Form 8-K TETRA TECHNOLOGIES INC For: Jul 01
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): July 1, 2016
TETRA Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 1-13455 | 74-2148293 |
(State or other jurisdiction | (Commission File Number) | (IRS Employer |
of incorporation) | Identification No.) | |
24955 Interstate 45 North | ||
The Woodlands, Texas 77380 | ||
(Address of Principal Executive Offices and Zip Code) | ||
Registrant’s telephone number, including area code: (281) 367-1983 | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Definitive Material Agreement.
Amendment to Credit Agreement
On July 1, 2016, TETRA Technologies, Inc., a Delaware corporation (the “Company”) and certain of its subsidiaries entered into an Agreement and Fourth Amendment to Credit Agreement (the “Fourth Amendment”) with JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto. The Fourth Amendment amends the Credit Agreement dated as of June 27, 2006, as previously amended (as amended, the “Credit Agreement”) while maintaining the existing $225 million commitment level under the Credit Agreement.
The Fourth Amendment replaced and modified certain financial covenants in the Credit Agreement as follows:
(i) | The interest coverage ratio covenant was deleted and replaced with a fixed charge coverage ratio. The fixed charge coverage ratio compares (a) the Company’s EBITDA (as defined in the Fourth Amendment) minus (1) cash income tax expense, (2) non-financed capital expenditures, and (3) cash dividends and distributions by the Company to (b) the Company’s interest expense plus (1) scheduled principal payments (including capital lease obligations) and (2) stock repurchases. The Fourth Amendment provides that the fixed charge coverage ratio may not be less than 1.25 to 1 as of the end of any fiscal quarter. |
(ii) | The consolidated leverage ratio covenant was amended and the consolidated leverage ratio may not exceed (a) 4.00 to 1 at the end of the Company’s fiscal quarters ending during the period from and including June 30, 2016 through and including March 31, 2018, (b) 3.75 to 1 at the end of the Company’s fiscal quarters ending during the period from and including June 30, 2018 through and including December 31, 2018, and (c) 3.5 to 1 at the end of each of the Company’s fiscal quarters thereafter. |
In addition, the Fourth Amendment provides for the following other changes related to the Credit Agreement: (i) imposed a requirement that all obligations under the Credit Agreement and the guarantees of such obligations be secured as more fully described below under the caption “Security Agreement”; (ii) imposed a requirement that the Company use designated consolidated cash and cash equivalents of the Company and certain subsidiaries in excess of $25.0 million (the amount of such excess, the “Excess Cash Amount”) to prepay the loans in an amount equal to the lesser of the Excess Cash Amount and the aggregate amount of the loans outstanding; (iii) imposed a requirement to provide, on a quarterly and annual basis, consolidating financial statements reconciling the financial condition of the restricted subsidiaries and unrestricted subsidiaries; (iv) reduced the amount of the Company’s permitted unsecured indebtedness from $550 million to $100 million; (v) reduced the amount of permitted capital expenditures and acquisitions to either $50 million or $75 million, based upon a pro forma leverage ratio calculation; (vi) imposed negative covenants restricting the ability of the Company and its restricted subsidiaries to, in each case with certain exceptions, (a) sell assets, (b) make investments, and (c) make restricted payments, including dividends and distributions; and (vii) included additional events of default related to the enforceability of the liens and security interests securing the indebtedness and to any event of default under the Amended and Restated GSO Note Purchase Agreement.
Borrowings under the credit facility following the Fourth Amendment generally bear interest at the British Bankers Association LIBOR rate or an alternate base rate, in each case plus an additional margin based on the table below:
Leverage Ratio | Eurocurrency Spread | ABR Spread | Commitment Fee Rate |
Category 1: greater than or equal to 3.50 to 1 | 4.00% | 1.00% | 0.75% |
Category 2: greater than or equal to 3.00 to 1 but less than 3.50 to 1 | 3.75% | 0.75% | 0.75% |
Category 3: greater than or equal to 2.50 to 1 but less than 3.00 to 1 | 3.50% | 0.50% | 0.50% |
Category 4: greater than or equal to 2.00 to 1 but less than 2.50 to 1 | 2.75% | 0.00% | 0.50% |
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Leverage Ratio | Eurocurrency Spread | ABR Spread | Commitment Fee Rate |
Category 5: greater than or equal to 1.50 to 1 but less than 2.00 to 1 | 2.50% | 0.00% | 0.35% |
Category 6: less than 1.50 to 1 | 2.25% | 0.00% | 0.35% |
Certain of the lenders under the Credit Agreement and their affiliates have in the past provided, and may from time to time in the future provide, commercial banking, financial advisory, investment banking and other services to the Company and its subsidiaries. They have received, and may receive in the future, customary fees and commissions for these transactions.
The foregoing description of the Fourth Amendment does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the Fourth Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
A discussion of the material terms of the Credit Agreement dated as of June 27, 2006 by and among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto is included in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2006, which includes as Exhibit 10.1 thereto a copy of the Credit Agreement. A discussion of the material terms of the Agreement and First Amendment to Credit Agreement dated as of December 15, 2006 by and among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto is included in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 10, 2007, which includes as Exhibit 10.1 thereto a copy of the Agreement and First Amendment to Credit Agreement. A discussion of the material terms of the Agreement and Second Amendment to Credit Agreement dated as of October 29, 2010 by and among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto is included in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 3, 2010, which includes as Exhibit 10.1 thereto a copy of the Agreement and Second Amendment to Credit Agreement. A discussion of the material terms of the Agreement and Third Amendment to Credit Agreement dated as of September 30, 2014 by and among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto is included in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2014, which includes as Exhibit 10.1 thereto a copy of the Agreement and Third Amendment to Credit Agreement.
Amended and Restated Note Purchase Agreement
On July 1, 2016, the Company entered into an Amended and Restated Note Purchase Agreement (the “Amended and Restated GSO Note Purchase Agreement”) with GSO Tetra Holdings LP (“GSO”). The Amended and Restated GSO Note Purchase Agreement amends and restates the Note Purchase Agreement (the “Original GSO Note Purchase Agreement”), dated November 5, 2015, by and between the Company and GSO, relating to the previous issuance and sale of $125 million aggregate principal amount of the Company’s 11.00% Senior Notes due November 5, 2022 (the “Notes”). The Notes were sold to GSO in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”).
The Notes bear interest at the fixed rate of 11.00% and mature on November 5, 2022. Interest on the Notes is due quarterly on March 15, June 15, September 15 and December 15 of each year, and commenced on March 15, 2016. The Company may prepay the Notes, in whole or in part (though not in an amount less than $1,000,000 in the aggregate in the case of a partial prepayment) at a prepayment price equal to (i) prior to the third anniversary of the date of the original closing of the issuance and sale of the Notes (the “Original Closing Date”), 100% of the principal amount so prepaid, plus accrued and unpaid interest and a “make-whole” prepayment amount, (ii) during the period commencing on the third anniversary of the Original Closing Date and ending on the day prior to the fourth anniversary of the Original Closing Date, 104% of the principal amount so prepaid, plus accrued and unpaid interest, (iii) during the period commencing on the fourth anniversary of the Original Closing Date and ending on the day prior to the fifth anniversary of the Original Closing Date, 102% of the principal amount so prepaid, plus accrued and unpaid interest, (iv) during the period commencing on the fifth anniversary of the Original Closing Date and ending on the day prior to the sixth anniversary of the Original Closing Date, 101% of the principal amount so prepaid, plus accrued and unpaid interest, and (v) from the sixth anniversary of Original Closing Date, 100% of the principal amount so prepaid, plus accrued and unpaid interest. The Amended and Restated GSO Note Purch
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ase Agreement provides that in the event of a change of control, the Company must extend to each holder of the Notes an offer to prepay all Notes at varying amounts set forth therein based upon when any such change in control occurs. A change of control shall be deemed to occur if any person or group becomes the beneficial owner, directly or indirectly, of more than 50% of the voting power of the then-outstanding class of capital stock having ordinary voting power to elect a majority of the board of directors, provided that a change of control shall not be deemed to have occurred if the Company, or the acquiring person (if the Company is no longer in existence or the acquiring person has acquired all or substantially all of the assets of the Company) shall have an Investment Grade Rating (as defined in the Amended and Restated GSO Note Purchase Agreement) immediately following such acquiring person becoming the beneficial owner or consummating such acquisition.
Pursuant to the Amended and Restated GSO Note Purchase Agreement the Notes are now secured by first-lien security interests in substantially all of the Company’s assets and the assets of designated existing and future domestic subsidiaries, and all of the capital stock and equity interest in designated existing and future subsidiaries as described below under the caption “Security Agreement,” and are guaranteed by certain of the Company’s material wholly owned U.S. subsidiaries. The Notes are now pari passu in right of payment to all borrowings under the Credit Agreement and rank at least pari passu in right of payment with all other outstanding indebtedness. The Amended and Restated GSO Note Purchase Agreement contains customary covenants that limit the ability of the Company and certain of its restricted subsidiaries to, among other things: incur or guarantee additional indebtedness; incur or create liens; merge or consolidate or sell substantially all of its assets; engage in a different business; enter into transactions with affiliates; and make certain payments as set forth in the Amended and Restated GSO Note Purchase Agreement. Subject to certain limited exceptions, aggregate asset sales by the Company and its restricted subsidiaries during any fiscal year are restricted to the greater of $50.0 million or 15% of the Company’s Consolidated Total Assets (as defined in the Amended and Restated GSO Note Purchase Agreement) as of the end of the immediately preceding fiscal year; provided that the Net Available Cash (as defined in the Amended and Restated GSO Note Purchase Agreement) with respect to any disposition of assets or group of related assets in any fiscal year may not exceed $25 million.
The Amended and Restated GSO Note Purchase Agreement also amends certain financial covenants in the Original Note Purchase Agreement. The amendments to the financial covenants include replacing the interest coverage ratio covenant in the Original GSO Note Purchase Agreement with a minimum permitted fixed charge coverage ratio at the end of any fiscal quarter of 1.1 to 1. Additionally, the maximum permitted ratio of consolidated funded indebtedness at the end of any fiscal quarter to EBITDA increased from 3.50 to 1.00 to (a) 4.50 to 1.00 as of the end of any fiscal quarter ending during the period commencing on July 1, 2016 and ending on March 31, 2018, (b) 4.25 to 1.00 as of the end of any fiscal quarter ending during the period commencing on June 30, 2018 and ending on December 31, 2018 and (c) 4.00 to 1.00 as of the end of any fiscal quarter ending thereafter.
The Amended and Restated GSO Note Purchase Agreement contains customary default provisions, as well as the following cross-default provision. An event of default will occur if the Company or any restricted subsidiary (i) fails to make any payment when due beyond any applicable grace period under any Indebtedness of at least $20.0 million, (ii) defaults in the performance of any obligation under the Amended and Restated GSO Note Purchase Agreement or the collateral documents and such default is not remedied within the applicable cure period, (iii) defaults in the performance of or compliance with any term of any Indebtedness in an aggregate outstanding principal amount of at least $20.0 million or of any mortgage, indenture or other agreement relating to such Indebtedness or any other condition exists, and as a result of such default or condition such Indebtedness is accelerated and declared due and payable before its stated maturity or before its regularly scheduled dates for payment, (iv) the Company or any restricted subsidiary of the Company becomes obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $20.0 million or one or more persons have the right to require the Company or any subsidiary of the Company to purchase or repay such Indebtedness or (v) with certain exceptions, the security interest in the collateral ceases to be in full force and effect. Upon the occurrence and during the continuation of an event of default under the Amended and Restated GSO Note Purchase Agreement, the Notes may become immediately due and payable, either automatically or by declaration of holders of more than 50% in principal amount of the Notes at the time outstanding.
The foregoing description of the Amended and Restated GSO Note Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the Amended and Restated GSO Note Purchase Agreement, a copy of which is filed as Exhibit 4.1 to this Current Report on Form 8-K and incorporated herein by reference.
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Security Agreement
On July 1, 2016, in connection with the execution of the Fourth Amendment and the Amended and Restated GSO Note Purchase Agreement, the Company and certain designated subsidiaries have pledged and granted to JPMorgan Chase Bank, N.A., as collateral agent (the “Collateral Agent”) pursuant to the Collateral Agency Agreement dated July 1, 2016, for the benefit of the lenders under the Credit Agreement and GSO, first-lien security interests in substantially all of the Company’s assets and the assets of designated existing and future domestic subsidiaries, and all of the capital stock and equity interest in designated existing and future subsidiaries (limited, in the case of foreign subsidiaries, to 66% of the voting stock or equity interests of first-tier foreign subsidiaries). In addition, TETRA International Incorporated, CSI Compressco GP Inc. and CSI Compressco Investment LLC have pledged to the Collateral Agent, for the benefit of the lenders under the Credit Agreement and GSO, first-lien security interests in the common units and incentive distribution rights in CSI Compressco LP (the “Partnership”) held by such parties. The obligations of the Company under the Credit Agreement, as amended by the Fourth Amendment, and the guarantors thereof are not secured by the assets of the Partnership and its subsidiaries.
The foregoing description of the Security Agreement does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the Security Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Liquidity Update
As recently disclosed by the Company, based on financial forecasts and market conditions as of June 13, 2016, the Company had determined that there was a significant level of uncertainty as to whether the Company would be in compliance with the interest coverage ratio covenant under the Credit Agreement as of September 30, 2016. If the Company was not in compliance with this covenant as of September 30, 2016, an event of default would occur under the Credit Agreement, which could result in an event of default under the Original GSO Note Purchase Agreement. As a result, the Company also recently disclosed that the significant uncertainty with respect to compliance with the interest rate coverage for the period ending September 30, 2016 raised a substantial doubt about the Company’s ability to continue as a going concern.
As disclosed above, the Fourth Amendment deleted the interest coverage ratio covenant, and replaced it with a more customary fixed charge coverage ratio. As a result, there no longer exists any uncertainty with respect to the Company’s compliance with the interest coverage ratio covenant as of September 30, 2016 and the Company expects that it will be in compliance with the financial covenants under the Credit Agreement, as amended by the Fourth Amendment, and the Amended and Restated GSO Note Purchase Agreement through June 30, 2017 thereby eliminating the doubt set forth above regarding the Company’s ability to continue as a going concern.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference in this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit Number | Description | |
4.1 | Amended and Restated Note Purchase Agreement, dated July 1, 2016, between TETRA Technologies, Inc. and GSO Tetra Holdings LP. | |
10.1 | Agreement and Fourth Amendment to Credit Agreement dated as of July 1, 2016, among TETRA Technologies, Inc., and certain of its subsidiaries as borrowers, JPMorgan Chase Bank, N.A., as administrative agent, and the lender parties thereto. | |
10.2 | Security Agreement dated as of July 1, 2016, among TETRA Technologies, Inc., and certain of its subsidiaries as pledgors, JPMorgan Chase Bank, N.A., in its capacity as collateral agent. | |
99.1 | Press release, dated July 5, 2016. | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
TETRA Technologies, Inc. | |
By: | /s/Stuart M. Brightman |
Stuart M. Brightman | |
President & Chief Executive Officer | |
Date: July 5, 2016 | |
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EXHIBIT INDEX
Exhibit Number | Description | |
4.1 | Amended and Restated Note Purchase Agreement, dated July 1, 2016, between TETRA Technologies, Inc. and GSO Tetra Holdings LP. | |
10.1 | Agreement and Fourth Amendment to Credit Agreement dated as of July 1, 2016, among TETRA Technologies, Inc., and certain of its subsidiaries as borrowers, JPMorgan Chase Bank, N.A., as administrative agent, and the lender parties thereto. | |
10.2 | Security Agreement dated as of July 1, 2016, among TETRA Technologies, Inc., and certain of its subsidiaries as pledgors, JPMorgan Chase Bank, N.A., in its capacity as collateral agent. | |
99.1 | Press release, dated July 5, 2016. | |
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EXHIBIT 4.1
TETRA TECHNOLOGIES, INC.
_________
AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
_________
Dated as of July 1, 2016
$125,000,000 11.00% Senior Secured Notes due November 5, 2022
TABLE OF CONTENTS
Page | |||
1. | AUTHORIZATION OF NOTES. | 1 | |
1.1. | Description of Notes Initially Issued. | 1 | |
1.2. | Subsidiary Guaranty; Release. | 1 | |
1.3. | Security for the Notes Obligations. | 2 | |
2. | SALE AND PURCHASE OF NOTES. | 2 | |
2.1. | Series 2015 Notes. | 2 | |
2.2. | Additional Series of Notes. | 3 | |
2.3. | Obligations under the Original Note Purchase Agreement. | 4 | |
3. | CLOSING. | 5 | |
4. | CONDITIONS PRECEDENT. | 5 | |
4.1. | Conditions to the Restatement Date. | 5 | |
5. | REPRESENTATIONS AND WARRANTIES OF THE COMPANY. | 7 | |
5.1. | Organization; Power and Authority. | 7 | |
5.2. | Authorization, etc. | 7 | |
5.3. | Disclosure. | 8 | |
5.4. | Organization and Ownership of Shares of Subsidiaries; Affiliates. | 8 | |
5.5. | Financial Statements. | 9 | |
5.6. | Compliance with Laws, Other Instruments, etc. | 10 | |
5.7. | Governmental Authorizations, etc. | 10 | |
5.8. | Litigation; Observance of Agreements, Statutes and Orders. | 11 | |
5.9. | Taxes. | 11 | |
5.10. | Title to Property; Leases. | 11 | |
5.11. | Licenses, Permits, etc. | 12 | |
5.12. | Compliance with ERISA. | 12 | |
5.13. | Private Offering by the Company. | 13 | |
5.14. | Use of Proceeds; Margin Regulations. | 13 | |
5.15. | Existing Indebtedness; Future Liens. | 14 | |
5.16. | Foreign Assets Control Regulations, etc. | 14 | |
5.17. | Status under Certain Statutes. | 16 | |
5.18. | Environmental Matters. | 16 | |
5.19. | Solvency of Subsidiary Guarantors. | 17 | |
6. | REPRESENTATIONS OF THE PURCHASERS. | 17 | |
6.1. | Ownership of Notes. | 17 | |
6.2. | Authorization. | 17 | |
6.3. | Restricted Securities. | 17 | |
7. | INFORMATION AS TO COMPANY. | 18 | |
7.1. | Financial and Business Information | 18 | |
7.2. | Officer’s Certificate. | 21 | |
7.3. | Inspection. | 21 | |
8. | PREPAYMENT OF THE NOTES. | 22 | |
8.1. | Required Prepayments; Maturity | 22 | |
8.2. | Optional Prepayments. | 22 | |
8.3. | Mandatory Offer to Prepay Upon Change of Control. | 23 | |
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Page | |||
8.4. | Mandatory Offer to Prepay Upon Disposition of Certain Assets. | 26 | |
8.5. | Allocation of Partial Prepayments. | 27 | |
8.6. | Maturity; Surrender, etc. | 27 | |
8.7. | Purchase of Notes. | 28 | |
8.8. | Make-Whole Amount. | 28 | |
9. | AFFIRMATIVE COVENANTS. | 30 | |
9.1. | Compliance with Law. | 30 | |
9.2. | Insurance. | 30 | |
9.3. | Maintenance of Properties. | 30 | |
9.4. | Payment of Taxes and Claims. | 31 | |
9.5. | Corporate Existence, etc. | 31 | |
9.6. | Additional Subsidiary Guarantors and Non-Recourse Pledgors. | 31 | |
9.7. | Ranking of Notes; Granting of Liens. | 32 | |
9.8. | Books and Records. | 32 | |
9.9. | Margin Regulations. | 33 | |
9.10. | Collateral | 33 | |
9.11. | Post-Closing Requirements. | 33 | |
10. | NEGATIVE COVENANTS. | 35 | |
10.1. | Fixed Charge Coverage Ratio. | 35 | |
10.2. | Consolidated Funded Indebtedness. | 35 | |
10.3. | Indebtedness. | 35 | |
10.4. | Capital Expenditures and Acquisitions. | 36 | |
10.5. | Liens. | 36 | |
10.6. | Mergers, Consolidations, etc. | 39 | |
10.7. | Sale of Assets. | 40 | |
10.8. | Designation of Restricted and Unrestricted Subsidiaries. | 42 | |
10.9. | Nature of Business. | 42 | |
10.10. | Transactions with Affiliates. | 43 | |
10.11. | Restricted Payments. | 45 | |
10.12. | Terrorism Sanctions Regulations. | 50 | |
11. | EVENTS OF DEFAULT. | 51 | |
12. | REMEDIES ON DEFAULT, ETC. | 53 | |
12.1. | Acceleration. | 53 | |
12.2. | Other Remedies. | 54 | |
12.3. | Rescission. | 54 | |
12.4. | No Waivers or Election of Remedies, Expenses, etc. | 55 | |
13. | REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. | 55 | |
13.1. | Registration of Notes. | 55 | |
13.2. | Transfer and Exchange of Notes. | 55 | |
13.3. | Replacement of Notes. | 56 | |
14. | PAYMENTS ON NOTES. | 56 | |
14.1. | Place of Payment. | 56 | |
14.2. | Home Office Payment. | 56 | |
15. | EXPENSES, ETC. | 57 | |
15.1. | Transaction Expenses. | 57 | |
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Page | |||
15.2. | Survival. | 57 | |
16. | SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. | 57 | |
17. | AMENDMENT AND WAIVER. | 58 | |
17.1. | Requirements. | 58 | |
17.2. | Solicitation of Holders of Notes. | 58 | |
17.3. | Binding Effect, etc. | 59 | |
17.4. | Notes held by Company, etc. | 59 | |
18. | NOTICES. | 59 | |
19. | REPRODUCTION OF DOCUMENTS. | 60 | |
20. | CONFIDENTIAL INFORMATION. | 60 | |
21. | SUBSTITUTION OF PURCHASER. | 61 | |
22. | MISCELLANEOUS. | 62 | |
22.1. | Successors and Assigns. | 62 | |
22.2. | Jurisdiction and Process; Waiver of Jury Trial. | 62 | |
22.3. | Payments Due on Non-Business Days. | 63 | |
22.4. | Severability. | 63 | |
22.5. | Construction. | 63 | |
22.6. | Effectiveness; Counterparts. | 63 | |
22.7. | Governing Law; Submission to Jurisdiction. | 64 | |
22.8. | GAAP. | 64 | |
22.9. | Amendment and Restatement. | 64 | |
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SCHEDULE A | -- | Information Relating to Purchasers |
SCHEDULE B | -- | Defined Terms |
SCHEDULE 5.3 | -- | Disclosure Materials |
SCHEDULE 5.4 | -- | Subsidiaries and Affiliates |
SCHEDULE 5.5 | -- | Financial Statements |
SCHEDULE 5.8 | -- | Litigation |
SCHEDULE 5.15 | -- | Existing Indebtedness |
SCHEDULE 10.5 | -- | Existing Liens |
EXHIBIT 1.1 | -- | Form of Senior Note |
EXHIBIT 1.2 | -- | Form of Subsidiary Guaranty |
EXHIBIT 1.3 | -- | Form of Security Agreement |
EXHIBIT 2.2 | -- | Form of Supplement |
EXHIBIT 4.1(e)(i) | -- | Form of Opinion of Counsel for the Company |
EXHIBIT 8.3(e) | -- | Change of Control Premium Calculation |
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TETRA TECHNOLOGIES, INC.
24955 Interstate 45 North
The Woodlands, TX 77380
(281) 367-1983
Facsimile: (281) 364-4306
$125,000,000 11.00% Senior Secured Notes due November 5, 2022
Dated as of July 1, 2016
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
TETRA TECHNOLOGIES, INC., a Delaware corporation (the “Company”), agrees with you as follows:
1. | AUTHORIZATION OF NOTES. |
1.1Description of Notes Initially Issued.
Pursuant to the Note Purchase Agreement dated as of November 5, 2015 (the “Original Note Purchase Agreement”), the Company has authorized the issue and sale of $125,000,000 aggregate principal amount of its 11.00% Senior Notes due November 5, 2022 (as so amended hereby, the “Series 2015 Notes”, the Series 2015 Notes together with each Series of Additional Notes that may be from time to time issued pursuant to Section 2.2 below, the “Notes”, such term to include any such notes issued in substitution therefor pursuant to Section 13 of this Agreement). The Notes issued under the Original Note Purchase Agreement have been issued substantially in the form of Exhibit 1.1 of the Original Note Purchase Agreement, and any other Notes or replacement Notes shall be substantially in the form set out in Exhibit 1.1 hereof. The Company and the holder of the Notes wish to amend and restate the Original Note Purchase Agreement to provide security for the Notes and to provide for the other modifications specified herein. Certain capitalized terms used in this Agreement are defined in Schedule B; references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
1.2Subsidiary Guaranty; Release.
(a)Subsidiary Guaranty. The payment by the Company of all amounts due on or in respect to the Notes and the performance by the Company of its obligations under this Agreement will be guaranteed by each Subsidiary that (regardless of whether required by the terms of the Credit Agreement or other applicable documents governing other Indebtedness of the Company) from time to time guarantees Indebtedness in respect of the Credit Agreement or any other Indebtedness in respect of borrowed money of the Company pursuant to the Subsidiary Guaranty in substantially the form of the attached Exhibit 1.2, as it may be amended or supplemented from time to time (the “Subsidiary Guaranty”).
(b)Release of Subsidiary Guarantors. Each holder of a Note acknowledges and agrees that each Subsidiary Guarantor shall be fully released and discharged from the Subsidiary Guaranty and the Security Agreement, and each holder of a Note fully releases and discharges such Subsidiary Guarantor from the Subsidiary Guaranty and the Security Agreement, immediately and without any further act, upon such Subsidiary being released and discharged as guarantor under and in respect of the Credit Agreement; provided that (i) no Default or Event of Default exists or will exist immediately following such release and discharge; (ii) if any fee or other consideration in excess of 0.50% of the outstanding principal amount of such Indebtedness is paid or given to any holder of any Indebtedness under the Credit Agreement in connection with such release, other than the repayment of all or a portion of such Indebtedness under the Credit Agreement, each holder of a Note receives equivalent consideration on a pro rata basis; and (iii) at the time of such release and discharge,
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the Company delivers to each holder of Notes a certificate of a Responsible Officer certifying that such Subsidiary Guarantor has been or is being released and discharged as a guarantor under and in respect of the Credit Agreement and the matters set forth in clauses (i) and (ii); provided further, that if the consideration referred to in clause (ii) above exceeds 0.50% of the outstanding principal amount of the Indebtedness under the Credit Agreement, the release and discharge of such Subsidiary Guarantor from the Subsidiary Guaranty and the Security Agreement shall only occur upon the consent of each of the holders of the Notes and each holder of a Note shall receive equivalent consideration on a pro rata basis.
1.3Security for the Notes Obligations.
The Company and each Affiliated Grantor shall execute a Security Agreement in substantially the form of Exhibit 1.3 attached hereto (as it may be amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”) and other Collateral Documents, pursuant to which the Company and each Affiliated Grantor shall pledge and grant a security interest in all of its right, title and interest in and to its Collateral for your benefit to secure the Company’s obligations under this Agreement.
2. | SALE AND PURCHASE OF NOTES. |
2.1Series 2015 Notes.
Pursuant to the Original Note Purchase Agreement, the Company has issued and sold to you and each of the other purchasers named in Schedule A (the “Other Purchasers”), and you and the Other Purchasers have purchased from the Company, at the Original Closing, Series 2015 Notes in the denomination and principal amount specified opposite the names of the Purchasers on Schedule A of the Original Note Purchase Agreement at the purchase price of 96% of the principal amount thereof.
2.2Additional Series of Notes.
(a)The Company may, from time to time but no later than the first anniversary of the Original Closing Date, in its sole discretion but subject to the terms hereof, issue and sell to you, the Other Purchasers or any other purchaser you may designate, one or more additional Series of its senior notes in an amount not exceeding $100,000,000 in the aggregate under the provisions of this Agreement pursuant to a supplement (a “Supplement”) substantially in the form of Exhibit 2.2 or such other form as may be agreed by the Company and the purchaser(s) of such additional Series of Notes.
(b)Each additional Series of Notes (the “Additional Notes”) issued pursuant to a Supplement shall be subject to the following terms and conditions and such other terms and conditions as the Company and the Additional Purchasers shall determine, in each case, in the sole discretion of each of such parties:
(i)each Series of Additional Notes, when so issued, shall be differentiated from previous Series by sequential alphabetical designation inscribed thereon;
(ii)each Series of Additional Notes when so issued shall be in a principal amount of $50,000,000;
(iii)Additional Notes of the same Series may consist of more than one different and separate tranches and may differ with respect to outstanding principal amounts, maturity dates, interest rates and premiums, if any, and price and terms of redemption or payment prior to maturity;
(iv)each Series of Additional Notes shall be dated the date of issue, bear interest at such rate or rates, mature on such date or dates, be subject to such put rights and mandatory and optional prepayment on the dates and at the premiums, if any, have such additional or different conditions precedent to closing, such representations and warranties and such additional covenants and defaults
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as shall be specified in the Supplement under which such Additional Notes are issued and upon execution of any such Supplement, this Agreement shall be deemed amended (A) to reflect such additional put rights, covenants and defaults without further action on the part of the holders of the Notes outstanding under this Agreement, provided, that any such additional put rights, covenants and defaults shall inure to the benefit of all holders of Notes so long as any Additional Notes issued pursuant to such Supplement remain outstanding and (B) to reflect such representations and warranties as are contained in such Supplement for the benefit of the holders of such Additional Notes in accordance with the provisions of Section 16;
(v)each Series of Additional Notes issued under this Agreement shall be substantially in the form of Exhibit B to Exhibit 2.2 with such variations, omissions and insertions as are necessary or permitted hereunder (subject to clause (c)(ii) below);
(vi)the minimum principal amount of any Note issued under a Supplement shall be $100,000, except as may be necessary to evidence the outstanding amount of any Note originally issued in a denomination of $100,000 or more;
(vii)all Additional Notes shall rank pari passu with all other outstanding Notes;
(viii)no Additional Notes shall be issued hereunder if at the time of issuance thereof and after giving effect to the application of the proceeds thereof, any Default or Event of Default shall have occurred and be continuing; and
(ix)such other terms as you shall agree in your sole discretion.
(c)The right of the Company to issue, and the obligation of the Additional Purchasers to purchase, any Additional Notes shall be subject to the following conditions precedent, in addition to the conditions specified in the Supplement pursuant to which such Additional Notes may be issued:
(i)a Responsible Officer of the Company shall execute and deliver to each Additional Purchaser and each holder of Notes an Officer’s Certificate dated the date of issue of such Series of Additional Notes stating that such officer has reviewed the provisions of this Agreement (including all Supplements) and setting forth the information required to establish whether the Company is in compliance with the covenants set forth in Sections 10.1 and 10.2 on such date;
(ii)the Company and each such Additional Purchaser shall execute and deliver a Supplement substantially in the form of Exhibit 2.2, including such additional terms and conditions as are acceptable to each Additional Purchaser in its sole discretion; and
(iii)each Additional Purchaser shall have confirmed in the Supplement that the representations set forth in Section 6 are true with respect to such Additional Purchaser on and as of the date of issue of such Additional Notes.
2.3Obligations under the Original Note Purchase Agreement.
This Agreement shall not constitute a novation of the obligations and liabilities of the parties under the Original Note Purchase Agreement or the other Note Documents as in effect prior to the Restatement Date and that remain outstanding as of the Restatement Date. Subject to the terms and conditions of this Agreement, the Notes (as defined in the Original Note Purchase Agreement) outstanding under the Original Note Purchase Agreement as of the Restatement Date (after giving effect to the modifications thereto on or prior to the Restatement Date as contemplated herein) shall remain outstanding on and after the Restatement Date as Notes issued pursuant to this Agreement and shall, on and after the Restatement Date, have all of the rights and benefits of the Notes as set forth in this Agreement and the other Note Documents.
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3. | CLOSING. |
The sale and purchase of the Series 2015 Notes purchased by you and the Other Purchasers occurred at the offices of Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022 at 9:00 a.m., New York time, at a closing upon satisfaction or waiver of the conditions set forth in Section 4.2 of the Original Note Purchase Agreement (the “Original Closing”) on the Original Closing Date.
4. | CONDITIONS PRECEDENT. |
4.1Conditions to the Restatement Date.
The effectiveness of this Agreement is subject to the fulfillment to your satisfaction or waiver by you of the following conditions (the date such conditions precedent are satisfied or waived being referred to as the “Restatement Date”):
(a)Execution and Delivery. You shall have received this Agreement, the Joinder to Subsidiary Guaranty, the Security Agreement and the other Collateral Documents (other than the Ship Mortgages, any Control Agreements or Collateral Documents relating to the pledge of the Equity Interests in foreign Subsidiaries), which shall be duly executed by each party thereto. In connection with the execution and delivery (and after filing, as necessary) of the Collateral Documents (other than the Ship Mortgages, any Control Agreements or Collateral Documents relating to the pledge of the Equity Interests in foreign Subsidiaries), you shall be reasonably satisfied that (i) the Collateral Documents create first priority perfected Liens (subject only to Liens permitted under Section 10.5 hereof) on the Collateral and (ii) the Collateral Agent shall have received certificates, together with undated, blank stock powers for each such certificate, representing all of the issued and outstanding Equity Interests, including Pledged Compressco Units under clause (a) of such defined term, that constitute Collateral (or shall otherwise be satisfied that your security interest in such Equity Interests is perfected by “control” under the applicable Uniform Commercial Code).
(b)Representations and Warranties. The representations and warranties of the Company contained in this Agreement and of the Company and each Affiliated Grantor contained in each other Note Document shall be true and correct when made and at the Restatement Date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date).
(c)No Default. No Default or Event of Default shall have occurred and be continuing immediately prior to or immediately after giving effect to this Agreement.
(d)Compliance Certificates.
(i)Officer’s Certificate. The Company shall have delivered to you an Officer’s Certificate, dated the Restatement Date, certifying that the conditions specified in Sections 4.1(b) and 4.1(c) have been fulfilled.
(ii)Secretary’s Certificate. The Company shall have delivered to you a certificate of the secretary or assistant secretary, or other officer with similar responsibilities, of the Company and each Affiliated Grantor or, in the event that such Person is a limited partnership, such Person’s general partner, certifying as of the Restatement Date: (i) resolutions of its board of directors or members, authorizing the transactions contemplated hereby; (ii) the names and genuine signatures of the officers of such Person authorized to execute, deliver and perform, as applicable, the Note Documents to be delivered by such Person (or that there have been no changes to any such officers so authorized since the Original Closing Date); (iii) the organizational documents of such Person as in effect on such date (or that there have been no changes to any such organizational documents since the Original Closing
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Date); and (iv) the good standing certificate for such Person, from its state of incorporation, formation or organization, as applicable, dated as of a recent date.
(e)Opinions of Counsel. You shall have received opinions in form and substance satisfactory to you, dated the Restatement Date, from (i) Andrews Kurth LLP, counsel to the Company, covering the matters set forth in Exhibit 4.1(e)(i) and covering such other matters incident to the transactions contemplated hereby as you or your counsel may reasonably request and (ii) local counsel in the State of Oklahoma covering such matters as you or your counsel may reasonably request (and the Company instructs its counsel to deliver such opinion to you).
(f)Payment of Fees and Expenses. Without limiting the provisions of Section 15.1, the Company shall have paid on or before the Restatement Date (i) all fees required to be paid on or before the Restatement Date hereunder, including the fees payable by the Company pursuant to that certain Fee Letter, dated as of the date hereof, between the Company and GSO Capital Partners LP and (ii) all other accrued and unpaid fees, costs and expenses otherwise owed pursuant to this Agreement to the extent then due and payable on the Restatement Date, including any such costs, fees and expenses arising under or referenced in Section 15.1, including, to the extent invoiced on or before the Restatement Date, all reasonable fees, charges and disbursements of Latham & Watkins LLP, to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Restatement Date.
(g)Proceedings and Documents. All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to you and your special counsel, and you and your special counsel shall have received all such counterpart originals or certified or other copies of such documents as you or they may reasonably request.
(h)Repayment of Certain Indebtedness. You shall have received an Officer’s Certificate, dated as of the Restatement Date, certifying that all of the Company’s outstanding 4.00% Senior Notes due April 29, 2020, 5.09% Senior Notes, Series 2010-A, due December 15, 2017, 5.67% Senior Notes, Series 2010-B, due December 15, 2020 and the Wells Fargo 2015 Notes have been repaid or repurchased, as the case may be (and, with respect to the Wells Fargo 2015 Notes, the security interests related thereto have been released).
(i)Amendment to Credit Agreement. You shall have received (i) a copy of the Fourth Amendment to Credit Agreement fully executed by the parties thereto and (ii) evidence satisfactory to you that all conditions precedent to the effectiveness of the Fourth Amendment to Credit Agreement have been satisfied or waived.
(j)Lien Searches. You shall have received appropriate UCC, judgment and tax lien search certificates reflecting no prior Liens (other than those Liens permitted by Section 10.5) encumbering the properties of the Company and the Affiliated Grantors for each jurisdiction reasonably requested by you.
5.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver each of the Note Documents to which it is a party and to perform the provisions hereof and thereof.
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5.2Authorization, etc.
This Agreement and the other Note Documents have been duly authorized by all necessary corporate or partnership action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
The Subsidiary Guaranty has been duly authorized by all necessary corporate, partnership or limited liability company action (as the case may be) on the part of each Subsidiary Guarantor and upon execution and delivery thereof will constitute the legal, valid and binding obligation of each Subsidiary Guarantor, enforceable against each Subsidiary Guarantor in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
Each of the Security Agreement and the other Collateral Documents has been duly authorized by all necessary corporate, partnership or limited liability company action (as the case may be) on the part of each Affiliated Grantor and upon execution and delivery thereof will constitute the legal, valid and binding obligation of each Affiliated Grantor, enforceable against each Affiliated Grantor in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
5.3Disclosure.
The written information provided to you and each Other Purchaser, along with the reports filed by the Company with the Securities and Exchange Commission, fairly describes, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries. Except as disclosed in Schedule 5.3, this Agreement, the documents, certificates or other writings delivered to you by or on behalf of the Company in connection with the transactions contemplated hereby and the financial statements listed in Schedule 5.5 (this Agreement and such documents, certificates or other writings and such financial statements delivered to each Purchaser being referred to, collectively, as the “Disclosure Documents”), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made; provided that with respect to projected financial information and any forecasts of financial performance, the Company makes no representation or warranty that such projections or forecasts will ultimately prove to have been accurate, and the Company represents only that such information was prepared in good faith based upon (i) assumptions believed to be reasonable at the time and (ii) the best information available to the Company and its Restricted Subsidiaries, in each case, as of the date of delivery and the Restatement Date. Except as expressly described in Schedule 5.3, or in one of the documents, certificates or other writings identified therein, or in the financial statements listed in Schedule 5.5, since the date of the most recent audited financial statements required to be filed with the Securities Exchange Commission as part of the Company’s Form 10-K, there has been no change in the financial condition, operations, business or properties of the Company or any Subsidiary except changes that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. There is no Material non-public information known to the Company that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the other documents, certificates and other writings delivered to you by or on behalf of the Company specifically for use in connection with the transactions contemplated hereby.
5.4Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a)Schedule 5.4 contains (except as noted therein) complete and correct lists of: (i) the Company’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its Capital Stock outstanding owned by the Company and each
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Subsidiary, (ii) the Company’s Affiliates, other than Subsidiaries, and (iii) the Company’s directors and senior officers. Except for those Subsidiaries listed in the definition of Unrestricted Subsidiary, each Subsidiary listed in Schedule 5.4 is designated as a Restricted Subsidiary of the Company.
(b)All of the outstanding shares of Capital Stock of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.4 and except with respect to foreign Subsidiaries that individually or in the aggregate are not Material and the consequence of which would not in the aggregate result in a Material Adverse Effect).
(c)Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact.
(d)No Restricted Subsidiary is a party to, or otherwise subject to, any legal restriction or any agreement (other than this Agreement or any other Note Document, the agreements listed on Schedule 5.4 and customary limitations imposed by corporate, partnership or limited liability company law statutes) restricting the ability of such Restricted Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Restricted Subsidiaries that owns outstanding shares of Capital Stock of such Restricted Subsidiary, except legal restrictions or agreements by foreign Subsidiaries that individually or in the aggregate are not Material and the consequence of which would not in the aggregate result in a Material Adverse Effect.
5.5Financial Statements.
The Company has delivered to you and each Other Purchaser copies of the financial statements of the Company and its Subsidiaries listed on Schedule 5.5. All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates specified in such Schedule and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments); provided that with respect to projected financial information, the Company represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. The Company and its Subsidiaries do not have any Material liabilities that are not disclosed in the Disclosure Documents.
5.6Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this Agreement and the Notes will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority, including the USA PATRIOT Act, applicable to the Company or any Subsidiary.
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The execution, delivery and performance by each Subsidiary Guarantor of the Subsidiary Guaranty will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of such Subsidiary Guarantor under, any agreement, or corporate charter or by-laws, to which such Subsidiary Guarantor is bound or by which such Subsidiary Guarantor or any of its properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to such Subsidiary Guarantor or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to such Subsidiary Guarantor.
The execution, delivery and performance by each Affiliated Grantor of each Collateral Document to which it is a party will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of such Affiliated Grantor under, any agreement, or corporate charter or by-laws, to which such Affiliated Grantor is bound or by which each such Affiliated Grantor or any of its properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to such Affiliated Grantor or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to such Affiliated Grantor.
5.7Governmental Authorizations, etc.
Except for such registrations and filings with any Governmental Authority as are required to perfect Liens securing obligations under the Note Documents, no consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of any Note Documents or the execution, delivery or performance by each Subsidiary Guarantor of the Subsidiary Guaranty and each Affiliated Grantor of each Collateral Document to which it is a party.
5.8Litigation; Observance of Agreements, Statutes and Orders.
(a)Except as disclosed in Schedule 5.8, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Restricted Subsidiary or Non-Recourse Pledgor or any property of the Company or any Restricted Subsidiary or Non-Recourse Pledgor in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(b)Neither the Company nor any Restricted Subsidiary nor any Non-Recourse Pledgor is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including Environmental Laws and the USA PATRIOT Act) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
5.9Taxes.
The Company and its Restricted Subsidiaries and Non-Recourse Pledgors have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (i) the amount of which is not individually or in the aggregate Material or (ii) the amount, applicability or validity of which is currently being diligently contested in good faith by appropriate proceedings and with respect to which the Company, a Restricted Subsidiary or a Non-Recourse Pledgor, as the case may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Restricted Subsidiaries in respect of Federal, state or other taxes for all fiscal
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periods are adequate. The Federal income tax liabilities of the Company, its Restricted Subsidiaries and the Non-Recourse Pledgors have been paid for all fiscal years up to and including the fiscal year ended December 31, 2015.
5.10Title to Property; Leases.
The Company, its Restricted Subsidiaries and the Non-Recourse Pledgors have good and sufficient title to their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by the Company, any Restricted Subsidiary or any Non-Recourse Pledgor after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.
5.11Licenses, Permits, etc.
(a)The Company and its Restricted Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others.
(b)To the best knowledge of the Company, no product of the Company or any Restricted Subsidiary infringes in any material respect any license, permit, franchise, authorization, patent, copyright, service mark, trademark, trade name or other right owned by any other Person.
(c)To the best knowledge of the Company, there is no Material violation by any Person of any right of the Company or any Restricted Subsidiary with respect to any patent, copyright, service mark, trademark, trade name or other right owned or used by the Company or any Restricted Subsidiary.
5.12Compliance with ERISA.
(a)The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA as a result of failure to comply with such titles or the penalty or excise tax provisions of the Code relating to “employee benefit plans” (as defined in section 3(3) of ERISA), and no event, transaction or condition has occurred or exists that could reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to section 430(k) of the Code or to any such penalty or excise tax provisions under the Code relating to “employee benefit plans” or section 4068 of ERISA, other than such liabilities or Liens as would not be individually or in the aggregate Material.
(b)The present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of the end of such Plan’s most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities. The term “benefit liabilities” has the meaning specified in section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in section 3 of ERISA.
(c)The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.
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(d)The expected postretirement benefit obligation (determined as of the last day of the Company’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 715-60, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Company and its Subsidiaries is not Material.
(e)The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by the Company in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of your representation in Section 6.5 of the Original Note Purchase Agreement as to the sources of the funds used to pay the purchase price of the Notes to be purchased by you.
5.13Private Offering by the Company.
As of the Restatement Date, neither the Company nor anyone acting on its behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any person other than you and the Other Purchasers and not more than 20 other Institutional Accredited Investors, each of which has been offered the Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act.
5.14Use of Proceeds; Margin Regulations.
(a)On the Original Closing Date, the Company applied a portion of the proceeds of the sale of the Series 2015 Notes to (i) repay all of the Company’s Indebtedness for borrowed money outstanding under the Credit Agreement and (ii) pay fees and expenses associated with the transactions contemplated hereunder. No later than 45 days from the Original Closing Date, the Company applied any remaining portion of the proceeds of the sale of the Series 2015 Notes, together with other funds (to the extent necessary), to (x) pay the purchase price for notes accepted for purchase by the Company pursuant to the tender offer for an aggregate of up to $25,000,000 in principal amount of the Company’s 5.09% Senior Notes, Series 2010-A and the 5.67% Senior Notes, Series 2010-B and (y) prepay in full all amounts owed in respect of the Company’s outstanding 5.90% Senior Notes, Series 2006-A, due April 30, 2016.
(b)No part of the proceeds from the sale of the Notes has been or will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.
5.15Existing Indebtedness; Future Liens.
(a)Except as described therein, Schedule 5.15 sets forth a complete and correct list of all outstanding Indebtedness of the Company and its Restricted Subsidiaries as of the Restatement Date. Neither the Company nor any Restricted Subsidiary nor any Non-Recourse Pledgor is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company, any Restricted Subsidiary or any Non-Recourse Pledgor and no event or condition exists with respect to any Indebtedness of the Company, any Restricted Subsidiary or any Non-Recourse Pledgor that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.
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(b)Except as disclosed in Schedule 10.5 or as described in Section 9.7, neither the Company nor any Restricted Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 10.5.
5.16Foreign Assets Control Regulations, etc.
(a)Neither the Company nor any Controlled Entity is (i) a Person whose name appears on the list of Specially Designated Nationals and Sanctioned Persons published by the Office of Foreign Assets Control, United States Department of the Treasury (“OFAC”) (an “OFAC Listed Person”) or any Sanctions-related list of designated Persons maintained by the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member state (ii) an agent, department, or instrumentality of, or is otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) any Person, entity, organization, foreign country or regime that is subject to any OFAC Sanctions Program, (iii) any Person operating, organized or resident in a Sanctioned Country, or (iv) otherwise blocked, subject to sanctions under or engaged in any activity in violation of other United States economic sanctions, including but not limited to, the Trading with the Enemy Act, the International Emergency Economic Powers Act, the Comprehensive Iran Sanctions, Accountability and Divestment Act (“CISADA”) or any similar law or regulation with respect to Iran or any other country, the Sudan Accountability and Divestment Act, or any Sanctions (each OFAC Listed Person and each other Person, entity, organization and government of a country described in clause (i), clause (ii), clause (iii) or clause (iv), a “Sanctioned Person”). Neither the Company nor any Controlled Entity has been notified that its name appears or may in the future appear on a state list of Persons that engage in investment or other commercial activities in Iran or any other country that is subject to Sanctions.
(b)No part of the proceeds from the sale of the Notes hereunder constitutes or will constitute funds obtained on behalf of any Sanctioned Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly, (i) in connection with any investment in, or any transactions or dealings with, any Sanctioned Person, or (ii) otherwise in violation of Sanctions.
(c)Neither the Company nor any Controlled Entity (i) has been found in violation of, charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes under the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act), the USA PATRIOT Act or any other United States law or regulation governing such activities (collectively, “Anti-Money Laundering Laws”) or any Sanctions violations, (ii) to the Company’s actual knowledge after making due inquiry, is under investigation by any Governmental Authority for possible violation of Anti-Money Laundering Laws or any Sanctions violations, (iii) has been assessed civil penalties under any Anti-Money Laundering Laws or any Sanctions, or (iv) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering Laws. The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable current and future Anti-Money Laundering Laws and Sanctions.
(d)(1) The Company has implemented and maintains in effect policies and procedures designed to ensure compliance by the Company, its Subsidiaries and their respective directors, officers, employees and agents with all laws, rules, and regulations of any jurisdiction applicable to the Company or any of its Affiliates from time to time concerning or relating to bribery or corruption, including, without limitation, the FCPA and the U.K. Bribery Act 2010 (collectively, “Anti-Corruption Laws”) and applicable Sanctions, and the Company, its Subsidiaries and their respective officers and employees and to the knowledge of the Company its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Company, any Subsidiary or any of their respective directors, officers or employees, or (b) to the knowledge of the Company, any agent of the Company or any Subsidiary that will act in any capacity in connection with or benefit from the notes facility established hereby, is a Sanctioned Person. No
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use of proceeds from the issuance of the Notes or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions. Neither the Company nor any Controlled Entity (i) to the Company’s actual knowledge after making due inquiry, is under investigation by any U.S. or non-U.S. Governmental Authority for possible violation of Anti-Corruption Laws, (ii) has been assessed civil or criminal penalties under any Anti-Corruption Laws or (iii) has been or is the target of Sanctions imposed by the United Nations or the European Union;
(2) To the Company’s actual knowledge after making due inquiry, neither the Company nor any Controlled Entity has, within the last five years, directly or indirectly offered, promised, given, paid or authorized the offer, promise, giving or payment of anything of value to a Governmental Official or a commercial counterparty for the purposes of: (i) influencing any act, decision or failure to act by such Government Official in his or her official capacity or such commercial counterparty, (ii) inducing a Governmental Official to do or omit to do any act in violation of the Governmental Official’s lawful duty, or (iii) inducing a Governmental Official or a commercial counterparty to use his or her influence with a government or instrumentality to affect any act or decision of such government or entity; in each case in order to obtain, retain or direct business or to otherwise secure an improper advantage; and
(3) No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any improper payments, including bribes, to any Governmental Official or commercial counterparty in order to obtain, retain or direct business or obtain any improper advantage. The Company has established procedures and controls which it reasonably believes are adequate (and otherwise comply with applicable law) to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all applicable current and future Anti-Corruption Laws.
5.17Status under Certain Statutes.
Neither the Company nor any Restricted Subsidiary nor any Non-Recourse Pledgor is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 2005, as amended, the ICC Termination Act, as amended, or the Federal Power Act, as amended.
5.18Environmental Matters.
(a)Neither the Company nor any Restricted Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Company or any Restricted Subsidiary or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect.
(b)Neither the Company nor any Restricted Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect.
(c)Neither the Company nor any Restricted Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them and has not disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a Material Adverse Effect.
(d)All buildings on all real properties now owned, leased or operated by the Company or any Restricted Subsidiary are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect.
5.19Solvency of Subsidiary Guarantors.
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After giving effect to the issuance and sale of the Notes and the application of the proceeds thereof and due consideration to any rights of contribution and reimbursement, (i) each Subsidiary Guarantor has received fair consideration and reasonably equivalent value for the incurrence of its obligations under the Subsidiary Guaranty or as contemplated by the Subsidiary Guaranty, (ii) the fair value of the assets of each Subsidiary Guarantor (at fair valuation) exceeds its liabilities, (iii) each Subsidiary Guarantor is able to and expects to be able to pay its debts as they mature, and (iv) each Subsidiary Guarantor has capital sufficient to carry on its business as conducted and as proposed to be conducted.
6. | REPRESENTATIONS OF THE PURCHASERS. |
6.1Ownership of Notes.
GSO Tetra Holdings LP is the sole Purchaser and holds 100% of the outstanding Notes.
6.2Authorization.
This Agreement and the other Note Documents to which each Purchaser is party have been duly authorized by all necessary corporate or partnership action on the part of each Purchaser, and this Agreement and any other Note Document to which it is party constitutes a legal, valid and binding obligation of such Purchaser enforceable against the Purchaser in accordance with its respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
6.3Restricted Securities.
(a)Each of the Purchasers and each subsequent holder of any Note, by its acceptance thereof, agrees to offer, sell or otherwise transfer (including, without limitation, by pledge or hypothecation) such Note only to:
(i)the Company or any of its Subsidiaries; or
(ii)to an Institutional Accredited Investor that is purchasing the Note for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act.
(b)No holder of Notes may effect a transfer of a Note that would result in GSO Capital Partners LP or its Affiliates ceasing to constitute the Required Holders without the prior consent of the Company.
7.INFORMATION AS TO COMPANY.
7.1Financial and Business Information
The Company will deliver to each holder of Notes that is an Institutional Accredited Investor:
(a)Quarterly Statements - within 60 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of,
(i)a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter,
(ii)consolidated statements of income of the Company and its Subsidiaries for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, and
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(iii)consolidated statements of cash flows of the Company and its Subsidiaries for such quarter or (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments, provided that delivery within the time period specified above of copies of the Company’s Quarterly Report on Form 10-Q prepared in compliance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this Section 7.1(a), provided, further, that the Company shall be deemed to have made such delivery of such Form 10-Q if it shall have timely made such Form 10-Q available on “EDGAR” and on its home page on the worldwide web (at the Restatement Date located at: http://www.tetratec.com) and shall have given each holder of Notes prior notice of such availability on EDGAR and on its home page in connection with each delivery (such availability and notice thereof being referred to as “Electronic Delivery”);
(b)Annual Statements - within 105 days after the end of each fiscal year of the Company, duplicate copies of,
(i)a consolidated balance sheet of the Company and its Subsidiaries, as at the end of such year, and
(ii)consolidated statements of income, changes in shareholders’ equity and cash flows of the Company and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion of independent certified public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit), which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, provided that the delivery within the time period specified above of the Company’s Annual Report on Form 10-K for such fiscal year (together with the Company’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this Section 7.1(b), provided, further, that the Company shall be deemed to have made such delivery of such Form 10-K if it shall have timely made Electronic Delivery thereof;
(c)Unrestricted Subsidiaries - if, at the time of delivery of any financial statements pursuant to Section 7.1(a) or (b), Unrestricted Subsidiaries account for more than 10% of (i) the consolidated total assets of the Company and its Subsidiaries reflected in the consolidated balance sheet included in such financial statements or (ii) the consolidated revenues of the Company and its Subsidiaries reflected in the consolidated statement of income included in such financial statements, an unaudited balance sheet for all Unrestricted Subsidiaries taken as whole as at the end of the fiscal period included in such financial statements and the related unaudited statements of income, stockholders’ equity and cash flows for such Unrestricted Subsidiaries for such period, together with consolidating statements reflecting all eliminations or adjustments necessary to reconcile such group financial statements to the consolidated financial statements of the Company and its Subsidiaries, shall be delivered together with the financial statements required pursuant to Sections 7.1(a) and (b);
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(d)Budget - unless a holder of Notes delivers a notice to the Company that such holder does not wish to receive such information (and until such time as such holder delivers a further notice indicating that such information should be delivered to such holder), as soon as available, and in any event no later than 60 days after the commencement of each fiscal year of the Company, a budget in form reasonably satisfactory to the holders of the Notes (including budgeted statements of income for each of the Company’s and its Restricted Subsidiaries’ business units and sources and uses of cash and balance sheets), prepared by the Company for each month of such fiscal year in detail, of the Company and its Restricted Subsidiaries, with appropriate presentation and discussion in reasonable detail of the principal assumptions upon which such budget is based, accompanied by a certificate of a Senior Financial Officer certifying that such budget is a reasonable estimate for the period covered thereby.
(e)SEC and Other Reports - promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the Company or any Subsidiary to public securities holders generally, and (ii) each regular or periodic report, each registration statement other than registration statements on Form S-8 (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by the Company or any Subsidiary with the Securities and Exchange Commission and of all press releases and other statements made available generally by the Company or any Subsidiary to the public concerning developments that are Material;
(f)Notice of Default or Event of Default - promptly, and in any event within 10 days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given notice or taken any action with respect to a claimed default of the type referred to in Section 11(g), a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto;
(g)ERISA Matters - promptly, and in any event within 10 days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto:
(i)with respect to any Plan, any reportable event, as defined in section 4043(b) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the Original Effective Date; or
(ii)the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or
(iii)any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect;
(h)Notices from Governmental Authority - promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company, any Restricted Subsidiary or any Non-Recourse Pledgor from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect; and
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(i)Requested Information - with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company, any Restricted Subsidiary or any Non-Recourse Pledgor or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes.
7.2Officer’s Certificate.
(a)Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or (b) shall be accompanied by a certificate of a Senior Financial Officer setting forth (which, in the case of Electronic Delivery of any such financial statements, shall be by separate concurrent delivery of such certificate to each holder of Notes):
(i)Covenant Compliance - the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Section 10 during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and
(ii)Event of Default - a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.
(b)Concurrently with the delivery of any officer’s certificate pursuant to Section 5.01(d) of the Credit Agreement (or any successor provision), the Company shall deliver a copy of such officer’s certificate to you.
7.3Inspection.
The Company will permit the representatives of each holder of Notes that is an Institutional Accredited Investor:
(a)No Default - if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company’s officers, and (with the consent of the Company, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times and as often as may be reasonably requested in writing; and
(b)Default - if a Default or Event of Default then exists, at the expense of the Company, to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances, and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested.
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8.PREPAYMENT OF THE NOTES.
8.1Required Prepayments; Maturity
(a)No regularly scheduled prepayments are due on the Series 2015 Notes prior to their stated maturity and the entire unpaid principal balance of the Series 2015 Notes shall be due and payable on the stated maturity thereof.
(b)Each Series and tranche, if applicable, of Additional Notes shall be subject to required prepayments as specified in the Supplement pursuant to which such Series and tranche, if applicable, of Additional Notes are issued.
8.2Optional Prepayments.
(a)The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of the Notes, in an amount not less than $1,000,000 in the aggregate in the case of a partial prepayment, at a prepayment price equal to:
(i)prior to the third anniversary of the Original Closing Date, 100% of the principal amount so prepaid, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount, plus accrued and unpaid interest thereon as of the date of prepayment; provided, however, that the Company may, on one occasion, at any time during such period, redeem up to 35% of the aggregate principal amount of outstanding Notes, at a redemption price equal to 111% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to the date of redemption (subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date), in an amount not to exceed the net proceeds from a public or private sale of (a) common stock of the Company by the Company (other than to a Subsidiary of the Company) or (b) the common stock of a direct or indirect parent entity of the Company (other than to the Company or a Subsidiary of the Company) to the extent that the net proceeds thereof are contributed to the Company (collectively, a “Common Stock Offering”) by the Company, provided that: (1) at least 65% of the aggregate principal amount of Series 2015 Notes (excluding Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and (2) the redemption occurs within 45 days of the date of the closing of such Common Stock Offering;
(ii)during the period commencing on the third anniversary of the Original Closing Date and ending on the day prior to the fourth anniversary thereof, 104% of the principal amount so prepaid, plus accrued and unpaid interest thereon as of the date of prepayment;
(iii)during the period commencing on the fourth anniversary of the Original Closing Date and ending on the day prior to the fifth anniversary thereof, 102% of the principal amount so prepaid, plus accrued and unpaid interest thereon as of the date of prepayment;
(iv)during the period commencing on the fifth anniversary of the Original Closing Date and ending on the day prior to the sixth anniversary thereof, 101% of the principal amount so prepaid, plus accrued and unpaid interest thereon as of the date of prepayment; and
(v)from the sixth anniversary of the Original Closing Date, 100% of the principal amount so prepaid, plus accrued and unpaid interest thereon as of the date of prepayment.
(b)The Company will give each holder of Notes to be prepaid written notice of each optional prepayment under this Section 8.2 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date, the aggregate principal amount of Notes to be
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prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.5), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount, if applicable, due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, if applicable, the Company shall deliver to each holder of Notes being prepaid a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.
8.3Mandatory Offer to Prepay Upon Change of Control.
(a)Notice of Change of Control or Control Event - The Company will, within 10 Business Days after any Responsible Officer has knowledge of the occurrence of any Change of Control or Control Event, give notice of such Change of Control or Control Event to each holder of Notes unless notice in respect of such Change of Control (or the Change of Control contemplated by such Control Event) shall have been given pursuant to paragraph (b) of this Section 8.3. If a Change of Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described in paragraph (c) of this Section 8.3 and shall be accompanied by the certificate described in paragraph (g) of this Section 8.3.
(b)Condition to Company Action - The Company will not take any action that consummates or finalizes a Change of Control unless (i) at least 15 Business Days prior to such action it shall have given to each holder of Notes written notice containing and constituting an offer to prepay Notes accompanied by the certificate described in paragraph (g) of this Section 8.3, and (ii) subject to the provisions of paragraph (d) below, contemporaneously with such action, it prepays all Notes required to be prepaid in accordance with this Section 8.3.
(c)Offer to Prepay Notes - The offer to prepay Notes contemplated by paragraphs (a) and (b) of this Section 8.3 shall be an offer to prepay, in accordance with and subject to this Section 8.3, all, but not less than all, of the Notes held by each holder (in this case only, “holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the “Proposed Prepayment Date”). If such Proposed Prepayment Date is in connection with an offer contemplated by paragraph (a) of this Section 8.3, such date shall be not less than 30 days and not more than 60 days after the date of such offer.
(d)Acceptance; Rejection - A holder of Notes may accept the offer to prepay made pursuant to this Section 8.3 by causing a notice of such acceptance to be delivered to the Company on or before the date specified in an officer’s certificate pursuant to paragraph (g)(viii) of this Section 8.3. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 8.3, or to accept an offer as to all of the Notes held by the holder, within such time period shall be deemed to constitute rejection of such offer by such holder.
(e)Prepayment - Prepayment of the Notes to be prepaid pursuant to this Section 8.3 shall be at a prepayment price equal to:
(i)if the Change of Control or Control Event occurs prior to the third anniversary of the Original Closing Date, 100% of the principal amount so prepaid, plus accrued and unpaid interest thereon, plus the discounted value at the date of the repayment, computed in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield, of the sum of (1) 100% of all interest payable on the Notes in the first year following the Original Closing Date, to the extent not previously paid, plus (2) 75% of all interest payable on the Notes in the second year following the Original Closing Date, to the extent not previously paid, plus (3) 50% of all interest payable on the Notes in the third year following the Original Closing Date, to the extent not previously paid, plus (4) 4.0% of the
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principal amount of the outstanding Notes (an example of the calculation of the Change of Control premium provided for under this clause (i) is set forth in Exhibit 8.3(e) for illustration purposes); and
(ii)if the Change of Control or Control Event occurs on or after the third anniversary of the Original Closing Date:
(1)during the period commencing on the third anniversary of the Original Closing Date and ending on the day prior to the fourth anniversary thereof, 104% of the principal amount so prepaid, plus accrued and unpaid interest thereon as at the date of prepayment;
(2)during the period commencing on the fourth anniversary of the Original Closing Date and ending on the day prior to the fifth anniversary thereof, 102% of the principal amount so prepaid, plus accrued and unpaid interest thereon as at the date of prepayment;
(3)during the period commencing on the fifth anniversary of the Original Closing Date and ending on the day prior to the sixth anniversary thereof, 101% of the principal amount so prepaid, plus accrued and unpaid interest thereon as at the date of prepayment; and
(4)from the sixth anniversary of the Original Closing Date, 100% of the principal amount so prepaid, plus accrued and unpaid interest thereon as at the date of prepayment.
The prepayment shall be made on the Proposed Prepayment Date except as provided in paragraph (f) of this Section 8.3.
(f)Deferral Pending Change of Control - The obligation of the Company to prepay Notes pursuant to the offers required by paragraphs (a) and (b) and accepted in accordance with paragraph (d) of this Section 8.3 is subject to the occurrence of the Change of Control in respect of which such offers and acceptances shall have been made. In the event that such Change of Control does not occur on or prior to the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until and shall be made on the date on which such Change of Control occurs. The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change of Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change of Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this Section 8.3 in respect of such Change of Control shall be deemed rescinded). Notwithstanding the foregoing, in the event that the prepayment has not been made within 90 days after such Proposed Prepayment Date by virtue of the deferral provided for in this Section 8.3(f), the Company shall make a new offer to prepay in accordance with paragraph (c) of this Section 8.3.
(g)Officer’s Certificate - Each offer to prepay the Notes pursuant to this Section 8.3 shall be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date, (ii) that such offer is made pursuant to this Section 8.3, (iii) the principal amount of each Note offered to be prepaid, (iv) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date, (v) that the conditions of this Section 8.3 have been fulfilled, (vi) in reasonable detail, the nature and date or proposed date of the Change of Control, (vii)(x) in the event the Change of Control occurred during the period specified in paragraph (e)(i) of this Section 8.3, a calculation of the estimated prepayment price (calculated as if the date of such notice were the date of prepayment) setting forth the details such computation and (y) in the event the Change of Control occurred during the periods specified in paragraph (e)(ii) of this Section 8.3, the amount of the prepayment premium and (viii) the date by which any holder of a Note that wishes to accept such offer must deliver notice thereof to the Company, which date shall not be earlier than three Business Days prior to the Proposed Prepayment Date or, in the case of a prepayment pursuant to Section 8.3(b), the date of the action referred to in Section 8.3(b)(i).
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8.4Mandatory Offer to Prepay Upon Disposition of Certain Assets.
(a)Offer to Prepay Notes. The Company shall offer to prepay the Notes with the Net Available Cash from any Material Disposition. The offer to prepay the Notes in accordance with this Section 8.4 shall be in an aggregate principal amount of the Notes (the “Mandatory Prepayment Amount”) equal to the lesser of (i) the aggregate principal amount of all then outstanding Notes and (ii) the Net Available Cash from such Material Disposition.
(b)Acceptance; Rejection. A holder of Notes may accept any offer to prepay made pursuant to this Section 8.4 by causing a notice of such acceptance to be delivered to the Company on or before the date specified in an officer’s certificate pursuant to paragraph (e)(vii) of this Section 8.4. A failure by a holder of Notes to (1) respond to an offer to prepay made pursuant to this Section 8.4 or (2) accept such offer, in each case, within such time period shall be deemed to constitute rejection of such offer in its totality by such holder of Notes. Any holder of Notes that accepts such offer shall be deemed to have agreed to the prepayment of Notes in accordance with the following paragraph (c).
(c)Prepayment. Prepayment of the principal amount of Notes to be prepaid pursuant to this Section 8.4 shall be at a prepayment price equal to 100% of the principal amount so prepaid, plus accrued and unpaid interest thereon as of the date of prepayment. Such prepayment shall be made on the date specified in the offer described in paragraph (a) above except as provided in paragraph (d) of this Section 8.4. On the date of prepayment, the Company shall prepay a percentage of the principal amount of the Notes held by each holder of Notes that accepts an offer to prepay made pursuant to this Section 8.4 equal to the lesser of (A) the aggregate principal amount of the Notes held by such holder of Notes and (B) such holder of Notes’ Pro Rata Acceptance Percentage (as defined below) of the Mandatory Prepayment Amount. “Pro Rata Acceptance Percentage” of any holder of Notes that accepts an offer to prepay made pursuant to this Section 8.4 means the quotient, expressed as a percentage, of (1) the aggregate principal amount of Notes held by such holder of Notes divided by (2) the aggregate principal amount of Notes held by all holder of Notes that accept such offer.
(d)Deferral Pending Disposition. The obligation of the Company to prepay Notes pursuant to the offers required by paragraph (a) and accepted in accordance with paragraph (b) of this Section 8.4 is subject to the consummation of the Disposition in respect of which such offers and acceptances shall have been made. In the event that such Disposition is not consummated, the prepayment shall be deferred until, and shall be made on the date on which, the Company determines the amount of Net Available Cash which in no event shall be more than 30 days following the consummation of such Material Disposition. The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Material Disposition and the prepayment are expected to occur (the “Proposed Proceeds Prepayment Date”), and (iii) any determination by the Company that efforts to effect such Material Disposition have ceased or been abandoned (in which case the offers and acceptances made pursuant to this Section 8.4 in respect of such Material Disposition shall be deemed rescinded). Notwithstanding the foregoing, in the event that the prepayment has not been made within 90 days after such Proposed Proceeds Prepayment Date, by virtue of the deferral provided for in this Section 8.4(d), the Company shall make a new offer to prepay in accordance with paragraph (a) of this Section 8.4.
(e)Officer's Certificate. Each offer to prepay the Notes pursuant to this Section 8.4 shall be delivered not less than 15 Business Days prior to the Proposed Proceeds Prepayment Date and shall be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated the date of such offer, specifying: (i) the Proposed Proceeds Prepayment Date, (ii) that such offer is made pursuant to this Section 8.4, (iii) a calculation of the Net Available Cash from such Disposition and the principal amount of each Note offered to be prepaid, (iv) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Proceeds Prepayment Date, (v) that the conditions of this Section 8.4 have been fulfilled, (vi) in reasonable detail, the nature and date or proposed date of the applicable Material Disposition and (vii) the
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date by which any holder of Notes that wishes to accept such offer must deliver notice thereof to the Company, which date shall not be earlier than three Business Days prior to the Proposed Proceeds Prepayment Date.
(f)Funds Not Accepted. Any funds constituting Net Available Cash from a Material Disposition that are not applied to the prepayment of Notes in accordance with this Section 8.4 (as a result of the rejection or deemed rejection of an offer to prepay Notes made pursuant to this Section 8.4) shall, in accordance with the definition of “Net Available Cash” cease to constitute Net Available Cash immediately upon such rejection or deemed rejection.
8.5Allocation of Partial Prepayments.
In the case of each partial prepayment of Notes pursuant to Section 8.2, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.
8.6Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount or other premium, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest, Make-Whole Amount, if any, and other premium, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full, after such payment and upon the written request of the Company, shall be surrendered to the Company and canceled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.
8.7Purchase of Notes.
The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes or (b) pursuant to an offer to purchase made by the Company or an Affiliate pro rata to the holders of any series of Notes at the time outstanding upon the same terms and conditions. Any such offer shall provide each holder with sufficient information reasonably determined by the Company to enable it to make an informed decision with respect to such offer, and shall remain open for at least 10 Business Days. If the holders of more than 50% of the principal amount of the Notes then outstanding accept such offer, the Company shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of Notes of such offer shall be extended by the number of days necessary to give each such remaining holder at least 10 Business Days from its receipt of such notice to accept such offer. The Company will promptly cancel all Notes acquired by the Company or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.
8.8Make-Whole Amount.
The term “Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments through the third anniversary of the Original Closing Date with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:
“Called Principal” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or 8.3, if applicable, or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.
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“Discounted Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.
“Reinvestment Yield” means, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by the yield(s) reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities (“Reported”) having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there are no such U.S. Treasury securities Reported having a maturity equal to such Remaining Average Life, then such implied yield to maturity will be determined by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between the yields Reported for the applicable most recently issued actively traded on-the-run U.S. Treasury securities with the maturities (1) closest to and greater than such Remaining Average Life and (2) closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.
If such yields are not Reported or the yields Reported as of such time are not ascertainable (including by way of interpolation), then “Reinvestment Yield” means, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by the U.S. Treasury constant maturity yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for the U.S. Treasury constant maturity having a term equal to the Remaining Average Life of such Called Principal as of such Settlement Date. If there is no such U.S. Treasury constant maturity having a term equal to such Remaining Average Life, such implied yield to maturity will be determined by interpolating linearly between (1) the U.S. Treasury constant maturity so reported with the term closest to and greater than such Remaining Average Life and (2) the U.S. Treasury constant maturity so reported with the term closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.
“Remaining Average Life” means, with respect to any Called Principal, the number of years obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years, computed on the basis of a 360-day year composed of twelve 30-day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.
“Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon and premium that would be due after the Settlement Date and on or before the third anniversary of the Original Closing Date with respect to such Called Principal if the Called Principal were prepaid on such third anniversary in accordance with Section 8.2, provided that if such Settlement Date is not a date on which interest payments are due to be made under the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.5 or Section 12.1.
“Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or 8.3, if applicable, or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.
9. | AFFIRMATIVE COVENANTS. |
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The Company covenants that from the Original Effective Date (except in the case of Sections 9.6 (as it relates to the granting of liens and security interests in Collateral), 9.7, 9.10 and 9.11, in each such case, from the Restatement Date) and, with respect to the Non-Recourse Pledgors and each Subsidiary Guarantor party to the Joinder to Subsidiary Guaranty, from the Restatement Date, and for so long thereafter as any of the Notes are outstanding:
9.1Compliance with Law.
The Company will, and will cause each Restricted Subsidiary and each Non-Recourse Pledgor to, comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including Environmental Laws and the USA PATRIOT Act and the other laws and regulations that are referred to in Section 5.16, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.2Insurance.
The Company will, and will cause each Restricted Subsidiary and each non-Recourse Pledgor to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is reasonable in the case of entities of established reputations engaged in the same or a similar business and similarly situated.
9.3Maintenance of Properties.
The Company will, and will cause each Restricted Subsidiary to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
9.4Payment of Taxes and Claims.
The Company will, and will cause each Restricted Subsidiary and each Non-Recourse Pledgor to, file all tax returns required to be filed in any jurisdiction and to pay and discharge when due all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Company, any Restricted Subsidiary or any Non-Recourse Pledgor, provided that neither the Company nor any Restricted Subsidiary nor any Non-Recourse Pledgor need pay any such tax or assessment or claims if (i) the amount, applicability or validity thereof is contested by the Company or such Restricted Subsidiary or Non-Recourse Pledgor on a timely basis in good faith and in appropriate proceedings, and the Company or a Restricted Subsidiary or Non-Recourse Pledgor has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Restricted Subsidiary or Non-Recourse Pledgor or (ii) the non-filing of such returns or nonpayment of all such taxes and assessments in the aggregate could not reasonably be expected to have a Material Adverse Effect.
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9.5Corporate Existence, etc.
Subject to Section 10.6, the Company will at all times preserve and keep in full force and effect its corporate existence. Subject to Sections 10.6 and 10.7, the Company will at all times preserve and keep in full force and effect the corporate, partnership or limited liability company existence of each of its Restricted Subsidiaries and Non-Recourse Pledgors (unless merged into the Company or a Restricted Subsidiary, or solely in the case of a Non-Recourse Pledgor, another Non-Recourse Pledgor) and all rights and franchises of the Company, its Restricted Subsidiaries and the Non-Recourse Pledgors unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate, partnership or limited liability company existence, right or franchise could not, individually or in the aggregate, have a Material Adverse Effect.
9.6Additional Subsidiary Guarantors and Non-Recourse Pledgors.
(a)The Company will cause any Subsidiary that (whether or not required by the terms of the Credit Agreement) from time to time guarantees Indebtedness in respect of the Credit Agreement to enter into the Subsidiary Guaranty and the Security Agreement, pursuant to which such Subsidiary shall guarantee the Company’s obligations under this Agreement and grant liens and security interests in its personal property that constitutes Collateral concurrently therewith, respectively, and as a part thereof, solely in connection with any Subsidiary Guarantor that becomes such after the Restatement Date, to deliver to each of the holders:
(i)a copy of an executed joinder to the Subsidiary Guaranty;
(ii)a copy of an executed supplement and assumption agreement to the Security Agreement; and
(iii)a certificate signed by a Responsible Officer of the Company confirming the accuracy of the representations and warranties in Sections 5.2, 5.6, 5.7 and 5.19, with respect to such Subsidiary, the Subsidiary Guaranty and the Security Agreement, as applicable.
(b)The Company will cause any Subsidiary that is a Non-Recourse Pledgor to enter into the Security Agreement, pursuant to which such Subsidiary shall grant liens and security interests in its personal property that constitutes Collateral concurrently therewith, and as a part thereof, solely in connection with any Non-Recourse Pledgor that becomes such after the Restatement Date, to deliver to each of the holders:
(i)a copy of an executed supplement and assumption agreement to the Security Agreement; and
(ii)a certificate signed by a Responsible Officer of the Company confirming the accuracy of the representations and warranties in Sections 5.2, 5.6 and 5.7, with respect to such Subsidiary and the Security Agreement, as applicable.
(c)In connection with the foregoing, the Company shall execute and deliver such other additional closing documents, certificates and legal opinions as shall reasonably be requested by the Collateral Agent (including, without limitation, any documents or actions necessary to perfect the Collateral Agent’s security interest in any Pledged Compressco Units).
9.7Ranking of Notes; Granting of Liens.
(a)The Notes and the Company’s obligations under this Agreement (i) will be general obligations of the Company, (ii) will be secured on an equal and ratable basis with all obligations of the Company under the Credit Agreement by a first priority pledge of the assets of the Company, the Restricted Subsidiaries and the Non-Recourse Pledgors specified in the Collateral Documents, (iii) will be pari passu in right of payment to all borrowings of the Company under the Credit Agreement, (iv) will be pari passu or senior in right of
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payment to any future Indebtedness of the Company, if any, and (v) will be unconditionally guaranteed by the Subsidiary Guarantors.
(b)The Company will, if it or any Subsidiary shall create any Lien upon any of its property or assets, whether now owned or hereafter acquired, in favor of the lenders or other creditors who are party to the Credit Agreement, make or cause to be made effective provision whereby the Notes will be secured by such Lien equally and ratably with the Indebtedness under the Credit Agreement.
9.8Books and Records.
The Company will, and will cause each of its Restricted Subsidiaries and Non-Recourse Pledgors to, maintain proper books of record and account in conformity with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company or such Subsidiary, as the case may be. The Company will, and will cause each of its Restricted Subsidiaries and Non-Recourse Pledgors to, keep books, records and accounts which, in reasonable detail, accurately reflect all transactions and dispositions of assets. The Company, its Restricted Subsidiaries and the Non-Recourse Pledgors have devised a system of internal accounting controls sufficient to provide reasonable assurances that their respective books, records, and accounts accurately reflect all transactions and dispositions of assets and the Company will, and will cause each of its Restricted Subsidiaries and Non-Recourse Pledgors to, continue to maintain such system.
9.9Margin Regulations.
If requested by any holder of Notes, the Company will furnish to such holder of Notes a statement confirming compliance with Regulations U, T and X of the Board of Governors of the Federal Reserve System in conformity with the requirements of Form FR U-1 or Form FR G-3, as applicable.
9.10Collateral
The Company will take, and will cause the Affiliated Grantors to take, all actions that are necessary or appropriate to (a) maintain the Collateral Agent’s security interest in the Collateral in full force and effect at all times (including the perfection and priority thereof), (b) preserve and protect the Collateral and (c) protect and enforce the Company’s and the Affiliated Grantors’ respective rights and title to, and the security interest of the Collateral Agent in, the Collateral. The Company will execute, and will cause the Affiliated Grantors to execute, acknowledge where appropriate, and deliver, and cause to be executed, acknowledged where appropriate, and delivered, from time to time promptly at the reasonable request of the Collateral Agent (at the direction of the applicable lenders under the Credit Agreement or the Required Holders), all such instruments and documents as are necessary or appropriate to carry out the intents and purposes of the Note Documents, including any instruments and documents (including filings, recordings or registrations required to be filed in respect of any Collateral Document or assignment thereto) necessary to maintain, to the extent permitted by Applicable Law, the Collateral Agent’s perfected security interest in the Collateral to the extent and in the priority required pursuant to this Agreement and the Collateral Documents.
9.11Post-Closing Requirements.
On or before July 31, 2016 or such later date as the Required Holders shall agree in their sole and absolute discretion:
(a)the Company shall deliver to the Collateral Agent, in form and substance satisfactory to you, the Control Agreements, which shall be duly executed by each party thereto, with respect to each deposit account which is, at any time, expected to have on deposit more than $250,000, maintained by the Company or any Restricted Subsidiary with any institution other than JPMorgan Chase Bank, N.A. with opinions from counsel to the Company covering such matters as you or your counsel may reasonably request, including, among other things, the enforceability of any Collateral Document executed and delivered after the Restatement Date in connection with the foregoing and perfection of the Liens granted thereunder; provided, that, for the
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avoidance of doubt, the escrow account created pursuant to the Escrow Agreement shall not be subject to a Control Agreement;
(b)(i) each Subsidiary Guarantor that is the owner of each of the U.S. flag vessels Epic Explorer, Official Number 603607, Epic Seahorse, Official Number 587754, and Tetra Arapaho, Official Number 625271, shall have executed, delivered and submitted for filing to the National Vessel Documentation Center of the United States Coast Guard at Falling Rivers, West Virginia (the “NVDC”) the U.S. First Preferred Fleet Mortgage in form and substance satisfactory to you, with proper acknowledgment attached and in proper form for recording, such that upon the recording of the U.S. First Preferred Fleet Mortgage by the NVDC, and with effect from the date and time that the U.S. First Preferred Fleet Mortgage is so submitted for filing, the U.S. First Preferred Fleet Mortgage will constitute a “preferred” mortgage on the foregoing vessels in favor of the Mortgagee, as defined in the U.S. First Priority Fleet Mortgage, having the effect and with the priority provided by Section 31301 et seq. of Title 46 of the United States Code; and (ii) you shall have received an opinion of counsel from counsel to the Company as shall be acceptable to you to the foregoing effect, covering such matters as you or your counsel may reasonably request;
(c)(i) the Subsidiary Guarantor that is the owner of the Vanuatu flag vessel Tetra Hedron, Official Number 2056 (the “Vanuatu Vessel”), shall have executed, delivered and submitted for filing to the Office of the Deputy Commissioner of Maritime Affairs for the Republic of Vanuatu (the “Deputy Commissioner”) in New York, New York the Vanuatu First Preferred Ship Mortgage in form and substance satisfactory to you, with proper acknowledgment attached and in proper form for recording, such that upon the recording of the Vanuatu First Preferred Ship Mortgage by the Deputy Commissioner, and with effect from the date and time that the Vanuatu First Preferred Ship Mortgage is so submitted for filing, the Vanuatu First Preferred Ship Mortgage will constitute a “preferred” mortgage on the Vanuatu Vessel in favor of the Mortgagee, as defined in the Vanuatu First Preferred Ship Mortgage, having the effect and with the priority provided by Chapter 5 of the Vanuatu Maritime Act Cap. 131, as amended, and otherwise under the laws of the Republic of Vanuatu; and (ii) you shall have received an opinion of counsel from counsel to the Company as shall be acceptable to you to the foregoing effect, covering such matters as you or your counsel may reasonably request; and
(d)the Company shall deliver to the Collateral Agent, in form and substance satisfactory to you, stock certificates, stock powers and other Collateral Documents as may be reasonably requested by you with respect to Equity Interests in any foreign Subsidiaries which are subject to the Security Agreement.
10.NEGATIVE COVENANTS.
The Company covenants that from the Restatement Date or, in the case of Sections 10.6, 10.8, 10.9, 10.10, 10.11 and 10.12, the Original Effective Date (provided that any amendments to such Sections that are made as of the Restatement Date shall only be effective as of the Restatement Date) and for so long thereafter as any of the Notes are outstanding:
10.1Fixed Charge Coverage Ratio.
The Company will not permit the Fixed Charge Coverage Ratio at the end of any of its fiscal quarters to be less than 1.1 to 1.
10.2Consolidated Funded Indebtedness.
The Company will not permit the ratio of Consolidated Funded Indebtedness as of the end of any fiscal quarter to EBITDA (for the then most recently completed four fiscal quarters) to be greater than (a) 4.50 to 1.00 as of the end of any fiscal quarter ending during the period commencing on the Restatement Date and ending on March 31, 2018, (b) 4.25 to 1.00 as of the end of any fiscal quarter ending during the period commencing on June 30, 2018 and ending on December 31, 2018 and (c) 4.00 to 1.00 as of the end of any fiscal quarter ending thereafter.
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10.3Indebtedness.
The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or permit to exist any Indebtedness, except:
(a)the incurrence by the Company and the Subsidiary Guarantors of Indebtedness represented by the Notes and the related Subsidiary Guaranty;
(b)Indebtedness existing on the date hereof and set forth in Schedule 5.15;
(c)Indebtedness between the Company and any Restricted Subsidiary or between Restricted Subsidiaries, to the extent not prohibited by Section 10.11;
(d)any Guaranty by any Restricted Subsidiary of Indebtedness of the Company or any other Restricted Subsidiary or any Guaranty by the Company of any Indebtedness of any Restricted Subsidiary, all subject to Section 10.11;
(e)purchase money Indebtedness and Indebtedness under any Capital Lease in an aggregate amount not exceeding, at any one time outstanding, the greater of (i) $20,000,000 or (ii) fifteen percent (15%) of EBITDA of the Company, determined on a consolidated basis, for the twelve (12) month period ending on the last day of the most recently ended fiscal quarter of the Company for which financial statements are available;
(f)Indebtedness associated with workers’ compensation claims, performance, bid, surety or similar bonds or surety obligations required by governmental requirements or third parties in connection with the operation of the businesses of the Company and the Restricted Subsidiaries;
(g)Indebtedness assumed or acquired in connection with any Acquisition, if such Indebtedness was not incurred in contemplation of such Acquisition;
(h)Indebtedness secured by Liens permitted pursuant to Sections 10.5(p) and 10.5(v);
(i)Indebtedness under the Credit Agreement in an aggregate principal amount not exceeding $225,000,000;
(j)endorsements of negotiable instruments for collection in the ordinary course of business;
(k)accounts payable and accrued expenses, liabilities or other obligations to pay the deferred purchase price of property or services, from time to time incurred in the ordinary course of business which are not greater than 60 days past the date of invoice or delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP;
(l)Subordinated Debt;
(m)other unsecured Indebtedness in an aggregate principal amount not exceeding $100,000,000 at any one time outstanding; and
(n)Permitted Refinancing Indebtedness with respect to any Indebtedness permitted under this Section 10.3.
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10.4Capital Expenditures and Acquisitions.
If, after giving effect thereto, the Pro Forma Leverage Ratio would be greater than 3.00 to 1, then the Company will not, and will not permit any Restricted Subsidiary to, in any fiscal year of the Company permit the aggregate amount of all Capital Expenditures and Acquisitions to exceed $50,000,000 (or its equivalent in other currencies as of the date of each relevant transaction). If, after giving effect thereto, the Pro Forma Leverage Ratio would be greater than 2.50 to 1, then the Company will not, and will not permit any Restricted Subsidiary to, in any fiscal year of the Company permit the aggregate amount of all Capital Expenditures and Acquisitions to exceed $75,000,000 (or its equivalent in other currencies as of the date of each relevant transaction). Subject to the foregoing, the Company and the Restricted Subsidiaries may at any time make any Acquisition or Capital Expenditure.
10.5Liens.
The Company will not, and will not permit any Restricted Subsidiary to, permit to exist, create, assume or incur, directly or indirectly (which shall include, without limitation, any Lien on the Equity Interests of an Unrestricted Subsidiary), any Lien, on its properties or assets, whether now owned or hereafter acquired, except:
(a)Liens for taxes, assessments or governmental charges not then due and delinquent or the nonpayment of which is permitted by Section 9.4 and for which adequate reserves have been maintained in accordance with GAAP;
(b)Liens in connection with workers’ compensation, unemployment insurance or other social security, old age pension or public liability obligations which are not overdue by more than 30 days or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP;
(c)Liens arising solely by virtue of any statutory or common law provision relating to bankers’ liens, rights of set-off or similar rights and remedies and burdening only deposit accounts or other funds maintained with a creditor depository institution;
(d)any attachment or judgment Lien, unless the judgment it secures has not, within 60 days after the entry thereof, been discharged or execution thereof stayed pending appeal, or has not been discharged within 60 days after the expiration of any such stay;
(e)Liens on cash or securities pledged to secure performance of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory or regulatory obligations and other obligations of a like nature incurred in the ordinary course of business;
(f)Liens incidental to the conduct of business or the ownership of properties and assets (whether arising by contract or by operation of law) incurred in the ordinary course of business and not in connection with the borrowing of money and that do not, in the aggregate, materially impair the use of such property in the operation of the business of the Company and its Restricted Subsidiaries taken as a whole or the value of such property for the purposes of such business;
(g)encumbrances in the nature of leases, subleases, zoning restrictions, easements, rights of way, minor survey exceptions and other rights and restrictions of record on the use of real property and defects in title arising or incurred in the ordinary course of business, which, individually and in the aggregate, do not materially impair the use of such property or assets subject thereto in the business of the Company and its Restricted Subsidiaries taken as a whole;
(h)Liens securing Indebtedness under the Credit Agreement to the extent the Notes are secured pari passu with the Liens securing the obligations under the Credit Agreement or otherwise securing
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Indebtedness existing on property or assets of the Company or any Subsidiary as of the Restatement Date that are described in Schedule 10.5;
(i)Liens resulting from extensions, renewals or replacements of Liens permitted by paragraph (h), provided that (i) there is no increase in the principal amount or decrease in maturity of the Indebtedness secured thereby at the time of such extension, renewal or replacement and (ii) any new Lien attaches only to the same property theretofore subject to such earlier Lien;
(j)Liens (i) existing on property at the time of its acquisition by the Company or a Restricted Subsidiary and not created in contemplation thereof, regardless of whether the Indebtedness secured by such Lien is assumed by the Company or a Subsidiary; or (ii) existing on property of a Person at the time such Person is merged or consolidated with, or becomes a Restricted Subsidiary of, or substantially all of its assets are acquired by, the Company or a Restricted Subsidiary and not created in contemplation thereof; provided that, in the case of each of clauses (i) and (ii), such Liens do not extend to additional property of the Company or any Restricted Subsidiary and that the aggregate principal amount of Indebtedness secured by each such Lien does not exceed the fair market value of the property subject thereto;
(k)Liens created pursuant to Capital Leases or purchase money Indebtedness permitted pursuant to this Agreement, if such Liens are only in respect of the property or assets subject to, and secure only, the respective Capital Leases or purchase money Indebtedness;
(l)Liens securing Indebtedness of a Restricted Subsidiary owed to the Company or to a Wholly Owned Restricted Subsidiary;
(m)Liens created under the Collateral Documents;
(n)Liens imposed by laws, such as carriers’, warehousemen’s, landlord’s, operators’, vendors’, suppliers’, workers’, materialmen’s, construction, carriers’, repairmen’s, mechanics’ or other like Liens, in each case, incurred in the ordinary course of business or incident to the exploration, development, operation and maintenance of oil and gas properties each of which is in respect of obligations that are not overdue by more than 30 days or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP;
(o)Liens on pipelines or pipeline facilities that arise by operation of law;
(p)Liens to secure Indebtedness of Restricted Subsidiaries that are identified as foreign Subsidiaries in Schedule 5.4 and that are not Guarantors; provided that the aggregate principal amount of any Indebtedness secured by Liens permitted under this clause (p) shall not exceed $5,000,000; provided further that Liens may not extend to any property or assets of the Company or any Subsidiary Guarantor other than the Capital Stock of any non-Guarantor Restricted Subsidiaries;
(q)Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any Joint Venture to the extent securing Non-Recourse Debt;
(r)contractual Liens which arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out agreements, division orders, contracts for the sale, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements, overriding royalty agreements, marketing agreements, processing agreements, net profits agreements, development agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits or agreements, and other agreements which are usual and customary in the Related Businesses and are for claims which are not overdue by more than 30 days or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained
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in accordance with GAAP, if any such Lien referred to in this clause does not materially impair the use of the property covered by such Lien for the purposes for which such property is held by the Company or any Restricted Subsidiary or materially impair the value of such property subject thereto;
(s)Permitted Maritime Liens;
(t)any and all Liens on the escrow account created pursuant to the Escrow Agreement;
(u)Liens on cash, Cash Equivalents or other property arising in connection with the defeasance, discharge or redemption of Indebtedness within one year of maturity thereof; and
(v)Liens not otherwise permitted by the foregoing clauses of this Section 10.5; provided, that the aggregate principal or face amount of all Indebtedness secured under this clause shall not exceed at any time the greater of (i) $20,000,000 or (ii) eight and one-half percent (8-1/2%) of Consolidated Net Worth as of the last day of the most recently ended fiscal quarter of the Company for which financial statements are available.
The Company will not, and will not permit any Restricted Subsidiary or Non-Recourse Pledgor to, permit to exist, create, assume or incur, directly or indirectly, any Lien for borrowed money or any consensual Liens of any type on Compressco Units that are general partner interests other than after June 30, 2021 as contemplated under this Agreement.
10.6Mergers, Consolidations, etc.
The Company will not, and will not permit any Restricted Subsidiary nor any Non-Recourse Pledgor to, consolidate with or merge with any other Person or convey, transfer, sell or lease all or substantially all of its assets in a single transaction or series of transactions to any Person except that:
(a)the Company may consolidate or merge with any other Person or convey, transfer, sell or lease all or substantially all of its assets in a single transaction or series of transactions to any Person, provided that:
(i)the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer, sale or lease all or substantially all of the assets of the Company as an entirety, as the case may be, is a solvent corporation or limited liability company organized and existing under the laws of the United States or any state thereof (including the District of Columbia), and, if the Company is not such corporation or limited liability company, such entity (y) shall have executed and delivered to each holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes and (z) shall have caused to be delivered to each holder of any Notes an opinion of independent counsel reasonably satisfactory to the Required Holders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof (provided that if the Company effects a reorganization pursuant to Section 251(g) of the Delaware General Corporation Law, whereby, among other things, the Equity Interests issued by it become owned by a holding company, no such opinion shall be required); and
(ii)immediately before and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;
(b)Any Restricted Subsidiary or Non-Recourse Pledgor may (x) merge into the Company (provided that the Company is the surviving entity) or sell, transfer or lease all or any part of its assets to the Company or a Restricted Subsidiary or (y) merge into or sell, transfer or lease all or any part of its assets to a Restricted Subsidiary, or (z) merge or consolidate with, or sell, transfer or lease all or substantially all of its assets to, any Person in a transaction that is permitted by Section 10.7 or, as a result of which, such Person
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becomes a Restricted Subsidiary; provided in each instance set forth in clauses (x) through (z) that, immediately before and after giving effect thereto, there shall exist no Default or Event of Default and further provided that (i) a Subsidiary Guarantor may not merge into, or sell all or substantially all of its assets to, (A) a Restricted Subsidiary that is not a Subsidiary Guarantor or (B) to a Person that becomes a Restricted Subsidiary, unless, concurrently therewith such Restricted Subsidiary becomes a party to the Subsidiary Guaranty and the Security Agreement and the Company delivers to each holder of Notes the documents required by Sections 9.6(a)(i) through (iii) in respect of such Restricted Subsidiary and (ii) a Non-Recourse Pledgor may not merge into, or sell all or substantially all of its assets to, (A) a Restricted Subsidiary that is not a Non-Recourse Pledgor or a Subsidiary Guarantor or (B) to a Person that becomes a Restricted Subsidiary, unless, concurrently therewith such Restricted Subsidiary becomes a party to the Security Agreement and the Company delivers to each holder of Notes the documents required by Sections 9.6(b)(i) and (ii) in respect of such Restricted Subsidiary.
No such conveyance, transfer, sale or lease of all or substantially all of the assets of the Company shall have the effect of releasing the Company or any successor corporation that shall theretofore have become such in the manner prescribed in this Section 10.6 from its liability under this Agreement or the Notes.
10.7Sale of Assets.
Except as permitted by Section 10.6, the Company will not, and will not permit any Restricted Subsidiary to, consummate any Disposition, in one or a series of transactions, to any Person, other than:
(a)Dispositions (other than Material Dispositions) in the ordinary course of business;
(b)Dispositions by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the Company or a Restricted Subsidiary; or
(c)Dispositions (other than Material Dispositions) not otherwise permitted by Section 10.7(a) or Section 10.7(b); provided that:
(i)the aggregate net book value of all assets disposed of in any fiscal year pursuant to this Section 10.7(c) does not exceed the greater of (A) 15% of Consolidated Total Assets as of the end of the immediately preceding fiscal year or (B) $50,000,000;
(ii)the Net Available Cash received by the Company with respect to the Disposition of a single asset or a group of related assets or any other related sales in any fiscal year pursuant to this Section 10.7(c) does not exceed $25,000,000 in the aggregate; and
(iii)at the time of such Disposition and after giving effect thereto no Default or Event of Default shall have occurred and be continuing.
Notwithstanding the foregoing provisions of this Section 10.7, the Company may, or may permit any Restricted Subsidiary to, make a Disposition (other than a Material Disposition) and the assets subject to such Disposition shall not be subject to or included in any of the foregoing limitations or the computation contained in Section 10.7(c) of the preceding sentence if the net proceeds from such Disposition are within 365 days of such Disposition:
(d)reinvested in productive assets used in carrying on the business of the Company and its Restricted Subsidiaries; or
(e)applied to the payment or prepayment of the Notes or of any other Senior Indebtedness.
Any prepayment of Notes pursuant to the foregoing provisions of this Section 10.7 shall be in accordance with Sections 8.2 or 8.5, as applicable, without regard to the minimum prepayment requirements of Section 8.2 or 8.5, as applicable, if such proceeds are less than such minimum.
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Notwithstanding the foregoing provisions of this Section 10.7, and in addition to the other provisions applicable to Dispositions, the Company shall not nor shall it permit any Subsidiary to consummate any Material Disposition unless: (i) not less than five Business Days prior to consummating such Material Disposition, the Company gives notice of such Material Disposition to each holder of Notes; (ii) in the case of a Material Disposition other than a Disposition of Compressco Units, the consideration for such Disposition is at least 75% cash; (iii) such Material Disposition is for a price not less than the Fair Market Value of the assets that are the subject of such Material Disposition, as certified in a resolution of the Board of Directors of the Company; and (iv) the Company makes an offer to prepay the Notes in accordance with Section 8.4 with the Net Available Cash, if any, received by the Company, any Restricted Subsidiary or any Non-Recourse Pledgor from such Material Disposition. If any Indebtedness other than the Notes (such other Indebtedness being referred to herein as “Subject Indebtedness”) requires cash proceeds received from a Material Disposition to be applied to the payment, prepayment, redemption, purchase or other retirement (collectively, the “retirement”) of such Subject Indebtedness on a pro rata basis with any other Indebtedness (including without limitation the Notes), the Company shall apply the portion of cash payments constituting Net Available Cash from such Material Disposition to offer to prepay the Notes in accordance with Section 8.4 concurrently with application of any such cash proceeds to the retirement of such Subject Indebtedness. If any Subject Indebtedness permits the Company to apply cash proceeds from a Material Disposition to the retirement of other Indebtedness rather than to the retirement of such Subject Indebtedness, the Company shall apply the portion of such cash proceeds constituting Net Available Cash from such Material Disposition to offer to prepay the Notes in accordance with Section 8.4 prior to application of any such cash proceeds to the retirement of such Subject Indebtedness.
10.8Designation of Restricted and Unrestricted Subsidiaries.
The Company may designate any Restricted Subsidiary as an Unrestricted Subsidiary and any Unrestricted Subsidiary as a Restricted Subsidiary by notice in writing given to the holders of the Notes; provided that,
(a)the Company may not designate a Restricted Subsidiary as an Unrestricted Subsidiary unless: (i) such Restricted Subsidiary does not own, directly or indirectly, any Indebtedness or Capital Stock of the Company or any other Restricted Subsidiary and (ii) immediately before and after such designation there exists no Default or Event of Default;
(b)the Company may not designate a Subsidiary Guarantor as an Unrestricted Subsidiary;
(c)notwithstanding Section 10.5(h), if an Unrestricted Subsidiary is designated as a Restricted Subsidiary, all outstanding Indebtedness and Liens of such Subsidiary shall be deemed to have been incurred as of the date of such designation; and
(d)if a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 10.11 or under one or more clauses of the definition of Permitted Investments, as determined by the Company, provided that designation will only be permitted if the Investment would be permitted at the time pursuant to Section 10.11 and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
10.9Nature of Business.
The Company will not, and will not permit any Restricted Subsidiary to, engage in any business if, as a result, the general nature of the business in which the Company and its Restricted Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the general nature of the business in which the Company and its Subsidiaries, taken as a whole, are engaged on the Restatement Date as described in the Disclosure Documents.
10.10Transactions with Affiliates.
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(a)The Company will not and will not permit any Restricted Subsidiary to enter into directly or indirectly any Material transaction or Material group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Company or a Restricted Subsidiary) (an “Affiliate Transaction”), unless:
(i)the Affiliate Transaction is entered into in the ordinary course of the Company’s or such Restricted Subsidiary’s business and upon fair and reasonable terms no less favorable to the Company or such Restricted Subsidiary than would be obtainable in a comparable arm’s-length transaction with a Person not an Affiliate;
(ii)with respect to any Affiliate Transaction involving aggregate consideration in excess of $25,000,000, the Company delivers to each holder of Notes a resolution of the Board of Directors of the Company set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (i) of this Section 10.10(a) and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Company;
(iii)with respect to any Affiliate Transaction involving aggregate consideration in excess of $50,000,000, the Company delivers to each holder of Notes an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing; and
(iv)no Default or Event of Default has occurred and is continuing.
(b)The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 10.10(a) hereof:
(i)any transaction or series of related transactions involving aggregate consideration of less than $1,000,000;
(ii)any employment, consulting or similar agreement or arrangement, stock option or stock ownership plan, employee benefit plan, equity award, equity option, equity appreciation agreement or plan, officer or director indemnification agreement, restricted stock agreement, severance agreement or other compensation plan or arrangement entered into by the Company or any of its Subsidiaries in the ordinary course of business and payments, awards, grants or issuances of securities pursuant thereto;
(iii)transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliate of the Company solely because the Company owns, directly or indirectly through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;
(iv)payment of reasonable and customary fees and reimbursements of expenses (pursuant to indemnity arrangements or otherwise) of, and compensation paid to, and indemnity, insurance or other benefits provided on behalf of, officers, directors, employees or consultants of the Company or any of its Restricted Subsidiaries, including, but not limited to, advancement of out-of-pocket expenses and provisions of officers’ and directors’ liability insurance;
(v)payment of loans or advances to employees not to exceed $2,500,000 in the aggregate at any one time outstanding;
(vi)any issuance of Equity Interests (other than Disqualified Stock) to, or receipt of a capital contribution from, Affiliates of the Company;
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(vii)pledges by the Company or any of its Restricted Subsidiaries of Equity Interests in Unrestricted Subsidiaries securing Non- Recourse Debt for the benefit of lenders or other creditors of Unrestricted Subsidiaries;
(viii)payments to an Affiliate in respect of the Notes or the Subsidiary Guaranty or any other Indebtedness of the Company or any Restricted Subsidiary on the same basis as concurrent payments made or offered to be made in respect thereof to non-Affiliates;
(ix)transactions between the Company or any Restricted Subsidiary and any Person, a director of which is also a director of the Company or any direct or indirect parent company of the Company and such director is the sole cause for such Person to be deemed an Affiliate of the Company or any Restricted Subsidiary; provided, however, that such director abstains from voting as a director of the Company or such direct or indirect parent company of the Company, as the case may be, on any matter involving such other Person;
(x)transactions with Unrestricted Subsidiaries, customers, clients, suppliers or purchasers or sellers of goods or services, or lessors or lessees of property, in each case in the ordinary course of business and otherwise in compliance with the terms of this Agreement which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), not materially less favorable to the Company and its Restricted Subsidiaries than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person, in the good faith determination of the Board of Directors of the Company or any officer of the Company involved in or otherwise familiar with such transaction, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;
(xi)the performance of obligations of the Company or any of its Restricted Subsidiaries under the terms of any written agreement to which the Company or any of its Restricted Subsidiaries was a party on the Restatement Date, as such agreements may be amended, modified or supplemented from time to time as long as such amendment, modification or supplement is not materially less advantageous to the Company or its Restricted Subsidiaries, taken as a whole, than the agreement so amended, modified or supplemented; and
(xii)Restricted Payments that do not violate Section 10.11 hereof or any Permitted Investments.
10.11Restricted Payments.
(a)The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:
(i)declare or pay any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company and other than dividends or distributions payable to the Company or any Restricted Subsidiary);
(ii)purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company;
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(iii)make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Debt (other than any intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries and the purchase, repurchase or other acquisition of Subordinated Debt purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such purchase, repurchase or other acquisition), except a payment of interest or principal at the stated maturity thereof; or
(iv)make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to such Restricted Payment,
(1) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;
(2) at the time of such Restricted Payment and immediately thereafter, the Company would be in compliance with the ratio test set forth in Section 10.1 and the ratio of Consolidated Funded Indebtedness as of the end of the fiscal quarter immediately preceding such Restricted Payment to EBITDA (for the most recently completed four fiscal quarters preceding such Restricted Payment) will not be greater than 3.00 to 1.00 (with such ratios calculated giving pro forma effect to the consummation of such Restricted Payment as if it had occurred at the beginning of the applicable four-quarter period used for calculation of such ratios); and
(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries since the Original Effective Date (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi) and (xii) (to the extent of Restricted Payments made pursuant to such clause (xii) in an aggregate amount up to $50,000,000) of Section 10.11(b)), is equal to or less than the sum, without duplication, of:
(A) 50% of the Consolidated Net Earnings of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing prior to the Original Effective Date to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Earnings for such period is a deficit, less 100% of such deficit); plus
(B) 100% of (i) the aggregate net cash proceeds received by the Company since the Original Effective Date as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock of the Company or convertible or exchangeable debt securities of the Company, in each case that have been converted into or exchanged for such Equity Interests of the Company (other than Equity Interests and convertible or exchangeable Disqualified Stock or debt securities sold to a Subsidiary of the Company), (ii) with respect to Indebtedness that is incurred on or after the Original Effective Date, the amount by which such Indebtedness of the Company or any of its Restricted Subsidiaries is reduced on the Company’s consolidated balance sheet upon the conversion or exchange after the Original Effective Date of any such Indebtedness into or for Equity Interests of the Company (other than Disqualified Stock), and (iii) the aggregate net cash proceeds, if any, received by the Company or any of its Restricted Subsidiaries upon any conversion or exchange described in clauses (i) or (ii) above; plus
(C) to the extent that any Restricted Investment that was made after the Original Effective Date is (x) sold for cash or otherwise cancelled, liquidated or repaid for cash, or (y) made in an entity that subsequently becomes a Restricted Subsidiary of the Company, the initial amount
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of such Restricted Investment (or, if less, the amount of cash received upon repayment or sale); plus
(D) 100% of any dividends received by the Company or a Restricted Subsidiary after the Original Effective Date from an Unrestricted Subsidiary, to the extent such dividends were not otherwise included in Consolidated Net Earnings of the Company for such period.
(b)The provisions of Section 10.11(a) will not prohibit:
(i)the payment of any dividend or distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or distribution or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend, distribution or redemption payment would have complied with the provisions of this Agreement;
(ii)so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, the making of any Restricted Payment in exchange for, or out of the net cash proceeds from the substantially concurrent (A) contribution (other than from a Subsidiary of the Company) to the equity capital of the Company or (B) sale (other than to a Subsidiary of the Company) of Equity Interests of the Company (other than Disqualified Stock); provided, however, that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded (or deducted, if included) from clause (3)(b) of Section 10.11(a) and will not be considered to be net proceeds from a sale of common stock for the purposes of Section 8.2(a);
(iii)the repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Debt (including the payment of any required premium and any fees and expenses incurred in connection with such repurchase, redemption, defeasance or other acquisition or retirement) with the net cash proceeds from a substantially concurrent incurrence of, or in exchange for, Permitted Refinancing Indebtedness;
(iv)the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary to the holders of Equity Interests (other than Disqualified Stock) of such Restricted Subsidiary; provided that such dividend or similar distribution is paid to all holders of such Equity Interests on a pro rata basis based on their respective holdings of such Equity Interests;
(v)so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, the defeasance, repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary held by any of the current or former directors or employees of the Company or of any Restricted Subsidiary; provided, however, that the aggregate price paid for all such defeased, repurchased, redeemed, acquired or retired Equity Interests may not exceed $2,500,000 in any fiscal year, with any portion of such $2,500,000 amount that is unused in any fiscal year to be carried forward to the immediately succeeding twelve month period (but not to any twelve month period thereafter) and added to such amount, plus, to the extent not previously applied or included (A) the cash proceeds received by the Company or any of its Restricted Subsidiaries from sales of Equity Interests of the Company to employees or directors of the Company or its Affiliates that occur after the Original Closing Date (to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of Section 10.11(a)(3)(B)) and (B) the cash proceeds of key man life insurance policies received by the Company or any of its Restricted Subsidiaries after the Original Closing Date;
(vi)the purchase, repurchase, redemption or other acquisition or retirement for value of Equity Interests deemed to occur upon the exercise of options, warrants, incentives, rights to acquire Equity Interests or other convertible securities if such Equity Interests represent a portion of the exercise
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or exchange price thereof, and any purchase, repurchase, redemption or other acquisition or retirement for value of Equity Interests made in lieu of withholding taxes in connection with any exercise or exchange of options, warrants, incentives or rights to acquire Equity Interests;
(vii)payments of cash, dividends, distributions, advances or other Restricted Payments, in each case, made in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible or exchangeable for Equity Interests or in connection with the payment of a dividend or distribution to the holders of Equity Interests of the Company in the form of Equity Interests (other than Disqualified Stock) of the Company;
(viii)so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, the purchase, redemption or other acquisition or retirement for value of Equity Interests of the Company or any Restricted Subsidiary representing fractional units of such Equity Interests in connection with a merger or consolidation involving the Company or such Restricted Subsidiary or any other transaction permitted by this Agreement;
(ix)in connection with an acquisition by the Company or any of its Restricted Subsidiaries, the return to the Company or any of its Restricted Subsidiaries of Equity Interests of the Company or its Restricted Subsidiaries constituting a portion of the purchase consideration in settlement of indemnification claims or purchase price adjustments;
(x)the purchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Debt (A) at a purchase price not greater than 101% of the principal amount of such Subordinated Debt plus accrued and unpaid interest thereon in accordance with provisions similar to Section 8.3 or (B) at a purchase price not greater than 100% of the principal amount of such Subordinated Debt plus accrued and unpaid interest thereon in accordance with provisions similar to Section 10.7; provided that, (i) simultaneously with such purchase, redemption, defeasance or other acquisition or retirement for value, the Company shall have complied with the provisions of Section 8.3 or Section 10.7, as the case may be, and repurchased all Notes validly tendered for payment in connection with the payment or prepayment, as the case may be, and (ii) in the case of Section 10.7, the Company shall not purchase, redeem, defease or otherwise acquire or retire for value such Subordinated Debt prior to 360 days following any such Disposition;
(xi)payments or distributions to dissenting stockholders pursuant to applicable law in connection with a merger, consolidation or transfer of all or substantially all of the assets of the Company that complies with Section 10.6;
(xii)so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, other Restricted Payments since the Original Effective Date, in the following amounts (reduced by any Permitted Investments made pursuant to clause (s) of the definition of Permitted Investments): (A) an aggregate amount not to exceed $25,000,000 (reduced by any Restricted Payments made pursuant to clauses (xii)(B) and (xii)(C)) if at the time of such Restricted Payment and immediately thereafter, the ratio of Consolidated Funded Indebtedness as of the end of the fiscal quarter immediately preceding such Restricted Payment to EBITDA (for the most recently completed four fiscal quarters preceding such Restricted Payment) is equal to or exceeds 2.50 to 1.00, (B) an aggregate amount not to exceed $50,000,000 (reduced by any Restricted Payments made pursuant to clauses (xii)(A) and (xii)(C)) if at the time of such Restricted Payment and immediately thereafter, the ratio of Consolidated Funded Indebtedness as of the end of the fiscal quarter immediately preceding such Restricted Payment to EBITDA (for the most recently completed four fiscal quarters preceding such Restricted Payment) is equal to or exceeds 2.00 to 1.00 and is less than 2.50 to 1.00 and (C) an aggregate amount not to exceed $100,000,000 (reduced by any Restricted Payments made pursuant to clauses (xii)(A) and (xii)(B)) if at the time of such Restricted Payment and immediately thereafter, the ratio of Consolidated Funded Indebtedness as of the end of the fiscal quarter immediately preceding
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such Restricted Payment to EBITDA (for the most recently completed four fiscal quarters preceding such Restricted Payment) is less than 2.00 to 1.00, in the case of each of clauses (A), (B) and (C) above, with such ratios calculated giving pro forma effect to the consummation of such Restricted Payment as if it had occurred at the beginning of the applicable four-quarter period used for calculation of such ratios; provided that, for the avoidance of doubt, the aggregate amount of all Restricted Payments made pursuant to this clause (xii) shall not exceed $100,000,000; and
(xiii)so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, Restricted Investments by the Company or any Restricted Subsidiary in Compressco or Dispositions by the Company or any Restricted Subsidiary of a portion of the Fluids Division to an Unrestricted Subsidiary or joint venture, in an aggregate amount not to exceed $100,000,000.
(c)The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Company or such Restricted Subsidiary of the Company, as the case may be, pursuant to such Restricted Payment, except that the Fair Market Value of any non-cash dividend or distribution paid within 60 days after the date of its declaration shall be determined as of such date of declaration. The Fair Market Value of any Restricted Investment, assets or securities that are required to be valued by this Section 10.11 will be determined in accordance with the definition of that term. For purposes of determining compliance with this Section 10.11, in the event that a Restricted Payment meets the criteria of more than one of the categories of Restricted Payments described in the preceding clauses (i) through (xiii) of Section 10.11(b), or is permitted pursuant to Section 10.11(a), the Company will be permitted to classify such Restricted Payment (or portion thereof) on the date made in any manner that complies with this Section 10.11.
10.12Terrorism Sanctions Regulations.
(a)The Company will not, and will not permit any Controlled Entity to, (i) become (including by virtue of being owned or controlled by a Sanctioned Person), own or control a Sanctioned Person or any Person that is the target of Sanctions (ii) directly or indirectly to have any investment in or engage in any dealing or transaction (including, without limitation, any investment, dealing or transaction involving the proceeds of the Notes) with any Person if such investment, dealing or transaction (A) would cause any holder to be in violation of any law or regulation applicable to such holder, or (B) is prohibited by or subject to any Anti-Corruption Laws or Sanctions or (iii) to engage, nor shall any Affiliate of either engage, in any activity that could subject such Person or any holder to sanctions under CISADA or any similar law or regulation with respect to Iran or any other country that is subject to Sanctions.
(b)The Company will not issue any Notes hereunder, and the Company shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Notes issued hereunder (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws in any material respect, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (iii) in any manner that would result in the violation of any Sanctions applicable to any party hereto.
11.EVENTS OF DEFAULT.
An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:
(a)the Company defaults in the payment of any principal, Make-Whole Amount, if any, other premium, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or
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(b)the Company defaults in the payment of any interest or breakage amount, if any, on any Note for more than five Business Days after the same becomes due and payable; or
(c)the Company defaults in the performance of or compliance with any term contained in Section 10; or
(d)the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) or in the Collateral Documents and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default or (ii) the Company receiving written notice of such default from any holder of a Note; or
(e)any representation or warranty made in writing by or on behalf of the Company, any Subsidiary Guarantor or any Non-Recourse Pledgor or by any officer of the Company, any Subsidiary Guarantor or any Non-Recourse Pledgor in this Agreement or any other Note Document or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or
(f)(i) the Company or any Restricted Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or breakage amount or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least $20,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any Restricted Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least $20,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Indebtedness to convert such Indebtedness into Equity Interests), (x) the Company or any Restricted Subsidiary has become obligated to purchase or repay Indebtedness before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $20,000,000, or (y) one or more Persons have the right to require the Company or any Subsidiary so to purchase or repay such Indebtedness; or
(g)the Company, any Restricted Subsidiary or any Non-Recourse Pledgor (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or
(h)a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company, any Restricted Subsidiary or any Non-Recourse Pledgor, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company, any Restricted Subsidiary or any Non-Recourse Pledgor, or any such petition shall be filed against the Company, any Restricted Subsidiary or any Non-Recourse Pledgor and such petition shall not be dismissed within 60 days; or
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(i)a final judgment or judgments for the payment of money aggregating more than $20,000,000 (net of insurance coverage, provided that the insurance carriers are solvent, rated investment grade and have acknowledged in writing their obligation so satisfy such judgments) are rendered against one or more of the Company and any Restricted Subsidiaries, which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or
(j)if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate “amount of unfunded benefit liabilities” (within the meaning of section 4001(a)(18) of ERISA) under all Plans determined in accordance with Title IV of ERISA, shall be greater than $20,000,000, (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect; or
(k)any of the Note Documents ceases to be in full force and effect (except, as to the Subsidiary Guaranty and the Security Agreement, as provided in Section 1.2(b)) for any reason, including by reason of (A) it being declared to be null and void in whole or in material part by a court or other governmental or regulatory authority having jurisdiction or (B) the validity or enforceability thereof being contested by any of the Company, any Subsidiary Guarantor or any Non-Recourse Pledgor or any of them renouncing any of the same or denying that it has any or further liability under any Note Document to which it is a party; or
(l)(i) any security interest created by any Collateral Document ceases to be in full force and effect (except as permitted by the terms of this Agreement or such Collateral Document) with respect to Collateral having a Fair Market Value in excess of $1,000,000, or an assertion by the Company, any Subsidiary Guarantor or any Non-Recourse Pledgor that any Collateral having a Fair Market Value in excess of $1,000,000 is not subject to a valid, perfected security interest (except as permitted by the terms of this Agreement or any of the Collateral Documents); or (ii) the repudiation by the Company, any Subsidiary Guarantor or any Non-Recourse Pledgor of any of its or their material obligations under any Collateral Document; or
(m)the Company and the Restricted Subsidiaries that are party to the Security Agreement and the Subsidiary Guaranty shall cease to own, in the aggregate, assets having an aggregate book value equal to or greater than eighty-five percent (85%) of the book value of all assets owned by the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP.
As used in Section 11(j), the terms “employee benefit plan” and “employee welfare benefit plan” shall have the respective meanings assigned to such terms in Section 3 of ERISA.
12. | REMEDIES ON DEFAULT, ETC. |
12.1Acceleration.
(a)If an Event of Default with respect to the Company, any Subsidiary Guarantor or any Non-Recourse Pledgor that is a “Significant Subsidiary” as defined in Regulation S-X (17 CFR part 210) described in paragraph (g) or (h) of Section 11 (other than an Event of Default described in clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the fact that such clause encompasses clause (i) of
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paragraph (g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.
(b)If any other Event of Default has occurred and is continuing, holders of more than 50% in principal amount of the Notes at the time outstanding may at any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable.
(c)If any Event of Default described in paragraph (a) or (b) of Section 11 has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (w) all accrued and unpaid interest thereon, and (x) any applicable Make-Whole Amount or other premium determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein or in any Supplement specifically provided for) and that the provision for payment of a Make-Whole Amount or other premium by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.
12.2Other Remedies.
If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3Rescission.
At any time after any Notes have been declared due and payable pursuant to clause (b) or (c) of Section 12.1, the holders of more than 50% in principal amount of the Notes then outstanding, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and any Make-Whole Amount or other premium on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and any Make-Whole Amount or other premium and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 17, and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto, to any Supplement or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.
12.4No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right, power or remedy conferred by this Agreement, any Supplement or by any Note or the Subsidiary Guaranty upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under Section 15, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all
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costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including, without limitation, reasonable attorneys’ fees, expenses and disbursements.
13. | REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. |
13.1Registration of Notes.
The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Accredited Investor, promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.
13.2Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the Company for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or his attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Company shall execute and deliver within ten days, at the Company’ expense (except as provided below), one or more new Notes (as requested by the holder thereof) of the same series in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Note specified for the Notes of such series and tranche, if any. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $100,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $100,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in Section 6.
13.3Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Accredited Investor, notice from such Institutional Accredited Investor, as applicable, of such ownership and such loss, theft, destruction or mutilation), and
(a)in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser, an original Additional Purchaser or another Institutional Accredited Investor holder of a Note with a minimum net worth of at least $50,000,000, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b)in the case of mutilation, upon surrender and cancellation thereof,
the Company at its own expense shall execute and deliver within ten days, in lieu thereof, a new Note of the same series and tranche, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
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14. | PAYMENTS ON NOTES. |
14.1Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, any premium, if any, and interest becoming due and payable on the Notes shall be made at the principal office of the Company in The Woodlands, Texas. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company or of its duly appointed paying agent in the United States of America.
14.2Home Office Payment.
So long as you or your nominee or any Additional Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, any premium, if any, breakage amount, if any, and interest by the method and at the address specified for such purpose below your name in Schedule A or, in the case of any Additional Purchaser, Schedule A attached to the applicable Supplement, or by such other method or at such other address as you shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, you or any Additional Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 14.1. Prior to any sale or other disposition of any Note held by you or your nominee or any Additional Purchaser or its nominee, such Person will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 13.2. The Company will afford the benefits of this Section 14.2 to any Institutional Accredited Investor that is the direct or indirect transferee of any Note purchased by you under this Agreement or any Additional Purchaser under a Supplement and that has made the same agreement relating to such Note as you or such Additional Purchaser have made in this Section 14.2.
15. | EXPENSES, ETC. |
15.1Transaction Expenses.
Without regard to whether the transactions contemplated hereby are consummated, the Company will pay all reasonable costs and expenses (including reasonable attorneys’ fees of a special counsel and, if reasonably required, local or other counsel) incurred by you and each Other Purchaser or holder of a Note in connection with such transactions, with any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective) and with any subsequent registration of the Notes as contemplated under Section 9.11, including: (a) the reasonable costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement or the Notes, or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement or the Notes, or by reason of being a holder of any Note and (b) the reasonable costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Company will pay, and will save you and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses if any, of brokers and finders (other than those retained by you).
15.2Survival.
The obligations of the Company under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement.
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16. | SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. |
All representations and warranties contained herein or in any Supplement shall survive the execution and delivery of this Agreement, such Supplement and the Notes, the purchase or transfer by you or any Additional Purchaser of any Note or portion thereof or interest therein and the payment of any Note through the payment or prepayment in full thereof, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of you, any Additional Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement or any Supplement shall be deemed representations and warranties of the Company under this Agreement; provided, that the representations and warranties contained in any Supplement shall be made for the benefit of all holders of Notes so long as any Additional Notes issued pursuant to such Supplement remain outstanding. Subject to the preceding sentence and to Section 22.9, this Agreement (including every Supplement), the Notes, the Collateral Documents and any Subsidiary Guaranties embody the entire agreement and understanding between you, each Additional Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.
17. | AMENDMENT AND WAIVER. |
17.1Requirements.
This Agreement and the other Note Documents may be amended, and the observance of any term hereof, of any Supplement or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Company (and the Subsidiary Guarantors, in the case of the Subsidiary Guaranty and the Security Agreement, and the Non-Recourse Pledgors, in the case of the Security Agreement) and the Required Holders, except that no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount or other premium on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend this Section 17.1; provided, that any amendment or waiver of the Collateral Documents shall be subject to the required consent of the lenders under the Credit Agreement.
17.2Solicitation of Holders of Notes.
(a)Solicitation. The Company will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof, of any Supplement or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 17 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.
(b)Payment. The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions hereof or of any Supplement unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment.
(c)Consent in Contemplation of Transfer. Any consent made pursuant to this Section 17.2 by the holder of any Note that has transferred or has agreed to transfer such Note to the Company, any Subsidiary or any Affiliate of the Company and has provided or has agreed to provide such written consent as a condition to such transfer shall be void and of no force or effect except solely as to such holder, and any amendments
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effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force or effect except solely as to such transferring holder.
17.3Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company and the holder of any Note nor any delay in exercising any rights hereunder, under any Supplement or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein, the term “this Agreement” or “the Agreement” and references thereto shall mean this Agreement as it may from time to time be amended or supplemented.
17.4Notes held by Company, etc.
Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.
18. | NOTICES. |
All notices and communications provided for hereunder shall be in writing and sent (a) by facsimile if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid) or (b) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent:
(i)if to you or your nominee, to you or it at the address specified for such communications in Schedule A, or at such other address as you or it shall have specified to the Company in writing,
(ii)if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing,
(iii)if to any Additional Purchaser or its nominee, to such Additional Purchaser or its nominee at the address specified for such communications in Schedule A to the applicable Supplement, or at such other address or e-mail address as such Additional Purchaser or its nominee shall have specified to the Company in writing, or
(iv)if to the Company, at its address set forth at the beginning hereof to the attention of the Chief Financial Officer and the General Counsel, or at such other address as the Company shall have specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. | REPRODUCTION OF DOCUMENTS. |
This Agreement and all documents relating thereto, including (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by you at the Original Closing and the Restatement Date (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and you may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original
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itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by you in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 19 shall not prohibit the Company or any holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.
20. | CONFIDENTIAL INFORMATION. |
For the purposes of this Section 20, “Confidential Information” means information delivered to you or any Additional Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement or any Supplement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by you or any Additional Purchaser as being confidential information of the Company or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to you or any Additional Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by you or any Additional Purchaser or any Person acting on your or such Additional Purchaser’s behalf, (c) otherwise becomes known to you or any Additional Purchaser other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered to you or any Additional Purchaser under Section 7.1 that are otherwise publicly available. You or any Additional Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by you or any Additional Purchaser in good faith to protect confidential information of third parties delivered to you or such Additional Purchaser, provided that you or such Additional Purchaser may deliver or disclose Confidential Information to (i) your Affiliates and your and their directors, trustees, officers, employees, agents, attorneys, advisors, sub-advisors, funding sources, investors, potential investors and other representatives and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by your Notes or, in the case of such advisors, sub-advisors, funding sources, investors, potential investors or other representatives, to the extent they are informed of the confidential nature of such Confidential Information and they agree to keep such Confidential Information confidential), (ii) your auditors, financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Accredited Investor to which you sell or offer to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (v) any Person from which you or any Additional Purchaser offer to purchase any security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (vi) any federal or state regulatory authority having jurisdiction over you or such Additional Purchaser, (vii) the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about your or any Additional Purchaser’s investment portfolio, (viii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Company or a Subsidiary Guarantor, (ix) any other Person with the prior written consent of the Company, or (x) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to you, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which you are a party or (z) if an Event of Default has occurred and is continuing, to the extent you or any Additional Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under your or any Additional Purchaser’s Notes, this Agreement (including any Supplement) or any Subsidiary Guaranty. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or under any Supplement or requested by such holder (other than a holder that is a party to this Agreement or any Supplement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 20.
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21. | SUBSTITUTION OF PURCHASER. |
You and each Additional Purchaser shall have the right to substitute any one of your Affiliates or such funds, entities and accounts that are managed or advised by you or your Affiliates (a “Substitute Purchaser”) as the purchaser of the Notes that you have agreed to purchase hereunder or under a Supplement, by written notice to the Company, which notice shall be signed by both you or such Additional Purchaser and such Substitute Purchaser, shall contain such Substitute Purchaser’s agreement to be bound by this Agreement or such Supplement, as the case may be, and shall contain a confirmation by such Substitute Purchaser of the accuracy with respect to it of the representations set forth in Section 6. Upon receipt of such notice, any reference to you or such Additional Purchaser in this Agreement (other than in this Section 21) or such Supplement shall be deemed to refer to such Substitute Purchaser in lieu of you or such original Additional Purchaser. In the event that such Substitute Purchaser is so substituted as a Purchaser or Additional Purchaser hereunder and such Substitute Purchaser thereafter transfers to you or such original Additional Purchaser all of the Notes then held by such Substitute Purchaser, upon receipt by the Company of notice of such transfer, wherever the word “you” is used and any reference to such Substitute Purchaser as a “Purchaser” or an “Additional Purchaser” in this Agreement (other than in this Section 21) or such Supplement, shall no longer be deemed to refer to such Substitute Purchaser, but shall refer to you or such original Additional Purchaser, and you or such original Additional Purchaser shall again have all the rights of an original holder of the Notes under this Agreement or such Supplement, as the case may be.
22. | MISCELLANEOUS. |
22.1Successors and Assigns.
All covenants and other agreements contained in this Agreement (including all covenants and other agreements contained in any Supplement) by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not.
22.2Jurisdiction and Process; Waiver of Jury Trial.
(a)The Company irrevocably submits to the exclusive jurisdiction of any New York or federal court sitting in New York City, over any suit, action or proceeding arising out of or relating solely to this Agreement or the Notes. To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
(b)The Company agrees, to the fullest extent permitted by applicable law, that a final judgment in any suit, action or proceeding of the nature referred to in Section 22.2(a) brought in any such court shall be conclusive and binding upon it subject to rights of appeal, as the case may be, and may be enforced in the courts of the United States of America or the State of New York (or any other courts to the jurisdiction of which it or any of its assets is or may be subject) by a suit upon such judgment.
(c)The Company consents to process being served in any suit, action or proceeding solely of the nature referred to in Section 22.2(a) by mailing a copy thereof by registered or certified or priority mail, postage prepaid, return receipt requested, or delivering a copy thereof in the manner for delivery of notices specified in Section 19, to it. The Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.
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(d)Nothing in this Section 22.2 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
(e)THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.
22.3Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary notwithstanding, any payment of principal of or Make-Whole Amount, other premium or breakage amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day.
22.4Severability.
Any provision of this Agreement or any Supplement 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 of such Supplement, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.
22.5Construction.
Each covenant contained herein or in any Supplement shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein or in any Supplement, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein or in any Supplement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.
22.6Effectiveness; Counterparts.
Subject to Section 22.9, this Agreement shall become effective on the Restatement Date. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.
22.7Governing Law; Submission to Jurisdiction.
This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.
22.8GAAP.
All financial amounts shall be computed without duplication. Except as otherwise expressly provided herein or in any Supplement, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that if the Company notifies the holders that the Company requests an amendment to any provision hereof or of a Supplement to eliminate the effect of any change occurring after the Original Effective Date in GAAP or in the application thereof on the operation of such provision (or if the Required Holders notify the Company that the Required Holders request an amendment to any provision hereof for such purpose), regardless of whether any such notice requesting an amendment is given before or after such change in GAAP or in the application
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thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
22.9Amendment and Restatement.
Each of the parties hereto agrees as follows:
(a) this Agreement (including all Exhibits and Schedules) shall amend, restate and replace in its entirety the Original Note Purchase Agreement (including all exhibits and schedules attached thereto) on the Restatement Date, and the Original Note Purchase Agreement (including all exhibits and schedules attached thereto) shall thereafter be of no further force and effect, except (i) for the purpose of incorporating by reference certain identified defined terms and other provisions from the Original Note Purchase Agreement in this Agreement, (ii) to evidence the incurrence by the Company of the obligations under the Original Note Purchase Agreement, without regard to whether such obligations are contingent as of the Restatement Date, and (iii) to evidence the representations and warranties made by the Company and the Subsidiary Guarantors prior to the Restatement Date (which representations and warranties shall not be superseded or rendered ineffective by this Agreement as they pertain to the period prior to the Restatement Date);
(b) this Agreement shall constitute an amendment of the Original Note Purchase Agreement made under and in accordance with the terms of Section 17 of the Original Note Purchase Agreement;
(c) from and after the Restatement Date, all references to the “Note Purchase Agreement” contained in the Note Documents shall be deemed to refer to this Agreement and all references to any Article or Section (or subsection) of this Agreement in any other Note Document shall be amended to become references to the corresponding provisions of this Agreement;
(d) all obligations under the Original Note Purchase Agreement (as such obligations may be amended, supplemented, replaced, expanded, extended or otherwise modified hereby on the Restatement Date) shall constitute obligations hereunder and shall continue to be valid, enforceable and in full force and effect and not to be impaired, in any respect, by the effectiveness of this Agreement; and
(e) this amendment and restatement of the Original Note Purchase Agreement shall be limited as written and not be a consent to any other amendment, restatement, supplement, waiver or other modification of any other provisions under any Note Documents, without regard to whether similar, and, except as expressly provided herein or in any other Note Document, all terms and conditions of the Note Documents remain in full force and effect unless otherwise specifically amended hereby.
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If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterpart of this Agreement and return it to the Company, whereupon the foregoing shall become a binding agreement between you and the Company.
Very truly yours,
TETRA TECHNOLOGIES, INC.
By: /s/Joseph J. Meyer
Name: Joseph J. Meyer
Title: Vice President - Finance, Treasurer and
Assistant Secretary
[Signature Page to Amended and Restated Note Purchase Agreement]
The foregoing is agreed
to as of the date thereof.
GSO Tetra Holdings LP
By: GSO Tetra Holdings GP LLC
By: /s/Marisa Beeney
Name: Marisa Beeney
Title: Authorized Person
[Signature Page to Amended and Restated Note Purchase Agreement]
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
Name of Purchaser | Principal Amount of Notes to be Purchased |
GSO Tetra Holdings LP | $125,000,000 |
(1) All scheduled payments of principal and interest shall be made by wire transfer of immediately available funds to such bank account as may be designated and notified by the Purchaser to the Company in writing.
(2) | Address for all notices and communications and for delivery of the Notes: |
GSO Tetra Holdings LP
c/o GSO Capital Partners LP
Attn: General Counsel
345 Park Avenue, 31st Floor
New York, NY 10154
With a copy to:
GSO Capital Partners LP
Attn: Loan Settlements
345 Park Avenue, 31st Floor
New York, NY 10154
(3) Taxpayer I.D. Number: 47-5502328
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SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:
“Acquired Debt” means, with respect to any specified Person:
(a) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, regardless of whether such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and
(b) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.
“Acquired Subordinated Indebtedness” means Subordinated Debt of the Company or any Restricted Subsidiary that is Acquired Debt and was not incurred in connection with, or in contemplation of, another Person merging with or into, or becoming a Restricted Subsidiary of, the Company or any of its Subsidiaries.
“Acquisition” means the acquisition by the Company or any Restricted Subsidiary of (a) sufficient equity or voting interests of a Person to cause such Person to become a Subsidiary or (b) all or substantially all of the assets or operations, division or line of business of a Person.
“Additional Notes” is defined in Section 2.2(b).
“Additional Purchasers” means purchasers of Additional Notes.
“Affiliate” means, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or Equity Interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or Equity Interests. As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Company. Notwithstanding anything in the foregoing to the contrary, a Person that (i) would be an Affiliate of the Company solely by virtue of its ownership of voting or Equity Interests of the Company and (ii) is eligible pursuant to Rule 13d-1(b) under the Exchange Act to file a statement with the Securities and Exchange Commission on Schedule 13G, shall not be deemed to be an Affiliate.
“Affiliate Transaction” is defined in Section 10.10(a).
“Affiliated Grantors” means the Subsidiary Guarantors and the Non-Recourse Pledgors.
“Anti-Corruption Laws” is defined in Section 5.16(d)(1).
“Anti-Money Laundering Laws” is defined in Section 5.16(c).
“Board of Directors” means: (a) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board; (b) with respect to a partnership, the Board of Directors of the general partner of the partnership; (c) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and (d) with respect to any other Person, the board or committee of such Person serving a similar function.
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“Business Day” means any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed.
“Capital Expenditure” means, for any period, all expenditures and costs of the Company and its Restricted Subsidiaries that are (or should be) capitalized on the consolidated balance sheet of the Company in accordance with GAAP as of the end of such period, but in any event excluding (a) any transaction constituting an Acquisition and (b) capital expenditures for the restoration, repair or replacement of any fixed or capital asset that was destroyed or damaged, in whole or in part, to the extent financed by the proceeds of insurance on such property.
“Capital Lease” means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.
“Capital Stock” means: (a) in the case of a corporation, corporate stock; (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (c) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and (d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.
“Cash Equivalents” means: (a) United States dollars; (b) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than six months from the date of acquisition; (c) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any lender party to the Credit Agreement or with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of “B” or better; (d) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above; (e) commercial paper having one of the two highest ratings obtainable from Moody’s or S&P and, in each case, maturing within six months after the date of acquisition; and (f) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (e) of this definition.
“Change of Control” means an event or series of events by which any person or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) (such person or persons hereinafter referred to as an “Acquiring Person”) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50% of the voting power of the then outstanding Voting Stock of the Company; provided that, notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred if the Company (or the Acquiring Person if either (x) the Company is no longer in existence or (y) the Acquiring Person has acquired all or substantially all of the assets thereof) shall have an Investment Grade Rating immediately following such Acquiring Person becoming the “beneficial owner” or consummating such acquisition.
“CISADA” is defined in Section 5.16(a).
“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.
“Collateral” is defined in the Security Agreement.
“Collateral Agency Agreement” means that certain Collateral Agency Agreement, dated as of the date hereof, among JPMorgan Chase Bank, N.A., as Collateral Agent, JPMorgan Chase Bank, N.A., as Administrative Agent under the Credit Agreement and GSO TETRA Holdings LP., as sole Purchaser under this Agreement.
“Collateral Agent” means JPMorgan Chase Bank, N.A..
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“Collateral Documents” means the Security Agreement, the Collateral Agency Agreement, the Ship Mortgages, any Control Agreements and all other financing statements, instruments, documents and agreements delivered by the Company pursuant to the Security Agreement, the Ship Mortgages, this Agreement or any other Note Document in order to (a) grant to the holders of Notes, a Lien on or security interest in any property or (b) set forth the relative priorities of any Lien on any property.
“Common Stock Offering” is defined in Section 8.2(a)(i).
“Company” means TETRA Technologies, Inc., a Delaware corporation.
“Compressco” means CSI Compressco LP, a Delaware limited partnership.
“Compressco Unit Holding Subsidiary” means any Subsidiary of the Company that owns Compressco Units from time to time.
“Compressco Units” means any general or limited partnership interests in, or any incentive distribution rights or other Equity Interest in, Compressco and any of its Subsidiaries.
“Confidential Information” is defined in Section 20.
“Consolidated Funded Indebtedness” means, as of any date, the outstanding Indebtedness of the Company and its Subsidiaries on such date of the kinds referred to in clauses (a), (b), (d), (f), (g) and (h) of the definition of Indebtedness, determined on a consolidated basis in accordance with GAAP.
“Consolidated Net Earnings” means, for any period, the net income or loss of the Company and its Restricted Subsidiaries for such period, including cash dividends and distributions (not return of capital) received from Persons other than Restricted Subsidiaries and after allowances for taxes for such period, determined on a consolidated basis in accordance with GAAP, provided that there shall be excluded therefrom (to the extent otherwise included therein): (i) extraordinary or nonrecurring gains, losses or expenses (including, whether or not otherwise includable as a separate item in the earnings statement for such period, non-cash losses on sales of assets outside of the ordinary course of business); (ii) non-cash gains, losses, expenses or adjustments under FASB Statement No. 133 as a result of changes in the fair market value of derivatives; (iii) any gains or losses attributable to write-ups or write-downs of assets, including ceiling test write-downs; (iv) adjustments due to changes in accounting principles and the effect of discontinued operations; and (v) any Equity Interest of the Company or any Restricted Subsidiary in the undistributed earnings of a Person that is not a Restricted Subsidiary.
“Consolidated Net Worth” means, as of any date, consolidated stockholders’ equity of the Company and its Restricted Subsidiaries on such date, determined in accordance with GAAP.
“Consolidated Total Assets” means, as of any date, the total assets of the Company and its Restricted Subsidiaries as of such date, determined on a consolidated basis in accordance with GAAP.
“Control Agreement” means an agreement, in form and substance reasonably satisfactory to the Collateral Agent, and executed by the financial institution or securities intermediary at which a deposit account or a securities account (as defined in the UCC), as the case may be, is maintained, pursuant to which such financial institution or securities intermediary agrees that the financial institution or securities intermediary, as the case may be, will comply with instructions or entitlement orders originated by the Collateral Agent as to disposition of funds in such account, without further consent by any other Person.
“Control Event” means the execution by the Company of a definitive written agreement (excluding, for the avoidance of doubt, any letter of intent) that, when fully performed by the parties thereto, would result in a Change of Control.
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“Controlled Entity” means (a) any of the Subsidiaries of the Company and any of their or the Company’s respective Affiliates and (b) any parent company of the Company and such parent company’s Affiliates.
“Credit Agreement” means the Credit Agreement dated as of June 27, 2006 among the Company, the foreign subsidiaries of the Company from time to time party thereto as borrowers, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, National Association and Wells Fargo Bank, N.A., as syndication agents, and J.P. Morgan Securities Inc. and Banc of America Securities LLC, as co-lead arrangers and co-bookrunners, as such agreement was amended on December 15, 2006, October 29, 2010, September 30, 2014 and July 1, 2016, and may be further amended, restated, supplemented, refinanced (subject to the applicable requirements of this Agreement) or reduced from time to time, and any successor credit agreement or similar facility.
“Currency Agreement” means in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party or a beneficiary.
“Customary Recourse Exceptions” means, with respect to any Non-Recourse Debt of an Unrestricted Subsidiary or Joint Venture, (i) Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any Joint Venture owned by the Company or any Restricted Subsidiary to the extent securing otherwise Non-Recourse Debt of such Unrestricted Subsidiary or Joint Venture and (ii) exclusions from the exculpation provisions with respect to such Non-Recourse Debt for the voluntary bankruptcy of such Unrestricted Subsidiary or Joint Venture, fraud, misapplication of cash, environmental claims, waste, willful destruction and other circumstances customarily excluded by lenders from exculpation provisions or included in separate indemnification agreements in non-recourse financings.
“Default” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.
“Default Rate” means 2% per annum above the rate of interest stated in clause (a) of the first paragraph of the Notes.
“Deputy Commissioner” is defined in Section 9.11(c).
“Disclosure Documents” is defined in Section 5.3.
“Disposition” means the sale, lease, transfer or other disposition, including by way of merger, of any assets, including Capital Stock of Restricted Subsidiaries; provided, however, that the following shall not constitute Dispositions:
(a)a Restricted Payment that does not violate Section 10.11 of this Agreement, including the issuance or sale of Equity Interests or the sale, lease or other disposition of products, services, equipment, inventory, accounts receivable or other assets pursuant to any such Restricted Payment;
(b)the consummation of a Permitted Investment, including, without limitation, unwinding any obligations under Hedging Contracts, and including the issuance or sale of Equity Interests or the sale, lease or other disposition of products, services, equipment, inventory, accounts receivable or other assets pursuant to any such Permitted Investment; and
(c)any issuance of Compressco Units by Compressco.
“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the latest maturing Series of Notes mature.
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“Divestiture” means the divesture by the Company or any Restricted Subsidiary of either (a) sufficient Equity Interests of a Restricted Subsidiary to cause it no longer to be a Subsidiary or (b) substantially all of the assets or operations of a Restricted Subsidiary or a division or line of business of the Company or a Restricted Subsidiary.
“EBITDA” means, for any period, without duplication, the sum of Consolidated Net Earnings for such period plus, to the extent deducted in calculating Consolidated Net Earnings: (i) Interest Expense, amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness (including the Notes); (ii) federal, state and foreign income tax expense; (iii) depreciation, depletion and amortization expenses; and (iv) any other noncash charges (including non-cash stock option costs and non-cash losses on the sale of assets) and minus, to the extent included in determining Consolidated Net Earnings for such period, any non-cash income (including non-cash gains on the sale of assets); provided that, for purposes of calculating EBITDA for any period of four consecutive fiscal quarters (each, a “Reference Period”) pursuant to any determination of any financial ratio, if at any time during such Reference Period (x) the Company or any Restricted Subsidiary has made any Divestiture, then EBITDA for such Reference Period shall be reduced by an amount equal to the EBITDA (if positive) attributable to the property that is subject to such Divestiture for such Reference Period or increased by an amount equal to the EBITDA (if negative) attributable thereto for such Reference Period; (y) the Company or any Restricted Subsidiary has made an Acquisition or a Capital Expenditure, then EBITDA for such Reference Period shall be calculated after giving pro forma effect thereto as if such Acquisition or Capital Expenditure had occurred on the first day of such Reference Period, and after giving effect to any credit received for costs and savings associated with such Acquisition that are permitted by the Securities and Exchange Commission to be included in pro forma financial statements filed therewith; or (z) a Subsidiary is redesignated as either an Unrestricted Subsidiary or a Restricted Subsidiary, then EBITDA for such Reference Period shall be determined after giving pro forma effect to such redesignation as if it had occurred on the first day of such Reference Period.
“Electronic Delivery” is defined in Section 7.1(a).
“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.
“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under section 414(b), (c), (m) or (o) of the Code.
“Escrow Agreement” means that certain Escrow Agreement, dated as of July 4, 2011, by and among TETRA Applied Technologies, LLC, Wison (Nantong) Heavy Industry Co., Ltd., and JPMorgan Chase Bank, N.A. Singapore Branch, as Escrow Agent.
“Event of Default” is defined in Section 11.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of the Company in the case of amounts of $25,000,000 or more and otherwise by an officer of the Company (unless otherwise provided in this Agreement).
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“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.
“Fixed Charge Coverage Ratio” means, as of the last day of any fiscal quarter, the ratio of (i) EBITDA minus cash income tax expense minus non-financed Capital Expenditures minus cash dividends and cash distributions by the Company to (ii) Interest Expense plus scheduled principal payments on Indebtedness (including obligations under Capital Leases) plus any Equity Interest repurchases for the applicable period, in each case for the 12 months then ending and determined on a consolidated basis for the Company and its consolidated Restricted Subsidiaries.
“Fluids Division” means the division of the Company and its subsidiaries that (a) manufactures and markets clear brine fluids, additives, and associated products and services to the oil and gas industry for use in well drilling, completion, and workover operations in the United States and in certain countries in Latin America, Europe, Asia, the Middle East, and Africa, (b) markets liquid and dry calcium chloride products to a variety of markets outside the energy industry and (c) provides North American onshore oil and gas operators with comprehensive water management services.
“Fourth Amendment to Credit Agreement” means that certain Fourth Amendment to the Credit Agreement, dated as of the date hereof, among the Company, as borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the other Persons party thereto.
“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.
“Governmental Authority” means:
(a)the government of the United States of America or any State or other political subdivision thereof, or
(b)the government of any jurisdiction in which the Company, any Restricted Subsidiary or any Non-Recourse Pledgor conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company, any Restricted Subsidiary or any Non-Recourse Pledgor, or
(c)any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.
“Guaranty” means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person:
(a)to purchase such indebtedness or obligation or any property constituting security therefor;
(b)to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation;
(c)to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or
(d)otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof.
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In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor.
“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable law (including, without limitation, asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls).
“Hedging Contracts” means, with respect to any specified Person:
(a)interest rate swap agreements, interest rate cap agreements and interest rate collar agreements;
(b)foreign exchange contracts and currency protection agreements;
(c)any commodity futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations in the price of commodities used, produced, processed or sold by that Person or any of its Restricted Subsidiaries at the time;
(d)hedging agreements or arrangements relating to Equity Interests of the Company or any of its Restricted Subsidiaries entered into in connection with the issuance of convertible debt securities by the Company or any of its Restricted Subsidiaries; and
(e)other agreements or arrangements designed to manage interest rates or interest rate risk or protect such Person or any of its Restricted Subsidiaries against fluctuations in commodity prices or currency exchange rates.
“holder” means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 13.1.
“Indebtedness” with respect to any Person means, at any time, without duplication,
(a)all obligations of such Person for borrowed money;
(b)all obligations of such Person evidenced by bonds, debentures, notes or similar instruments;
(c)all payment obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person;
(d)all payment obligations of such Person in respect of the deferred purchase price of property acquired by such Person (excluding current accounts payable);
(e)all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed;
(f)all Guaranties of such Person of Indebtedness of others of the kinds referred to in clauses (a), (b), (d), (g) and (h) of this definition;
(g)all liabilities appearing on such Person’s balance sheet in accordance with GAAP in respect of Capital Leases;
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(h)all liabilities of such Person as an account party in respect of letters of credit and letters of guaranty; and
(i)all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances;
provided however, that Indebtedness shall not include normal operating liabilities accrued in the ordinary course of business. Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. For all purposes of this Agreement, Indebtedness shall be calculated at its stated principal amount, without regard to the effect of utilizing FASB No. 159 (Fair Value Option for Financial Assets and Financial Liabilities).
“Institutional Accredited Investor” means an institution that is an “accredited investor” within the meaning of Rule 501(a)(1),(2),(3) or (7) under the Securities Act.
“Interest Expense” means, for any period, total cash interest expense (including imputed interest on Capital Leases and amounts, both positive and negative, attributable to interest expense incurred under Swaps) accruing on Indebtedness of the Company and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP.
“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests or debt or other securities of another Person, (b) a loan, advance or capital contribution to, guarantee or assumption of Indebtedness of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of all or substantially all of the property and assets or business of another Person or assets constituting a business unit, line of business or division of such Person.
“Investment Grade Rating” in respect of any Person means, at the time of determination, at least a majority of the following ratings of its senior, unsecured long-term indebtedness for borrowed money pari passu with the Notes: (i) by Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, or any successor thereof (“S&P”), “BBB-” or better, (ii) by Moody’s Investors Service, Inc., or any successor thereof (“Moody’s”), “Baa3” or better, or (iii) by another rating agency of recognized national standing, an equivalent or better rating. For the avoidance of doubt, a Person shall not be obligated to obtain more than one rating to obtain an Investment Grade Rating.
“Joinder to Subsidiary Guaranty” means that certain Joinder to Subsidiary Guaranty, dated as of the date hereof, entered into by the Subsidiary Guarantors signatory thereto.
“Joint Venture” means any Person that is not a direct or indirect Subsidiary of the Company in which the Company or any of its Restricted Subsidiaries makes any Investment.
“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements).
“Make-Whole Amount” is defined in Section 8.8 with respect to the Notes (including any Additional Notes, unless otherwise specified in the applicable Supplement).
“Mandatory Prepayment Amount” is defined in Section 8.4(a).
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“Material” means material in relation to the business, operations, affairs, financial condition, assets or properties of the Company and its Restricted Subsidiaries taken as a whole; provided that, with respect to any Disposition of assets included in the Fluids Division, Material means the Fair Market Value thereof exceeds $25,000,000.
“Material Adverse Effect” means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company and its Restricted Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement and the Notes, or (c) the ability of any Subsidiary Guarantor to perform its obligation under the Subsidiary Guaranty, or (d) the validity or enforceability of this Agreement, the Notes or the Subsidiary Guaranty.
“Material Disposition” means any Disposition of (i) Compressco Units or (ii) a Material portion of the Fluids Division or (iii) assets forming part of the Collateral and not otherwise included in clauses (i) and (ii) above; provided, that Dispositions of assets described in clause (iii) above shall not constitute Material Dispositions so long as the Net Available Cash received by the Company with respect to all Dispositions in any fiscal year does not exceed $10,000,000 in the aggregate.
“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).
“Net Available Cash” from a Disposition of assets means cash payments received as proceeds from such Disposition, net of:
(a)all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses Incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Disposition;
(b)in the case of a Disposition of Compressco Units, all payments (i) that are made in respect of any Indebtedness secured by any Compressco Units, in accordance with the terms of any Lien upon such Compressco Units, or (ii) that must, pursuant to the terms of any Indebtedness secured by any Compressco Units (regardless of whether the Compressco Units disposed are the collateral for such Indebtedness), or pursuant to applicable law, be made or offered to be made out of the proceeds from such Disposition of Compressco Units to pay, prepay, redeem, purchase or otherwise retire such Indebtedness;
(c)all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures or to holders of royalty or similar interests as a result of such Disposition; and
(d)the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the assets disposed of in such Disposition and retained by the Company or any Subsidiary after such Disposition;
provided, however that cash payments received as proceeds from such Disposition shall cease to constitute “Net Available Cash” to the extent not applied to the prepayment of Notes (as a result of the rejection or deemed rejection of an offer to prepay Notes made pursuant to Section 8.4).
“Non-Recourse Debt” means Indebtedness:
(a)as to which neither the Company nor any of its Restricted Subsidiaries (i) provides credit support of any kind (including any undertaking, Subsidiary Guaranty, indemnity, agreement or instrument that would constitute Indebtedness) or (ii) is directly or indirectly liable as a guarantor or otherwise, in each case of clauses (i) and (ii) above, except for Customary Recourse Exceptions; and
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(b)no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Notes) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its stated maturity.
“Non-Recourse Pledgor” means each Compressco Unit Holding Subsidiary (other than a Subsidiary that owns only general partner interests in Compressco and does not own any common units or incentive distribution rights in Compressco) that is not required to be a Subsidiary Guarantor hereunder.
“Note Documents” means the Note Purchase Agreement, the Subsidiary Guaranty, the Notes, any Supplement and any other documents evidencing the Additional Notes, the Collateral Documents and any other agreements, instruments, documents and certificates delivered pursuant to this Agreement.
“Notes” is defined in Section 1.
“NVDC” is defined in Section 9.11(b).
“OFAC” is defined in Section 5.16(a).
“OFAC Listed Person” is defined in Section 5.16(a).
“OFAC Sanctions Program” means any economic or trade sanction that OFAC is responsible for administering and enforcing. A list of OFAC Sanctions Programs may be found at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.
“Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate.
“Original Closing” is defined in Section 3.
“Original Closing Date” means November 20, 2015.
“Original Effective Date” means November 5, 2015.
“Original Note Purchase Agreement” is defined in Section 1.1.
“Other Purchasers” is defined in Section 2.
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.
“Permitted Business Investments” means Investments by the Company or any of its Restricted Subsidiaries in any Unrestricted Subsidiary or in any Joint Venture, provided that:
(a)at the time of such Investment and immediately thereafter, the Company would be in compliance with the ratio tests set forth in Sections 10.1 and 10.2 (with such ratios calculated giving pro forma effect to the consummation of such Investment as if it had occurred at the beginning of the applicable four-quarter period used for calculation of such ratios);
(b)if such Unrestricted Subsidiary or Joint Venture has outstanding Indebtedness at the time of such Investment, either (i) all such Indebtedness is Non-Recourse Debt or (ii) any such Indebtedness of such Unrestricted Subsidiary or Joint Venture that is recourse to the Company or any of its Restricted Subsidiaries (which shall include, without limitation, all Indebtedness of such Unrestricted Subsidiary or Joint Venture for which the Company or any of its Restricted Subsidiaries may be directly or indirectly, contingently or otherwise,
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obligated to pay, whether pursuant to the terms of such Indebtedness, by law or pursuant to any guarantee, including, without limitation, any “claw-back,” “make-well” or “keep-well” arrangement) would, at the time such Investment is made and immediately thereafter, permit the Company to be in compliance with the ratio tests set forth in Sections 10.1 and 10.2 (with such ratios calculated giving pro forma effect to the consummation of such Investment as if it had occurred at the beginning of the applicable four-quarter period used for calculation of such ratios); and
(c)such Unrestricted Subsidiary’s or Joint Venture’s activities are not outside the scope of the Related Businesses.
“Permitted Investments” means:
(a)any Investment in the Company (including, without limitation, through purchases of Notes) or in a Restricted Subsidiary;
(b)any Investment in Cash Equivalents;
(c)any Investment by the Company or any Restricted Subsidiary in a Person, if as a result of such Investment:
i.such Person becomes a Restricted Subsidiary; or
ii.such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its properties or assets to, or is liquidated into, the Company or a Restricted Subsidiary;
(d)any Investment made as a result of the receipt of non-cash consideration from a Disposition of assets that was made pursuant to and in compliance with Section 10.7;
(e)any Investment in any Person (except to the extent of cash payments in lieu of fractional shares) in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;
(f)any Investment received in compromise or resolution of (i) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Company or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or as a result of a foreclosure by, or other transfer of title to, the Company or any of its Restricted Subsidiaries with respect to any secured Investment in default, or (ii) litigation, arbitration or other disputes;
(g)Investments represented by obligations under Hedging Contracts;
(h)Investments in any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other deposits made in the ordinary course of business by the Company or any of its Restricted Subsidiaries;
(i)advances to or reimbursements of employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business;
(j)loans or advances to officers, directors or employees made in the ordinary course of business or consistent with past practice of the Company or any Restricted Subsidiary in an aggregate principal amount not to exceed $2,500,000 at any one time outstanding;
(k)repurchases of the Notes;
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(l)receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;
(m)any Guaranty of Indebtedness that would not cause the Company to fall out of compliance with the ratio tests under Section 10.1 or Section 10.2 other than a Guaranty of Indebtedness of an Affiliate of the Company that is not a Restricted Subsidiary;
(n)any Investment existing on, or made pursuant to binding commitments existing on, the Original Effective Date and disclosed on Schedule 10.10 hereto; provided that the amount of any such Investment may be increased as required by the terms of such Investment as in existence on the Original Effective Date;
(o)surety and performance bonds and workers’ compensation, utility, lease, tax, performance and similar deposits and prepaid expenses in the ordinary course of business;
(p)Guaranties by the Company or any of its Restricted Subsidiaries of operating leases (other than obligations with respect to Capital Leases) or of other obligations that do not constitute Indebtedness, in each case entered into by the Company or any such Restricted Subsidiary in the ordinary course of business;
(q)Permitted Business Investments in amounts not to exceed the Restricted Payments permitted pursuant to Section 10.11;
(r)Investments received as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment in default; and
(s)other Investments in any Person (including Investments in any Joint Venture) having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (s) that are at the time outstanding, that do not exceed $25,000,000; provided, however, that if any Investment pursuant to this clause (s) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (a) above and shall cease to have been made pursuant to this clause (s) for so long as such Person continues to be a Restricted Subsidiary.
“Permitted Maritime Liens” means (i) Liens for crew wages (including wages of the masters of the Vessels) incurred in the ordinary course of business and that are not yet due and payable or that are being contested in good faith by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP; (ii) Liens for necessaries provided to the Vessels incurred in the ordinary course of business that are not yet due and payable or that are being contested in good faith by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP; (iii) Liens arising by operation of Law in the ordinary course of business in connection with operating, maintaining or repairing the Vessels that are not yet due and payable or that are being contested in good faith by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP; and (iv) Liens for damages arising from maritime torts that are unclaimed or that are covered by insurance and any deductible thereto, or in respect of which a bond or other security has been posted on behalf of the ship owner with the appropriate court or other tribunal to prevent the arrest or to secure the release of the applicable Vessel from arrest (provided that any Indebtedness incurred or Lien created by the Company or any of its Restricted Subsidiaries with respect to any bond or other security provided in accordance with this clause (iv) shall comply, as applicable, with the requirements of Sections 10.3 and 10.5 (and, for this purpose, Section 10.5(s) shall be disregarded)), unless any such Lien does not involve a significant risk of a sale, forfeiture or loss of the applicable Vessel, and is being contested in good faith by appropriate proceedings diligently
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conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP.
“Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease, refund, discharge or otherwise retire for value, in whole or in part (collectively, a “Refinancing,” and the term “Refinanced” has a correlative meaning) any other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness) in a principal amount not to exceed (after deduction of reasonable and customary fees and expenses incurred in connection with the Refinancing) the lesser of:
(i) the principal amount of the Indebtedness so Refinanced (plus, in the case of Indebtedness, the amount of premium, if any paid in connection therewith); and
(ii) if the Indebtedness being Refinanced was issued with any original issue discount, the accreted value of such Indebtedness (as determined in accordance with GAAP) at the time of such Refinancing.
Notwithstanding the preceding, no Indebtedness will be deemed to be Permitted Refinancing Indebtedness, unless:
(A) such Indebtedness, has a final maturity date no earlier than the final maturity date, as applicable, of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being Refinanced;
(B) if the Indebtedness being Refinanced is contractually subordinated or otherwise junior in right of payment to the Notes or the Subsidiary Guaranty, such Indebtedness (and any related Guaranty) is contractually subordinated or otherwise junior in right of payment to the Notes or the Subsidiary Guaranty on terms at least as favorable to the holders of the Notes as those contained in the documentation governing such Indebtedness;
(C) such Indebtedness is incurred or issued by the Company or such Indebtedness is incurred or issued by a Restricted Subsidiary who is the obligor on the Indebtedness being Refinanced; provided that a Restricted Subsidiary that is also a Subsidiary Guarantor may guarantee Permitted Refinancing Indebtedness incurred by the Company, regardless of whether such Restricted Subsidiary was an obligor or guarantor of the Indebtedness being Refinanced;
(D) the terms and conditions of such Indebtedness (other than with respect to pricing, premiums, fees, rate floors and conversion features) are not, taken as a whole, more favorable to the lenders or holders providing such Indebtedness than, (x) with respect to Permitted Refinancing Indebtedness incurred in connection with the Credit Agreement, the terms and conditions of the Credit Agreement as compared to the terms and conditions applicable to the Notes as of the Restatement Date and (y) with respect to any other Indebtedness, the terms and conditions applicable to the Notes; provided, however, that notwithstanding the foregoing, the Company may incur such Indebtedness the terms and conditions of which are, taken as a whole, more favorable to the lenders or holders providing such Indebtedness than, (x) with respect to Permitted Refinancing Indebtedness incurred in connection with the Credit Agreement, the terms and conditions of the Credit Agreement as compared to the terms and conditions applicable to the Notes as of the Restatement Date and (y) with respect to any other Indebtedness, the terms and conditions applicable to the Notes, to the extent that this Agreement and any other applicable Note Document are amended to reflect such more favorable terms and conditions; and
(E) such Indebtedness is provided by lenders that are commercial banks.
“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.
“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five
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years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.
“Pledged Compressco Units” means (a) prior to June 30, 2021, common units representing limited partner Equity Interests in and to Compressco, including any warrants, options, subordinated units, incentive distribution rights or other rights entitling any entity to purchase or acquire any such common units but excluding general partner interests and (b) on or after June 30, 2021, Compressco Units.
“Pro Forma Leverage Ratio” means the pro forma ratio of Consolidated Funded Indebtedness as of the end of any fiscal quarter to EBITDA (for the 12 months then ended) after giving effect to all recently completed and planned Acquisitions, Capital Expenditures and Divestitures, all as further described in this definition. The Pro Forma Leverage Ratio will always be computed as of the date of the most recent consolidated financial statements of the Company; the numerator of the Pro Forma Leverage Ratio shall include all Consolidated Funded Indebtedness incurred in connection with Acquisitions and Capital Expenditures consummated after the date of such financial statements and exclude all Consolidated Funded Indebtedness repaid in connection with Divestitures consummated after the date of such financial statements, and the denominator shall be pro forma EBITDA as if all Acquisitions, Capital Expenditures and Divestitures consummated after the date of the income statement had been made one year before the date of such financial statements; and in the case of both the numerator and the denominator, after giving pro forma effect to (a) any redesignation of a Subsidiary as either a Restricted Subsidiary or an Unrestricted Subsidiary as if such redesignation had occurred one year before the date of such income statement and (b) the planned Acquisition or Capital Expenditure which caused the Pro Forma Leverage Ratio to be computed for purposes of determining compliance with Section 10.4.
“property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.
“Proposed Prepayment Date” is defined in Section 8.3(c).
“Proposed Proceeds Prepayment Date” is defined in Section 8.4(d).
“Purchaser” means each purchaser listed in Schedule A.
“Reference Period” is defined in the defined term “EBITDA”.
“Reinvestment Yield” is defined in Section 8.8.
“Related Businesses” means the lines of business in which the Company and the Subsidiaries are engaged, as described in the public filings of the Company with the Securities and Exchange Commission through the Original Effective Date, together with those businesses that are reasonably related thereto.
“Required Holders” means, at any time, the holders of more than 50% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).
“Responsible Officer” means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement.
“Restatement Date” is defined in Section 4.1.
“Restricted Investment” means any Investment other than a Permitted Investment.
“Restricted Payment” is defined in Section 10.11(a).
“Restricted Subsidiary” means any Subsidiary (a) of which at least a majority of the voting securities are owned by the Company and/or one or more Restricted Subsidiaries and (b) that is not listed in the definition of an
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Unrestricted Subsidiary below or that the Company has not designated an Unrestricted Subsidiary by notice in writing given to the holders of the Notes pursuant to Section 10.8.
“Sanctioned Person” is defined in Section 5.16(a).
“Securities Act” means the Securities Act of 1933, as amended from time to time.
“Security Agreement” is defined in Section 1.3.
“Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.
“Senior Indebtedness” means (a) any Indebtedness of the Company, other than any Indebtedness that is in any manner subordinated in right of payment or security in any respect to the Notes, and (b) any Indebtedness of any Restricted Subsidiary, other than Indebtedness that is in any manner subordinated in right of payment or security in any respect to the Notes.
“Series” means a series of the Notes, as the context shall require.
“Series 2015 Notes” is defined in Section 1.1.
“Ship Mortgages” means, collectively, the U.S. First Preferred Fleet Mortgage and the Vanuatu First Preferred Ship Mortgage.
“Subordinated Debt” means Indebtedness of the Company or a Subsidiary Guarantor that is contractually subordinated in right of payment (by its terms or the terms of any document or instrument relating thereto) to the Notes or the Subsidiary Guaranty of such Subsidiary Guarantor, as applicable.
“Subsidiary” means, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership, limited liability company or joint venture if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership, limited liability company or joint venture can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Company.
“Subsidiary Guarantor” means any Subsidiary of the Company that executes and delivers, or becomes a party to, the Subsidiary Guaranty.
“Subsidiary Guaranty” is defined in Section 1.2(a).
“Substitute Purchaser” is defined in Section 21.
“Supplement” is defined in Section 2.2(a).
“Swap” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; but no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Company or any Restricted Subsidiary shall be a Swap Agreement.
“this Agreement” or “the Agreement” is defined in Section 17.3.
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“Unrestricted Subsidiary” means any Subsidiary of the Company that (a) has been so designated by notice in writing given to the holders of the Note, or (b) is listed below:
CSI Compressco GP Inc.
CSI Compressco LP
CSI Compressco Sub Inc.
CSI Compressco Operating LLC
CSI Compressco Field Services International LLC
Compressco de Argentina SRL
CSI Compressco International LLC
CSI Compressco Holdings LLC
CSI Compressco Leasing LLC
Compressco Netherlands Coöperatief U.A.
Compressco Netherlands B.V.
Compressco Canada Inc.
CSI Compressco Mexico Investment I LLC
CSI Compressco Mexico Investment II LLC
Providence Natural Gas, LLC
Production Enhancement Mexico, S. de R.L. de C.V.
CSI Compressco Finance Inc.
Compressor Systems, Inc.
CSI Compression Holdings, LLC
Rotary Compressor Systems, Inc.
Compressor Systems de Mexico S. de R.L. de C.V.
Compressor Systems Australia Pty Ltd.
CSI Compressco Investment LLC
“USA PATRIOT Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“U.S. First Preferred Fleet Mortgage” means a First Preferred Fleet Mortgage by Epic Driving & Marine Services, LLC and TETRA Applied Technologies, LLC to the Collateral Agent.
“Vanuatu First Preferred Ship Mortgage” means a First Preferred Ship Mortgage by TETRA Applied Technologies, LLC to the Collateral Agent.
“Vanuatu Vessel” is defined in Section 9.11(c).
“Voting Stock” means, with respect to any Person, any class of shares of stock or other Equity Interests of such Person having general voting power under ordinary circumstances to elect a majority of the board of directors or other managing entities, as appropriate, of such Person (irrespective of whether or not at the time stock of any other class or classes or other Equity Interests of such Person shall have or might have voting power by reason of the happening of any contingency).
“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:
(a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by
17
(b) the then outstanding principal amount of such Indebtedness.
“Wells Fargo 2015 Notes” means the $50,000,000 Senior Secured Notes due April 1, 2017 issued by the Company to Wells Fargo Energy Capital Inc., as Noteholder Representative.
“Wholly Owned Restricted Subsidiary” means, at any time, any Restricted Subsidiary 100% of all of the Equity Interests (except directors’ qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company’s other Wholly Owned Restricted Subsidiaries at such time.
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EXHIBIT 10.1
AGREEMENT AND FOURTH AMENDMENT TO
CREDIT AGREEMENT
This Agreement and Fourth Amendment to Credit Agreement (this “Amendment”) dated as of July 1, 2016 is among TETRA TECHNOLOGIES, INC. (the “Parent”), a Delaware corporation; JPMORGAN CHASE BANK, N.A., as administrative agent (in such capacity, together with its successors in such capacity, the “Administrative Agent”) for the financial institutions (collectively, the “Lenders”) party to the hereinafter-defined Credit Agreement; and the undersigned Lenders.
W I T N E S S E T H:
WHEREAS, the Parent, the Lenders, Bank of America, National Association and Wells Fargo Bank, N.A., as Syndication Agents, Comerica Bank, as Documentation Agent, and JPMorgan Chase Bank, N.A., as Administrative Agent, executed and delivered that certain Credit Agreement (as amended and supplemented to the date hereof, the “Credit Agreement”) dated as of June 27, 2006, as amended by instruments dated as of December 15, 2006, October 29, 2010 and September 30, 2014; and
NOW, THEREFORE, in consideration of the premises and the mutual agreements, representations and warranties herein set forth, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parent and the Lenders do hereby agree as follows:
Section 1.Amendments to Credit Agreement.
(a)The definition of “Applicable Rate” contained in Section 1.01 of the Credit Agreement is hereby amended to read in its entirety as follows:
“Applicable Rate” means, for any day with respect to any ABR Loan or Eurocurrency Loan or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “ABR Spread”, “Eurocurrency Spread” or “Commitment Fee Rate”, as the case may be, based upon the Leverage Ratio as of the most recent determination date:
Leverage Ratio | Eurocurrency Spread | ABR Spread | Commitment Fee Rate |
Category 1: greater than or equal to 3.50 to 1 | 4.00% | 1.00% | 0.75% |
Category 2: greater than or equal to 3.00 to 1 but less than 3.50 to 1 | 3.75% | 0.75% | 0.75% |
Category 3: greater than or equal to 2.50 to 1 but less than 3.00 to 1 | 3.50% | 0.50% | 0.50% |
Category 4: greater than or equal to 2.00 to 1 but less than 2.50 to 1 | 2.75% | 0.00% | 0.50% |
Category 5: greater than or equal to 1.50 to 1 but less than 2.00 to 1 | 2.50% | 0.00% | 0.35% |
Category 6: less than 1.50 to 1 | 2.25% | 0.00% | 0.35% |
For purposes of the foregoing, (i) the Leverage Ratio shall be determined as of the end of each fiscal
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quarter of the Parent’s fiscal year based upon the Parent’s consolidated financial statements delivered pursuant to Sections 5.01(a) or (b) and (ii) each change in the Applicable Rate resulting from a change in the Leverage Ratio shall be effective during the period commencing on and including the date of delivery to the Administrative Agent of such consolidated financial statements indicating such change and ending on the date immediately preceding the effective date of the next such change; but the Leverage Ratio shall be deemed to be in Category 1 at the request of the Required Lenders if the Parent fails to timely deliver the consolidated financial statements required to be delivered by it pursuant to Sections 5.01(a) or (b), during the period from the deadline for delivery thereof until such consolidated financial statements are received. Notwithstanding anything to the contrary set forth in this definition, the Applicable Rate for Swingline Loans shall be the same as the Applicable Rate for ABR Loans.
(b)A new definition of “Cash Equivalents” is hereby added to Section 1.01 of the Credit Agreement, such new definition to read in its entirety as follows:
“Cash Equivalents” means any of the following types of Investments, to the extent owned by the Parent or any of its Restricted Subsidiaries free and clear of all Liens (other than Liens securing the Obligations and other Liens permitted hereunder):
(a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;
(b) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $500,000,000, in each case with maturities of not more than 270 days from the date of acquisition thereof;
(c) commercial paper issued by any entity organized under the laws of any state of the United States of America and rated with the two highest classifications available by Moody’s or S&P, in each case with maturities of not more than 270 days from the date of acquisition thereof; and
(d) Investments, classified in accordance with GAAP as current assets of the Parent or any of its Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the two highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition.
(c)A new definition of “Collateral Agent” is hereby added to Section 1.01 of the Credit Agreement, such new definition to read in its entirety as follows:
“Collateral Agent” means JPMorgan Chase Bank, N.A., acting in its capacity as Collateral
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Agent under that certain Collateral Agency Agreement dated as of July 1, 2016 executed by and among JPMorgan Chase Bank, N.A., as collateral agent, Parent, certain Affiliates of Debtor therein named, the Administrative Agent, and GSO Tetra Holdings LP., acting as agent under the GSO NPA, as the same may be amended, modified, supplemented and restated from time to time.
(d)A new definition of “Excess Cash Amount” is hereby added to Section 1.01 of the Credit Agreement, such new definition to read in its entirety as follows:
“Excess Cash Amount” has the meaning set forth in Section 2.09(c).
(e)A new definition of “Excluded Assets” is hereby added to Section 1.01 of the Credit Agreement, such new definition to read in its entirety as follows:
“Excluded Assets” means (i) all real property now or hereafter owned by Parent or any of its Subsidiaries, (ii) motor vehicles or assets with a certificate of title having an aggregate book value of not greater than $3,000,000, (iii) “commercial tort claims” (as that term is defined in the UCC) having an aggregate book value of not greater than $250,000, (iv) any outstanding Equity Interests in TETRA-Medit Oil Service (Libya), TETRA Technologies Nigeria Limited, TETRA Yemen for Oilfield Services Co., Ltd., TETRA (Thailand) Limited, or TETRA Technologies de Venezuela, S.A. and the outstanding Equity Interests in each other Foreign Subsidiary which is owned directly by Parent or any of its Domestic Subsidiaries in excess of 66% of issued and outstanding Equity Interests of such Foreign Subsidiary, (v) any property owned by any Foreign Subsidiary or any Unrestricted Subsidiary (other than any Pledged Compressco LP Units, which will not constitute Excluded Assets)), (vi) the Hedron Escrow Account, (vii) Equity Interests in CSI Compressco GP Inc. and (viii) any item of general intangibles that is now or hereafter held by Parent or any of its Subsidiaries but only to the extent that such item of general intangibles (or any agreement evidencing such item of general intangibles) contains a term, provision or other contractual obligation or is subject to a rule of law, statute or regulation that restricts, prohibits, or requires a consent (that has not been obtained) of a Person (other than Parent or any of its Subsidiaries) to, the grant, creation, attachment or perfection of the security interest granted in the Security Agreements, and any such restriction, prohibition and/or requirement of consent is effective and enforceable under applicable law and is not rendered ineffective by applicable law (including, without limitation, pursuant to Sections 9.406, 9.407, 9.408 or 9.409 of the UCC, and any successor provision thereto).
(f)A new definition of “Fixed Charge Coverage Ratio” is hereby added to Section 1.01 of the Credit Agreement, such new definition to read in its entirety as follows:
“Fixed Charge Coverage Ratio” means, as of the last day of any fiscal quarter, the ratio of (a) EBITDA minus cash income tax expense minus non-financed Capital Expenditures minus cash dividends and cash distributions by the Parent to (b) Interest Expense plus scheduled principal payments on Indebtedness (including Capital Lease Obligations) plus any Equity Interest repurchases, for the applicable period, in each case for the 12 months then ending and determined on a consolidated basis for the Parent and its Consolidated Restricted Subsidiaries.
(g)A new definition of “GSO NPA” is hereby added to Section 1.01 of the Credit Agreement, such new definition to read in its entirety as follows:
“GSO NPA” means that certain Note Purchase Agreement dated as of July 1, 2016 executed
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by and between Parent and GSO TETRA HOLDINGS LP., as the sole current purchaser. Notwithstanding anything to the contrary set forth herein, all references herein to the GSO NPA shall mean the GSO NPA as it exists on the date hereof and without amendment except as may be approved by the Required Lenders and each such reference to the GSO NPA shall remain in effect regardless of termination of such Note Purchase Agreement for any reason (including by reason of payment of full of the underlying debt obligations).
(h)A new definition of “Hedron Escrow Account” is hereby added to Section 1.01 of the Credit Agreement, such new definition to read in its entirety as follows:
“Hedron Escrow Account” means the escrow account maintained with JPMorgan Chase Bank, N.A. relating to warranty claims with respect to the Vanuatu flag vessel Tetra Hedron, Official Number 2056.
(i)The definition of “Loan Documents” contained in Section 1.01 of the Credit Agreement is hereby amended to read in its entirety as follows:
“Loan Documents” means, collectively, this Agreement, the Notes, the Guaranty, the Security Agreements, the Notice of Entire Agreement, the Contribution Agreement, any subordination agreement relating to Subordinated Debt, letter of credit applications and agreements between any Loan Party and any Issuing Bank regarding the respective rights and obligations between any Loan Party and such Issuing Bank in connection with the issuance of Letters of Credit, all instruments, certificates and agreements now or hereafter executed or delivered to the Administrative Agent or any Lender pursuant to any of the foregoing or in connection with the obligations under this Agreement and the other Loan Documents or any commitment regarding such obligations, and all amendments, modifications, renewals, extensions, increases and rearrangements of, and substitutions for, any of the foregoing. The term “Loan Document” as used herein shall not include any Swap Agreement (but the obligations now or hereafter owing to any Lender or any Affiliate of a Lender under a Swap Agreement shall nevertheless be secured by all collateral subject to the Loan Documents).
(j)The definition of “Material Indebtedness” contained in Section 1.01 of the Credit Agreement is hereby amended to read in its entirety as follows:
“Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the Loan Parties in an aggregate principal amount exceeding $20,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that would be required to be paid if such Swap Agreement were terminated at such time.
(k)The definition of “Permitted Encumbrances” contained in Section 1.01 of the Credit Agreement is hereby amended by (i) deleting clause (e) and substituting the foregoing clause (e) therefor and (ii) adding the following new clauses (j), (k) and (l) to the end of said definition:
(e) (i) Liens for crew wages (including wages of the masters of any applicable vessels) incurred in the ordinary course of business and that are not yet due and payable or that are being contested in good faith by appropriate proceedings; (ii) Liens for necessaries provided to any applicable vessels incurred in the ordinary course of business that are not yet due and payable; (iii)
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Liens arising by operation of law in the ordinary course of business in connection with operating, maintaining or repairing any applicable vessels that are not yet due and payable; and (iv) Liens for damages arising from maritime torts that are unclaimed or that are covered by insurance, or in respect of which a bond or other security has been posted on behalf of the ship owner with the appropriate court or other tribunal to prevent the arrest or to secure the release of any applicable vessel from arrest, unless any such Lien is being contested in good faith by appropriate proceedings;
(j) Liens on the Hedron Escrow Account;
(k) Liens incidental to the conduct of business or the ownership of properties and assets (whether arising by contract or by operation of law) incurred in the ordinary course of business and not in connection with the borrowing of money and that do not, in the aggregate, materially impair the use of such property in the operation of the business of the Parent and its Restricted Subsidiaries taken as a whole or the value of such property for the purposes of such business;
(l) Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any Joint Venture to the extent securing Non-Recourse Debt (as defined in the GSO NPA);
(l)A new definition of “Pledged Compressco LP Units” is hereby added to Section 1.01 of the Credit Agreement, such new definition to read in its entirety as follows:
“Pledged Compressco LP Units” means common units representing limited partner Equity Interests in and to CSI Compressco LP, a Delaware limited partnership, including any warrants, options or other rights entitling Parent or any Subsidiary to purchase or acquire any such common units. The Pledged Compressco LP Units shall not include any General Partner Interests, as such term is defined in the First Amended and Restated Agreement of Limited Partnership of CSI Compressco LP (the “Compressco Partnership Agreement”), but shall include Subordinated Units and Incentive Distribution Rights, as such terms are defined in the Compressco Partnership Agreement.
(m)A new definition of “Security Agreements” is hereby added to Section 1.01 of the Credit Agreement, such new definition to read in its entirety as follows:
“Security Agreements” means, collectively, (i) the Security Agreements dated as of July 1, 2016 executed between Parent and each of its Restricted Subsidiaries which are Domestic Subsidiaries and CSI Compressco GP Inc. and CSI Compressco Investment LLC, respectively, and Collateral Agent and (ii) any and all security agreements, fleet or vessel mortgages or other lien instruments hereafter securing all or any part of the Obligations, as any of them may from time to time be amended, modified, restated or supplemented.
(n)The reference in Section 2.07(d) of the Credit Agreement to “$428,000,000” is hereby amended to read “$300,000,000”.
(o)Clauses (c) and (d) of Section 2.09 of the Credit Agreement are hereby re-styled as clauses (d) and (e), and a new clause (c) is hereby added to Section 2.09 of the Credit Agreement, such new clause to read in its entirety as follows:
(c) If, as of the end of any Business Day, the consolidated cash and Cash Equivalents (other than (i) any cash set aside by Foreign Subsidiaries in the ordinary course of business or (ii)
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cash in the Hebron Escrow Account)) balance of the Parent and its Restricted Subsidiaries exceeds $25,000,000 (the amount of such excess being referred to as the “Excess Cash Amount”), then, within five (5) Business Days of such date, the Parent shall prepay Revolving Borrowings or Swingline Borrowings (or, if no such Borrowings are outstanding, deposit cash collateral in an account with the Administrative Agent pursuant to Section 2.04(j)) in an amount equal to the lesser of (x) such Excess Cash Amount and (y) the aggregate principal amount of all Loans outstanding at such time. Such prepayment will not result in the reduction of the Revolving Commitments. Notwithstanding anything contained herein to the contrary in no event shall this Section apply to the cash or Cash Equivalents of CSI Compressco LP or its Subsidiaries.
(p)Section 4.02 of the Credit Agreement is hereby amended to read in its entirety as follows:
SECTION 4.02 Each Credit Event. The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to receipt of the request therefor in accordance herewith and to the satisfaction of the following conditions:
(a) The representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the date of such Borrowing, or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, such representations and warranties shall continue to be true and correct in all material respects as of such specified earlier date.
(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing.
(c) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, the consolidated cash and Cash Equivalents (other than (i) any cash set aside by Foreign Subsidiaries in the ordinary course of business or (ii) cash in the Hebron Escrow Account)) balance of the Parent and its Restricted Subsidiaries shall not exceed an amount equal to $25,000,000. Notwithstanding anything contained herein to the contrary in no event shall this Section apply to the cash or Cash Equivalents of CSI Compressco LP or its Subsidiaries.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by Parent on the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section.
(q)The reference in Section 5.01(h) of the Credit Agreement to “one hundred twenty (120)” is hereby amended to read “sixty (60)”.
(r)Sections 5.01(h) and (i) of the Credit Agreement are hereby restyled as Sections 5.01(k) and (l), and new Sections 5.01(h), (i) and (j) are hereby added to the Credit Agreement, such new sections to read in their entireties as follows:
(h) within 45 days after the end of each of the first three fiscal quarters of each fiscal
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year of the Parent (commencing with the fiscal quarter ending June 30, 2016), its internally-prepared consolidating financial statements reconciling the financial condition of its Restricted Subsidiaries and Unrestricted Subsidiaries, in a format reasonably acceptable to the Required Lenders, certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Restricted Subsidiaries and Unrestricted Subsidiaries of the Parent in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes;
(i) if, at the time of delivery of any financial statements pursuant to Sections 5.01(a) or (b), Unrestricted Subsidiaries account for more than 10% of (i) the consolidated total assets of the Parent and its Subsidiaries reflected in the consolidated balance sheet included in such financial statements or (ii) the consolidated revenues of the Parent and its Subsidiaries reflected in the consolidated statement of income included in such financial statements, an unaudited balance sheet for all Unrestricted Subsidiaries taken as whole as at the end of the fiscal period included in such financial statements and the related unaudited statements of income, stockholders’ equity and cash flows for such Unrestricted Subsidiaries for such period, together with consolidating statements reflecting all eliminations or adjustments necessary to reconcile such group financial statements to the consolidated financial statements of the Parent and its Subsidiaries, shall be delivered together with the financial statements required pursuant to Sections 5.01(a) and (b);
(j) concurrently with the delivery of any officer’s certificate pursuant to Section 7.2 of the GSO NPA, the Parent shall delivery of copy of such officer’s certificate to the Administrative Agent;
(s)Section 6.01 of the Credit Agreement is hereby amended to read in its entirety as follows:
SECTION 6.01 Financial Covenants.
(a) Fixed Charge Coverage Ratio. The Parent will not permit the Fixed Charge Coverage Ratio at the end of any of its fiscal quarters to be less than 1.25 to 1.
(b) Leverage Ratio. The Parent will not permit the Leverage Ratio to be greater than (i) 4.00 to 1 at the end of its fiscal quarters ending during the period from and including June 30, 2016 through and including March 31, 2018, (ii) 3.75 to 1 at the end of its fiscal quarters ending during the period from and including June 30, 2018 through and including December 31, 2018, and (iii) 3.50 to 1 at the end of each of its fiscal quarters ending thereafter.
(t)Section 6.02(h) of the Credit Agreement is hereby amended to read in its entirety as follows:
(h) Indebtedness under the GSO NPA;
(u)The reference in Section 6.02(l) of the Credit Agreement to “$550,000,000” is hereby amended to read “$100,000,000”.
(v)Section 6.03(f) of the Credit Agreement is hereby amended to read in its entirety as follows:
(f) Liens securing Indebtedness under the GSO NPA which also secure, on a parri passu basis, the Obligations;
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(w)Section 6.06 of the Credit Agreement is hereby amended to read in its entirety as follows:
SECTION 6.06 Transactions with Affiliates. The Parent will not, and will not permit any Restricted Subsidiary to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions in the ordinary course of business that are at prices and on terms and conditions not less favorable to it than could be obtained on an arm’s-length basis from unrelated third parties and (b) transactions between or among the Parent and/or the Restricted Subsidiaries not involving any other Affiliate. Any transaction that is subject to the provisions of this Section must also comply with the terms of Section 10.10 of the GSO NPA, and the Parent shall be required to deliver to the Administrative Agent, concurrent with any delivery required under the GSO NPA, copies of any applicable resolutions and fairness opinions regarding the applicable transaction.
(x)Section 6.08 of the Credit Agreement is hereby amended to read in its entirety as follows:
SECTION 6.08 Capital Expenditures and Acquisitions. If, after giving effect thereto, the Pro Forma Leverage Ratio would be greater than 3.00 to 1, then the Parent will not, and will not permit any Restricted Subsidiary to, in any fiscal year of the Parent permit the aggregate amount of all Capital Expenditures and Acquisitions to exceed $50,000,000 (or its equivalent in other currencies as of the date of each relevant transaction). If, after giving effect thereto, the Pro Forma Leverage Ratio would be greater than 2.50 to 1, then the Parent will not, and will not permit any Restricted Subsidiary to, in any fiscal year of the Parent permit the aggregate amount of all Capital Expenditures and Acquisitions to exceed $75,000,000 (or its equivalent in other currencies as of the date of each relevant transaction). Subject to the foregoing, the Parent and the Restricted Subsidiaries may at any time make any Acquisition or Capital Expenditure.
(y)A new Section 6.12 is hereby added to Article VI of the Credit Agreement, such new Section to read in its entirety as follows:
SECTION 6.12 Sale of Assets. Except as permitted by Section 6.04, the Parent will not, and will not permit any Restricted Subsidiary to, consummate any Disposition (hereinafter defined), in one or a series of transactions, to any Person, other than:
(a) Dispositions (other than Material Dispositions (hereinafter defined)) in the ordinary course of business;
(b) Dispositions by the Parent to a Restricted Subsidiary or by a Restricted Subsidiary to the Parent or a Restricted Subsidiary; or
(c) Dispositions (other than Material Dispositions) not otherwise permitted by Section 6.12(a) or Section 6.12(b); provided that:
(i) | the aggregate net book value of all assets disposed of in any fiscal year pursuant to this Section 6.12(c) does not exceed the greater of (A) 15% of Consolidated Total Assets (hereinafter defined) as of the end of the immediately preceding fiscal year or (B) $50,000,000; |
(ii) | the Net Available Cash (hereinafter defined) received by the Parent with respect to the |
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Disposition of a single asset or a group of related assets or any other related sales in any fiscal year pursuant to this Section 6.12(c) does not exceed $25,000,000 in the aggregate; and
(iii) | at the time of such Disposition and after giving effect thereto no Default or Event of Default shall have occurred and be continuing. |
(d) Notwithstanding the foregoing provisions of this Section, the Parent may, or may permit any Restricted Subsidiary to, make a Disposition (other than a Material Disposition) and the assets subject to such Disposition shall not be subject to or included in any of the foregoing limitations or the computation contained in Section 6.12(c) of the preceding sentence if the net proceeds from such Disposition are within 365 days of such Disposition:
(i) | reinvested in productive assets used in carrying on the business of the Parent and its Restricted Subsidiaries; or |
(ii) | applied to the payment or prepayment of the Obligations or of any other Indebtedness (other than Subordinated Debt). |
(e) Any prepayment of Obligations pursuant to the foregoing provisions of this Section shall be in accordance with Section 2.09, without regard to the minimum prepayment requirements of this Agreement, if such proceeds are less than such minimum.
(f) Notwithstanding the foregoing provisions of this Section, and in addition to the other provisions applicable to Dispositions, the Parent shall not nor shall it permit any Subsidiary to consummate any Material Disposition (hereinafter defined) unless: (i) not less than five Business Days prior to consummating such Material Disposition, the Company gives notice of such Material Disposition to the Administrative Agent; (ii) in the case of a Material Disposition other than a Disposition of Compressco Units, the consideration for such Disposition is at least 75% cash; (iii) such Material Disposition is for a price not less than the Fair Market Value of the assets that are the subject of such Material Disposition, as certified in a resolution of the Board of Directors of the Parent; and (iv) the Parent uses the net available cash proceeds, if any, from such Material Disposition to prepay Secured Obligations (as defined in the Collateral Agency Agreement) on a pro rata basis. The term “Material Disposition” as used herein means any Disposition of (i) Compressco Units (hereinafter defined) or (ii) assets of the Fluids Division (hereinafter defined) having a Fair Market Value (hereinafter defined) exceeding $25,000,000 or (iii) assets forming a part of the collateral for the Obligations and not otherwise included in clauses (i) and (ii) above; provided, that Dispositions of assets described in clause (iii) above shall not constitute Material Dispositions so long as the Net Available Cash received by the Parent and its Subsidiaries with respect to all Dispositions in any fiscal year does not exceed $10,000,000 in the aggregate.
(g) The following terms used in this Section shall have the meanings indicated:
(i) | The term “Compressco Units”, as used herein, means any general or limited partnership interests in, or any incentive distribution rights or other Equity Interest in, CSI Compressco LP, a Delaware limited partnership, or any of its Subsidiaries. |
(ii) | The term “Disposition”, as used herein, means the sale, lease, transfer or other disposition, including by way of merger, of any assets, including Equity Interests of Restricted |
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Subsidiaries; provided, however, that the following shall not constitute Dispositions:
(x) | a Restricted Payment that does not violate Section 6.13 of this Agreement, including the issuance or sale of Equity Interests or the sale, lease or other disposition of products, services, equipment, inventory, accounts receivable or other assets pursuant to any such Restricted Payment; |
(y) | the consummation of a Permitted Investment (hereinafter defined), including, without limitation, unwinding any obligations under Swap Agreements, and including the issuance or sale of Equity Interests or the sale, lease or other disposition of products, services, equipment, inventory, accounts receivable or other assets pursuant to any such Permitted Investment; and |
(z) | any issuance of Compressco Units by CSI Compressco LP, a Delaware limited partnership. |
(iii) | The term “Consolidated Total Assets”, as used herein, means, as of any date, the total assets of the Parent and its Restricted Subsidiaries as of such date, determined on a consolidated basis in accordance with GAAP. For the avoidance of doubt, Consolidated Total Assets shall not include the assets of CSI Compressco LP and its Subsidiaries. |
(iv) | The term “Fair Market Value”, as used herein, means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of the Parent in the case of amounts of $25,000,000 or more and otherwise by an officer of the Parent. |
(v) | The term “Fluids Division”, as used herein, means the division of the Parent and its Subsidiaries that (a) manufactures and markets clear brine fluids, additives, and associated products and services to the oil and gas industry for use in well drilling, completion, and workover operations in the United States and in certain countries in Latin America, Europe, Asia, the Middle East, and Africa, (b) markets liquid and dry calcium chloride products to a variety of markets outside the energy industry and (c) provides North American onshore oil and gas operators with comprehensive water management services. |
(vi) | The term “Net Available Cash” from a Disposition of assets means cash payments received as proceeds from such Disposition, net of: |
(w) | all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses Incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Disposition; |
(x) | in the case of a Disposition of Compressco Units, all payments (i) that are made in respect of any Indebtedness secured by any Compressco Units, in accordance with the terms of any Lien upon such Compressco Units, or (ii) that must, pursuant to the terms of any Indebtedness secured by any Compressco Units (regardless of whether the Compressco Units disposed are the collateral for such Indebtedness), or pursuant to applicable law, be made or offered to be made out of the proceeds from such |
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Disposition of Compressco Units to pay, prepay, redeem, purchase or otherwise retire such Indebtedness;
(y) | all distributions and other payments required to be made to minority interest holders in Subsidiaries or Joint Ventures (as defined in the GSO NPA) or to holders of royalty or similar interests as a result of such Disposition; and |
(z) | the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the assets disposed of in such Disposition and retained by the Parent or any Subsidiary after such Disposition. |
(vii) | The term “Permitted Business Investments”, as used herein, means Investments by the Parent or any of its Restricted Subsidiaries in any Unrestricted Subsidiary or in any Joint Venture (as defined in the GSO NPA), provided that: |
(a) | at the time of such Investment and immediately thereafter, the Parent would be in compliance with the ratio tests set forth in Section 6.01 (with such ratios calculated giving pro forma effect to the consummation of such Investment as if it had occurred at the beginning of the applicable four-quarter period used for calculation of such ratios); |
(b) | if such Unrestricted Subsidiary or Joint Venture (as defined in the GSO NPA) has outstanding Indebtedness at the time of such Investment, either (i) all such Indebtedness is Non-Recourse Debt (as defined in the GSO NPA) or (ii) any such Indebtedness of such Unrestricted Subsidiary or Joint Venture (as defined in the GSO NPA) that is recourse to the Parent or any of its Restricted Subsidiaries (which shall include, without limitation, all Indebtedness of such Unrestricted Subsidiary or Joint Venture (as defined in the GSO NPA) for which the Parent or any of its Restricted Subsidiaries may be directly or indirectly, contingently or otherwise, obligated to pay, whether pursuant to the terms of such Indebtedness, by law or pursuant to any guarantee, including, without limitation, any “claw-back,” “make-well” or “keep-well” arrangement) would, at the time such Investment is made and immediately thereafter, permit the Parent to be in compliance with the ratio tests set forth in Section 6.01 (with such ratios calculated giving pro forma effect to the consummation of such Investment as if it had occurred at the beginning of the applicable four-quarter period used for calculation of such ratios) and Section 6.02; and |
(c) | such Unrestricted Subsidiary’s or Joint Venture’s (as defined in the GSO NPA) activities are not outside the scope of the Related Businesses. |
(viii) | The term “Permitted Investment”, as used herein, means the following: |
(a) any Investment in the Parent or in a Restricted Subsidiary;
(b) any Investment in Cash Equivalents;
(c) | any Investment by the Parent or any Restricted Subsidiary in an entity, if as a result of such Investment: |
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(x) | such entity becomes a Restricted Subsidiary; or |
(y) | such entity is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its properties or assets to, or is liquidated into, the Parent or a Restricted Subsidiary; |
(d) any Investment made as a result of the receipt of non-cash consideration from a Disposition of assets that was made pursuant to and in compliance with this Section;
(e) any Investment in any entity (except to the extent of cash payments in lieu of fractional shares) in exchange for the issuance of Equity Interests (other than Disqualified Stock (as defined in Section 6.13 hereof)) of the Parent;
(f) any Investment received in compromise or resolution of (i) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Parent or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or as a result of a foreclosure by, or other transfer of title to, the Parent or any of its Restricted Subsidiaries with respect to any secured Investment in default, or (ii) litigation, arbitration or other disputes;
(g) Investments represented by obligations under Swap Agreements;
(h) Investments in any person or entity to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other deposits made in the ordinary course of business by the Parent or any of its Restricted Subsidiaries;
(i) advances to or reimbursements of employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business;
(j) loans or advances to officers, directors or employees made in the ordinary course of business or consistent with past practice of the Parent or any Restricted Subsidiary in an aggregate principal amount not to exceed $2,500,000 at any one time outstanding;
(k) prepayment of the Obligations;
(l) receivables owing to the Parent or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Parent or any such Restricted Subsidiary deems reasonable under the circumstances;
(m) any guaranty of Indebtedness that would not cause the Parent to fall out of compliance with the ratio tests under Section 6.01 or Section 6.02 other than a guaranty of Indebtedness of an Affiliate of the Parent that is not a Restricted Subsidiary;
(n) any Investment existing on, or made pursuant to binding commitments existing on November 5, 2015 and disclosed to the Administrative Agent in writing; provided that the amount of any such Investment may be increased as required by the terms of such Investment as in existence
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on November 5, 2015;
(o) surety and performance bonds and workers’ compensation, utility, lease, tax, performance and similar deposits and prepaid expenses in the ordinary course of business;
(p) guaranties by the Parent or any of its Restricted Subsidiaries of operating leases (other than Capital Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case entered into by the Parent or any such Restricted Subsidiary in the ordinary course of business;
(q) Permitted Business Investments in amounts not to exceed the Restricted Payments permitted pursuant to Section 6.13;
(r) Investments received as a result of a foreclosure by the Parent or any of its Restricted Subsidiaries with respect to any secured Investment in default; and
(s) other Investments in any entity (including Investments in any Joint Venture (as defined in the GSO NPA)) having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (s) that are at the time outstanding, that do not exceed $25,000,000; provided, however, that if any Investment pursuant to this clause (s) is made in any entity that is not a Restricted Subsidiary at the date of the making of such Investment and such entity becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (a) above and shall cease to have been made pursuant to this clause (s) for so long as such entity continues to be a Restricted Subsidiary.
(z)A new Section 6.13 is hereby added to Article VI of the Credit Agreement, such new Section to read in its entirety as follows:
SECTION 6.13 Restricted Payments.
(a) The Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:
(i) | declare or pay any dividend or make any other payment or distribution on account of the Parent’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Parent or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Parent’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Parent and other than dividends or distributions payable to the Parent or any Restricted Subsidiary); |
(ii) | purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Parent) any Equity Interests of the Parent or any direct or indirect parent of the Parent; |
(iii) | make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Debt (other than any intercompany Indebtedness between or among the Parent and any of its Restricted Subsidiaries and the purchase, |
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repurchase or other acquisition of Subordinated Debt purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such purchase, repurchase or other acquisition), except a payment of interest or principal at the stated maturity thereof; or
(iv) | make any Restricted Investment |
(all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to such Restricted Payment,
(1) | no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; |
(2) | at the time of such Restricted Payment and immediately thereafter, the Parent would be in compliance with the ratio test set forth in Section 6.01(a) and the Leverage Ratio as of the end of the fiscal quarter immediately preceding such Restricted Payment will not be greater than 3.00 to 1.00 (with such ratios calculated giving pro forma effect to the consummation of such Restricted Payment as if it had occurred at the beginning of the applicable four-quarter period used for calculation of such ratios); and |
(3) | such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Parent and its Restricted Subsidiaries since November 5, 2015 (excluding Restricted Payments permitted by clauses (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi) and (xii) (to the extent of Restricted Payments made pursuant to such clause (xii) in an aggregate amount up to $50,000,000) of Section 6.13(b)), is equal to or less than the sum, without duplication, of: |
(A) | 50% of the Consolidated Net Earnings of the Parent for the period (taken as one accounting period) from October 1, 2015 to the end of the Parent’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Earnings for such period is a deficit, less 100% of such deficit); plus |
(B) | 100% of (i) the aggregate net cash proceeds received by the Parent since November 5, 2015 as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Parent (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock of the Parent or convertible or exchangeable debt securities of the Parent, in each case that have been converted into or exchanged for such Equity Interests of the Parent (other than Equity Interests and convertible or exchangeable Disqualified Stock or debt securities sold to a Subsidiary of the Parent), (ii) with respect to Indebtedness that is incurred on or after November 5, 2015, the amount by which such Indebtedness of the Parent or any of its Restricted Subsidiaries is reduced on the Parent’s consolidated balance sheet upon the conversion or exchange after November 5, 2015 of any such Indebtedness into or for Equity Interests of the Parent (other than |
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Disqualified Stock), and (iii) the aggregate net cash proceeds, if any, received by the Parent or any of its Restricted Subsidiaries upon any conversion or exchange described in clauses (i) or (ii) above; plus
(C) | to the extent that any Restricted Investment that was made after November 5, 2015 is (x) sold for cash or otherwise cancelled, liquidated or repaid for cash, or (y) made in an entity that subsequently becomes a Restricted Subsidiary of the Parent, the initial amount of such Restricted Investment (or, if less, the amount of cash received upon repayment or sale); plus |
(D) | 100% of any dividends received by the Parent or a Restricted Subsidiary after November 5, 2015 from an Unrestricted Subsidiary, to the extent such dividends were not otherwise included in Consolidated Net Earnings of the Parent for such period. |
(b) The provisions of Section 6.13(a) will not prohibit:
(i) | the payment of any dividend or distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or distribution or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend, distribution or redemption payment would have complied with the provisions of this Agreement; |
(ii) | so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, the making of any Restricted Payment in exchange for, or out of the net cash proceeds from the substantially concurrent (A) contribution (other than from a Subsidiary of the Parent) to the equity capital of the Parent or (B) sale (other than to a Subsidiary of the Parent) of Equity Interests of the Parent (other than Disqualified Stock); provided, however, that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded (or deducted, if included) from clause (3)(b) of Section 6.13(a); |
(iii) | the repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Debt (including the payment of any required premium and any fees and expenses incurred in connection with such repurchase, redemption, defeasance or other acquisition or retirement) with the net cash proceeds from a substantially concurrent incurrence of, or in exchange for, Permitted Refinancing Indebtedness; |
(iv) | the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary to the holders of Equity Interests (other than Disqualified Stock) of such Restricted Subsidiary; provided that such dividend or similar distribution is paid to all holders of such Equity Interests on a pro rata basis based on their respective holdings of such Equity Interests; |
(v) | so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, the defeasance, repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Parent or any Restricted Subsidiary held by any of the current or former directors or employees of the Parent or of any Restricted Subsidiary; provided, however, that the aggregate price paid for all such defeased, repurchased, redeemed, acquired or retired Equity Interests may not exceed $2,500,000 in any fiscal year, with any portion |
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of such $2,500,000 amount that is unused in any fiscal year to be carried forward to the immediately succeeding twelve month period (but not to any twelve month period thereafter) and added to such amount, plus, to the extent not previously applied or included (A) the cash proceeds received by the Parent or any of its Restricted Subsidiaries from sales of Equity Interests of the Parent to employees or directors of the Parent or its Affiliates that occur after November 5, 2015 (to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of Section 6.13(a)(3)(B)) and (B) the cash proceeds of key man life insurance policies received by the Parent or any of its Restricted Subsidiaries after November 5, 2015;
(vi) | the purchase, repurchase, redemption or other acquisition or retirement for value of Equity Interests deemed to occur upon the exercise of options, warrants, incentives, rights to acquire Equity Interests or other convertible securities if such Equity Interests represent a portion of the exercise or exchange price thereof, and any purchase, repurchase, redemption or other acquisition or retirement for value of Equity Interests made in lieu of withholding taxes in connection with any exercise or exchange of options, warrants, incentives or rights to acquire Equity Interests; |
(vii) | payments of cash, dividends, distributions, advances or other Restricted Payments, in each case, made in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible or exchangeable for Equity Interests or in connection with the payment of a dividend or distribution to the holders of Equity Interests of the Parent in the form of Equity Interests (other than Disqualified Stock) of the Parent; |
(viii) | so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, the purchase, redemption or other acquisition or retirement for value of Equity Interests of the Parent or any Restricted Subsidiary representing fractional units of such Equity Interests in connection with a merger or consolidation involving the Parent or such Restricted Subsidiary or any other transaction permitted by this Agreement; |
(ix) | in connection with an acquisition by the Parent or any of its Restricted Subsidiaries, the return to the Parent or any of its Restricted Subsidiaries of Equity Interests of the Parent or its Restricted Subsidiaries constituting a portion of the purchase consideration in settlement of indemnification claims or purchase price adjustments; |
(x) | the purchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Debt (A) at a purchase price not greater than 101% of the principal amount of such Subordinated Debt plus accrued and unpaid interest thereon in accordance with provisions similar to Section 8.3 of the GSO NPA or (B) at a purchase price not greater than 100% of the principal amount of such Subordinated Debt plus accrued and unpaid interest thereon in accordance with provisions similar to Section 6.12; provided that, (i) simultaneously with such purchase, redemption, defeasance or other acquisition or retirement for value, the Parent shall have complied with the provisions of Section 6.12, and (ii) the Parent shall not purchase, redeem, defease or otherwise acquire or retire for value such Subordinated Debt prior to 360 days following any such Disposition; |
(xi) | payments or distributions to dissenting stockholders pursuant to applicable law in connection with a merger, consolidation or transfer of all or substantially all of the assets of the Parent |
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that complies with Section 6.04;
(xii) | so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, other Restricted Payments since November 5, 2015, in the following amounts (reduced by any Permitted Investments (as defined in Section 6.12 hereof) made pursuant to clause (s) of the definition of Permitted Investments): (A) an aggregate amount not to exceed $25,000,000 (reduced by any Restricted Payments made pursuant to clauses (xii)(B) and (xii)(C)) if at the time of such Restricted Payment and immediately thereafter, the Leverage Ratio as of the end of the fiscal quarter immediately preceding such Restricted Payment is equal to or exceeds 2.50 to 1.00, (B) an aggregate amount not to exceed $50,000,000 (reduced by any Restricted Payments made pursuant to clauses (xii)(A) and (xii)(C)) if at the time of such Restricted Payment and immediately thereafter, the Leverage Ratio as of the end of the fiscal quarter immediately preceding such Restricted Payment is equal to or exceeds 2.00 to 1.00 and is less than 2.50 to 1.00 and (C) an aggregate amount not to exceed $100,000,000 (reduced by any Restricted Payments made pursuant to clauses (xii)(A) and (xii)(B)) if at the time of such Restricted Payment and immediately thereafter, the Leverage Ratio as of the end of the fiscal quarter immediately preceding such Restricted Payment is less than 2.00 to 1.00, in the case of each of clauses (A), (B) and (C) above, with such ratios calculated giving pro forma effect to the consummation of such Restricted Payment as if it had occurred at the beginning of the applicable four-quarter period used for calculation of such ratios; provided that, for the avoidance of doubt, the aggregate amount of all Restricted Payments made pursuant to this clause (xii) shall not exceed $100,000,000; and |
(xiii) | so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, Restricted Investments by the Parent or any Restricted Subsidiary in CSI Compressco LP, a Delaware limited partnership, or its general partner or Dispositions by the Parent or any Restricted Subsidiary of a portion of the Fluids Division (as defined in Section 6.12 hereof) to an Unrestricted Subsidiary or Joint Venture (as defined in the GSO NPA), in an aggregate amount not to exceed $100,000,000. |
(c) The amount of all Restricted Payments (other than cash) shall be the Fair Market Value (as defined in Section 6.12 hereof) on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Parent or such Restricted Subsidiary of the Parent, as the case may be, pursuant to such Restricted Payment, except that the Fair Market Value of any non-cash dividend or distribution paid within 60 days after the date of its declaration shall be determined as of such date of declaration. The Fair Market Value of any Restricted Investment, assets or securities that are required to be valued by this Section will be determined in accordance with the definition of that term. For purposes of determining compliance with this Section in the event that a Restricted Payment meets the criteria of more than one of the categories of Restricted Payments described in the preceding clauses (i) through (xiii) of Section 6.13(b), or is permitted pursuant to Section 6.13(a), the Parent will be permitted to classify such Restricted Payment (or portion thereof) on the date made in any manner that complies with this Section.
(d) The following terms used in this Section shall have the meanings indicated:
(i) | The term “Disqualified Stock”, as used herein, means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, |
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in each case, at the option of the holder of the Equity Interest), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Equity Interest, in whole or in part, on or prior to the date that is 91 days after the Revolving Maturity Date.
(ii) | The term “Permitted Refinancing Indebtedness”, as used herein, means any Indebtedness of the Parent or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease, refund, discharge or otherwise retire for value, in whole or in part (collectively, a “Refinancing, ” and the term “Refinanced” has a correlative meaning) any other Indebtedness of the Parent or any of its Restricted Subsidiaries (other than intercompany Indebtedness) in a principal amount not to exceed (after deduction of reasonable and customary fees and expenses incurred in connection with the Refinancing) the lesser of: |
(x) | the principal amount of the Indebtedness so Refinanced (plus, in the case of Indebtedness, the amount of premium, if any paid in connection therewith); and |
(y) | if the Indebtedness being Refinanced was issued with any original issue discount, the accreted value of such Indebtedness (as determined in accordance with GAAP) at the time of such Refinancing. |
Notwithstanding the preceding, no Indebtedness will be deemed to be Permitted Refinancing Indebtedness, unless:
(A) | such Indebtedness, has a final maturity date no earlier than the final maturity date, as applicable, of, and has a Weighted Average Life to Maturity (hereinafter defined) equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being Refinanced; |
(B) | if the Indebtedness being Refinanced is contractually subordinated or otherwise junior in right of payment to the Obligations, such Indebtedness (and any related guaranties) is contractually subordinated or otherwise junior in right of payment to the Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing such Indebtedness; and |
(C) | such Indebtedness is incurred or issued by the Parent or such Indebtedness is incurred or issued by a Restricted Subsidiary who is the obligor on the Indebtedness being Refinanced; provided that a Restricted Subsidiary that is also a Guarantor may guarantee Permitted Refinancing Indebtedness incurred by the Parent, regardless of whether such Restricted Subsidiary was an obligor or guarantor of the Indebtedness being Refinanced. |
(iii) | The term “Restricted Investment”, as used herein, means any Investment other than a Permitted Investment. |
(iv) | The term “Weighted Average Life to Maturity”, as used herein, means, when applied to any Indebtedness at any date, the number of years obtained by dividing: |
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(a) | the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by |
(b) | the then outstanding principal amount of such Indebtedness. |
(aa)Clause (k) of Article VII of the Credit Agreement is hereby amended to read in its entirety as follows:
(k) one or more judgments for the payment of money (exclusive of amounts covered by insurance) in an aggregate amount in excess of $20,000,000 shall be rendered against the Parent or any Material Subsidiary and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Parent or any Material Subsidiary to enforce any such judgment;
(ab)New clauses (n), (o), (p) and (q) are hereby added to Article VII of the Credit Agreement, such new clauses to read in their entireties as follows:
(n) the occurrence of an “Event of Default” under the GSO NPA;
(o) any Subsidiary of Parent shall guaranty any Indebtedness under the GSO NPA without concurrently guarantying the Obligations, or Parent or any Subsidiary of Parent shall grant a Lien on any asset securing any Indebtedness under the GSO NPA without concurrently granting a parri passu Lien securing the Obligations;
(p) any material property owned by Parent or any of its Subsidiaries (other than Excluded Assets) shall cease to be subject to a first priority Lien securing the Obligations, subject only to exceptions permitted under this Agreement;
(q) the Parent and the Restricted Subsidiaries which are party to the Security Agreements and the Guaranties shall cease to own, in the aggregate, assets having an aggregate book value equal to or greater than eighty-five percent (85%) of the book value of all assets owned by the Parent and its Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP;
(ac)A new Section 9.20 is hereby added to the Credit Agreement, such new section to read in its entirety as follows:
SECTION 9.20. FATCA. For purposes of determining withholding Taxes imposed under FATCA (hereinafter defined), from and after July 1, 2016, the Parent and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) the Loans and the Loan Documents as not qualifying as “grandfathered obligations” within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i). The term “FATCA”, as used herein, means Sections 1471 through 1474 of the Code as of July 1, 2016 (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), and any current or future regulations
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or official interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code.
(ad)Exhibit B to the Credit Agreement is hereby amended to be identical to Exhibit B attached hereto.
Section 2.Conditions. This Amendment shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02 of the Credit Agreement) (the “Effective Date”):
(a)the Administrative Agent (or its counsel) has received from the Loan Parties and all of the Lenders either (1) a counterpart of this Amendment signed on behalf of such party or (2) written evidence satisfactory to the Administrative Agent (which may include telecopy or e-mail transmission of a signed signature page of this Amendment) that such party has signed counterparts of this Amendment,
(b)the Administrative Agent shall have received each of the following, each in form and substance satisfactory to the Administrative Agent:
(1) | executed security agreements from the Parent and from the Restricted Subsidiaries which are Domestic Subsidiaries, CSI Compressco GP Inc. and CSI Compressco Investment LLC, respectively; |
(2) | executed Guaranty from the Restricted Subsidiaries which are Material Domestic Subsidiaries (amending and restating the existing Guaranty); |
(3) | executed collateral agency agreement from the Parent, the Restricted Subsidiaries which are Domestic Subsidiaries, CSI Compressco GP Inc. and CSI Compressco Investment LLC and GSO Tetra Holdings LP; |
(4) | certificates representing all of the outstanding Equity Interests owned by Parent or by any Restricted Subsidiary which are Domestic Subsidiaries, CSI Compressco GP Inc. and CSI Compressco Investment LLC (other than Equity Interests included in the Excluded Assets) and powers of attorney, endorsed in blank, with respect to such certificates; |
(5) | the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to the Parent and each Restricted Subsidiary which are Domestic Subsidiaries, CSI Compressco GP Inc. and CSI Compressco Investment LLC in such jurisdictions as the Administrative Agent may require and copies of the financing statements (or similar documents) disclosed by such search and evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are permitted by this Agreement or have been released; and |
(6) | all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create or perfect the Liens intended to be created under the Security Agreements. |
(c)the Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good
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standing of the Parent and the Restricted Subsidiaries which are Domestic Subsidiaries, CSI Compressco GP Inc. and CSI Compressco Investment LLC, the authorization of the execution, delivery and performance of this Amendment and the related Loan Documents by the Parent and the Restricted Subsidiaries which are Domestic Subsidiaries, CSI Compressco GP Inc. and CSI Compressco Investment LLC and any other legal matters relating to this Amendment.
The Administrative Agent shall give, or cause to be given, prompt notice to the Parent and the Lenders as to whether the conditions specified in the immediately preceding sentence have been satisfied by the deadline set forth therein and shall specify the Effective Date; such notice may be oral, telephonic, written (including faxed) or by e-mail.
Section 3.Post-Closing Requirements. On or before July 31, 2016, Parent shall deliver to the Administrative Agent each of the following, each in form and substance satisfactory to the Administrative Agent:
(a)stock certificates and stock powers related to Equity Interests in any Foreign Subsidiaries which are subject to a Security Agreement;
(b)executed account control agreements with respect to each material deposit account maintained by the Parent or any Restricted Subsidiary which has executed a Security Agreement with any institution other than JPMorgan Chase Bank, N.A.; and
(c)executed fleet mortgages and such other collateral documents as the Administrative Agent shall require to create and perfect a first-priority (except as expressly permitted by the Credit Agreement) Lien upon U.S. flag vessels Epic Explorer, Official Number 603607, Epic Seahorse, Official Number 587754, and Tetra Arapaho, Official Number 625271, and Vanuatu flag vessel Tetra Hedron, Official Number 2056.
Section 4.Representations True; No Default. The Parent represents and warrants that the representations and warranties contained in the Loan Documents are true and correct in all material respects on and as of the date hereof as though made on and as of such date, except (i) to the extent any such representation or warranty is expressly limited to an earlier date, in which case, on and as of the date hereof, such representation or warranty shall continue to be true and correct in all material respects as of such specified earlier date and (ii) an adverse ruling in the arbitration described on Annex I hereto could have a Material, Adverse Effect on the ability of Epic Diving & Marine Services, LLC to perform its obligations under the Loan Documents. The Parent hereby certifies that no Default or Event of Default has occurred and is continuing.
Section 5.Ratification. Except as expressly amended hereby, the Loan Documents shall remain in full force and effect. The Credit Agreement, as hereby amended, and all rights and powers created thereby or thereunder and under the other Loan Documents are in all respects ratified and confirmed and remain in full force and effect.
Section 6.Definitions and References. Any term used in this Amendment that is defined in the Credit Agreement shall have the meaning therein ascribed to it. The terms “Agreement” and “Credit Agreement” as used in the Loan Documents or any other instrument, document or writing furnished to the Administrative Agent or any lender by any Loan Party and referring to the Credit Agreement shall mean the Credit Agreement as hereby amended.
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Section 7.Expenses; Additional Information. The Parent shall pay to the Administrative Agent all reasonable expenses incurred in connection with the execution of this Amendment and the new Notes.
Section 8.Miscellaneous. This Amendment (a) shall be binding upon and inure to the benefit of Parent and the Lenders and their respective successors, assigns, receivers and trustees (but Parent shall not assign its rights hereunder without the express prior written consent of the Administrative Agent and each Lender); (b) may be modified or amended only by a writing signed by the party against whom the same is to be enforced; (c) may be executed in several counterparts, and by the parties hereto on separate counterparts, and each counterpart, when so executed and delivered, shall constitute an original agreement, and all such separate counterparts shall constitute but one and the same agreement, and (d) together with the other Loan Documents, embodies the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior agreements, consents and understandings relating to such subject matter.
[remainder of page left blank intentionally]
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THE LOAN DOCUMENTS (INCLUDING THIS AMENDMENT) REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective duly authorized officers, effective as of the date first above written.
TETRA TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/Joseph J. Meyer
Joseph J. Meyer, Vice President - Finance,
Treasurer and Assistant Secretary
[unnumbered signature page to Fourth Amendment]
JPMORGAN CHASE BANK, N.A.,
individually and as Administrative Agent
By: /s/Jennifer Kalvaitis
Name: Jennifer Kalvaitis
Title: Executive Director
[unnumbered signature page to Fourth Amendment]
BANK OF AMERICA, NATIONAL
ASSOCIATION
By: /s/Tyler Ellis
Name: Tyler Ellis
Title: Senior Vice President
[unnumbered signature page to Fourth Amendment]
WELLS FARGO BANK, N.A.
By: /s/Maxwell J. Felts
Name: Maxwell J. Felts
Title: Assistant Vice President
[unnumbered signature page to Fourth Amendment]
COMERICA BANK
By: /s/Gary Culbertson
Name: Gary Culbertson
Title: Vice President
[unnumbered signature page to Fourth Amendment]
ROYAL BANK OF CANADA
By: /s/Kristan Spivey
Name: Kristan Spivey
Title: Authorized Signatory
[unnumbered signature page to Fourth Amendment]
DNB CAPITAL, LLC
By: /s/Jill Ilski
Name: Jill Ilski
Title: First Vice President
By: /s/Mack Lambert
Name: Mack Lambert
Title: Vice President
[unnumbered signature page to Fourth Amendment]
Each Guarantor executes this Amendment to evidence its (a) consent, to the extent such consent is necessary or required, to the execution and delivery by the Parent of the Amendment; (b) confirmation that the Guaranty continues to cover all of the Debt (as such term is defined in the Guaranty), including Debt incurred under the Credit Agreement as amended by the Amendment, with the obligations of such Guarantor under the Guaranty limited as set forth therein, and (c) acknowledgement that the Lenders would not have executed this Amendment but for such consent and confirmation.
COMPRESSCO FIELD SERVICES, L.L.C.,
an Oklahoma limited liability company
COMPRESSCO, INC.,
a Delaware corporation
EPIC DIVING & MARINE SERVICES, LLC,
a Delaware limited liability company
MARITECH RESOURCES, LLC.
a Delaware limited liability company
TETRA APPLIED HOLDING COMPANY,
a Delaware corporation
TETRA APPLIED TECHNOLOGIES, LLC,
a Delaware limited liability company
TETRA FINANCIAL SERVICES, INC.
a Delaware corporation
TETRA FOREIGN INVESTMENTS, LLC.
a Delaware limited liability company
TETRA - HAMILTON FRAC WATER
SERVICES, LLC, an Oklahoma limited liability
company
TETRA INTERNATIONAL INCORPORATED,
a Delaware corporation
TETRA MICRONUTRIENTS, INC.,
a Texas corporation
TETRA PROCESS SERVICES, L.C.,
a Texas limited liability company
TETRA PRODUCTION TESTING SERVICES,
LLC, a Delaware limited liability
company
TSB OFFSHORE, INC.,
a Delaware corporation
By: /s/Joseph J. Meyer
Joseph J. Meyer, Treasurer
[unnumbered signature page to Fourth Amendment]
COMPRESSCO TESTING, L.L.C.,
an Oklahoma limited liability company
By: COMPRESSCO, INC.,
a Delaware corporation,
its Sole Member
By: /s/Joseph J. Meyer
Joseph J. Meyer, Treasurer
T-PRODUCTION TESTING, LLC,
a Texas limited liability company
By: TETRA APPLIED TECHNOLOGIES, LLC,
a Delaware limited liability company,
its Sole Member
By:/s/Joseph J. Meyer
Joseph J. Meyer, Treasurer
[unnumbered signature page to Fourth Amendment]
EXHIBIT 10.2
SECURITY AGREEMENT
This Security Agreement (as amended, supplemented or restated from time to time, this “Agreement”) dated as of July 1, 2016, is by and between the entities executing this Agreement as “Grantors” (together with any other entity that may become a party hereto as provided herein, each a “Grantor”, and collectively, herein called “Grantors”), each of whose address is 24955 I-45 North, The Woodlands, Texas 77380 and whose taxpayer identification numbers and organizational numbers issued by their jurisdictions of organization are listed on Exhibit G hereto, and JPMORGAN CHASE BANK, N.A., whose address is 712 Main Street, Houston, Texas 77002, in its capacity as Collateral Agent (in such capacity, the “Secured Party”) under that certain Collateral Agency Agreement (the “Collateral Agency Agreement”) dated concurrently herewith executed by and among Secured Party, TETRA TECHNOLOGIES, INC., a Delaware corporation (“Parent”), Grantors, JPMorgan Chase Bank, N.A., as Administrative Agent under the Credit Agreement (hereinafter defined), and GSO TETRA HOLDINGS LP., as the sole current Purchaser under the Note Purchase Agreement (hereinafter defined).
Recitals
WHEREAS, pursuant to that certain Credit Agreement (as amended by instruments dated as of December 15, 2006, October 29, 2010, September 30, 2014 and July 1, 2016 and as the same may be further amended, modified, extended, renewed or replaced from time to time, the “Credit Agreement”) dated as of June 27, 2006 among Parent, certain lenders therein named (collectively, the “Lenders”) and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), the Lenders have agreed to make loans and issue letters of credit upon the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to that certain Amended and Restated Note Purchase Agreement (as the same may be amended, modified, extended, renewed or replaced from time to time, the “Note Purchase Agreement”) dated as of July 1, 2016 between Parent and GSO Tetra Holdings L.P., as purchaser, GSO Tetra Holdings L.P. has agreed to purchase indebtedness of the Parent upon the terms and subject to the conditions set forth therein;
WHEREAS, it is a condition precedent to the effectiveness (or continued effectiveness) of the Credit Agreement and the Note Purchase Agreement and the obligations of the Lenders and the purchasers under the Credit Agreement and the Note Purchase Agreement, respectively, that the Grantors shall have executed and delivered this Agreement to the Secured Party for the ratable benefit of the Creditors (as defined in the Collateral Agency Agreement); and
WHEREAS, Grantors will receive direct or indirect benefits from the execution of, and performance of obligations under, this Agreement.
NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantors and Secured Party agree as follows:
Any capitalized term used in this Agreement and not otherwise defined herein shall have the meaning ascribed to such term in the Credit Agreement. Terms used in this Agreement which are defined in the UCC are used with the meanings as therein defined. All principles of construction set forth in Article I of the Credit Agreement are incorporated herein by reference for all purposes.
ARTICLE 1
Creation of Security Interest
In order to secure the prompt and unconditional payment of the Debt (as defined in Section 2.2), each Grantor hereby grants to Secured Party on behalf of the holders of the Debt a security interest in and mortgages, assigns, transfers, delivers, pledges, sets over and confirms to Secured Party on behalf of the holders of the Debt all of Grantors’ remedies, powers, privileges, rights, titles and interests (including all power of Grantors, if any, to pass greater title
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than it has itself) of every kind and character now owned or hereafter acquired, created or arising in and to all personal property of Grantors, including without limitation, all of Grantors’ remedies, powers, privileges, rights, titles and interests (including all power of Grantors, if any, to pass greater title than it has itself) of every kind and character now owned or hereafter acquired, created or arising in and to the following:
Accounts
(a) | all accounts, receivables and accounts receivable regardless of form (including all choses or things in action, trade names, trademarks, patents, patents pending, infringement claims, service marks, licenses, copyrights, blueprints, drawings, plans, diagrams, schematics, computer programs, computer tapes, computer discs, reports, catalogs, customer lists, purchase orders, goodwill, route lists, monies due or recoverable from pension funds, tax refunds and all rights to any of the foregoing), book debts, contract rights and rights to payment no matter how evidenced (including those accounts listed on the Schedule or Schedules which may from time to time be attached hereto); |
(b) | all chattel paper, notes, drafts, acceptances, payments under leases of equipment or sale of inventory, and other forms of obligations received by or belonging to any Grantor for goods sold or leased and/or services rendered by such Grantor; |
(c) | purchase orders, instruments and other documents (including all documents of title) evidencing obligations to any Grantor, including those for or representing obligations for goods sold or leased and/or services rendered by such Grantor; |
(d) | all monies due or to become due to any Grantor under all contracts, including those for the sale or lease of goods and/or performance of services by such Grantor no matter how evidenced and whether or not earned by performance; |
(e) | all accounts, receivables, accounts receivable, contract rights, and general intangibles arising as a result of any Grantor’s having paid accounts payable (or having had goods sold or leased to any Grantor or services performed for any Grantor giving rise to accounts payable) which accounts payable were paid for or were incurred by such Grantor on behalf of any third parties pursuant to an agreement or otherwise; |
(f) | all goods, the sale and delivery of which give rise to any of the foregoing, including any such goods which are returned to any Grantor for credit; |
Inventory
all goods, merchandise, raw materials, work in process, finished goods, and other tangible personal property of whatever nature now owned by any Grantor or hereafter from time to time existing or acquired, wherever located and held for sale or lease, including those held for display or demonstration or out on lease or consignment, or furnished or to be furnished under contracts of service or used or usable or consumed or consumable in any Grantor’s business or which are finished or unfinished goods and all accessions and appurtenances thereto, together with all warehouse receipts and other documents evidencing any of the same and all containers, packing, packaging, shipping and similar materials;
Equipment and General Intangibles
all general intangibles now owned by any Grantor or existing or hereafter acquired, created or arising (whether or not related to any of the other property described in this Article) and all goods, equipment, machinery, furnishings, fixtures, furniture, appliances, accessories, leasehold improvements, chattels and other articles of personal property of whatever nature (whether or not the same constitute fixtures) now owned by any Grantor or hereafter acquired, and all component parts thereof and all appurtenances thereto;
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Patents, Trademarks and Copyrights
(a) | all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos, and other source or business identifiers (and all amendments, supplements, restatements and modifications thereof or thereto from time to time), and all prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications, if any, in connection therewith including registrations, recordings and applications, if any, in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof, or any other country or any political subdivision thereof (each such office or agency being referred to herein as a “Trademark Office”) and all reissues, continuations, continuations-in-part, extensions or renewals thereof (each of the foregoing items in this paragraph and listed on Exhibit A attached hereto being herein referred to as a “Trademark” and collectively called the “Trademarks”) and all of the goodwill of the business connected with the use of, and symbolized by, each Trademark; |
(b) | all letters patent of the United States or any other country, all registrations and recordings thereof, and all applications for such letters patent, including, without limitation, registrations, recordings and applications in a Trademark Office and all reissues, continuations, continuations-in-part, extensions or renewals thereof (each of the foregoing being herein called a “Patent”), and any license related thereto (each herein called a “Patent License”; listed on Exhibit A attached hereto are all Patents and Patent Licenses of Grantors); |
(c) | copyrights and copyright registrations, including, without limitation, the copyright registrations and recordings thereof and all applications in connection therewith listed on Exhibit A attached hereto, and (i) all reissues, continuations, extensions or renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable under and with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements or dilutions thereof, (iii) the right to sue for past, present and future infringements and dilutions thereof, (iv) the goodwill of any Grantor’s business symbolized by the foregoing and connected therewith and (v) all of Grantors’ rights corresponding thereto throughout the world (all of the foregoing copyrights and copyright registrations, together with the items described in clauses (i)-(v) in this paragraph (c), are sometimes hereinafter individually and/or collectively referred to as the “Copyrights”); and (ii) all products and proceeds of any and all of the foregoing, including, with limitation, licensed royalties and proceeds of infringement suits; |
(d) | any claim for past, present or future infringement or dilution of any Trademark, Patent, Patent License or Copyright (including licensed royalties), or for injury to the goodwill associated with any Trademark; |
Stock
(a) | all of the investment securities listed on Exhibit B, hereto attached and hereby made a part hereof; |
(b) | all dividends (cash or otherwise), rights to receive dividends, stock dividends, dividends paid in stock, distributions upon redemption or liquidation, distributions as a result of split-ups, recapitalizations or rearrangements, stock rights, rights to subscribe, voting rights, rights to receive securities, and all new securities and other investment property and other property which any Grantor may hereafter become entitled to receive on account of the foregoing; |
Partnership and Limited Liability Company Interests
(a) | The partnerships and limited liability companies (the “Non-Corporate Entities”) created under and by virtue of the organizational documents (collectively, the “Non-Corporate Entity Agreements”) described on Exhibit B hereto; |
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(b) | all instruments, documents, chattel papers, accounts, general intangibles, profits, income, surplus, money, credits, claims, demands and other property (real or personal) and revenues of any kind or character now or hereafter relating to, accruing or arising under or in respect of the Non-Corporate Entity Agreements and all property, real or personal, now or hereafter owned by the Non-Corporate Entities or paid, payable or otherwise distributed or distributable or transferred or transferable to any Grantor under, in connection with or otherwise in respect of any of such property or the Non-Corporate Entity Agreements (whether by reason of any Grantor’s ownership interest, loans by any Grantor or otherwise); |
Commercial Tort Claims, Deposit Accounts, Negotiable Collateral,
Supporting Obligations and Money
(a) | All of Grantors’ right, title and interest with respect to any “commercial tort claims” as that term is defined in the UCC including, without limitation, the commercial tort claims listed on Exhibit C (“Commercial Tort Claims”); |
(b) | All of Grantors’ right, title, and interest with respect to any “deposit account” as that term is defined in the UCC and the investments and earnings therein and documents evidencing the same, including, without limitation, any checking or other demand deposit account, time, savings, passbook or similar account maintained with a bank including, without limitation, the deposit accounts set forth on Exhibit C (“Deposit Accounts”); |
(c) | All of Grantors’ right, title and interest with respect to letters of credit, letter-of-credit rights, instruments, promissory notes, drafts, and documents (including any bills of lading, dock warrants, dock receipts, warehouse receipts or orders for delivery of goods and also any other document which in the regular course of business or financing is treated as adequately evidencing that the person in possession of it is entitled to receive, hold and dispose of such document and the goods it covers), as such terms may be defined in the UCC, and any and all supporting obligations in respect thereof (“Negotiable Collateral”); |
(d) | All of Grantors’ right, title, and interest with respect to any “supporting obligations” as such term is defined in the UCC, including letters of credit and guaranties issued in support of accounts, chattel paper, documents, general intangibles, instruments, or investment property (the “Supporting Obligations”); |
(e) | All of Grantors’ money, cash, cash equivalents or other assets of any Grantor that now or hereafter come into the possession, custody, or control of Secured Party or any Lender or any Purchaser; |
all accessions, appurtenances and additions to and substitutions for any of the foregoing and all products and proceeds of any of the foregoing, together with all renewals and replacements of any of the foregoing, all accounts, receivables, account receivables, instruments, notes, chattel paper, documents (including all documents of title), other Negotiable Collateral, Supporting Obligations, cash, books, records, contract rights and general intangibles arising in connection with any of the foregoing (including all insurance and claims for insurance affected or held for the benefit of any Grantor or Secured Party in respect of the foregoing). Without limiting any of the foregoing, the security interest herein granted shall cover all of the rights, titles and interests of Grantors in and to all goods (including inventory, equipment and any accessions to this Agreement), instruments (including promissory notes), documents, accounts (including health-care-insurance receivables), chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, securities and all other investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, and all general intangibles (including all payment intangibles). All of the properties and interests described in this Article (specifically excluding the Excluded Assets) are herein collectively called the “Collateral”, it being understood that, notwithstanding any other provision set forth in this Agreement, this Agreement
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shall not, at any time, constitute a grant of a security interest in any property that is, at such time, an Excluded Asset. The inclusion of proceeds does not authorize any Grantor to sell, dispose of or otherwise use the Collateral in any manner not authorized herein.
ARTICLE 2
Secured Indebtedness
2.1This Agreement is made to secure all of the following present and future debt and obligations:
(a) | All debt now and hereafter evidenced by the Notes. |
(b) | All debt now and hereafter evidenced by the Notes (as defined in the Note Purchase Agreement). |
(c) | All obligations and Indebtedness of any Grantor now or hereafter created or incurred under, or in connection with the Credit Agreement and the Note Purchase Agreement. |
(d) | All other obligations, if any, undertaken by any Grantor in any other place in this Agreement. |
(e) | Any and all sums and the interest which accrues on them as provided in this Agreement which Secured Party or any holder of the Debt may advance or which any Grantor may owe Secured Party or any holder of the Debt pursuant to this Agreement on account of such Grantor’s failure to keep, observe or perform any of the covenants of such Grantor under this Agreement. |
(f) | (i) All present and future debts and obligations under or pursuant to any Loan Documents now or in the future governing, evidencing, guaranteeing or securing or otherwise relating to payment of all or any part of the debt evidenced by the Notes, including the LC Exposure, (ii) all obligations of Grantors or any other Loan Party now or hereafter owing to any Lender or any Affiliate of a Lender under a Swap Agreement or under an agreement governing Banking Services (hereinafter defined) and (iii) all supplements, amendments, restatements, renewals, extensions, rearrangements, increases, expansions or replacements of them. |
(g) | (i) All present and future debts and obligations under or pursuant to any Note Documents (as defined in the Note Purchase Agreement) now or in the future governing, evidencing, guaranteeing or securing or otherwise relating to payment of all or any part of the debt evidenced by the Notes (as defined in the Note Purchase Agreement) and (ii) all supplements, amendments, restatements, renewals, extensions, rearrangements, increases, expansions or replacements of them. |
2.2The term “Debt” means and includes all of the Indebtedness and other obligations described or referred to in Section 2.1. The Debt includes interest and other obligations accruing or arising after (a) commencement of any case under any bankruptcy or similar laws by or against any Grantor or any other Person now or hereafter primarily or secondarily obligated to pay all or any part of the Debt (each Grantor and each such other Person being herein called individually an “Obligor” and collectively, “Obligors”) or (b) the obligations of any Obligor shall cease to exist by operation of law or for any other reason. The Debt also includes all reasonable attorneys’ fees and any other reasonable expenses incurred by Secured Party in enforcing any of the Loan Documents or Note Documents. The term “Banking Services” means each and any of the following bank services provided to any Loan Party by any Lender or any of its Affiliates: (a) commercial credit cards, (b) stored value cards and (c) treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services).
2.3Notwithstanding the foregoing, the right of recovery against each Grantor under this Agreement (other than the Non-Recourse Grantors (as defined in Section 8.28 hereof, whose liability hereunder is limited as set forth in such section) is limited to the extent it is judicially determined with respect to any such Grantor that entering this
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Agreement would violate Section 548 of the United States Bankruptcy Code or any comparable provisions of any state law, in which case such Grantor shall be liable under this Agreement only for amounts aggregating up to the largest amount that would not render such Grantor’s obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any state law.
ARTICLE 3
Representations and Warranties
Each Grantor represents and warrants as follows:
(a) | Grantors are the legal and equitable owner and holder of good and marketable title to the Collateral free of any adverse claim and free of any Lien except only for the Liens granted hereby and the Permitted Encumbrances (such warranty to supersede any provision contained in this Agreement limiting the liability of any Grantor). Except for matters which have previously been released, there are no financing statements directly or indirectly affecting the Collateral or any part of it now on file in any public office except as Secured Party may otherwise consent in writing. |
(b) | All leased and owned locations of Grantors are located at the addresses set forth on Exhibit D attached hereto; and in this regard, Grantors’ locations means all places of business of Grantors. All books and records of any applicable Grantor with regard to the Collateral are maintained and kept at locations identified on Exhibit D. Other than Collateral in use or repair in the ordinary course of business, all Collateral other than inventory in transit is located at the places specified on Exhibit D. Upon request from the Secured Party, Grantors will provide a list of the current locations of all Collateral. |
(c) | Except as set forth on Exhibit E hereto, no part of the Collateral is covered by a certificate of title or subject to any certificate of title law. No part of the Collateral consists or will consist of consumer goods, farm products, timber and the like or accounts resulting from the sale thereof. |
(d) | No Grantor has changed its name, whether by amendment of its organizational documents or otherwise, or the jurisdiction under whose laws such Grantor is organized within the last five (5) years. Exhibit F attached hereto lists all tradenames, fictitious names and other names used by any Grantor in the last five (5) years. |
(e) | Grantors’ correct taxpayer identification numbers and organizational identification numbers, if any, issued by their jurisdictions of organization are listed on Exhibit G hereto. |
(f) | The Collateral described in Article 1 under the heading “Stock” (the “Stock Collateral”) is free from any restriction relating to the granting of Liens, duly and validly authorized and issued, and fully paid, and is hereby duly and validly pledged and hypothecated to Secured Party in accordance with applicable U.S. law, subject to the post-closing requirements in Section 3 of that certain Agreement and Fourth Amendment to Credit Agreement dated as of the date hereof, by and among Parent, the Administrative Agent and the Lenders. |
(g) | Exhibit C attached hereto sets forth all Commercial Tort Claims of Grantors for which claims have been filed, indicating the case caption for each claim, the court or other judicial forum where such claim is being litigated and the remedies sought in such claim and all other relevant information necessary or required to create a Lien on such claim in favor of Secured Party. |
(h) | The value of the consideration received and to be received by each Grantor is reasonably worth at least as much as the liability and obligation of such Grantor incurred or arising under this Agreement and all related papers and arrangements. Each Grantor’s board of directors, general partners or other governors have determined that such liability and obligation may reasonably be expected to substantially benefit such Grantor directly or indirectly. Each Grantor has had full and complete access |
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to the underlying papers relating to the Debt and all other papers executed by Parent, any Obligor or any other person or entity in connection with the Debt, has reviewed them and is fully aware of the meaning and effect of their contents. Each Grantor is fully informed of all circumstances which bear upon the risks of executing this Agreement and which a diligent inquiry would reveal. Each Grantor has adequate means to obtain from the Parent on a continuing basis information concerning Parent’s financial condition, and is not depending on Secured Party or any holder of the Debt to provide such information, now or in the future. Each Grantor agrees that neither Secured Party nor any holder of the Debt shall have any obligation to advise or notify any Grantor or to provide any Grantor with any data or information.
ARTICLE 4
Covenants
4.1Each Grantor covenants and agrees with Secured Party as follows:
(a) | Each Grantor shall furnish to Secured Party such instruments as may be reasonably required by Secured Party or any Creditor to assure the transferability of any Collateral in accordance with this Agreement when and as often as may be reasonably requested by Secured Party or such Creditor. |
(b) | If (i) the validity or priority of this Agreement or of any material rights, titles, security interests or other interests created or evidenced hereby shall be attacked, endangered or questioned or (ii) if any legal proceedings are instituted with respect thereto, Grantors will give prompt written notice thereof to Secured Party and at Grantors’ own cost and expense will diligently endeavor to cure any material defect that may be developed or claimed, and will take all necessary and proper steps for the defense of such legal proceedings; and if an Event of Default has or would result, Secured Party (whether or not named as a party to legal proceedings with respect thereto) is hereby authorized and empowered to take such additional steps as in its judgment and discretion may be necessary or proper for the defense of any such legal proceedings or the protection of the validity or priority of this Agreement and the material rights, titles, security interests and other interests created or evidenced hereby, and all reasonable and customary expenses so incurred of every kind and character shall constitute sums advanced pursuant to Section 4.2 of this Agreement. |
(c) | Each Grantor will, on request of Secured Party or any Creditor, (i) promptly correct any defect, error or omission which may be discovered in the contents of this Agreement or in any other instrument executed in connection herewith or in the execution or acknowledgment thereof; (ii) execute, acknowledge, deliver and record or file such further instruments (including further security agreements, financing statements and continuation statements) and do such further acts as may be necessary, desirable or proper to carry out more effectively the purposes of this Agreement and such other instruments and to subject to the Liens hereof and thereof any property intended by the terms hereof and thereof to be covered hereby and thereby including specifically any renewals, additions, substitutions, replacements or appurtenances to the then Collateral; and (iii) execute, acknowledge, deliver, procure and record or file any document or instrument (including specifically any financing statement) deemed advisable by Secured Party or any Creditor to protect the security interest hereunder against the rights or interests of third persons, and Grantors will pay all reasonable and customary costs connected with any of the foregoing. |
(d) | Notwithstanding the security interest in proceeds granted herein, no Grantor will, except as otherwise expressly permitted herein or in both the Credit Agreement and the Note Purchase Agreement, sell, lease, exchange, lend, rent, assign, license, transfer or otherwise dispose of, or pledge, hypothecate or grant any Lien in, or permit to exist any Lien against, all or any part of the Collateral or any interest therein or permit any of the foregoing to occur or arise or permit title to the Collateral, or any interest therein, to be vested in any other party, in any manner whatsoever, by operation of law or otherwise, without the prior written consent of Secured Party. Except as provided by both the Credit Agreement |
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and the Note Purchase Agreement or as otherwise permitted herein, no Grantor shall, without the prior written consent of Secured Party, (i) acquire any such Collateral under any arrangement whereby the seller or any other Person retains or acquires any Lien in such Collateral or (ii) return or give possession of any such Collateral to any supplier or any other Person.
(e) | Grantors shall at all times keep accurate and complete records of the Collateral and its proceeds. Grantors shall, where applicable, at Grantors’ own expense take all reasonable and appropriate steps to enforce the collection of the Collateral and items representing proceeds thereof. |
(f) | No Grantor will change its organizational identification number, taxpayer identification number, jurisdiction of organization, address, location, name, identity or, if applicable, structure unless such Grantor shall have (i) notified Secured Party of such change in writing at least thirty (30) days before the effective date of such change and (ii) taken such action, reasonably satisfactory to Secured Party, to have caused the Lien of Secured Party on behalf of the holders of the Debt in the Collateral to be at all times perfected and in full force and effect in the manner. |
(g) | Grantors shall at all times keep accurate books and records reflecting all facts concerning the Collateral including those pertaining to the warranties, representations and agreements of Grantors under this Agreement. Upon reasonable request by Secured Party, Grantors will take reasonable steps to make written designation on the books and records of Grantors to reflect thereon the assignment to Secured Party of the Collateral covered by this Agreement; provided, however, that the failure of any Grantor to make such a written designation shall not affect the rights of Secured Party to any of the Collateral. |
(h) | If the Collateral is evidenced by promissory notes, trade acceptances or other instruments for the payment of money or other Negotiable Collateral, Grantors will, at the request of Secured Party, immediately deliver any of the foregoing to Secured Party, appropriately endorsed to Secured Party’s order and regardless of the form of endorsement, each Grantor waives presentment, demand, notice of dishonor, protest and notice of protest. Prior to such delivery, such Collateral shall be held by Grantors in trust for the benefit of Secured Party and the holders of the Debt and subject to the Liens granted herein. |
(i) | No Grantor will use, or allow the use of, the Collateral in any manner which constitutes a public or private nuisance or which makes void, voidable or cancelable any insurance then in force with respect thereto. No Grantor will do or suffer to be done any act outside its ordinary course of business whereby the value of any part of the Collateral may be lessened in any material respect. |
(j) | Grantors agree to provide, maintain and keep in force casualty, liability and other insurance for that portion of the Collateral which is tangible personal property to the extent required by the Credit Agreement and the Note Purchase Agreement. Each Grantor hereby assigns to Secured Party on behalf of the holders of the Debt the exclusive right (exercisable at any time after the occurrence and during the continuation of an Event of Default) to collect any and all monies that may become payable under any insurance policies covering any part of the Collateral, or any risk to or about the Collateral. To the extent such policies are transferable, and subject to the consent and requirements of the applicable insurance companies or policies, foreclosure of this Agreement shall automatically constitute foreclosure upon all policies of insurance insuring any part of or risk to the Collateral and all claims thereunder arising from post-foreclosure events. To the extent such policies are transferable, and subject to the consent and requirements of the applicable insurance companies or policies, the successful bidder or bidders for any Collateral at any foreclosure, as their respective interests may appear, shall automatically accede to all of Grantors’ rights in, under and to such policies and all post-foreclosure event claims, and such bidder(s) shall be named as insured(s) on request, whether or not the bill of sale to any such successful bidder mentions insurance. Unless Secured Party or Secured Party’s representative reserves at the foreclosure sale the right to collect any uncollected insurance proceeds recoverable for events occurring before foreclosure (in which event the successful bidder at |
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the sale, if not Secured Party, shall have no interest in such proceeds and Secured Party shall apply them, if and when collected, to the Debt in such order and manner as Secured Party shall then elect and remit any remaining balance to Grantors or to such other Person as is legally entitled to them), all proceeds of all such insurance which are not so reserved by Secured Party at the foreclosure sale and are not actually received by Secured Party until after foreclosure shall be the property of the successful bidder or bidders at foreclosure, as their interests may appear, and no Grantor shall have any interest in them and shall receive no credit for them. Neither Secured Party nor any holder of the Debt shall have any duty to any Grantor or anyone else to either require or provide any insurance or to determine the adequacy or disclose any inadequacy of any insurance. If Secured Party or any holder of the Debt elects at any time or for any reason to purchase insurance relating to the Collateral, it shall have no obligation to cause any Grantor or anyone else to be named as an insured, to cause any Grantor’s or anyone else’s interests to be insured or protected or to inform any Grantor or anyone else that his or its interests are uninsured or underinsured.
(k) | The Collateral is and shall remain in Grantors’ possession or control at all times at Grantors’ risk of loss at Grantors’ locations as described in writing to Secured Party, where Secured Party may inspect it at any time, except for (i) its temporary removal in connection with its ordinary use, (ii) any removal to which Secured Party consents in writing in advance, (iii) Collateral which is leased in accordance with Section 4.1(l) below and (iv) dispositions permitted hereby or by both the Credit Agreement and the Note Purchase Agreement. |
(l) | Save as otherwise provided under the Credit Agreement or the Note Purchase Agreement, until the occurrence of an Event of Default which has not been cured or waived, Grantors may use the Collateral described in Article 1 under the caption “Inventory” in any lawful manner not inconsistent with this Agreement or with the terms or conditions of any policy of insurance thereon and may also sell or lease such Collateral in the ordinary course of business. A sale in the ordinary course of business does not include a transfer in partial or total satisfaction of a debt. Until the occurrence of an Event of Default which has not been cured or waived, Grantors may also (i) lease Equipment in the ordinary course of business consistent with their current business practices and (ii) use and consume any raw materials or supplies, the use and consumption of which are necessary to carry on the businesses of Grantors. |
(m) | Except as disclosed to Secured Party in writing, none of the Collateral described in Article 1 under the caption “Equipment” is or shall be wholly or partly affixed to real estate or other goods so as to become fixtures on such real estate or accessions to such other goods. To the extent any of such Collateral is or shall be wholly or partly affixed to real estate or other goods so as to become fixtures on such real estate or accessions to such other goods, Grantors have supplied to Secured Party a description of the real estate or other goods to which such Collateral is or shall be wholly or partly affixed. Said real estate is not subject to any lien or mortgage except as disclosed to Secured Party in writing. Grantors will, on demand by Secured Party, furnish or cause to be furnished to Secured Party a disclaimer or disclaimers, signed by all persons having an interest in the applicable real estate or other goods to which such Collateral is or shall be wholly or partly affixed, of any interest in such Collateral which is before Secured Party’s interest. |
(n) | In the event any Grantor receives any new securities or other investment property or other property on account of any of the Stock Collateral, such Grantor will immediately deliver the same to Secured Party to be held by Secured Party subject to the terms and provisions of this Agreement. |
(o) | Such Grantor agrees to cause each of its Subsidiaries that is required to become a party to this Agreement pursuant to Article VII(p) of the Credit Agreement or Section 9.6 of the Note Purchase Agreement to become a Grantor for all purposes of this Agreement by executing and delivering an Assumption Agreement substantially in the form of Annex 1 hereto. |
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4.2If any Grantor fails to comply with any of its agreements, covenants or obligations under this Agreement or any other Loan Document or Note Document and such failure continues for 10 days after Secured Party has given such Grantor written notice thereof, Secured Party (in such Grantor’s name or in Secured Party’s own name as agent for the Creditors) may perform them or cause them to be performed for the account and at the expense of such Grantor, but shall have no obligation to perform any of them or cause them to be performed. Any and all reasonable and customary, out-of-pocket expenses thus incurred or paid by Secured Party shall be the Grantors’ obligations to Secured Party due and payable on demand, or if no demand is sooner made, then they shall be due on or before four (4) years after the respective dates on which they were incurred, and each shall bear interest from the date Secured Party pays it until the date Grantors repay it to Secured Party, at the greater of (a) the rate provided in the Credit Agreement and (b) the rate provided in the Note Purchase Agreement, in each case, for interest on past due payments (the “Default Rate”). Upon making any such payment or incurring any such expense, Secured Party shall be fully and automatically subrogated to all of the rights of the Person receiving such payment. Any amounts owing by any Grantor to Secured Party pursuant to this or any other provision of this Agreement shall automatically and without notice be and become a part of the Debt and shall be secured by this and all other instruments securing the Debt. The amount and nature of any such expense and the time when it was paid shall be fully established by the affidavit of Secured Party or any of Secured Party’s officers or agents. The exercise of the privileges granted to Secured Party in this Section shall in no event be considered or constitute a cure of the Default or a waiver of Secured Party’s right at any time after an Event of Default to declare the Debt to be at once due and payable, but is cumulative of such right and of all other rights given by this Agreement, the Credit Agreement, the Note Purchase Agreement, the Notes, the Notes (as defined in the Note Purchase Agreement) and the other Loan Documents and Note Documents and of all rights given Secured Party by law.
4.3Each Grantor, at its own expense, will perform all acts and execute all documents, including, without limitation, documents or instruments suitable for filing with any Trademark Office or the United States Copyright Office (the “Copyright Office”), as applicable, at any time to evidence, perfect, maintain, record and enforce the Secured Party’s interest in the Collateral described in Article 1 under the heading “Patents; Trademarks and Copyrights” (collectively, the “Intellectual Property Collateral”), or to prosecute any Trademark application, or Copyright application, as applicable, or to preserve, extend, reissue, continue or renew any such Collateral (unless not doing so would be commercially reasonable and would not have a material adverse effect on such Grantor or its ability to perform its obligations under the Loan Documents or the Note Documents), or otherwise in furtherance of the provisions of this Agreement.
4.4In no event shall any Grantor, either itself or through any agent, employee, license or designee, file an application for the registration of any trademark, tradename, service mark, or patent or Copyright, with any Trademark Office or the Copyright Office, as applicable, or in any similar office or agency of the United States, any State thereof, or any other country or any political subdivision thereof in which such intellectual property is typically placed of record unless it promptly thereafter informs the Secured Party, and, upon Secured Party’s or any Creditor’s request, executes and delivers any and all agreements, instruments, documents and papers as Secured Party may request to grant to Secured Party a security interest in such trademark, service mark, tradename or patent or Copyright, as applicable, and in any general intangibles related to or arising in connection with the same, including any underlying technology, inventions and trade secrets of the applicable Grantor relating thereto or represented thereby.
4.5Each Qualified ECP Loan Party hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Loan Party to honor all of its obligations under any Loan Document in respect of Swap Obligations (provided, however, that each Qualified ECP Loan Party shall only be liable under this Section for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section or otherwise under any applicable Loan Document voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). Each Qualified ECP Loan Party intends that this Section constitute, and this Section shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
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ARTICLE 5
Assignment of Payments; Certain Powers
of Secured Party; Voting Rights
5.1During the continuation of an Event of Default, each Grantor hereby authorizes and directs each account debtor and each other Person (a “Collateral Obligor”) obligated to make payment in respect of any of the Collateral to pay over to Secured Party or its designee, upon demand by Secured Party, all or any part of the Collateral without making any inquiries as to the status or balance of the Debt and without any notice to or further consent of any Grantor. Grantors hereby agree to indemnify each Collateral Obligor and hold each Collateral Obligor harmless from all expenses and losses which it may incur or suffer as a result of any payment it makes to Secured Party pursuant to this paragraph. To facilitate the rights of Secured Party hereunder, each Grantor hereby authorizes Secured Party and its designees, during the continuation of an Event of Default:
(a) | to notify Collateral Obligors of Secured Party’s security interest in the Collateral and to collect all or any part of the Collateral without further notice to or further consent by any Grantor; and each Grantor hereby constitutes and appoints Secured Party the true and lawful attorney of such Grantor (such agency being coupled with an interest), irrevocably, with power of substitution, in the name of such Grantor or in its own name or otherwise, to take any of the actions described in the following clauses (b), (c), (d), (e), (f) and (g); |
(b) | to ask, demand, collect, receive, give receipt for, sue for, compound and give acquittance for any and all amounts which may be or become due or payable under the Collateral and to settle and/or adjust all disputes and/or claims directly with any Collateral Obligor and to compromise, extend the time for payment, arrange for payment in installments, otherwise modify the terms of, or release, any of the Collateral, on such terms and conditions as Secured Party may determine (without thereby incurring responsibility to or discharging or otherwise affecting the liability of any Grantor to Secured Party or any Creditor under this Agreement or otherwise); |
(c) | to direct delivery of, receive, open and dispose of all mail addressed to any Grantor and to execute, sign, endorse, transfer and deliver (in the name of such Grantor or in its own name or otherwise) any and all receipts or other orders for the payment of money drawn on the Collateral and all notes, acceptances, commercial paper, drafts, checks, money orders and other instruments given in payment or in partial payment thereof and all invoices, freight and express bills and bills of lading, storage receipts, warehouse receipts, other Negotiable Collateral and other instruments and documents in respect of any of the Collateral and any other documents necessary to evidence, perfect and realize upon the Liens created pursuant to this Agreement; |
(d) | in its discretion to file any claim or take any other action or proceeding which Secured Party may reasonably deem necessary or appropriate to protect and preserve the rights, titles and interests of Secured Party hereunder; |
(e) | to file financing statements, and to sign the name of any Grantor to drafts against any Collateral Obligor, assignments or verifications of any of the Collateral and notices to any Collateral Obligor; |
(f) | to station one or more representatives of Secured Party on any Grantor’s premises for the purpose of exercising any rights, benefits or privileges available to Secured Party hereunder or under any of the Loan Documents or Note Documents or at law or in equity, including receiving collections and taking possession of books and records relating to the Collateral; and |
(g) | to cause title to any or all of the Collateral to be transferred into the name of Secured Party or any nominee or nominees of Secured Party. |
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5.2Unless and until an Event of Default, as hereinafter defined, shall have occurred and be continuing, (i) Grantors shall be entitled to exercise all voting and consensual powers and rights pertaining to the Stock Collateral or any part thereof for all purposes not inconsistent with the terms of this Agreement and (ii) except as herein provided, Grantors shall be entitled to receive and retain all dividends on the Stock Collateral or any part thereof. During the continuation of an Event of Default, Secured Party shall have the right to the extent permitted by applicable law (but shall not be obligated to exercise such right), and each Grantor shall take all such action as may be reasonably necessary or appropriate to give effect to such right, to vote and give consents, ratifications and waivers, and take any other action with respect to any or all of the Stock Collateral with the same force and effect as if Secured Party were the owner thereof. All dividends in stock or property representing stock, and all subscription warrants or any other rights or options issued in connection with the Stock Collateral, and all liquidating dividends or distributions or return of capital upon or in respect of the Stock Collateral or any part thereof, or resulting from any split, revision or reclassification of the Stock Collateral or any part thereof or received in exchange for the Stock Collateral or any part thereof as a result of a merger, consolidation or otherwise, shall be paid or transferred directly to Secured Party, or if paid to or received by any Grantor, shall, immediately upon receipt thereof, be paid over, transferred and delivered to Secured Party and shall be Stock Collateral pledged under and subject to the terms of this Agreement.
5.3The powers conferred on Secured Party pursuant to this Article are conferred solely to protect Secured Party’s interest in the Collateral and shall not impose any duty or obligation on Secured Party or any holder of the Debt to perform any of the powers herein conferred. No exercise of any of the rights provided for in this Article shall constitute a retention of Collateral in satisfaction of the indebtedness as provided for in the UCC.
ARTICLE 6
Events of Default
An Event of Default under the Credit Agreement or the Note Purchase Agreement shall constitute an Event of Default under this Agreement (“Event of Default”).
ARTICLE 7
Remedies in Event of Default
7.1During the continuation of an Event of Default:
(a) | [Intentionally Left Blank] |
(b) | Secured Party is authorized, in any legal manner and without breach of the peace, to take possession of the Collateral (each Grantor hereby WAIVING all claims for damages arising from or connected with any such taking, except as may be caused by the gross negligence, bad faith or willful misconduct of Secured Party) and of all books, records and accounts relating thereto and to exercise, without interference from any Grantor, any and all rights which each Grantor has with respect to the management, possession, operation, protection or preservation of the Collateral, including the right to sell or rent the same for the account of any applicable Grantor and to deduct from such sale proceeds or such rents all costs, expenses and liabilities of every character incurred by Secured Party in collecting such sale proceeds or such rents and in managing, operating, maintaining, protecting or preserving the Collateral and to apply the remainder of such sales proceeds or such rents on the Debt. Before any sale, Secured Party may, at its option, complete the processing of any of the Collateral and/or repair or recondition the same to such extent as Secured Party may deem advisable. Secured Party may take possession of any Grantor’s premises to complete such processing, repairing and/or reconditioning, using the facilities and other property of any Grantor to do so, to store any Collateral and to conduct any sale as provided for herein, all without compensation to any Grantor. All costs, expenses, and liabilities incurred by Secured Party in collecting such sales proceeds or such rents, or in managing, operating, maintaining, protecting or preserving such properties, or in processing, |
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repairing and/or reconditioning the Collateral if not paid out of such sales proceeds or such rents as hereinabove provided, shall constitute a demand obligation owing by Grantors and shall bear interest from the date of expenditure until paid at the Default Rate, all of which shall constitute a portion of the Debt. If necessary to obtain the possession provided for above, Secured Party may invoke any and all legal remedies to dispossess any Grantor, including specifically one or more actions for forcible entry and detainer. In connection with any action taken by Secured Party pursuant to this paragraph, neither Secured Party nor any holder of the Debt shall be liable for any loss sustained by any Grantor resulting from any failure to sell or let the Collateral, or any part thereof, or from any other act or omission of Secured Party or any holder of the Debt with respect to the Collateral unless such loss is caused by the gross negligence, willful misconduct or bad faith of Secured Party or any holder of the Debt, nor shall Secured Party be obligated to perform or discharge any obligation, duty, or liability under any sale or lease agreement covering the Collateral or any part thereof or under or by reason of this instrument or the exercise of rights or remedies hereunder.
(c) | Secured Party may, without notice except as hereinafter provided, sell the Collateral or any part thereof at public or private sale or at any broker’s board or on any securities exchange (with or without appraisal or having the Collateral at the place of sale) for cash and at such price or prices as Secured Party may deem best, and Secured Party or any Creditor may be the purchaser of any and all of the Collateral so sold and Secured Party may apply upon the purchase price therefor any of the Debt and thereafter hold the same absolutely free from any right or claim of whatsoever kind. Secured Party is authorized at any such sale, if Secured Party deems it advisable or is required by applicable law so to do, (i) to restrict the prospective bidders on or purchasers of any of the Stock Collateral to a limited number of sophisticated investors who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of any of the Stock Collateral, (ii) to cause to be placed on certificates for any or all of the Stock Collateral a legend to the effect that such security has not been registered under the Securities Act of 1933 and may not be disposed of in violation of the provisions of said Act, and (iii) to impose such other limitations or conditions in connection with any such sale as Secured Party deems necessary or advisable in order to comply with said Act or any other applicable law. In any such public or private sale, each holder of the Debt if bidding for its own account or for its own account and the accounts of other holders of the Debt is prohibited from including in the amount of its bid an amount to be applied as a credit against that portion of the Debt owing to it or the portion of the Debt owing to the other holders of the Debt; instead, such holder of the Debt must bid in cash only. However, in any such public or private sale, Secured Party may (but shall not be obligated to) submit a bid for all holders of the Debt (including itself) in the form of a credit against the Debt owed to all of the holders of the Debt, and Secured Party or its designee may (but shall not be obligated to) accept title to property purchased at such public or private sale for and on behalf of all holders of the Debt. Each Grantor covenants and agrees that it will execute and deliver such documents and take such other action as Secured Party reasonably deems necessary or advisable in order that any such sale may be made in compliance with applicable law. Upon any such sale Secured Party shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right of whatsoever kind, including any equity or right of redemption, stay or appraisal which any Grantor has or may have under any rule of law or statute now existing or hereafter adopted. Secured Party shall give Grantors written notice at the address set forth herein (which shall satisfy any requirement of notice or reasonable notice in any applicable statute) of Secured Party’s intention to make any such public or private sale. Such notice shall be personally delivered or mailed, postage prepaid, at least ten (10) calendar days before the date fixed for a public sale, or at least ten (10) calendar days before the date after which the private sale or other disposition is to be made, unless the Collateral is of a type customarily sold on a recognized market, is perishable or threatens to decline speedily in value. Such notice, in case of public sale, shall state the time and place fixed for such sale or, in case of private sale or other disposition other than a public sale, the time after which the private sale or other such disposition is to be made. In case of sale at broker’s board or on a securities exchange, such notice shall state the board or exchange at which such sale is to be made and the day on which t |
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he Collateral or that portion thereof so being sold will first be offered for sale at such board or exchange. Any public sale shall be held at such time or times, within the ordinary business hours and at such place or places, as Secured Party may fix in the notice of such sale. At any sale the Collateral may be sold in one lot as an entirety or in separate parcels as Secured Party may determine. Secured Party shall not be obligated to make any sale pursuant to any such notice. Secured Party may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at any time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. Each and every method of disposition described in this Section shall constitute disposition in a commercially reasonable manner. Each Obligor, to the extent applicable, shall remain liable for any deficiency.
(d) | Secured Party shall have all the rights of a secured party after default under the UCC and in conjunction with, in addition to or in substitution for those rights and remedies: |
(i) | Secured Party may require Grantors to assemble the Collateral and make it available at a place Secured Party designates which is mutually convenient to allow Secured Party to take possession or dispose of the Collateral; and |
(ii) | it shall not be necessary that Secured Party or any holder of the Debt take possession of the Collateral or any part thereof before the time that any sale pursuant to the provisions of this Article is conducted and it shall not be necessary that the Collateral or any part thereof be present at the location of such sale; and |
(iii) | before application of proceeds of disposition of the Collateral to the Debt, such proceeds shall be applied to the reasonable and customary, out-of-pocket expenses of retaking, holding, preparing for sale or lease, selling, leasing, licensing, sublicensing and the like and the reasonable and customary out-of-pocket attorneys’ fees and legal expenses incurred by Secured Party, each Obligor, to the extent applicable, to remain liable for any deficiency; and |
(iv) | the sale by Secured Party of less than the whole of the Collateral shall not exhaust the rights of Secured Party hereunder, and Secured Party is specifically empowered to make successive sale or sales hereunder until the whole of the Collateral shall be sold; and, if the proceeds of such sale of less than the whole of the Collateral shall be less than the aggregate of the Debt, this Agreement and the Liens created hereby shall remain in full force and effect as to the unsold portion of the Collateral just as though no sale had been made; and |
(v) | in the event any sale hereunder is not completed or is defective in the opinion of Secured Party, such sale shall not exhaust the rights of Secured Party hereunder and Secured Party shall have the right to cause a subsequent sale or sales to be made hereunder; and |
(vi) | any and all statements of fact made in any bill of sale or assignment or other instrument evidencing any foreclosure sale hereunder shall be taken as rebuttable evidence of the truth of the facts so stated; and |
(vii) | Secured Party may appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by Secured Party, including the sending of notices and the conduct of sale, but in the name and on behalf of Secured Party; and |
(viii) | demand of performance, advertisement and presence of property at sale are hereby WAIVED and Secured Party is hereby authorized to sell hereunder any evidence of debt it may hold as security for the Debt. Except as provided herein or in any other Loan Document or Note Document, all demands and presentments of any kind or nature are expressly WAIVED by each Grantor. Each Grantor WAIVES the right to require Secured Party or any holder of the Debt to pursue any other remedy for the benefit of any Grantor and agrees that Secured Party |
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or any holder of the Debt may proceed against any Obligor for the amount of the Debt owed to Secured Party or any holder of the Debt without taking any action against any other Obligor or any other Person and without selling or otherwise proceeding against or applying any of the Collateral in Secured Party’s possession.
(e) | Secured Party may, at any time and from time to time, license or, to the extent permitted by an applicable license, sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any of the Intellectual Property Collateral, throughout the world for such term or terms, on such conditions, and in such manner, as Secured Party shall in its sole discretion determine. |
(f) | Secured Party may (without assuming any obligations or liability thereunder), at any time, enforce and shall have the exclusive right to enforce against any licensor, licensee or sublicensee all rights and remedies of any Grantor in, to and under any one or more licenses or other agreements with respect to any Intellectual Property Collateral and take or refrain from taking any action under any thereof. |
(g) | Without limiting any other provision of this Agreement, each Grantor expressly agrees that Secured Party, without demand, presentment or protest to or upon any Grantor or any other Person, may at any time collect, receive, appropriate and realize upon any Intellectual Property Collateral or may at any time in a commercially reasonable manner, sell, lease, assign, license, sublicense, give an option or options to purchase or otherwise dispose of and deliver any Intellectual Property Collateral (or contract to do so) in one or more parcels, at one or more public or private sales or other dispositions, upon such terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or other consideration or on credit (provided that such credit is secured by the property so disposed of), or for future delivery without assumption of any credit risk, with the right to Secured Party or any holder of the Debt, to the extent permitted by applicable law, upon any such sale or sales, public or private, to purchase any or all Intellectual Property Collateral so sold or conveyed. |
(h) | In order to implement the sale, lease, assignment, license, sublicense or other disposition of any of the Intellectual Property Collateral pursuant to this Article 7, Secured Party may, at any time, execute and deliver on behalf of any Grantor one or more instruments of assignment of any or all Intellectual Property Collateral, in form suitable for filing, recording or registration in any Trademark Office or the Copyright Office, as applicable. Each Grantor agrees to pay when due all reasonable costs incurred in any such transfer and registration of the Intellectual Property Collateral, including any taxes, fees and reasonable attorneys’ fees. |
(i) | In the event of any sale, lease, assignment, license, sublicense or other disposition of any of the Intellectual Property Collateral pursuant to this Article 7, Grantors shall supply to Secured Party or its designee its know-how and expertise relating to the manufacture and sale of the products relating to any Intellectual Property Collateral, as applicable, subject to such disposition, and its customer lists and other records relating to such Intellectual Property Collateral, as applicable, and to the distribution of said products. |
7.2All remedies expressly provided for in this Agreement are cumulative of any and all other remedies existing at law or in equity and are cumulative of any and all other remedies provided for in any other instrument securing the payment of the Debt, or any part thereof, or otherwise benefiting Secured Party or any holder of the Debt, and the resort to any remedy provided for hereunder or under any such other instrument or provided for by law shall not prevent the concurrent or subsequent employment of any other appropriate remedy or remedies.
7.3Secured Party or any Creditor may resort to any security given by this Agreement or to any other security now existing or hereafter given to secure the payment of the Debt, in whole or in part, and in such portions and in such order as may seem best to Secured Party or such Creditor, as the case may be, in its sole discretion, and any such action shall not in anywise be considered as a waiver of any of the rights, benefits or security interests evidenced by this Agreement.
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7.4To the full extent Grantors may do so, each Grantor agrees that no Grantor will at any time insist upon, plead, claim or take the benefit or advantage of any law now or hereafter in force providing for any stay, extension or redemption; and each Grantor, for itself and for any and all Persons ever claiming any interest in the Collateral, to the extent permitted by law, hereby WAIVES and releases all rights of redemption, stay of execution, notice of intention to mature or to declare due the whole of the Debt, notice of election to mature or to declare due the whole of the Debt and all rights to a marshaling of the assets of any Grantor, including the Collateral, or to a sale in inverse order of alienation in the event of foreclosure of the security interest hereby created.
ARTICLE 8
Additional Agreements
8.1Subject to the automatic reinstatement provisions of Section 8.20 below, upon full satisfaction of the Debt under the Loan Documents and the Note Documents and final termination of each Lender’s obligations (if any) to make any further advances under the Credit Agreement, all rights under this Agreement shall terminate and the Collateral shall become wholly clear of the security interest evidenced hereby, and upon written request by Grantors such security interest shall be released by Secured Party in due form and at Grantors’ cost.
8.2Secured Party or any Creditor may waive any default without waiving any other prior or subsequent default. Secured Party or any Creditor may remedy any default without waiving the default remedied. The failure by Secured Party or any holder of the Debt to exercise any right, power or remedy upon any default shall not be construed as a waiver of such default or as a waiver of the right to exercise any such right, power or remedy at a later date. No single or partial exercise by Secured Party or any holder of the Debt of any right, power or remedy hereunder shall exhaust the same or shall preclude any other or further exercise thereof, and every such right, power or remedy hereunder may be exercised at any time and from time to time. No modification or waiver of any provision hereof nor consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be in writing and signed by Secured Party (and, if required by Section 9.02 of the Credit Agreement, Section 17 of the Note Purchase Agreement or by the Collateral Agency Agreement, the Creditors or any subset of the Creditors), and then such waiver or consent shall be effective only in the specific instances, for the purpose for which given and to the extent therein specified. No notice to nor demand on any Grantor in any case shall of itself entitle any Grantor to any other or further notice or demand in similar or other circumstances. Acceptance by Secured Party or any holder of the Debt of any payment in an amount less than the amount then due on the Debt shall be deemed an acceptance on account only and shall not constitute a waiver of a default hereunder.
8.3Subject to Section 9.02 of the Credit Agreement and Section 17 of the Note Purchase Agreement and subject to the Collateral Agency Agreement, Secured Party may at any time and from time to time in writing (a) waive compliance by any Grantor with any covenant herein made by such Grantor to the extent and in the manner specified in such writing; (b) consent to any Grantor’s doing any act which hereunder such Grantor is prohibited from doing, or consent to any Grantor’s failing to do any act which hereunder such Grantor is required to do, to the extent and in the manner specified in such writing; (c) release any part of the Collateral, or any interest therein, from the security interest of this Agreement; or (d) release any Person liable, either directly or indirectly, for the Debt or for any covenant herein or in any other instrument now or hereafter securing the payment of the Debt, without impairing or releasing the liability of any other Person. No such act shall in any way impair the rights of Secured Party or any holder of the Debt hereunder except to the extent specifically agreed to by Secured Party or such holder of the Debt in such writing.
8.4A carbon, photographic or other reproduction of this Agreement or of any financing statement relating to this Agreement shall be sufficient as a financing statement.
8.5Each Grantor will cause all financing statements and continuation statements relating hereto to be recorded, filed, re-recorded and refiled in such manner and in such places as Secured Party shall reasonably request and will pay all such recording, filing, re-recording, and refiling taxes, fees and other charges. Without limiting the foregoing, Secured Party is hereby authorized to file financing statements and continuation statements relating hereto
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in any such office, in any such form and with any such collateral description as reasonably determined by Secured Party, including without limitation financing statements covering “all assets or all personal property” of any Grantor or words of similar import (provided, that the authorization to use the “all assets or all personal property” super-generic collateral description shall not apply to any financing statement filed against CSI COMPRESSCO GP INC., a Delaware corporation, and CSI COMPRESSCO INVESTMENT LLC, a Delaware limited liability company, and such financing statements shall be limited so as to not include any Excluded Assets).
8.6In the event the ownership of the Collateral or any part thereof becomes vested in a Person other than a Grantor, Secured Party and each holder of the Debt may, without notice to any Grantor, deal with such successor or successors in interest with reference to this Agreement and to the Debt in the same manner as with Grantors, without in any way vitiating or discharging any Grantor’s liability hereunder or upon the Debt. No forbearance on the part of Secured Party or any holder of the Debt and no extension of the time for the payment of the Debt given by Secured Party or any holder of the Debt shall operate to release, discharge, modify, change or affect, in whole or in part, the liability of any Grantor hereunder for the payment of the Debt or the liability of any other Obligor for the payment of the Debt, except as agreed to in writing by Secured Party.
8.7Any other or additional security taken for the payment of any of the Debt shall not in any manner affect the security given by this Agreement.
8.8To the extent that proceeds of the Debt are used to pay indebtedness secured by any outstanding Lien against the Collateral, such proceeds have been advanced by Creditors at Grantors’ request, and Secured Party, on behalf of the holders of the Debt, shall be subrogated to any and all rights and Liens owned by any owner or holder of such outstanding Lien.
8.9If any part of the Debt cannot be lawfully secured by this Agreement, or if the Liens of this Agreement cannot be lawfully enforced to pay any part of the Debt, then and in either such event, at the option of Secured Party, all payments on the Debt shall be deemed to have been first applied against that part of the Debt.
8.10Subject to the terms of the Collateral Agency Agreement, Secured Party may assign this Agreement so that the assignee shall be entitled to the rights and remedies of Secured Party hereunder.
8.11Subject to Section 9.02 of the Credit Agreement and Section 17 of the Note Purchase Agreement and subject to the Collateral Agency Agreement, this Agreement shall not be changed orally but shall be changed only by agreement in writing signed by Grantors and Secured Party. No course of dealing between the parties, no usage of trade and no parole or extrinsic evidence of any nature shall be used to supplement or modify any of the terms or provisions of this Agreement.
8.12Any notice, request or other communication required or permitted to be given hereunder shall be given as provided in the Credit Agreement and the Note Purchase Agreement, as applicable.
8.13This Agreement shall be binding upon Grantors, and the trustees, receivers, successors and assigns of Grantors, including all successors in interest of any Grantor in and to all or any part of the Collateral, and shall benefit Secured Party and its successors and assigns.
8.14If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected thereby, and this Agreement shall be liberally construed so as to carry out the intent of the parties to it. Each waiver in this Agreement is subject to the overriding and controlling rule that it shall be effective only if and to the extent that (a) it is not prohibited by applicable law and (b) applicable law neither provides for nor allows any material sanctions to be imposed against Secured Party for having bargained for and obtained it.
8.15Secured Party and each holder of the Debt shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral in its possession if it takes such action for that purpose as Grantors
17
request in writing, but failure of Secured Party or any holder of the Debt to comply with such request shall not of itself be deemed a failure to have exercised reasonable care, and no failure of Secured Party or any holder of the Debt to take any action so requested by Grantors shall be deemed a failure to exercise reasonable care in the custody or preservation of such Collateral. Neither Secured Party nor any holder of the Debt shall be responsible in any way for any depreciation in the value of the Collateral, nor shall any duty or responsibility whatsoever rest upon Secured Party or any holder of the Debt to enforce collection of the Collateral by legal proceedings or otherwise, the sole duty of Secured Party being to receive collections, remittances and payments on such Collateral as and when made and received by Secured Party and to apply the amount or amounts so received, after deduction of any collection costs incurred, as payment upon any of the Debt or to hold the same for the account and order of Grantors.
8.16In the event any Grantor instructs Secured Party or any holder of the Debt, in writing or orally, to deliver any or all of the Collateral to a third Person, and Secured Party or any holder of the Debt agrees to do so, the following conditions shall be conclusively deemed to be a part of Secured Party’s or such holder of the Debt’s agreement, whether or not they are specifically mentioned to the applicable Grantor at the time of such agreement: (i) Neither Secured Party nor any holder of the Debt shall assume any responsibility for checking the genuineness or authenticity of any Person purporting to be a messenger, employee or representative of such third Person to whom the applicable Grantor has directed Secured Party or any holder of the Debt to deliver the Collateral, or the genuineness or authenticity of any document or instructions delivered by such Person; (ii) the applicable Grantor will be considered by requesting any such delivery to have assumed all risk of loss as to the Collateral; (iii) Secured Party’s and holder of the Debt’s sole responsibility will be to deliver the Collateral to the Person purporting to be such third Person described by the applicable Grantor, or a messenger, employee or representative thereof; and (iv) Secured Party and Grantors hereby expressly agree that the foregoing actions by Secured Party or any holder of the Debt shall constitute reasonable care.
8.17The pronouns used in this Agreement are in the masculine and neuter genders but shall be construed as feminine, masculine or neuter as occasion may require. “Secured Party”, “Obligor” and “Grantor” as used in this Agreement include the heirs, devisees, executors, administrators, personal representatives, trustees, beneficiaries, conservators, receivers, successors and assigns of those parties.
8.18The section headings appearing in this Agreement have been inserted for convenience only and shall be given no substantive meaning or significance whatever in construing the terms and provisions of this Agreement. Wherever the term “including” or a similar term is used in this Agreement, it shall be read as if it were written “including by way of example only and without in any way limiting the generality of the clause or concept referred to.”
8.19THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF NEW YORK AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT.
8.20Each Grantor agrees that, if at any time all or any part of any payment previously applied by Secured Party or any holder of the Debt to the Debt is or must be returned by Secured Party or any holder of the Debt--or recovered from Secured Party or any holder of the Debt--for any reason (including the order of any bankruptcy court), this Agreement shall automatically be reinstated to the same effect, as if the prior application had not been made. Each Grantor hereby agrees to indemnify Secured Party and each holder of the Debt against, and to save and hold Secured Party and each holder of the Debt harmless from any required return by Secured Party or any holder of the Debt--or recovery from Secured Party or any holder of the Debt--of any such payments because of its being deemed preferential under applicable bankruptcy, receivership or insolvency laws, or for any other reason.
8.21This Agreement, the other Loan Documents and the other Note Documents embody the entire agreement and understanding between Secured Party and Grantors with respect to their subject matter and supersede all prior conflicting or inconsistent agreements, consents and understandings relating to such subject matter. Each Grantor acknowledges and agrees there is no oral agreement between any Grantor and Secured Party which has not been incorporated in this Agreement, the other Loan Documents and the other Note Documents.
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8.22Secured Party may from time to time and at any time, without any necessity for any notice to or consent by any Grantor or any other Person, release all or any part of the Collateral from the Liens created pursuant to of this Agreement, with or without cause, including as a result of any determination by Secured Party that the Collateral or any portion thereof contains or has been contaminated by or releases or discharges any hazardous or toxic waste, material or substance.
8.23This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Delivery of an executed counterpart of this Agreement by facsimile shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by facsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability and binding effect of this Agreement.
8.24Each Grantor agrees that it shall never be entitled to be subrogated to any of Secured Party’s or any Lender’s rights against any Obligor or any other person or entity or any Collateral or offset rights held by Secured Party or any Lender for payment of the Debt until final termination of this Agreement.
8.25The obligations of Grantors hereunder shall be joint and several.
8.26EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT, IN EITHER CASE, SITTING IN NEW YORK CITY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND EACH GRANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE PARTIES HERETO TO BRING PROCEEDINGS IN THE COURTS OF ANY OTHER JURISDICTION.
8.27EACH PARTY TO THIS AGREEMENT HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
8.28Notwithstanding anything herein to the contrary, this Security Agreement is not intended to create any liability of CSI COMPRESSCO GP INC. or CSI COMPRESSCO INVESTMENT LLC (each, a “Non-Recourse Grantor”) for payment of the Debt and, with respect to each Non-Recourse Grantor, is intended only to provide a security interest in the Collateral to secure the Debt. Secured Party shall not have any recourse against any Non-Recourse Grantor (including any recourse against assets of such Non-Recourse Grantor that do not constitute Collateral for any deficiency remaining after disposition of Collateral) except its remedies specified herein or available under law with respect to the Collateral following an Event of Default.
[Signature Pages Follow]
19
EXECUTED as of the date first set forth above.
“Grantors”
TETRA TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/Joseph J. Meyer
Joseph J. Meyer, Vice President - Finance,
Treasurer and Assistant Secretary
COMPRESSCO FIELD SERVICES, L.L.C.,
an Oklahoma limited liability company
COMPRESSCO, INC.,
a Delaware corporation
EPIC DIVING & MARINE SERVICES, LLC,
a Delaware limited liability company
MARITECH RESOURCES, LLC.
a Delaware limited liability company
TETRA APPLIED HOLDING COMPANY,
a Delaware corporation
TETRA APPLIED TECHNOLOGIES, LLC,
a Delaware limited liability company
TETRA FINANCIAL SERVICES, INC.
a Delaware corporation
TETRA FOREIGN INVESTMENTS, LLC.
a Delaware limited liability company
TETRA - HAMILTON FRAC WATER
SERVICES, LLC, an Oklahoma limited liability
company
TETRA INTERNATIONAL INCORPORATED,
a Delaware corporation
TETRA MICRONUTRIENTS, INC.,
a Texas corporation
TETRA PROCESS SERVICES, L.C.,
a Texas limited liability company
[Signature Pages for Security Agreement]
TETRA PRODUCTION TESTING SERVICES,
LLC, a Delaware limited liability
company
TSB OFFSHORE, INC.,
a Delaware corporation
By:/s/Joseph J. Meyer
Joseph J. Meyer, Treasurer
COMPRESSCO TESTING, L.L.C.,
an Oklahoma limited liability company
By: COMPRESSCO, INC.,
a Delaware corporation,
its Sole Member
By:/s/Joseph J. Meyer
Joseph J. Meyer, Treasurer
T-PRODUCTION TESTING, LLC,
a Texas limited liability company
By: TETRA APPLIED TECHNOLOGIES, LLC,
a Delaware limited liability company,
its Sole Member
By:/s/Joseph J. Meyer
Joseph J. Meyer, Treasurer
[Signature Pages for Security Agreement]
CSI COMPRESSCO GP INC.,
a Delaware corporation
By:/s/Joseph J. Meyer
Joseph J. Meyer, Treasurer
CSI COMPRESSCO INVESTMENT LLC,
a Delaware limited liability company
By: CSI COMPRESSCO GP INC.,
a Delaware corporation,
its Sole Member
By:/s/Joseph J. Meyer
Joseph J. Meyer, Treasurer
[Signature Pages for Security Agreement]
“Secured Party”
JPMORGAN CHASE BANK, N.A.,
as Collateral Agent
By: /s/Jennifer Kalvaitis
Name: Jennifer Kalvaitis
Title: Executive Director
[Signature Pages for Security Agreement]
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
TETRA TECHNOLOGIES, INC.
ANNOUNCES AMENDMENTS TO FINANCING AGREEMENTS
PROVIDING ENHANCED FINANCIAL FLEXIBILITY
THE WOODLANDS, Texas July 5, 2016 /PRNewswire/ - TETRA Technologies, Inc. (NYSE: TTI) (the “Company” or “TETRA”) today announced it has amended its revolving credit agreement with JPMorgan Chase Bank, N.A. (“JPMorgan”) and the other lenders thereto and has amended and restated its Note Purchase Agreement with an affiliate of GSO Capital Partners LP (“GSO”).
Stuart M. Brightman, TETRA's President and Chief Executive Officer, stated, “We are pleased to announce that our management team has successfully amended our main debt agreements, including their financial covenants, with no change in commitment levels, providing us with enhanced financial flexibility. We would also like to thank JPMorgan, GSO and the rest of the lending group for constructively working with us through the amendment process. These amendments, combined with our recent public offering of common stock, are very positive developments for the Company and important steps for our long-term success, as they strengthen our balance sheet, provide additional liquidity, and better position us to respond rapidly when activity levels rebound.”
By executing the Agreement and Fourth Amendment to Credit Agreement dated July 1, 2016 (the “Fourth Amendment”) with JPMorgan, as administrative agent, and the other lender parties, TETRA resolves its previously reported concerns regarding future compliance with the interest coverage ratio covenant under the Credit Agreement dated June 27, 2006 (as previously amended the “Credit Agreement”). The interest coverage ratio covenant was replaced with a more customary fixed charge coverage ratio covenant and the maximum consolidated leverage ratio was increased from 3.0X to 4.0X from June 30, 2016 through March 31, 2018, with subsequent step downs. In connection with the Fourth Amendment, the Company and certain of its subsidiaries (other than CSI Compressco LP (NASDAQ:CCLP) and its subsidiaries) pledged collateral to secure the obligations under the Credit Agreement. The amendment also included additional negative covenants consistent with those included in the Amended and Restated Note Purchase Agreement with GSO and increased the applicable margin, based on the Company’s leverage ratio. The Fourth Amendment maintains the previous $225 million commitment level under the Credit Agreement.
Simultaneously with the execution of the Fourth Amendment, the Company executed its Amended and Restated Note Purchase Agreement dated July 1, 2016 (as amended and restated, the "Amended and Restated Note Purchase Agreement") with GSO regarding the Company’s $125 million of 11% Senior Notes maturing in 2022. The Amended and Restated Note Purchase Agreement, which supersedes the previously executed Note Purchase Agreement dated November 5, 2015, was amended to delete the interest coverage ratio covenant and replace it with a more customary fixed charge coverage ratio covenant and increase the maximum consolidated leverage ratio from 3.5X to 4.5X from June 30, 2016 through March 31, 2018, with subsequent step downs. The Company and certain of its subsidiaries (other than CSI Compressco LP and its subsidiaries) also provided GSO with a security interest in the same collateral that was provided under the Fourth Amendment.
Additional details of both transactions are included in the Company’s Form 8-K filed today with the Securities and Exchange Commission.
Company Overview and Forward Looking Statements
TETRA is a geographically diversified oil and gas services company, focused on completion fluids and associated products and services, water management, frac flowback, production well testing, offshore rig cooling, compression services and equipment, and selected offshore services including well plugging and abandonment, decommissioning, and diving. TETRA owns an equity interest, including all of the general partner interest, in CSI Compressco LP (NASDAQ:CCLP), a master limited partnership.
This press release includes certain statements that are deemed to be forward-looking statements. Generally, the use of words such as “may,” “expect,” “intend,” “estimate,” “projects,” “anticipate,” “believe,” “assume,” “could,” “should,” “plans,” “targets” or similar expressions that convey the uncertainty of future events, activities, expectations or outcomes
1
identify forward-looking statements that the Company intends to be included within the safe harbor protections provided by the federal securities laws. These forward-looking statements include statements concerning the Company’s expectations regarding its ability to comply with the amended financial covenants, as well as the Company's beliefs, expectations, plans, goals, future events and performance, and other statements that are not purely historical. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of risks and uncertainties, many of which are beyond the control of the Company. Investors are cautioned that any such statements are not guarantees of future performances or results and that actual results or developments may differ materially from those projected in the forward-looking statements. Some of the factors that could affect actual results are described in the section titled “Risk Factors” contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, as well as other risks identified from time to time in its reports on Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.
Contact
TETRA Technologies, Inc. l The Woodlands, Texas
Stuart M. Brightman, President and Chief Executive Officer
Tel. 1-281-367-1983
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