptly provided to Tenant.  All personal and separate liability of Landlord or any officer or partner of Landlord, of every kind or nature, if any, is waived by Tenant, and by every person now or later claiming by, through or under Tenant; and Tenant will look solely to the equity of Landlord in the Leased Premises for any claims against Landlord.  Such exculpation of liability is absolute and without exception.

 

B.                                    The termination of this Lease will not work a merger, and such termination will, at the option of Landlord, either terminate all subleases and subtenancies or operate as an assignment to Landlord of any or all of such subleases or subtenancies.

 

C.                                    This Lease will be construed as though the covenants herein between Landlord and Tenant are independent, and not dependent.  Except as otherwise provided in this Lease, Tenant will not be entitled to any setoff of the Rent or other amounts owing hereunder against Landlord if Landlord fails to perform its obligations set forth herein; provided, however, that the foregoing will in no way impair the right of Tenant to commence a separate action against Landlord for any violation by Landlord of the provisions hereof so long as notice is first given to Landlord and to any holder of a mortgage or deed of trust covering the Leased Premises or any portion thereof of which Tenant has received written notice, and a reasonable opportunity is granted to Landlord to correct such violation.

 

D.                                    No act or thing done by Landlord or Landlord’s agent during the term hereof, including, but not limited to, any agreement to accept surrender of the Leased Premises or to amend or modify this Lease, will be deemed to be binding upon Landlord unless such act or things will be signed by Landlord or a party designated in writing by Landlord as so authorized to act.  No act or thing done by Tenant or Tenant’s agent during the term hereof, including, but not limited to, any agreement to surrender the Leased Premises or to amend or modify this Lease, will be deemed to be binding upon Tenant unless such act or things will be signed by Tenant or a party designated in writing by Tenant as so authorized to act.  The delivery of keys to Landlord or Landlord’s agent, employees or officers will not operate as a termination of this Lease or a surrender of the Leased Premises.  No payment by Tenant, or receipt by Landlord, of a lesser amount than the monthly rent herein stipulated will be deemed to be other than on account of the earliest stipulated rent, nor will any endorsement or statement on any check or any letter accompanying any check, or payment as rent, be deemed on accord and satisfaction; and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rent or to pursue any other remedy available to Landlord.

 

E.                                     Tenant will not record this Lease or a memorandum hereof.  In the event that Tenant violates this provision, this will be deemed an Event of Default of this Lease by Tenant, affording Landlord all those remedies set out herein.  If Tenant records this Lease or a memorandum hereof, then Tenant will immediately execute and record a quit claim deed releasing all claims to the Leased Premises, and, if Tenant fails to do so upon demand, Tenant hereby appoints Landlord as Tenant’s attorney-in-fact to do so in Tenant’s name, place and stead.

 

30

 

F.                                      Tenant will pay, or cause to be paid, before delinquency, any and all taxes levied or assessed and which become payable during the term hereof upon all of Tenant’s income, leasehold improvements, equipment, furniture, fixtures and personal property owned by Tenant located in or on the Leased Premises.  In the event that any or all of Tenant’s leasehold improvements, equipment, furniture, fixtures and personal property will be assessed and taxed with the Building, Tenant will pay to Landlord as additional Rent hereunder such taxes within 30 days after delivery to Tenant by Landlord of a statement in writing setting forth the amount of such taxes applicable to Tenant’s property.

 

G.                                    If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws effective during the Lease Term then and in that event, it is the intention of the parties hereto that the remainder of this Lease will not be affected thereby; and it is also the intention of the parties to this Lease that in lieu of each clause or provision of this Lease that is illegal, invalid or unenforceable, there will be added as a part of this Lease a legal, valid and enforceable clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible.

 

H.                                   The captions of each paragraph are added as a matter of convenience only and will be considered to be of no effect in the construction of any provision or provisions of this Lease.

 

I.                                        Except as herein specifically set forth, all terms, conditions and covenants to be observed and performed by the parties hereto will be applicable to and binding upon their respective successors and assigns.

 

J.                                        Landlord and Tenant acknowledge and agree that they have not relied upon any statements, representations, agreements or warranties except such as are expressed in this Lease, and that no amendment or modification of this Lease will be valid or binding unless expressed in writing and executed by Landlord and Tenant in the same manner as the execution of this Lease.

 

K.                                   Time is of the essence hereof.  If the last day permitted for the performance of any act required or permitted under this Lease falls on a Saturday, Sunday or holiday, the time for such performance will be extended to the next succeeding business day.

 

L.                                     Any obligation of the Landlord or Tenant hereunder that is delayed or not performed due to acts of God, strike or labor troubles, unavailability of materials, inclement weather, lockouts, fuel or energy shortages, governmental restrictions, regulation, controls, actions or inaction, civil commotion, fire, national emergency, acts of war or terrorism, or any other reason beyond the reasonable control of Landlord or Tenant will not constitute a default hereunder and will be performed within a reasonable time after the end of such cause for delay or non-performance.

 

M.                                 The language in all parts of this Lease will be construed according to its normal and usual meaning and not strictly for or against either Landlord or Tenant.

 

N.                                    The respective parties hereto will and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the

 

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other on any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Leased Premises, or any claim of injury or damage, or the enforcement of any remedy under any statute, emergency or otherwise.

 

O.                                    Landlord will have the right to add to the amount of any undisputed payment that is required to be made by Tenant and that is overdue by 30 days or more, a late charge equal to 5% of the amount due, and any failure by Tenant to pay such amount within 10 business days after demand by Landlord will be an additional Event of Default under this Lease.  This provision for a late charge will be in addition to all of Landlord’s other rights and remedies available under this Lease or at law.  Default interest will also accrue on all unpaid amounts under this Lease from the date due or incurred until paid at the rate of 10% per annum.

 

P.                                      In the event of any litigation between Landlord and Tenant, the prevailing party in such litigation will be entitled to an award of its reasonable attorneys’ fees and costs.

 

Q.                                    Tenant acknowledges that the attorneys at Sherman & Howard L.L.C. represent only Landlord in this transaction.  Tenant is advised to seek the advice of legal counsel in connection with this Lease and all matters subject to this Lease and the transactions contemplated hereunder.  Sherman & Howard L.L.C. does not represent Tenant in this transaction.

 

R.                                    Except for:  (a) each party’s attorneys and accountants and (b) any party to whom disclosure must be made as required by applicable law, regulations or securities rules, neither party will issue any press release or disclose any information to any third party pertaining to the transactions contemplated hereunder without the prior written approval of the other party, which will not be unreasonably withheld, conditioned or delayed.

 

S.                                      This Lease will be governed by and construed under the laws of Colorado.

 

[Remainder of page intentionally blank.]

 

32

 

	
LANDLORD:
    	
 
    	
TENANT:
    
	
 
    	
 
    	
 
    
	
LIBERTY   PROPERTY HOLDINGS, INC., 

a   Delaware corporation
    	
 
    	
STARZ,   LLC,

a   Delaware limited liability company
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Albert Rosenthaler
    	
 
    	
By:   
    	
Scott   Macdonald
    
	
Its: 
    	
Senior Vice President
    	
 
    	
Its:   
    	
EVP   and CFO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Address:   
    	
12300   Liberty Boulevard
    	
 
    	
Address:   
    	
8900   Liberty Circle
    
	
 
    	
 Englewood, Colorado 80112
    	
 
    	
 
    	
Englewood,   Colorado 80112
    
	
 
    	
 Attn: General Counsel
    	
 
    	
 
    	
Attn:   Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
With   a copy to:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Address:   
    	
8900   Liberty Circle
    
	
 
    	
 
    	
 
    	
Englewood,   Colorado 80112
    
	
 
    	
 
    	
 
    	
Attn:   General Counsel
    
							

 

	
Starz Entertainment, LLC, signs this Lease for the
    	
 
    	
 
    
	
sole   purpose of joining in the agreements and
    	
 
    	
 
    
	
Property   Transfers set forth in Paragraph 30 above:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
STARZ   ENTERTAINMENT, LLC,
    	
 
    	
 
    
	
a Colorado limited liability company
    	
 
    	
 
    

 

 

	
By: 
    	
/s/ Scott Macdonald
    	
 
    	
 
    
	
Its: 
    	
EVP and CFO
    	
 
    	
 
    

 

Date: January 11, 2013

 

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List of Omitted Exhibits and Schedules

 

The following exhibits to the Commercial Lease, dated as of January 11, 2013, by and among Liberty Property Holdings, Inc., Starz, LLC and, for the limited purposes stated therein, Starz Entertainment, LLC have not been provided herein:

 

Exhibit A-1: Description of Property

Exhibit A-2: Depiction of Property

Exhibit B: The Common Areas

Exhibit C: Disclosure

Exhibit D: The Exercise Facilities Premises

Exhibit E: Tenant’s Personal Property

Exhibit F: Example of Allocation of Taxes

Exhibit G: Landlord Service Premises

Exhibit H: Power Facility Maintenance Contracts

 

The Registrant hereby undertakes to furnish supplementally a copy of any omitted exhibit to the Securities and Exchange Commission upon request.

 

H-1Exhibit 10.1

 

RESTRUCTURING SUPPORT AGREEMENT

 

This RESTRUCTURING SUPPORT AGREEMENT is made and entered into as of January 15, 2013 (the “Agreement”) by and among (i) Geokinetics Inc. on behalf of itself and each of its direct and indirect domestic subsidiaries and affiliates (collectively, the “Company”), which include: (a) Geokinetics Holdings USA, Inc., (b) Geokinetics Services Corp., (c) Geokinetics Processing, Inc., (d) Geokinetics Acquisition Company, (e) Geokinetics USA, Inc., (f) Geokinetics International Holdings, Inc., (g) Geokinetics Management, Inc.,  (h) Geokinetics International, Inc., and (i) Advanced Seismic Technology, Inc.; (ii) American Securities Opportunities Advisors, LLC (“American Securities”), Gates Capital Management, Inc. (“Gates”) and the other undersigned holders (the “Noteholders”), each as the beneficial owners (or advisor, nominee or investment manager for beneficial owner(s)) of the 9.75% Senior Secured Notes due 2014 issued by Geokinetics Holdings USA, Inc. (the “Notes”) and, if and as applicable, as lenders under that certain Amended and Restated Credit Agreement dated as of August 12, 2011 (the “Revolving Credit Facility”); and (iii) Avista Capital Partners, L.P. and Avista Capital Partners (Offshore), L.P. (the “Preferred Equity Holders” and, together with the Company and the Noteholders, each referred to as a “Party” and collectively referred to as the “Parties”), each as the beneficial owners (or advisor, nominee or investment manager for beneficial owner(s)) of preferred equity interests in Geokinetics Inc. comprised of Series B-1 Senior Convertible Preferred Stock and Series C-1 Senior Preferred Stock (collectively, the “Preferred Equity”) as well as junior preferred equity interests in Geokinetics Inc. comprised of Series D Junior Preferred Stock (the “Series D Preferred Stock”).

 

WITNESSETH:

 

WHEREAS, representatives of the Company, Noteholders, and Preferred Equity Holders have agreed to the terms of a financial restructuring of the Company’s indebtedness and other obligations (the “Restructuring”), the principal terms of which are set forth in this Agreement and the accompanying term sheet, including exhibits, attached hereto as Exhibit A (the “Restructuring Term Sheet”);

 

WHEREAS, the Company intends to (i) commence voluntary cases (collectively, the “Chapter 11 Case”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), (ii) file and use its reasonable best efforts to obtain confirmation by the Bankruptcy Court of a chapter 11 plan of reorganization in the Chapter 11 Case that is consistent with the Restructuring Term Sheet and implements the terms of the Restructuring (such plan of reorganization, the “Chapter 11 Plan”), and (iii) file and use its reasonable best efforts to obtain approval by the Bankruptcy Court of a disclosure statement and related materials for the Chapter 11 Plan that are consistent with the Restructuring Term Sheet (the “Disclosure Statement”);

 

WHEREAS, this Agreement and the Restructuring Term Sheet, which is incorporated herein by reference and is made part of this Agreement, set forth the agreement among the Parties concerning their commitment, subject to the terms and conditions hereof and thereof, to implement the Restructuring.  In the event the terms and conditions as set forth in the Restructuring Term Sheet and this Agreement are inconsistent, the terms and conditions contained in the Restructuring Term Sheet shall govern.

 

 

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

 

Section 1.                                           General. Each of the Parties agrees and covenants that, on the terms and subject to the conditions set forth on the Restructuring Term Sheet:

 

(a)                                 it will negotiate in good faith (i) the documentation regarding the Restructuring or otherwise contemplated by the Restructuring Term Sheet, (ii) the Chapter 11 Plan, and (iii) the other documents contemplated hereby and thereby, and will use its reasonable best efforts to proceed expeditiously to complete such documents to the extent possible prior to the Chapter 11 Commencement Date (as defined below);

 

(b)                                 it will not (i) object to, delay, impede, commence any proceeding, or take any other action to interfere, directly or indirectly, in any material respect with the acceptance or implementation of the Chapter 11 Plan, (ii) vote for, consent to, support, encourage, induce or participate in any way in the formulation of any other plan of reorganization or liquidation to be proposed, proposed or filed in any chapter 11 or chapter 7 case or under the insolvency laws of any foreign jurisdiction commenced in respect of the Company, (iii) directly or indirectly, in whatever jurisdiction, seek, solicit, support, induce, facilitate, encourage or engage in discussions with any person or entity concerning any other plan, sale, proposal, or offer of dissolution, winding up, liquidation, administration, reorganization, composition, arrangement, merger, consolidation or restructuring of the Company that could reasonably be expected to prevent, delay or impede the success of the Restructuring contemplated by the Chapter 11 Plan or the Restructuring Term Sheet, (iv) participate itself, or in conjunction with others in the commencement of any involuntary bankruptcy proceedings against the Company, (vi) seek the appointment of a trustee or examiner under section 1104 of the Bankruptcy Code or the conversion or dismissal of the Chapter 11 Case under section 1112 of the Bankruptcy Code, or (vii) take any other action, in the Chapter 11 Case or otherwise and in whatever jurisdiction, that is inconsistent with, or is intended or is reasonably likely to interfere with or impede or delay, confirmation of the Chapter 11 Plan and consummation of the Restructuring;

 

(c)                                  it will take or cause to be taken all reasonable actions necessary to confirm and consummate the Chapter 11 Plan on the terms and subject to the conditions set forth in this Agreement and on the Restructuring Term Sheet.

 

Section 2.                                           Support for the Chapter 11 Plan.

 

(a)                                 Except as otherwise provided in this Agreement, the Company agrees and covenants that (i) it shall perform its commitments and other obligations under the Restructuring Term Sheet and (ii) in connection with the commencement of the Chapter 11 Case, it shall use its reasonable best efforts to (A) launch the solicitation of votes to accept or reject the Chapter 11 Plan required for confirmation of the Chapter 11 Plan (the “Solicitation”) prior to the date of the filing of the Company’s chapter 11 petitions (the “Chapter 11 Commencement Date”); provided, however, that if the Majority Noteholders (as defined below) determine that the Company should pursue a pre-negotiated Chapter 11 Plan rather than a prepackaged Chapter 11 Plan, such Solicitation shall be performed by the Company during the Chapter 11 Case after approval of the Disclosure Statement by the Bankruptcy Court, (B) file the Chapter 11 Plan on the Chapter 11

 

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Commencement Date, (C) seek approval of the Disclosure Statement and confirmation of the Chapter 11 Plan by the Bankruptcy Court as expeditiously as possible, (D) obtain any and all required regulatory and/or third-party approvals for the Restructuring, (E) not take any actions inconsistent with this Agreement, the Restructuring Term Sheet or the Chapter 11 Plan, and (F) take all other necessary actions to support the Chapter 11 Plan provided that nothing herein shall require the Company or its officers or directors to breach its, his or her fiduciary duties.

 

(b)                                 Except as otherwise provided in the Agreement, each of the Preferred Equity Holders agrees and covenants that it shall (i) perform its commitments and other obligations under this Agreement and the Restructuring Term Sheet, (ii) not object to any motions to be filed by the Company in connection with the Chapter 11 Case, so long as such motions are not inconsistent with the treatment of the Preferred Equity Holders as set forth in the Restructuring Term Sheet, (iii) not object to the Disclosure Statement, the solicitation of votes to accept the Chapter 11 Plan or confirmation of the Chapter 11 Plan, so long as the Disclosure Statement and Plan are not inconsistent with the treatment of the Preferred Equity Holders as set forth in the Restructuring Term Sheet, (iv) take or cause to be taken all reasonable actions necessary to ensure that the Company performs its commitments and other obligations under this Agreement and the Restructuring Term Sheet; (v) at every meeting of Preferred Equity Holders called, and at every adjournment or postponement thereof, and on every action or approval by written consent of the Preferred Equity Holders, if applicable, attend such meeting in person or by proxy and/or to vote in  favor of, or consent to, the approval of the Restructuring, (vi) following receipt of the solicitation materials (the “Solicitation Materials”), promptly and timely exercise all votes to which it is entitled with respect to Preferred Equity to accept the Chapter 11 Plan in accordance with the applicable procedures set forth in the Solicitation Materials (and will not withdraw or change such votes) and, to the extent such election is available, shall not elect on its ballot to preserve any claims (in respect of the claims that each Preferred Equity Holder may own) that may be affected by any releases provided for under the Chapter 11 Plan, and (vii) take or cause to be taken all reasonable actions necessary to fully cooperate with the Company and the Noteholders in implementing the terms of the Restructuring, including, without limitation, obtaining approval of the Chapter 11 Plan as expeditiously as possible.

 

(c)                                  Except as otherwise provided in the Agreement, so long as the Chapter 11 Plan is consistent with the Restructuring Term Sheet, including, without limitation, the terms of treatment of the Noteholders and other classes of creditors, each of the Noteholders agrees and covenants that it shall (i) perform its commitments and other obligations under the Restructuring Term Sheet, (ii) not object to any motions to be filed by the Company in connection with the Chapter 11 Case, so long as such motions are in form and substance substantially the same as the form approved by the Noteholders holding more than 50% of the aggregate principal amount of all Notes (the “Majority Noteholders”), (iii) not object to the Disclosure Statement, the solicitation of votes to accept the Chapter 11 Plan or confirmation of the Chapter 11 Plan, so long as the Disclosure Statement and the Chapter 11 Plan are in form and substance substantially the same as the form approved by the Majority Noteholders, (iv) following receipt of Solicitation Materials, promptly and timely exercise all votes to which it is entitled to accept the Chapter 11 Plan in accordance with the applicable procedures set forth in the Solicitation Materials (and will not withdraw or change such votes) and, to the extent such election is available, shall not elect on its ballot to preserve any claims (in respect of the claims that each Noteholder may own) that may be affected by any releases provided for under the Chapter 11 Plan, and (v) take or cause to

 

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be taken all reasonable actions necessary to fully cooperate with the Company and the Preferred Equity Holders in implementing the terms of the Restructuring, including, without limitation, obtaining approval of the Chapter 11 Plan as expeditiously as possible.

 

(d)                                 Notwithstanding the foregoing, nothing in this Agreement shall be construed to prohibit any Party from appearing as a party-in-interest in any matter to be adjudicated in the Chapter 11 Cases so long as such appearance and the positions advocated in connection therewith are consistent with this Agreement and the Restructuring Term Sheet and are not for the purpose of, and could not reasonably be expected to have the effect of, hindering, delaying or preventing the consummation of the Restructuring as set forth in the Restructuring Term Sheet.

 

Section 3.                                           Representations and Warranties.

 

(a)                                 Each of the Parties severally, and not jointly, represents and warrants to each of the other Parties that the following statements are true and correct as of the date hereof:

 

(1)                                 Power and Authority. It has all requisite power and authority to enter into this Agreement and to carry out the transactions contemplated by, and perform its respective obligations under, this Agreement.

 

(2)                                 Authorization. The execution and delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary action on its part.

 

(3)                                 No Conflicts. The execution and delivery by it, and performance by it of the transactions contemplated by this Agreement, do not and shall not (i) violate any provision of law, rule, or regulation applicable to it or its certificate of incorporation or bylaws (or other organizational documents) or (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation to which it is a party.

 

(4)                                 Governmental Consents. Except as contemplated by this Agreement and the Restructuring Term Sheet, the execution and delivery by it, and performance by it of the transactions contemplated by this Agreement, do not and shall not require any registration or filing with, consent or approval of, or notice to, or other action to, with, or by, any Federal, state, or other governmental authority or regulatory body.

 

(5)                                 Binding Obligation. This Agreement is the legally valid, and binding obligation of it, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

 

(6)                                 Proceedings. No litigation or proceeding before any court, arbitrator, or administrative or governmental body is pending or threatened against it that would adversely affect its ability to enter into this Agreement or perform its obligations hereunder.

 

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(b)                                 Each of the Preferred Equity Holders represents and warrants, severally and not jointly, to each of the other Parties that the following statements are true, correct, and complete as of the date hereof:

 

(1)                                 Ownership. It is (i) the sole beneficial owner of the aggregate principal amount of the Preferred Equity set forth on the signature page hereto and/or the investment advisor or manager for the beneficial owners of such Preferred Equity, having the power to vote and dispose of such Preferred Equity on behalf of such beneficial owners, and (ii) entitled (for its own account or for the account of other persons claiming through it) to all of the rights and economic benefits of such Preferred Equity.

 

(2)                                 Transfers. It has made no prior assignment, sale, participation, grant, conveyance, or other transfer of, and has not entered into any other agreement or otherwise agreed to assign, sell, participate, grant, or otherwise transfer, in whole or in part, any portion of its right, title, or interests in the Preferred Equity represented as owned or controlled by it on the signature pages hereto.

 

(c)                                  Each of the Noteholders represents and warrants, severally and not jointly, to each of the other Parties that the following statements are true, correct, and complete as of the date hereof:

 

(1)                                 Ownership. It is (i) the sole beneficial owner of (a) the aggregate principal amount of the Notes and (b) as applicable, the aggregate principal amount owing under the Revolving Credit Facility (the “Revolving Lender Claims”) set forth on the signature page hereto and/or the investment advisor or manager for the beneficial owners of such Notes and, as applicable, Revolving Lender Claims, having the power to vote and dispose of such Notes and, as applicable, Revolving Lender Claims on behalf of such beneficial owners, and (ii) entitled (for its own account or for the account of other persons claiming through it) to all of the rights and economic benefits of such Notes and, as applicable, Revolving Lender Claims.

 

(2)                                 Transfers. It has made no prior assignment, sale, participation, grant, conveyance, or other transfer of, and has not entered into any other agreement or otherwise agreed to assign, sell, participate, grant, or otherwise transfer, in whole or in part, any portion of its right, title, or interests in the Notes or, as applicable, the Revolving Lender Claims represented as owned or controlled by it on the signature pages hereto.

 

Section 4.                                           Covenants.

 

(a)                                 Each Preferred Equity Holder individually covenants that such Party shall not, directly or indirectly, (i) sell, pledge, hypothecate, or otherwise transfer any shares of (A) Preferred Equity or (B) shares of Series D Preferred Stock except to a purchaser or other entity who executes and delivers to the Company prior to the time of settlement of such transfer an agreement in writing to be bound by all the terms of this Agreement (which agreement shall include the applicable representations and warranties set forth in Section 3 hereof), or (ii) grant any proxies, deposit any of its Preferred Equity in a voting trust or enter into a voting or trading agreement with respect to the Preferred Equity.  Any transfer of any shares of Preferred Equity by a Preferred Equity Holder that does not comply with the procedure set forth in the foregoing sentence shall be deemed void ab initio.

 

5

 

(b)                                 Each Noteholder individually covenants that such Party shall not, directly or indirectly, sell, pledge, hypothecate, or otherwise transfer any Notes or, as applicable, Revolving Lender Claims, except to a purchaser or other entity who executes and delivers to the Company prior to the time of settlement of such transfer an agreement in writing to be bound by all the terms of this Agreement (which agreement shall include the applicable representations and warranties set forth in Section 3 hereof).  Any transfer of any Notes or Revolving Lender Claims by a Noteholder that does not comply with the procedure set forth in the foregoing sentence shall be deemed void ab initio.

 

(c)                                  This Agreement shall in no way be construed to preclude the Preferred Equity Holders or Noteholders from acquiring Notes or additional Notes, provided that the Parties hereto shall be given written notice by such transferee of such acquisition and any such Notes shall automatically be deemed to be subject to the terms of this Agreement.

 

(d)                                 Each Noteholder individually covenants that such Party: (i) will not exercise any rights under that certain Indenture dated as of December 23, 2009 (as amended, modified or supplemented from time to time, the “Indenture”) or, to the extent applicable, under the Revolving Credit Facility, or instruct U.S. Bank National Association, as the trustee under the Indenture (including any successors, assigns or agents, the “Trustee”) or, to the extent applicable, Whitebox Advisors LLC, as the Administrative Agent and Collateral Agent under the Revolving Credit Facility (including any successors, assigns or agents, the “Revolving Credit Agent”) to exercise any such rights except as consistent with this Agreement and the Restructuring Term Sheet, (ii) in the event of any action by the Trustee to enforce rights and remedies triggered by a Default or an Event of Default under (and as defined in) the Indenture, will direct the Trustee to forbear from exercising such rights and remedies, and (iii) to the extent applicable, in the event of any action by the Revolving Credit Agent to enforce rights and remedies triggered by a Default or an Event of Default under (and as defined in) the Revolving Credit Facility, will direct the Revolving Credit Agent to forbear from exercising such rights and remedies.

 

Section 5.                                           Termination by the Noteholders. This Agreement may be terminated by any Noteholder, or group of Noteholders, that beneficially owns or acts as the investment advisor or manager with respect to at least a majority of the aggregate principal face amount of the Notes that are subject to the terms of this Agreement on the occurrence of any of the following events, by delivering written notice of the occurrence of such event in accordance with Section 14 below to the other Parties:

 

(a)                                 the Company fails to meet any of the milestones set forth below:(1)

 

(1)  If the Majority Noteholders determine that the Company should pursue a pre-negotiated Chapter 11 Plan rather than a prepackaged Chapter 11 Plan, the milestones in this Section 5(a) shall be adjusted as follows:

 

(1)                                 the Company has not filed petitions commencing the Chapter 11 Case by January 31, 2013;

 

(2)                                 the Company has not filed the Chapter 11 Plan and the Disclosure Statement on the Chapter 11 Commencement Date;

 

6

 

(1)                                 the Company has not used its reasonable best efforts to commence the Solicitation on or before January 22, 2013, and in any event, the Solicitation is not commenced by January 31, 2013 (the “Solicitation Date”);

 

(2)                                 the Company has not filed petitions commencing the Chapter 11 Case by the date that is 14 days from the Solicitation Date;

 

(3)                                 the Company has not filed the Chapter 11 Plan and the Disclosure Statement on the Chapter 11 Commencement Date;

 

(4)                                 the entry of an order (the “Interim DIP Order”) approving debtor in possession financing pursuant to the terms set forth in the Restructuring Term Sheet (the “DIP Facility”) on an interim basis in form and substance acceptable to the Backstop DIP Lenders (as defined in the Restructuring Term Sheet) has not occurred by the date that is 10 days after the Chapter 11 Commencement Date;

 

(5)                                 the entry of a final order approving the DIP Facility in form and substance acceptable to the Backstop DIP Lenders has not occurred by the date that is 20 days after the entry of the Interim DIP Order;

 

(6)                                 the entry of an order or orders in form and substance acceptable to the Majority Noteholders by the Bankruptcy Court confirming the Chapter 11 Plan pursuant to section 1129 of the Bankruptcy Code has not occurred by the date that is 35 days after the Chapter 11 Commencement Date;

 

(7)                                 the effective date of the Chapter 11 Plan has not occurred by the date that is 50 days after the Chapter 11 Commencement Date.

 

(b)                                 the Company files a chapter 11 plan or any exhibits, amendments, modifications or supplements thereto that are not in form or substance acceptable to the Majority Noteholders;

 

(3)                                 the entry of the Interim DIP Order (as defined below) has not occurred by the date that is 10 days after the Chapter 11 Commencement Date;

 

(4)                                 the entry of a final order approving the DIP Facility (as defined below) in form and substance acceptable to the Backstop DIP Lenders has not occurred by the date that is 20 days after the entry of the Interim DIP Order;

 

(5)                                 the entry of an order by the Bankruptcy Court approving the Disclosure Statement in form and substance acceptable to the Majority Noteholders has not occurred by the date that is 40 days after the Chapter 11 Commencement Date;

 

(6)                                 the entry of an order or orders in form and substance acceptable to the Majority Noteholders by the Bankruptcy Court confirming the Chapter 11 Plan pursuant to section 1129 of the Bankruptcy Code has not occurred by the date that is 75 days after the Chapter 11 Commencement Date;

 

(7)                                 the effective date of the Chapter 11 Plan has not occurred by the date that is 90 days after the Chapter 11 Commencement Date.

 

7

 

(c)                                  an order converting the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code is entered by the Bankruptcy Court and such order is not stayed, vacated, or reversed within thirty (30) days;

 

(d)                                 the Company’s exclusive right to file a chapter 11 plan pursuant to section 1121 of the Bankruptcy Code shall have terminated;

 

(e)                                  entry of an order dismissing the Chapter 11 Case;

 

(f)                                   a change in the operations of the Company occurs that would have, or would reasonably be expected to have, a material adverse effect on the ability of the Company to perform its obligations under this Agreement and effect the Restructuring (a “Material Adverse Change”); provided however, that the filing of the Chapter 11 Case and the other transactions contemplated by the Restructuring Term Sheet shall not in and of itself constitute a Material Adverse Change;

 

(g)                                  any court of competent jurisdiction or other competent governmental or regulatory authority shall have issued an order making illegal or otherwise restricting, preventing, or prohibiting the Restructuring on the terms set forth in the Restructuring Term Sheet in a manner that cannot be reasonably remedied in a timely manner by the Company or the Noteholders or Preferred Equity Holders, as applicable;

 

(h)                                 the Company files or publicly announces its intention to file a chapter 11 plan or any exhibit, amendment, modification or supplement to the chapter 11 plan that contains terms or conditions that are not consistent with the Restructuring or the Restructuring Term Sheet;

 

(i)                                     the Company shall have breached its obligations under this Agreement in any material respect;

 

(j)                                    the entry of an order by the Bankruptcy Court appointing an examiner with enlarged powers relating to the operation of the material part of the business of the Company, taken as a whole (powers beyond those set forth in section 1106(a)(3) and (4) of the Bankruptcy Code) under section 1106(b) of the Bankruptcy Code, or the entry of an order by the Bankruptcy Court appointing a trustee under section 1104 of the Bankruptcy Code and, in either case, such order has not been stayed, reversed, or vacated within thirty (30) days after the entry of such order;

 

(k)                                 the entry of an order by the Bankruptcy Court denying confirmation of the Chapter 11 Plan or the Chapter 11 Plan is withdrawn by the Company;

 

(l)                                     any of the Preferred Equity Holders has breached its obligations under this Agreement in any material respect;

 

(m)                             termination of this Agreement by the Preferred Equity Holders in accordance with Section 6 hereof;

 

(n)                                 the aggregate amount of all projected claims against the Company in the Chapter 11 Case, other than claims with respect to amounts owed under the Revolving Credit

 

8

 

Facility and the Notes, and other than claims for amounts typically accounted for as deferred revenue on the Company’s balance sheet, reasonably determined by the Majority Noteholders to be allowed claims exceeds $85.7 million; or

 

(o)                                 the conditions set forth in the Restructuring Term Sheet as the “Certain Closing and Other Conditions to the Restructuring” have not occurred and/or have not been waived by the Majority Noteholders.

 

Section 6.                                           Termination by the Preferred Equity Holders.  This Agreement may be terminated by any Preferred Equity Holder or group of Preferred Equity Holders that beneficially owns at least a majority of the shares of the Preferred Equity, solely with respect to such Preferred Equity Holder or group of Preferred Equity Holders, on the occurrence of any of the following events, by delivering written notice of the occurrence of such event in accordance with Section 14 below to the other Parties; provided, however that any termination by a Preferred Equity Holder or group of Preferred Equity Holders pursuant to this section shall not terminate this Agreement or affect the obligations of the other Parties under this Agreement:

 

(a)                                 in the event that the Chapter 11 Plan, without the consent of the Preferred Equity Holders, provides for a treatment of the Preferred Equity Holders that is different than the Restructuring Term Sheet and such difference adversely affects in any material respect the treatment or value of the consideration provided to the Preferred Equity Holders;

 

(b)                                 Noteholders holding in excess of one third of the aggregate outstanding face amount of the Notes breach their obligations under this Agreement in any material respect;

 

(c)                                  an order converting the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code is entered by the Bankruptcy Court and such order is not stayed, vacated, or reversed within thirty (30) days;

 

(d)                                 the Company’s exclusive right to file a chapter 11 plan pursuant to section 1121 of the Bankruptcy Code shall have terminated;

 

(e)                                  the entry of an order by the Bankruptcy Court appointing an examiner with enlarged powers relating to the operation of the material part of the business of the Company, taken as a whole (powers beyond those set forth in section 1106(a)(3) and (4) of the Bankruptcy Code) under section 1106(b) of the Bankruptcy Code, or the entry of an order by the Bankruptcy Court appointing a trustee under section 1104 of the Bankruptcy Code and, in either case, such order has not been stayed, reversed, or vacated within sixty (30) days after the entry of such order;

 

(f)                                   the entry of an order by the Bankruptcy Court denying confirmation of the Chapter 11 Plan or the Chapter 11 Plan is withdrawn by the Company; or

 

(g)                                  in the event that prior to February 15, 2013, American Securities and Gates have not executed an agreement authorizing and approving the form of a shareholders’ agreement governing the rights of holders of New Common Stock (as defined in the Restructuring Term Sheet); provided, however, that the Preferred Equity Holders, American Securities and Gates may extend such deadline by unanimous agreement; and provided  further

 

9

 

that unless so extended or unless notice of termination shall have been given by the Preferred Equity Holder as provided herein on or prior to February 15, 2013, this right to terminate shall be null and void and of no further force and effect.

 

Section 7.                                           Termination by the Company.  In the event that (a) the Noteholders holding in excess of one third of the aggregate outstanding face amount of the Notes breach their obligations under this Agreement in any material respect, or (b) any court of competent jurisdiction or other competent governmental or regulatory authority shall have issued an order making illegal or otherwise restricting, preventing, or prohibiting the Restructuring on the terms set forth in the Restructuring Term Sheet in a manner that cannot be reasonably remedied in a timely manner by the Company or the Noteholders or Preferred Equity Holders, as applicable, then the Company shall have the right to terminate this Agreement by delivering written notice of the occurrence of such event in accordance with Section 14 below to the other Parties.

 

Section 8.                                           Termination by American Securities and/or Gates.  In the event that American Securities and Gates have not jointly executed an agreement authorizing and approving the form of a shareholders’ agreement governing the rights of holders of New Common Stock (as defined in the Restructuring Term Sheet) immediately prior to the earlier of (a) the launch of the Solicitation and (b) the commencement of the Chapter 11 Cases, then this Agreement may be terminated by either American Securities or Gates, in the discretion of each resepctively, by delivering written notice of the occurrence of such event in accordance with Section 14 below to the Parties.

 

Section 9.                                           Effect of Termination.

 

(a)                                 On the delivery of the written notice referred to in Sections 5, 7 or 8 in connection with the valid termination of this Agreement, the obligations of each of the Parties hereunder shall thereupon terminate and be of no further force and effect. Upon termination of this Agreement, no Party (or any other party) shall have any continuing liability or obligation to the other Parties hereunder; provided, however, that no such termination shall relieve any party from liability for its breach or non-performance of its obligations hereunder prior to such termination.

 

(b)                                 On the delivery of the written notice referred to in Section 6 in connection with the valid termination of this Agreement, the obligations hereunder of the Party that has delivered notice pursuant to Section 6 (the “Terminating Party”) shall thereupon terminate and be of no further force and effect solely with respect to such Terminating Party. Upon termination of this Agreement pursuant to Section 6, no such Terminating Party shall have any continuing liability or obligation to the other Parties hereunder; provided, however, that no such termination shall relieve any party from liability for its breach or non-performance of its obligations hereunder prior to such termination.

 

Section 10.                                    Preparation of Restructuring Documents.  The Company shall instruct its counsel promptly to deliver to counsel to the each of the Noteholders and the Preferred Equity Holders for their review and comment prior to the earlier of their filing or mailing (w) the Chapter 11 Plan and Disclosure Statement, (x) the Bankruptcy Court orders to be prepared in connection therewith, (y) the Solicitation Materials, and (z) all other documents or agreements to be executed or implemented in connection therewith (collectively the, “Restructuring

 

10

 

Documents”), each of which Restructuring Documents shall be consistent in all material respects with this Agreement and the Restructuring Term Sheet and acceptable (i) to the Majority Noteholders in all respects, and (ii) to the Preferred Equity Holders in respect that the treatment of their holdings of the Preferred Equity is consistent with the Restructuring Term Sheet.  The Parties further agree that this Agreement is not a financial accommodation contract that would be unenforceable under section 365(c)(2) or the Bankruptcy Code, and each agrees not to take any contrary position in the Chapter 11 Case.

 

Section 11.                                    Good Faith Negotiation of Documents.  Each Party hereby further covenants and agrees to negotiate the Restructuring Documents in good faith and, in any event, in all respects consistent with the Restructuring Term Sheet.

 

Section 12.                                    Amendments. This Agreement may not be modified, amended, or supplemented except in writing signed by the Parties.

 

Section 13.                                    Governing Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflict of laws of the State of New York. By its execution and delivery of this Agreement, each of the Parties hereto hereby irrevocably and unconditionally agrees for itself that any legal action, suit, or proceeding against it with respect to any matter under or arising out of or in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit, or proceeding, shall be brought in federal court in the Southern District of New York. By execution and delivery of this Agreement, each of the Parties hereto hereby irrevocably accepts and submits to the exclusive jurisdiction of such court, generally and unconditionally, with respect to any such action, suit, or proceeding. Notwithstanding the foregoing consent to jurisdiction, upon the commencement of the Chapter 11 Case, each of the Parties hereto hereby agrees that the Bankruptcy Court shall have exclusive jurisdiction over all matters arising out of or in connection with this Agreement.

 

Section 14.                                    Notices. All demands, notices, requests, consents, and communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or by courier service, or messenger, or by facsimile or telecopy, and shall be deemed to have been duly given or made (i) upon delivery, if delivered personally or by courier service, or messenger, in each case with record of receipt, or (ii) upon transmission with confirmed delivery, if sent by facsimile or telecopy, to the following addresses, or such other addresses as may be furnished hereafter by notice in writing, to the following Parties:

 

11

 

If to the Company:

 

	
Gary   L. Pittman

Geokinetics   Inc.

1500   City West Blvd., Suite 800

Houston,   Texas 77042

Telephone:   (281) 848-6823

Facsimile:   (713) 850-7330

 

with   a copy to (which shall not constitute notice):

 
    	
William (Bill) L. Moll, Jr.

Geokinetics   Inc.

1500   City West Blvd., Suite 800

Houston,   Texas 77042

Telephone:   (281) 848-6820

Facsimile:   (713) 850-7330

 
    
	
Akin Gump Strauss Hauer & Feld LLP

1700 Pacific Avenue, Suite 4100

Dallas, Texas 75201

Attn: Sarah Link Schultz, Esq.

Telephone: (214) 969-2800

Facsimile: (214) 969-4343
    	
Akin Gump Strauss Hauer & Feld LLP

1111 Louisiana Street, 44th Floor

Houston, Texas 77002

Attn: David P. Elder, Esq.

Telephone: (713) 220-5800

Facsimile: (713) 236-0822
    
	
 

If   to the Noteholders:

 

Larry   First
   American Securities Opportunities Advisors, LLC
   299 Park Avenue
   34th Floor
   New York, NY 10171
    	
 

Jeffrey Gates

Gates Capital Management, Inc.
   1177 Avenue of the Americas
   32nd Floor
   New York, NY 10036
    

 

with a copy to (which shall not constitute notice):

 

Brad Eric Scheler, Esq.

Jennifer Rodburg, Esq.

Fried, Frank, Harris, Shriver & Jacobson LLP

One New York Plaza

New York, NY 10004-1980

Telephone: (212) 859-8520

Facsimile: (212) 859-4000

 

If to the Preferred Equity Holders:

 

12

 

Avista Capital Holdings, L.P.

65 East 55th Street, 18th Floor

New York, N.Y.

Attn:  General Counsel

Telephone: (212) 593-6900

Facsimile: (212) 593-6901

 

and

 

Avista Capital Holdings, L.P.

1000 Louisiana

Houston, TX 77002

Attn:  Jeff Gunst

Telephone: (212) 328-1099

Facsimile: (212) 328-1097

 

with a copy to (which shall not constitute notice):

 

Steven D. Rubin, Esq.
 Gardere Wynne Sewell LLP
 Wells Fargo Plaza, Suite 3400
 1000 Louisiana
 Houston, TX 77002
 Telephone: 713-276-5202
 Facsimile: 713-276-6202

 

Section 15.            Entire Agreement. This Agreement constitutes the full and entire understanding and agreement among the Parties with regard to the subject matter hereof, and supersedes all prior negotiations and agreements with respect to the subject matter hereof.

 

Section 16.            Headings. The headings of the paragraphs and subparagraphs of this Agreement are inserted for convenience only and shall not affect the interpretation hereof.

 

Section 17.            Successors and Assigns. This Agreement is intended to bind and inure to the benefit of the Parties and their respective successors and permitted assigns; provided, however, that nothing contained in this paragraph shall be deemed to permit sales, assignments, or transfers other than in accordance with Section 4.

 

Section 18.            Specific Performance. Each Party hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement may cause other parties to sustain damages for which such parties would not have an adequate remedy at law for money damages, and therefore each Party hereto agrees that in the event of any such breach, such other parties shall be entitled to seek the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which such parties may be entitled, at law or in equity.

 

13

 

Section 19.            Several Not Joint Obligations. The agreements, representations, and obligations of the Parties under this Agreement are, in all respects, several and not joint.

 

Section 20.            Remedies Cumulative. All rights, powers, and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any right, power, or remedy thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power, or remedy by such party.

 

Section 21.            No Waiver. The failure of any Party hereto to exercise any right, power, or remedy provided under this Agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other Party hereto with its obligations hereunder, and any custom or practice of the parties at variance with the terms hereof, shall not constitute a waiver by such Party of its right to exercise any such or other right, power, or remedy or to demand such compliance.  Moreover, each of the Parties expressly acknowledges and agrees that, except as expressly provided in this Agreement, nothing in this Agreement is intended to, or does, in any manner waive, limit, impair or restrict the ability of any party to this Agreement to protect and preserve all of its rights, remedies and interests, including, without limitation, with respect to its claims against and interests in the Company.

 

Section 22.            Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Delivery of an executed signature page of this Agreement by telecopier or email shall be as effective as delivery of a manually executed signature page of this Agreement.

 

Section 23.            Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

 

Section 24.            Effectiveness of this Agreement.  The effectiveness of this Agreement, and the respective obligations of the Parties under this Agreement, are conditioned upon the receipt of the consent and signature hereto of each of the Parties.

 

Section 25.            No Third-Party Beneficiaries. Unless expressly stated herein, this Agreement shall be solely for the benefit of the Parties, and no other person or entity shall be a third party beneficiary hereof.

 

Section 26.            Additional Parties. Without in any way limiting the provisions hereof, additional holders of Notes may elect to become Parties by executing and delivering to the Company a counterpart hereof. Such additional holder shall become a Party to this Agreement as a Noteholder in accordance with the terms of this Agreement as if such additional holder were an original named party hereto.

 

Section 27.            No Solicitation. This Agreement is not intended to be, and each signatory to this Agreement acknowledges that this Agreement is not, a solicitation to the acceptance or rejection of a plan of reorganization for the Company. Acceptance of the Restructuring will not

 

14

 

be solicited from any holder of Notes until it has received the disclosures required under or otherwise in compliance with applicable law.

 

Section 28.            Settlement Discussions. This Agreement and the Restructuring are part of a proposed settlement of a dispute among the Parties. Nothing herein shall be deemed an admission of any kind. Pursuant to Federal Rule of Evidence 408 and any applicable state rules of evidence, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding other than a proceeding to enforce the terms of this Agreement.

 

Section 29.            Consideration. It is hereby acknowledged by the Parties hereto that, other than the agreements, covenants, representations, and warranties set forth herein and in the Restructuring Term Sheet and the Indenture, no consideration shall be due or paid to the Parties for their agreement to support and vote to accept the Chapter 11 Plan in accordance with the terms and conditions of this Agreement.

 

Section 30.            Receipt of Adequate Information; Representation by Counsel. Each Party acknowledges that it has received adequate information to enter into this Agreement and that it has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of law or any legal decision that would provide any party with a defense to the enforcement of the terms of this Agreement against such party shall have no application and is expressly waived.  The provisions of the Agreement shall be interpreted in a reasonable manner to effect the intent of the Parties.

 

Section 31.            Mutual Assurances.  Each Party hereby covenants to the other Parties to use its reasonable best efforts, as expeditiously as possible, to perform its respective obligations under this Agreement and take such actions as may be reasonably necessary under this Agreement to consummate the Restructuring.  The Parties further agree to take such other actions as are reasonably necessary and appropriate to carry out the foregoing and to effectuate the Restructuring and evidence the Parties’ support of the Chapter 11 Plan and commitment to vote in favor of the Chapter 11 Plan including, without limitation, the execution and delivery of any transmittal letters, written consents, or other similar documents  containing customary terms and provisions, for distribution to the holders of any impaired claims against or interests in the Company.

 

Signature Pages Follow

 

15

 

IN WITNESS WHEREOF, the Parties hereto have duly executed and delivered this Agreement as of the date first above written.

 

Dated:  January     , 2013

 

	
Geokinetics Inc.
    	
 
    	
Geokinetics USA, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Geokinetics Holdings   USA, Inc.
    	
 
    	
Geokinetics International Holdings, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Geokinetics Services Corp.
    	
 
    	
Geokinetics Management, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Geokinetics   Processing, Inc.
    	
 
    	
Geokinetics International, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Geokinetics Acquisition   Company
    	
 
    	
Advanced Seismic Technology, Inc.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    

 

16

 

	
Dated:  January       ,   2013
    	
[Party]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
Telephone:
    
	
 
    	
Facsimile:
    
	
 
    	
 
    
	
 
    	
Aggregate principal amount of Revolving   Lender Claims:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
$
    
	
 
    	
 
    
	
 
    	
Aggregate principal amount of Noteholder Claims:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
$
    
	
 
    	
 
    
	
 
    	
Aggregate number of Preferred Equity Interests:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
$
    
	
 
    	
 
    
	
 
    	
Any other claims or interests against the Company:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    

 

17

 

EXHIBIT A

 

RESTRUCTURING TERM SHEET

 

18

 

GEOKINETICS INC.

SUMMARY OF PRINCIPAL TERMS AND CONDITIONS OF RESTRUCTURING

 

This term sheet (the “Restructuring Term Sheet”) outlines certain of the principal economic terms of a proposed restructuring (the “Restructuring Transaction”) of the outstanding indebtedness of, and equity interests in, Geokinetics, Inc. and its direct and indirect domestic affiliates and subsidiaries (collectively, the “Company”).  The proposed terms and conditions set forth in this Restructuring Term Sheet are intended as an outline of certain material terms of the Restructuring Transaction.  This Restructuring Term Sheet does not include descriptions of all terms, conditions and other provisions that would be contained in definitive documentation related to a financial restructuring and is not intended to limit the scope of discussion or negotiation of any matters not inconsistent with the specific matters set forth herein.  The transactions contemplated by this Restructuring Term Sheet will be subject to the terms and conditions to be set forth in definitive documents at a later date.

 

This Restructuring Term Sheet does not constitute an offer of securities or a solicitation of the acceptance or rejection of any restructuring or similar plan.

 

The Restructuring Transaction is intended to be effectuated through either a pre-packaged or pre-negotiated in-court restructuring and chapter 11 plan of reorganization described below.

 

This Restructuring Term Sheet is strictly confidential and may not be shared with any person.

 

I.                                        GENERAL

 

	
Company
    	
 
    	
Geokinetics Inc.; Geokinetics Holdings   USA, Inc.; Geokinetics Services Corp.; Geokinetics Processing, Inc.;   Geokinetics Acquisition Company; Geokinetics USA, Inc.; Geokinetics   International Holdings, Inc.; Geokinetics Management, Inc.;  Geokinetics International, Inc.; and   Advanced Seismic Technology, Inc.    The entities listed herein as the “Company” are based on the   understanding that they include Geokinetics, Inc. and all of its direct   and indirect domestic affiliates and subsidiaries.
    
	
 
    	
 
    	
 
    
	
Revolving   Lenders
    	
 
    	
Lenders (collectively, “Revolving   Lenders”) under the $50 million revolving credit facility (the “Revolving   Credit Facility”) pursuant to that certain Amended and Restated Credit   Agreement, dated as of August 12, 2011, and as amended from time to   time, among the Company and the various financial entities signatory thereto.
    
	
 
    	
 
    	
 
    
	
Noteholders   
    	
 
    	
Holders (collectively, “Noteholders”)   of $300 million in principal amount of 9.75% senior secured notes (the “Senior   Secured Notes”) due December 2014.    The holders of 50.1% or more in aggregate principal amount of the   Senior Secured Notes shall be referred to herein as the “Majority   Noteholders”.
    
	
 
    	
 
    	
 
    
	
Preferred   Equity Holders
    	
 
    	
Holders (collectively, “Preferred   Equity Holders”) of approximately $144 million in preferred equity   interests in Geokinetics Inc. comprised of Series B-1 Senior Convertible   Preferred Stock and Series C-1 Senior Preferred Stock (collectively, the   “Preferred Equity Interests”).
    

 

1

 

	
Restructuring   Transaction
    	
 
    	
Subject to the terms hereof, the   Company shall file for chapter 11 relief in the District of Delaware (the “Bankruptcy   Court”) and restructure its capital structure (the “Restructuring”)   through a pre-packaged or pre-negotiated restructuring plan (the “Plan”)   as determined by the Majority Noteholders.    The Plan shall be consistent with the terms of this Restructuring Term   Sheet and satisfactory in form and substance to the Majority Noteholders.  The Majority Noteholders shall determine   whether the Plan will be implemented through a pre-packaged chapter 11 case   or a pre-negotiated chapter 11 case provided that regardless of such   determination, the Company shall file the Plan and related disclosure   statement and a bar date motion with the Bankruptcy Court on the same day the   Company files its bankruptcy petitions (the “Petition Date”).  In light of the treatment of unsecured   creditors provided herein and the execution of the Restructuring Support   Agreement, the Company shall request that an official committee of unsecured   creditors not be appointed in Company’s chapter 11 case.  
    
	
 
    	
 
    	
 
    
	
Plan   Support
    	
 
    	
The Majority Noteholders, and Avista   Capital Partners, L.P. and Avista Capital Partners (Offshore), L.P., holders   of over two thirds of the Preferred Equity Interests, will enter into a plan   support agreement (the “PSA”) with the Company wherein they will   commit to support the Restructuring and the Plan.  This Restructuring Term Sheet will be an   exhibit to the PSA and will be incorporated into the PSA in all respects.
    

 

II.                                   FINANCING

 

	
Debtor   In Possession Financing
    	
 
    	
Up to $25 million of debtor in   possession financing (“DIP Facility”), subject to a budget approved by   the Backstop DIP Lenders (as defined and provided in Exhibit 1), shall   be provided by Noteholders.  The   opportunity to participate in the DIP Facility will be given to all   Noteholders on a pro rata basis based on their holdings of the Senior Secured   Notes.  American Securities   Opportunities Advisors, LLC and Gates Capital Management, Inc. will   backstop the entire amount of the DIP Facility based on their pro rata   holdings of the Senior Secured Notes vis-à-vis each other.

 

The DIP Facility will be secured by liens   junior to the Revolving Credit Facility and senior to all other liens, including,   without limitation, the liens securing the Senior Secured Notes.

 

Pursuant to the Plan, on the effective   date of the Plan (the “Effective Date”), all outstanding amounts under   the DIP Facility shall be converted into newly issued shares of common stock   of reorganized Geokinetics Inc. (the “New Common Stock”) at a 20%   discount to Plan value (the “DIP Equity Distribution”) with such Plan   value as agreed to by the Majority Noteholders and the Company.

 

A summary of the principal terms and   conditions of the DIP Facility is set forth in the debtor in possession   financing term sheet (the “DIP Term Sheet”) attached hereto as Exhibit 1.
    

 

2

 

	
Exit   Facility
    	
 
    	
The reorganized Company will obtain   exit financing (the “Exit Facility”) in an amount and on terms to be   determined by the Majority Noteholders, to fund the cash requirements of the   Plan, including without limitation, repayment of the $50 million outstanding   under the Revolving Credit Facility plus accrued interest, and the   post-confirmation operations of the Company’s business.
    

 

III.                              TREATMENT OF CLAIMS AND INTERESTS UNDER THE PLAN

 

	
Administrative   Expense Claims
    	
 
    	
All administrative expense claims will   be paid in full, in cash, on the Effective Date; provided that,   (i) administrative expense claims incurred in the ordinary course will   be paid in accordance with their terms and (ii) fees and expenses of   professionals retained under section 327 or 1103 of the Bankruptcy Code will   be paid in accordance with the procedures established by the Bankruptcy   Court.
    
	
 
    	
 
    	
 
    
	
Priority   Tax Claims
    	
 
    	
All priority tax claims will be paid   in full, in cash, on the Effective Date or treated in an alternative manner   consistent with the Bankruptcy Code and determined by the Majority Noteholders.
    
	
 
    	
 
    	
 
    
	
Unsecured   Priority Claims
    	
 
    	
All unsecured priority claims will be   paid in full, in cash, on the Effective Date or treated in an alternative   manner consistent with the Bankruptcy Code and determined by the Majority   Noteholders.  
    
	
 
    	
 
    	
 
    
	
DIP   Facility
    	
 
    	
On the Effective Date, all outstanding   amounts under the DIP Facility shall be converted into New Common Stock at a   20% discount to Plan value with such Plan value determined as set forth   above.
    
	
 
    	
 
    	
 
    
	
Revolving   Credit Facility
    	
 
    	
On the Effective Date, the $50 million   in outstanding revolving loans plus any accrued interest(1) shall be   satisfied in full with proceeds of the Exit Facility, or will be afforded   such other treatment as agreed by the Revolving Lenders and the Majority   Noteholders. 
    
	
 
    	
 
    	
 
    
	
Senior   Secured Notes 
    	
 
    	
On the Effective Date, in exchange for   their Senior Secured Notes, Noteholders shall receive their pro rata share of   100% of the New Common Stock (subject to dilution from the Management   Incentive Plan (as detailed below) and the DIP Equity Distribution).
    
	
 
    	
 
    	
 
    
	
Preferred   Equity Interests
    	
 
    	
On the Effective Date, in exchange for   their Preferred Equity Interests, Preferred Equity Holders shall receive   their pro rata share of a $6 million cash distribution.
    
	
 
    	
 
    	
 
    
	
Series D   Preferred Stock
    	
 
    	
Holders of Series D Preferred   Stock shall receive no distribution and their Series D Preferred Stock   shall be canceled under the Plan.
    
	
 
    	
 
    	
 
    
	
Common   Equity Interests
    	
 
    	
Holders of common stock shall receive   no distribution and their equity interests shall be canceled under the Plan.
    

 

(1)  Interest shall accrue at the non-default contract rate.

 

3

 

	
Trade   Claims and Other Unsecured Claims
    	
 
    	
The Company represents that trade and   other unsecured claims scheduled by the Company in its bankruptcy schedules   will not exceed $46 million in the aggregate and that claims of governmental   units will not exceed $40 million in the aggregate.  Based on these representations, unless   otherwise determined by the Majority Noteholders, all trade claims and other   unsecured debt shall be paid in the ordinary course of business.
    
	
 
    	
 
    	
 
    
	
Releases   and Exculpation
    	
 
    	
Management, the Board of Directors,   the Revolving Lenders (and Agents under the Revolving Credit Facility), the   Noteholders and the Preferred Equity Holders will receive mutual releases and   exculpation (from each other and from the Company) on customary terms.  D&O coverage will continue without any   lapses for new, continuing and departing directors and officers.
    

 

IV.                               CORPORATE GOVERNANCE AND MANAGEMENT

 

	
Board   of Directors 
    	
 
    	
Board of Directors (the “New Board”)   to be determined by the Majority Noteholders.    The identities and affiliations of the members of the New Board will   be disclosed to the Bankruptcy Court as required by the Bankruptcy Code. 
    
	
 
    	
 
    	
 
    
	
Management
    	
 
    	
The senior management team of the   reorganized Company will enter into new employment agreements that shall be   satisfactory to the Majority Noteholders.    
    
	
 
    	
 
    	
 
    
	
Management   Incentive Plan
    	
 
    	
On or as soon as reasonably   practicable after the Effective Date, a management incentive program (the “Management   Incentive Program”) shall be adopted by the New Board to provide   designated members of senior management of the Company with shares of, units   representing shares of or the value of a share of, and/or options to purchase   shares of, up to 10% of the New Common Stock.    The Management Incentive Program shall contain performance based   and/or time-vesting grants and the specific identities of recipients, amounts   and timing of grants and other terms and conditions will be determined by the   New Board.  
    
	
 
    	
 
    	
 
    
	
Shareholders   Agreement
    	
 
    	
It shall be a condition to the   Restructuring and the Majority Noteholders’ support of the Restructuring that   prior to the earlier of the solicitation of votes to accept or reject the   Plan or the commencement of the chapter 11 cases, American Securities   Opportunities Advisors, LLC and Gates Capital Management, Inc. shall   have reached mutual agreement as to the terms of a shareholders’ agreement   for holders of New Common Stock.
    

 

4

 

	
Terms   for Reorganized Company and New Common Stock
    	
 
    	
The New Common Stock will be issued   pursuant to one or more exemptions from registration under federal and state   securities laws and will: (i) not be registered and (ii) be   transferable by the recipients thereof only under an effective registration   statement or pursuant to an exemption from registration, including, without   limitation, section 1145 of the Bankruptcy Code.  The Plan shall provide that the New Common   Stock is being issued pursuant to section 1145 of the Bankruptcy Code.  The reorganized Company will initially be a   private company.

 

The organizational structure of the   reorganized Company shall be structured in the most tax efficient manner as   determined by the Majority Noteholders (and the terms of the Plan shall be   revised to the extent necessary to be consistent with any such structure).
    
	
 
    	
 
    	
 
    
	
Professional   Fees and Expenses 
    	
 
    	
All of the Majority Noteholders’   professional fees and out-of-pocket expenses incurred in connection with the   Restructuring or any other matter in connection thereto, including, without   limitation, those fees and expenses incurred during the Company’s chapter 11   cases, shall be paid by the Company on a current basis and prior to and as a   condition to the Effective Date without need for a fee application or court   approval.

 

Up to $75,000 in the aggregate of   Avista Capital Partners, L.P. and Avista Capital Partners (Offshore), L.P.’s   professional fees and out-of-pocket expenses incurred in connection with the   Restructuring or any other matter in connection thereto, including without   limitation, those fees and expenses incurred during the Company’s chapter 11   cases, shall be paid by the Company on a current basis and prior to and as a   condition to the Effective Date without need for a fee application or court   approval.
    
	
 
    	
 
    	
 
    
	
Corporate   Governance Documents
    	
 
    	
Corporate governance terms to be   determined by the Majority Noteholders in consultation with the Company.
    

 

V.                                    OTHER TERMS

 

	
Governing   Law
    	
 
    	
New York
    

 

5

 

	
Certain   Closing and Other Conditions to the Restructuring
    	
 
    	
The Restructuring shall be subject to   usual and customary and necessary conditions for a transaction of this type,   as well as other conditions satisfactory to the Majority Noteholders,   including, without limitation:

 

·                  The terms, conditions and circumstances of any and all documents   relating to the Restructuring and the Company shall be acceptable to the   Majority Noteholders in all respects and will have been reviewed and   expressly approved by the Majority Noteholders.

 

·                  All of the Majority Noteholders’ professional fees and out-of-pocket   expenses incurred in connection with the Restructuring or any other matter in   connection thereto, including, without limitation, those fees and expenses   incurred during the Company’s chapter 11 cases, shall have been paid by the   Company as a condition to the Effective Date.

 

·                  The Company shall have provided the Majority Noteholders with full   and complete access to the Company and its management.

 

·                  The Restructuring transactions shall be structured in the most tax   efficient manner as determined by the Majority Noteholders, and all   accounting treatment and other tax matters shall be resolved to the   satisfaction of the Majority Noteholders.

 

·                  All requisite governmental or regulatory approvals for the   Restructuring shall have been obtained and no governmental or regulatory   authority shall have taken any action that could reasonably be expected to   have a material adverse effect on the consummation (including, without   limitation, timing) of the Restructuring.

 

·                  There is no material adverse change to the assets, liabilities,   businesses or prospects of the Company which occurs or is discovered after   the date of execution of the PSA.

 

·                  The amount of all projected claims against the Company, including,   without limitation, all trade and other unsecured claims, but excluding   claims for amounts owed under the Revolving Credit Facility and the Notes,   and excluding claims for amounts typically accounted for as deferred revenue   on the Company’s balance sheet, reasonably determined by the Majority   Noteholders to be allowed claims shall not exceed $85.7 million in the   aggregate.
    

 

6

 

EXHIBIT 1

 

DEBTOR-IN-POSSESSION FACILITY

 

Summary of Principal Terms and Conditions

 

 

This Summary of Principal Terms and Conditions outlines certain key terms of a proposed Debtor-in-Possession Facility by and among the Loan Parties, the DIP Agent and the DIP Lenders, each as described below (the “DIP Facility”). This term sheet (the “DIP Term Sheet”) is not binding on any party and does not contain all of the terms, conditions and other provisions of the transactions contemplated hereby.  As such, the terms and conditions set forth in this DIP Term Sheet are to be used solely as a basis for continued discussions and do not constitute a commitment to provide a financing commitment of any sort or to prepare, negotiate, execute or deliver such a commitment.  The DIP Term Sheet is in the nature of a settlement proposal in furtherance of settlement discussions and is entitled to protection from any use or disclosure to any party or person pursuant to Federal Rule of Evidence 408 and any other rule of similar import.  All figures, terms, and conditions are subject to change or withdrawal at any time.  This DIP Term Sheet is confidential and is subject to the execution of definitive documents acceptable to the parties in their sole discretion.

 

I.                PARTIES

 

	
Debtor/Loan Parties:
    	
 
    	
Geokinetics Holdings USA, Inc.   and its domestic direct and indirect subsidiaries, as debtors and   debtors-in-possession in a case under chapter 11 of the United States   Bankruptcy Code, 11 U.S.C. §§ 101, et seq. commenced in the District of Delaware   (such case, the “Case”).    Geokinetics Holdings USA, Inc. shall be the “Borrower” and   Geokinetics Inc. (the “Parent”) and each of its direct and indirect   domestic subsidiaries (other than the Borrower) shall be “Guarantors” of the   DIP Obligations (the Borrower and Guarantors, collectively, the “Loan   Parties”). 
    
	
 
    	
 
    	
 
    
	
DIP Agent:
    	
 
    	
[              ](2)
    
	
 
    	
 
    	
 
    
	
DIP Lenders:
    	
 
    	
The Backstop DIP Lenders (as defined   below) to provide (i) during the Interim Period (as defined below), the   Interim Availability (as defined below) of Term Loans subject to the Approved   Budget (as defined below) and (ii) upon entry of the Final DIP Order (as   defined below), the Final Availability (as defined below) of the Term Loans   subject to the Approved Budget; provided that each beneficial holder of the   9.75% Senior Secured Notes Due 2014 (the “Senior Notes”) [that is an   accredited investor] will have an opportunity prior to entry of the Final DIP   Order to elect to be a lender under the DIP Facility and to fund a portion of   the aggregate Term Loans under the DIP Facility based on such holder’s pro   rata share of the principal amount of the Senior Notes held by such holder   (such electing holders, together with the Backstop DIP Lenders, the “DIP   Lenders”).

 
    
	
 
    	
 
    	
 
    
	
Backstop DIP Lenders:
    	
 
    	
American Securities Opportunities   Advisors, LLC (“Am Sec”) and Gates Capital Management, Inc. (“GCM”   and together with Am Sec, the “Backstop DIP Lenders”) shall backstop   the entire DIP Facility (including (i) as to elections of other DIP   Lenders to become DIP Lenders and (ii) as to any defaulting DIP Lender   that fails to fund its portion of the DIP Facility) based on their pro rata   holding of Senior 
    

 

(2)  DIP Agent to be determined by the Majority Noteholders.

 

1

 

	
 
    	
 
    	
Notes vis-a-vis   each other.
    

 

II.           DIP FACILITY(3)

 

	
Type and Amount:
    	
 
    	
A superpriority debtor-in-possession   term loan facility in an aggregate principal amount of up to $25,000,000 (the   “Term Loan” and together with all other obligations under the DIP   Facility, the “DIP Obligations”), subject to the Approved Budget (as   defined below) and other limitations set forth below, secured by liens junior   to the Revolving Credit Facility (as defined below) and senior to all other   liens, including, without limitation, the liens securing the Senior Notes (as   defined below).  
    
	
 
    	
 
    	
 
    
	
DIP Closing Date:
    	
 
    	
Closing to occur upon satisfaction   (or waiver by the Backstop DIP Lenders in their sole discretion) of the   conditions under “Closing Conditions” below.
    
	
 
    	
 
    	
 
    
	
DIP Maturity Date: 
    	
 
    	
The date that is the earlier to occur   of: (a) four (4) months after the DIP Closing Date; (b) the   date the DIP Obligations are accelerated pursuant to the terms of the DIP   Documentation (defined below), whether at stated maturity, upon an Event of   Default or otherwise; and (c) the effective date of the Loan Parties’   confirmed chapter 11 plan. 
    
	
 
    	
 
    	
 
    
	
Availability:
    	
 
    	
Up to $25,000,000 of the Term Loan   shall be available to the Borrower during the term of the DIP Facility   subject to terms and conditions set forth in the DIP Documentation and the   Approved Budget (as defined below); provided that: (a) after   entry of the Interim Order, in form and substance satisfactory to the   Backstop DIP Lenders, but prior to the entry of the Final DIP Order, the   Borrower shall only be permitted to request and receive an amount not to   exceed, as of any date of determination, the lesser of (i) $15,000,000   and (ii) the amount authorized by the Bankruptcy Court pursuant to the   Interim DIP Order (“Interim Availability”) to be funded by the   Backstop DIP Lenders);(4) (b) upon entry of the Final DIP Order   approving the Adequate Protection (as defined below) and otherwise in form   and substance satisfactory to the Backstop DIP Lenders, subject to the terms   and conditions of the DIP Documentation, the Borrower shall only be permitted   to request and receive an amount not to exceed, as of any date of   determination, $25,000,000 minus the   aggregate amount borrowed during the Interim Period (“Final Availability”)(5) to   be funded by the Backstop DIP Lenders (or, to the extent funded pursuant to   the election of other Senior Noteholders, the other DIP Lenders); and   (c) each borrowing shall be requested and made in accordance with the   Approved Budget (as defined below) and subject to the satisfaction of the   conditions precedent in the DIP Documentation.   For the avoidance of doubt, (x) if   the Final DIP Order does not approve the Adequate Protection or the Final DIP   Order is not otherwise in form and 
    

 

(3)  In the event the Majority Noteholders determine to proceed with a pre-packaged chapter 11 filing, the type and amount, maturity date and availability, as well as other applicable terms will be modified to address the shorter duration of the Case.

 

(4)  The “Interim DIP Order” means any order entered by the Bankruptcy Court in the Case approving the DIP Facility on an interim basis.

 

(5)  The “Interim Period” means the period from the DIP Closing Date through entry of the order by the Bankruptcy Court in the Case approving the DIP Facility on a final non-appealable basis (the “Final DIP Order”).

 

2

 

	
 
    	
 
    	
substance satisfactory to the   Backstop DIP Lenders, the DIP Lenders shall have no commitment to make any   additional loans and all availability under the DIP Facility shall be   eliminated and (y) the Backstop DIP Lenders shall not be required to   make any Loans in excess of the Interim Availability (during the Interim   Period) or the Final Availability (after the Interim Period) for any reason, including,   without limitation, to pay the fees and expenses of estate-retained   professionals. 
    
	
 
    	
 
    	
 
    
	
Purpose:
    	
 
    	
Upon entry of the Interim DIP Order,   the proceeds of the Term Loan shall be used to fund the working capital needs   and general corporate purposes of the Borrower (including, without   limitation, costs related to the Case) and for such other purposes as agreed   by the Borrower and Backstop DIP Lenders.    Use of the proceeds of the Term Loan pursuant to this paragraph each   shall be subject to availability pursuant to the preceding section entitled   “Availability”.  None of the proceeds   may be used to challenge, as opposed to investigate, the validity,   perfection, priority, extent or enforceability of the Senior Notes, or the   liens or security interests securing the obligations under the Senior Notes   or to pursue any causes of action of any kind against the Collateral Trustee   and/or the Indenture Trustee for the Senior Notes, or the holders of the   Senior Notes (the “Senior Noteholders”).  To the extent an official committee of   unsecured creditors is appointed in the Case, no more than $25,000 of any   proceeds or cash collateral shall be used by counsel to the official   committee, if any, to investigate, but not prosecute, the validity,   perfection, priority, extent or enforceability of the Senior Notes or the   liens or security interests securing the obligations under the Senior   Notes.  The Loan Parties shall waive   the right to investigate and challenge the validity, perfection, priority,   extent or enforceability of the Senior Notes (and the liens and claims   granted thereunder) and shall waive any and all claims of any kind against   the Collateral Trustee, the Indenture Trustee and Senior Noteholders (subject   to the rights of the official committee, if any, to commence any action   against the Collateral Trustee, the Indenture Trustee and/or the Senior   Noteholders within 15 days of the committee’s appointment).  Notwithstanding anything herein, the Loan   Parties shall not be entitled to use the proceeds of the Term Loan in any way   or for any purpose other than as explicitly set forth in the Approved Budget   and the DIP Documentation. 
    

 

III.      CERTAIN ECONOMIC TERMS

 

	
Interest Rate:
    	
 
    	
The outstanding DIP Obligations shall   bear interest at a rate equal to 9.25% per annum and shall be paid in cash on   the last business day of each month.  
    
	
 
    	
 
    	
 
    
	
DIP Agent Fees:
    	
 
    	
$[      ].(6)
    
	
 
    	
 
    	
 
    
	
Transaction Fees:
    	
 
    	
None.
    

 

(6)  Fees of DIP Agent will depend on the DIP Agent selected by the Backstop DIP Lenders.

 

3

 

IV.       COLLATERAL

 

	
Collateral:
    	
 
    	
The DIP Lenders shall be granted pursuant to sections 361, 362,   364(c)(2), 364(c)(3), and 364(d) of the Bankruptcy Code, continuing,   valid, binding, enforceable, non-avoidable, and automatically perfected   post-petition security interests (the “DIP Liens”), which are junior   to the security interests securing the revolving loans pursuant to the   Amended and Restated Credit Agreement dated as of August 12, 2011 by and   among the Borrower, Parent, Administrative Agent and Collateral Agent and the   lenders party thereto from time to time (collectively, the “Revolving   Lenders”) (the “Revolving Credit Facility”), and senior and   superior in priority to all other secured and unsecured creditors of the Loan   Parties’ estate, upon and to be upon all real and personal property(7) of   the Loan Parties now owned or hereafter acquired and all other property of   whatever kind and nature (whether pre or post petition), in each case, that   is pledged as collateral or is otherwise subject to a lien or security   interest under any security document constituting part of the DIP   Documentation (as defined below) or any order of the Bankruptcy Court in the   Case relating to working capital needs and general corporate purposes of the   Borrower (including, without limitation, costs related to the Case)   (collectively, the “Collateral”), including, without limitation, the   Interim DIP Order and/or Final DIP Order (each such financing order is   individually and collectively, a “DIP Order”); provided, however,   all liens and security interests securing the DIP Obligations shall be   subject to: (a) so long as no Event of Default has occurred, allowed   professional fees and expenses in the Case incurred prior to the occurrence   of an Event of Default, subject to entry of a customary order of the   Bankruptcy Court;(8) (b) following an Event of Default, allowed   professional fees and expenses in the Case, which expenses and fees were   incurred solely following such Event of Default, in an aggregate amount not   to exceed $2,500,000; and (c) United States Trustee’s fees pursuant to   28 U.S.C. 1930(a)(6) and 31 U.S.C. 3717 (the fees and expenses described   in this paragraph, collectively, the “Carve-Out”); and provided,   further, however, any liens and security interests in Avoidance   Actions shall be granted only pursuant to the Final DIP Order and shall not   be granted pursuant to any Interim DIP Order.   As used herein, the term “Avoidance   Actions” means any and all claims or causes of action arising under Chapter 5   (other than Section 506(c) or Section 724(a)) of the   Bankruptcy Code to avoid transfers, preserve or transfer liens or otherwise   recover property of the estate and the proceeds thereof and property received   thereby whether by judgment, settlement or otherwise.  “Avoidance Actions” do not include claims   or causes of action pursuant to Section 549 of the Bankruptcy Code and   the proceeds thereof, to the extent the transfer avoided was of an asset   otherwise constituting Collateral securing the Senior Notes on the Petition   Date.

 

For the avoidance of doubt, liens and   security interests granted pursuant to Bankruptcy Code section   364(d) shall mean any liens or security 
    

 

(7)  Personal property includes cash, deposit accounts, negotiable instruments and other cash equivalents.  Personal property also includes Avoidance Actions (as defined below).

 

(8)  For the avoidance of doubt, fees and expenses incurred prior to an Event of Default by a court-approved professional, regardless of whether an order has been entered approving such fees and expenses shall be included in this section “ (a) ”, but no fees or expenses shall be paid unless and until such time as an order is entered approving such fees and expenses.

 

4

 

	
 
    	
 
    	
interests subordinate and junior to the liens and security interests   securing the loans and other obligations under the Revolving Credit Facility   in existence and equal or senior in priority to valid and enforceable liens   and security interests in existence on Petition Date in the Collateral that   are perfected and unavoidable on the Petition Date (or perfected after the   Petition Date pursuant to Bankruptcy Code section 546(b)).

 

For the avoidance of doubt, subject to   (a) the Carve-Out, and (b) as to the Avoidance Actions, upon entry   of the Final DIP Order, the Collateral includes all of the assets of the Loan   Parties existing on the date of the filing by Loan Parties of the   petition(s) with respect to the Case (the “Petition Date”) and   all of the assets of Loan Parties arising or acquired after the Petition   Date, including, without limitation, Avoidance Actions.

 

Subject to the Carve-Out, all DIP Obligations will constitute   allowed super-priority administrative expense claims in the Case having   priority over all other administrative expenses of the kind specified in   sections 503(b) and 507(b) of the Bankruptcy Code (other than any   administrative expenses claims of the kind specified in sections   503(b) and 507(b) of the Bankruptcy Code to extent provided to   Revolving Lenders and Agents  under the   Revolving Credit Facility, in which case, such claims of the Revolving   Lenders and Agents shall have priority over all of such claims owned by the   DIP Agent and DIP Lenders).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Except for the DIP Orders, no filing with any governmental   authority, delivery of possessory collateral, establishment of “control” or   other action shall be required with respect to perfection of the DIP Liens;   and no endorsement of any insurance policies to include a lender’s loss   payable clause, or to name the DIP Agent as additional insured, shall be   required in respect of the DIP Facility; provided that Company shall make   such filings and take such other actions as the Backstop DIP Lenders may   reasonably request, subject to the cooperation of the Collateral Trustee, if   required.
    

 

V.            ADEQUATE PROTECTION

 

	
Adequate Protection (Senior Notes):
    	
 
    	
Pursuant to sections 361,   363(e) and 364(d)(1) of the Bankruptcy Code, the Collateral Trustee   (insofar as acting on behalf of the Indenture Trustee and the Senior Noteholders),   the Indenture Trustee for the Senior Notes, and the Senior Noteholders shall   be granted the following as adequate protection (collectively, the “Adequate   Protection”) of their respective prepetition security interests and in   connection with the use of cash collateral, the consensual priming specified   herein and any diminution in the value of collateral securing the Senior   Notes and the pre-petition security interests of the Collateral Trustee   (insofar as acting on behalf of the Indenture Trustee and the Senior   Noteholders), Indenture Trustee and Senior Noteholders, whether or not   such diminution in value results from the sale, lease or use by the Loan   Parties of the collateral securing the Senior Notes, including, without   limitation, cash collateral or the stay of enforcement of any pre-petition   security interest arising from section 362 of the Bankruptcy Code, or   otherwise:
    

 

5

 

	
 
    	
 
    	
(a) Note Adequate Protection   Lien. Without the necessity of the execution of mortgages, security   agreements, pledge agreements, financing statements or other agreements, a   security interest in and lien on the Collateral (the “Note Adequate   Protection Liens”), subject and subordinate only to (x) the liens   securing the Revolving Credit Facility, (y) the Carve-Out and   (z) the liens securing the DIP Facility.

 

(b) Super-Priority Claim. Subject to   the payment of the Carve-Out, a superpriority administrative expense claim as   provided for in section 507(b) of the Bankruptcy Code, immediately   junior to the claims under section 364(c)(1) of the Bankruptcy Code held   by the DIP Agent and the DIP Lenders under the DIP Facility, provided that   the Indenture Trustee and the Senior Noteholders shall not receive or retain   any payments, property or other amounts in respect of the superpriority   claims under section 507(b) of the Bankruptcy Code granted hereunder   unless and until the obligations under the DIP Facility and Revolving Credit   Facility have indefeasibly been paid in cash in full.

 

(c) Professional Fees and   Expenses.  Payment of the costs and   expenses of the Indenture Trustee for the Senior Notes, and the Backstop DIP   Lenders, including, without limitation, the professional fees and expenses of   Fried, Frank, Harris, Shriver and Jacobson LLP.  No fee application or court approval shall   be required and payment upon delivery of an invoice shall be sufficient.  These fees and expenses shall be paid on a   current basis during the Case and, to the extent not so paid, shall be a   condition to the effective date of any chapter 11 plan.

 

(d) Waiver of Claims.  The Loan Parties shall acknowledge the   Borrower’s indebtedness under the Senior Notes and shall waive all claims it   may have against the Indenture Trustee and Senior Noteholders under the Senior   Notes.
    
	
 
    	
 
    	
 
    
	
Adequate Protection (Revolving Credit   Facility):
    	
 
    	
Pursuant to sections 361 and   363(e) of the Bankruptcy Code, the Agents and Revolving Lenders under   the Revolving Credit Facility shall be granted the following as adequate   protection (collectively, the “Revolver Adequate Protection”; together   with Note Adequate Protection, the “Adequate Protection”) of their   respective prepetition security interests and in connection with the use of   cash collateral, and any diminution in the value of collateral securing the   Revolving Credit Facility and the pre-petition security interests of the   Agents and the Revolving Lenders under the Revolving Credit Facility, whether   or not such diminution in value results from the sale, lease or use by the   Loan Parties of the collateral securing the Revolving Credit Facility,   including, without limitation, cash collateral or the stay of enforcement of   any pre-petition security interest arising from section 362 of the Bankruptcy   Code, or otherwise:

 

(a) Adequate Protection Lien.   Without the necessity of the execution of mortgages, security agreements,   pledge agreements, financing statements or other agreements, a security   interest in and lien on the Collateral (the “Revolver Adequate Protection   Liens”), subject and subordinate only to the Carve-Out.

 

(b) Super-Priority Claim. Subject   to the payment of the Carve-Out, a superpriority administrative expense claim   as provided for in section 
    

 

6

 

	
 
    	
 
    	
507(b) of the Bankruptcy Code,   senior to the claims under section 364(c)(1) of the Bankruptcy Code held   by the DIP Agent and the DIP Lenders under the DIP Facility and held by the   Indenture Trustee and Noteholders and senior to the superpriority   administrative expense claims under section 507(b) of the Bankruptcy   Code provided to Indenture Trustee and Noteholders.

 

(c) Professional Fees and   Expenses.  Payment of the reasonable   fees and expenses of the attorneys for the Agents and Revolving Lenders under   the Credit Facility.  No fee application   or court approval shall be required and payment upon delivery of an invoice   shall be sufficient.
    

 

VI.       CERTAIN CONDITIONS

 

	
Closing Conditions:
    	
 
    	
The DIP Facility shall be conditioned   upon the satisfaction of conditions precedent usual and customary for facilities   and transactions of this type as agreed to by the Loan Parties and the   Backstop DIP Lenders.  In addition, the   following conditions shall also be satisfied as a condition to the   effectiveness of the DIP Facility and the DIP Lenders’ commitment to make DIP   Loans during the Interim Period:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Each Loan Party   shall have executed and delivered satisfactory to the Backstop DIP Lenders   definitive financing documentation for the DIP Facility (the “DIP   Documentation”).  Also, such DIP   Documentation shall confirm that all representations and warranties in the   DIP Documentation are accurate in all material respects.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The DIP Agent and the Backstop DIP   Lenders shall have received (i) a detailed 2013 budget with back-up and   schedules and (ii) an initial thirteen-week cash flow forecast for the   period beginning with the week which includes the Petition Date through the   thirteenth week thereafter, in each case in form and substance satisfactory   to the Backstop DIP Lenders (the “Initial Approved Budget”).(9)    The Borrower shall not pay current interest on the Revolving Credit Facility   or the Senior Notes during the Case and the Approved Budget shall so reflect   this.  All interest earned under the   Revolving Credit Facility and the Senior Notes shall accrue during the Case   and shall be added to the pre-petition claim amount of the holders thereof to   be satisfied in accordance with the Plan (as defined below).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Interim DIP   Order shall have authorized (i) the Borrower to pay to the Backstop DIP   Lenders (as applicable) from proceeds of the DIP Facility or from other funds   at closing all actual expenses required to be paid for which invoices have   been presented on or before the DIP Closing Date including, without   limitation, the fees and expenses of Fried, Frank, Harris, Shriver &   Jacobson LLP and (ii) the DIP Loans to be made during the Interim Period   consistent with the provisions hereof.    
    

 

(9)  For the avoidance of doubt, estate-retained professionals will estimate their anticipated fees and expenses to be included within the Initial Approved Budget; however, the fees and expenses of estate-retained professionals, and the incurrence of Term Loans for the payment thereof, shall not be subject to the Initial Approved Budget or any other Approved Budget (as defined below).

 

7

 

	
 
    	
 
    	
All approvals necessary in connection   with the financing contemplated hereby and the continuing operations of the   Loan Parties shall have been obtained on terms satisfactory to the Backstop   DIP Lenders and shall be in full force and effect, and all applicable waiting   periods shall have expired without any action being taken or threatened by   any competent authority that would restrain, prevent or otherwise impose   adverse conditions on the DIP Facility or the transactions contemplated   hereby.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Backstop DIP Lenders shall have   received title reports and UCC lien and intellectual property related search   results with respect to the Collateral indicating no material liens other   than the Priority Liens subject to the Collateral Trust and Intercreditor Agreement,   dated as of December 23, 2009 (the “Collateral Trust and   Intercreditor Agreement”), among Borrower, the guarantors from time to   time party thereto, the Priority Debt Representatives (as defined therein)   and U.S. Bank National Association, as collateral trustee.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Borrower shall have provided the   Backstop DIP Lenders a copy of all motions to be filed on the Petition Date   by the Borrower with the Bankruptcy Court as soon as possible and in no event   later than the DIP Closing Date.

 

The form and substance of any motion   submitted to the Bankruptcy Court requesting approval of the DIP Facility   shall be satisfactory to the Backstop DIP Lenders.

 

The Bankruptcy Court shall have   entered the Interim DIP Order, in form and substance satisfactory to the   Backstop DIP Lenders, which shall not be subject to any stay or injunction or   otherwise be subject to reversal on appeal as to any funded portion of the   DIP Facility.

 

The Borrower shall have filed a chapter 11   plan and related disclosure statement on the date of the filing of the   Borrower’s chapter 11 petitions, which plan shall be consistent with the   Restructuring Term Sheet and Restructuring Support Agreement in all respects   (the “Plan”) and shall be, in form and substance, satisfactory to the   Backstop DIP Lenders.

 

For the sake of clarity, (a) no   assignments to the DIP Agent or the DIP Lenders of the Priority Liens, and no   consent by existing holders of Priority Lien Obligations (whether by Act of   Instructing Debtholders (as defined in the Collateral Trust and Intercreditor   Agreement) or otherwise), will be required as a condition to advances under   the DIP Facility, and (b) the DIP Obligations will not, and will not be   required to, constitute Priority Lien Obligations under the Collateral Trust   and Intercreditor Agreement.

 

With respect to DIP Loans to be made during   the Interim Period (in addition to satisfaction of the above conditions):

 

All representations and warranties in the   DIP Documentation are accurate in all respects after giving effect to each   advance (unless such representations and warranties were made as of an   earlier date in which case such representations and warranties shall be   accurate in all respects 
    

 

8

 

	
 
    	
 
    	
as of such earlier date) and no default or   event of default is in existence at the time of, or after giving effect to   the making of, such advance.

 

The amount of any advance is   consistent with the Approved Budget.(10)
    
	
 
    	
 
    	
 
    
	
Additional Advance Conditions After   Interim Period
    	
 
    	
(a) The   Closing Conditions have been satisfied.

 

(b) The   Bankruptcy Court shall have entered the Final DIP Order, in form and   substance satisfactory to the Backstop DIP Lenders, which Final DIP Order   shall be in full force and effect and which shall not have been reversed,   vacated, or stayed and shall not have been amended, supplemented, or   otherwise modified in a manner adverse to the Backstop DIP Lenders without   the prior written consent of the Backstop DIP Lenders.

 

(c) All   representations and warranties in the DIP Documentation are accurate in all   material respects after giving effect to each additional advance (unless such   representations and warranties were made as of an earlier date in which case   such representations and warranties shall be accurate in all respects as of   such earlier date) and no default or event of default is in existence at the   time of, or after giving effect to the making of, such additional advance.

 

(d) The amount   of any advance is consistent with the applicable updated thirteen week cash   flow forecast and related supporting schedules that have been approved by the   Backstop DIP Lenders (collectively, the “Approved Budget”).(11)
    

 

VII.  CERTAIN DOCUMENTATION MATTERS

 

	
DIP Documentation:
    	
 
    	
All documents relating to the DIP Facility,   including, without limitation, the DIP Documentation and DIP Orders, shall be   in form and substance satisfactory to the Backstop DIP Lenders.
    
	
 
    	
 
    	
 
    
	
Funding Conditions, Representations,   Warranties, Covenants, Prepayments:
    	
 
    	
DIP Documentation to contain conditions to funding,   reporting requirements and provision of financial statements,   representations, warranties, covenants, and prepayments customary for   financings of this type and other terms as agreed to by the Loan Parties and   the Backstop DIP Lenders.

 

While the DIP Facility is outstanding, the   Loan Parties shall submit (i) an updated thirteen-week cash flow   forecast on a weekly basis that is acceptable to the Backstop DIP Lenders,   and a comparison of actual performance to projections for the prior week and   the prior cumulative four-week period and an explanation for any variance or   other
    

 

(10)  For the avoidance of doubt, estate-retained professionals will estimate their anticipated fees and expenses to be included within the Approved Budget; however, the fees and expenses of estate-retained professionals, or the incurrence of Term Loans for the payment thereof, shall not be subject to the Approved Budget or any variance testing thereunder.

 

(11)  For the avoidance of doubt, estate-retained professionals will estimate their anticipated fees and expenses to be included within the Approved Budget; however, the fees and expenses of estate-retained professionals, or the incurrence of Term Loans for the payment thereof, shall not be subject to the Approved Budget or any variance testing thereunder.

 

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information and (ii) any material   changes to the 2013 budget or Approved Budget, which must be acceptable to   the Backstop DIP Lenders.
    
	
 
    	
 
    	
 
    
	
Events of Default
    	
 
    	
Usual events of default, including, but not   limited to, payment, cross-default to post-petition obligations, violation of   covenants, breach of representations or warranties, judgment, ERISA,   environmental, change of control, loss of material permits, licenses and regulatory   approvals and other events of default which are usual and customary in   facilities of this nature, modified as necessary to reflect the commencement   of the Case.

 

In   addition, an event of default shall occur if: (i) the Case shall be   dismissed or converted to a chapter 7 case; a chapter 11 trustee or an   examiner with enlarged powers shall be appointed; any other superpriority   administrative expense claim which is senior to or pari passu with the DIP   Lenders’ claims shall be granted (other than to Revolving Lenders and Agents   under the Revolving Credit Facility); the Interim DIP Order or the Final DIP   Order, as the case may be, shall be stayed, amended, modified, reversed or   vacated; (ii) a plan shall be confirmed in the Cases which is   inconsistent with the Restructuring Term Sheet or the Restructuring Support   Agreement; or the Loan Parties shall take any action, including, without   limitation, the filing of an application, in support of any plan that is   inconsistent with the Restructuring Term Sheet or the Restructuring Support   Agreement, or any person other than the Loan Parties shall do so and such   application is not contested in good faith by the Loan Parties; or   (iii) an official committee, if any, or any other party seeks leave to   file an action challenging the validity, perfection, priority, extent or   enforceability of the DIP Documentation (and the liens and claims granted   thereunder).
    
	
 
    	
 
    	
 
    
	
Milestones
    	
 
    	
In addition, an event of default shall occur   upon the failure to achieve any of the following milestones in the   pre-packaged Case:(12)

 

·      the   Borrower shall have used its reasonable best efforts to send the solicitation   materials to all Senior Noteholders and all holders of the Preferred Equity   Interests on or before January 22, 2013, and in no event later than   January 31, 2013 (the “Solicitation Date”);

·      the   Company shall have filed petitions commencing the Case by 
    

 

(12)  If the Majority Noteholders determine that the Company should pursue a pre-negotiated Chapter 11 Plan rather than a prepackaged Chapter 11 Plan, the milestones in this section shall be adjusted as follows:

 

·  the Borrower shall have filed petitions commencing the Case by January 31, 2013;

 

·  the Borrower shall have filed the Plan and related disclosure statement on the Petition Date;

 

·  the Bankruptcy Court shall have entered the Interim DIP Order, which is in form and substance satisfactory to the Backstop DIP Lenders, within 10 days after the Petition Date;

 

·  within 20 days after the entry of the Interim DIP Order, the Bankruptcy Court shall have entered the Final DIP Order, which is in form and substance satisfactory to the Backstop DIP Lenders;

 

·  on or prior to 40 days following the Petition Date, the Loan Parties shall have obtained an order of the Bankruptcy Court approving the disclosure statement, which is in form and substance satisfactory to the Backstop DIP Lenders;

 

·  on or prior to 75 days following the Petition Date, the Loan Parties shall have obtained an order of the Bankruptcy Court confirming the Plan, which is in form and substance satisfactory to the Backstop DIP Lenders;  and

 

·  on or prior to 90 days following the Petition Date, the effective date of the Plan shall have occurred.

 

10

 

	
 
    	
 
    	
the date that is 14 days from the Solicitation Date;

·                  the Borrower shall have filed the Plan   and related disclosure statement by the Petition Date;

·                  the Bankruptcy Court shall have entered   the Interim DIP Order, which is in form and substance satisfactory to the   Backstop DIP Lenders, within 10 days after the Petition Date;

·                  within 20 days after the entry of the   Interim DIP Order, the Bankruptcy Court shall have entered the Final DIP   Order, which is in form and substance satisfactory to the Backstop DIP   Lenders;

·                  on or prior to 35 days following the   Petition Date, the Loan Parties shall have obtained an order or orders in   form and substance acceptable to the Backstop DIP Lenders by the Bankruptcy   Court confirming the Plan; and

·                  on or prior to 50 days following the Petition Date, the effective   date of the Plan shall have occurred.
    
	
 
    	
 
    	
 
    
	
Remedies:
    	
 
    	
Upon occurrence and during the continuance   of an Event of Default, the Backstop DIP Lenders may suspend or terminate all   commitments under the DIP Facility.    Following 3 days notice of such Event of Default to the Borrower, the   official committee of unsecured creditors appointed in the Case, if any, and   the U.S. Trustee, unless such Event of Default is cured within such time or   an order of the Bankruptcy Court is entered to the contrary, the DIP Lenders   shall be relieved from the automatic stay (without the need for further court   order) to exercise remedies under the DIP Facility and the Borrower’s right   to use cash collateral shall thereupon terminate pending further order of the   Bankruptcy Court.
    
	
 
    	
 
    	
 
    
	
Voting:
    	
 
    	
Amendments, consents and waivers under the   DIP Documentation will be subject to the approval of the DIP Lenders holding   at least 70.0% of the aggregate principal amount of the outstanding Term   Loans (other than with respect to amendments to provisions that typically   require consent of each affected DIP Lender).
    
	
 
    	
 
    	
 
    
	
Expenses and Indemnification:
    	
 
    	
The Borrower shall pay: (a) all   actual out-of-pocket expenses of the DIP Agent and the Backstop DIP Lenders   (i) associated with the preparation, negotiation, execution and delivery   of this term sheet and associated with the preparation, negotiation,   execution, delivery and administration of the DIP Documentation and any   amendment or waiver with respect thereto (including, without limitation, the   fees, disbursements and other charges of professionals and/or counsel), and   (ii) incurred by the DIP Agent and the Backstop DIP Lenders in   connection with the Case (including, without limitation, the fees,   disbursements and other charges of professionals and/or counsel); and   (b) all actual out-of-pocket expenses of the DIP Agent and the Backstop   DIP Lenders (including, without limitation, the fees, disbursements and other   charges of professionals and/or counsel) in connection with the enforcement   of the DIP Documentation.
    
	
 
    	
 
    	
 
    
	
Assignments,   Participations, Etc.:
    	
 
    	
The DIP Lenders shall be permitted to   sell or assign their rights and obligations under the DIP Documentation, or   any part thereof, to any person or entity without the consent of the Loan   Parties; provided, however, that each of the Backstop DIP   Lenders agrees not to make any such sale or assignment if as a result thereof   the Backstop DIP Lenders or their affiliates would not hold a majority of the   Term Loans and 
    

 

11

 

	
 
    	
 
    	
commitments under the DIP Facility   and in any event, may not assign their “backstop” obligations described   herein (except to their affiliates), including in the section entitled   “Backstop DIP Lenders” above.  The DIP   Lenders shall be permitted to grant participations in such rights and   obligations, or any part thereof, to any person or entity without consent of   the Loan Parties.
    
	
 
    	
 
    	
 
    
	
Governing Law:
    	
 
    	
State of New York, except as governed   by the Bankruptcy Code.
    

 

12

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